Fever Tree tonic water is taking on soft drink brand Schweppes.
Fever Tree tonic water is taking on soft drink brand Schweppes.

The pricey drink taking on $2 pantry staple

"IF three quarters of a drink is the mixer, mix it with the best," is the argument tonic water brand Fever Tree wants you to believe.

The premium mixed drink company has made millions of dollars from consumers who prefer Fever Tree's more expensive tonic waters in their gin and tonics, rather than cheap mixers from traditional soft drink brands such as Schweppes.

A four pack of Fever Tree's 200mL glass bottles will set you back $7.55 and a 500mL bottle costs $4.70, while a 1L plastic bottle of Schweppes tonic water costs $2.15. Woolworths' and Coles' home brand tonic waters both cost 90 cents for a 1L bottle.

Fever Tree's UK co founders Tim Warrillow and Charles Rolls started Fever Tree in 2005 and became millionaires in 2014, selling £25m ($44m) of stock between them when they floated the company on the London Stock Exchange.

The Fever Tree group made £104m ($183m) in the first six months of 2018 in the UK alone. UK sales make up 50 per cent of its global revenue, which is up 45 per cent compared to this time last year.

Back home, Fever Tree has won the Australian Liquor Industry Awards Best Mixer award four years in a row.

It's stocked in Woolworths, Coles, Dan Murphy's, BWS and many independent bottle shops.

The full range of Fever Tree products.
The full range of Fever Tree products.

So why are gin drinkers buying it in droves? Because they want a tonic water that's as fancy as their gin, said Fever-Tree Asia Pacific brand director Andy Gaunt.

"They're fed up with this dirt that is artificially sweetened and flavoured. It's pretty terrible quality," Mr Gaunt told news.com.au, referring to traditional tonic waters from soft drink brands.

"Artificial sweeteners are being used instead of sugar and it creates a sticky, cloying taste that takes away from the freshness of a gin and tonic," Mr Gaunt said.

Tonic water gets its unique bitter, citrus flavour from the quinine plant.

Fever Tree uses quinine trees planted in the mountains of the Dominican Republic, which Mr Gaunt claims are the best in the world.

Natural cane sugar and natural citrus flavour from tangerines and oranges are then added to carbonated spring water.

Mr Gaunt believes a focus on quality ingredients makes his product taste better, which is why consumers keep buying it.

"When you taste it, there's a huge difference in quality," he said.

And that's why it costs so much.

"We do believe that people will pay more for things that they feel are worth more. To create Fever Tree is a complex process. It's very hands on and intensive and it does cost us more to make it so it will cost more on the shelf."

But what's wrong with cheaper tonic waters?

"The carbonation is not that great and they use syrups that are very sweet," Mr Gaunt said.

The bottle is also important.

"A lot of the traditional mixer products are in larger 1L or 2L formats. So if I'm at a bar, I might receive a drink from a freshly opened bottle, but the next person who gets a drink will lose that carbonation. When we drink tonic water at home, often we don't finish the bottle. It goes into the fridge and it goes to waste. A very high proportion of mixer is leftover in those bottles," Mr Gaunt said.

Fever Tree tonic waters are designed to be single use, to prevent the drink from going flat. Its drinks come in environmentally-friendly glass bottles, which hold carbonation better than plastic.

"Carbonation and fizz is a really important part of how we enjoy drinking drinks. When we taste a fizzy drink, carbonic acid is released and our body naturally reacts by releasing endorphins," Mr Gaunt said.

"But carbonation disappears as soon as you open a bottle.

"It loses its fizz. That's why we created small, single use bottles."

CAPI tomato and basil G + T
CAPI tomato and basil G + T

Fever Tree isn't the only company taking on the big soft drink giants. Australian brand CAPI is also stocked in supermarkets and it's a little cheaper - $2.65 for a 750ml bottle.

CAPI's tonic water is produced using quinine from the same plantation as Fever Tree.

"People's tastes are getting more sophisticated. If you're spending $70 on a lovely Four Pillars gin, why would you want to mix it with something full of artificial flavours and sweeteners?' CAPI co-founder Pitzy Folk told The Australian Financial Review.

"We're 25 per cent dearer than Schweppes and 25 per cent cheaper than Fever Tree," Mr Folk said.

The rise of Fever Tree and CAPI is directly linked to the growth of premium, boutique gins.

In Australia, local brand such as Four Pillars, Archie Rose and Poor Tom's now sit with the grown ups, alongside overseas favourites Bombay Sapphire, Tanqueray and Hendrick's.

"If I'm going to spend $70-$90 on a bottle of gin, I want to make sure my tonic water is good too," Mr Gaunt said.

While the soft drink sector continues to decline rapidly - Coca-Cola's profits have plummeted as health-conscious consumers turn away from sugary drinks - premium drink brands like Fever Tree are enjoying their time in the sun.

"We have consolidated our number one position at UK retail and continue to take market share from Schweppes across both the on and off trade channel. The growth is ahead of schedule and we're really happy with it," Mr Gaunt said.

"We never created Fever Tree to take on companies like Schweppes. We never intended to take Schweppes on, but once someone has tasted us, it's quite difficult to go back."


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