Fever Gives Way To Chills
Many years ago, at a house party, I remember wandering through to the kitchen to refill my glass whereupon I saw the host had stocked up on the cheapest supermarket tonic water. As diplomatically as I could I advised him that if he was going to skimp on anything he could do so on the gin but never the tonic - this had no fizz, too much sugar and had never seen a quinine leaf !
Of course those were the days when I didn’t have a small interest in a Oxford Distillery that, amongst other spirts, makes gin - I may well temper the trade off a little but the fact remains a cheap tonic can compromise any drink.
If this preamble was a drink it would be called a ‘sharpener’ so appetite whetted let’s move on to the real drinking session - the ‘high-end’ UK tonic water brand, Fevertree, which today saw its shares fall by 25% as it announced UK sales growth had halted and profits had shrunk in 2019.
Let’s get the plaudits out of the way first. The Fevertree founders reinvigorated the mixer category, improved drinks overnight and brought premium packaging cues to a flabby competitor line-up. Schweppes (in the UK) and Canada Dry (North America) had grown complacent and when the “upstart” arrived it was grabbed by two hands by both consumer and bartender alike.
Over the last five years in particular, as its market share has grown its prominence on the bar menu grew. It was as if my house party conversation had taken hold - a drink wasn’t a drink without Fevertree.
And then something interesting happened, Fevertree started to be discounted in supermarkets - no harm in that, got to get the next wave of consumers drinking it and they need an inducement ! Then along came some competitors, Fentimans in particular who seemed to be more interesting with stronger credentials and they weren’t “mass”, because by this point Fevertree had become ubiquitous - lot’s of innovation didn’t really help. Oh and guess what ? Schweppes repacked and started advertising in a more salient way.
So where does that leave Fevertree ?
No longer special
In a more competitive category (which it ironically created)
Outclassed by smaller, “boutique” brands (who maintain a price premium to Fevertree)
Aggressively targeted by Schweppes
Losing bar prominence and often on a lower shelf in supermarkets
Dependent on gin popularity which may be dipping
Relatively expensive and easy to substitute now
Of course the clever chaps at Fevertree probably anticipated all of this - hence the overseas expansion but this feels like a case where a new brand has an incredibly short “half-life”. Early investors cleaned up but things are now going flat.
These cases always lend the question - better to be a smaller, niche brand which is highly profitable with longevity or a larger one that loses it’s edge within a decade. Fevertree is in the middle of the road now and that is a dangerous place to be.
Cheers.
About The Author
The author is a brand consultant and founder of Mission Critical, a highly focused and curated weekly briefing for time poor and information hungry decision makers and THE FIRST, a monthly briefing containing 31 inspirational insights.
