Fast forward to today and Fevertree is worth more than £4bn while Britvic’s market cap growth has only just about bettered inflation.
Few would have seen this coming, including the boards of Britvic and Schweppes, the two previously dominant players in the tonic market.
Schweppes can almost be forgiven: it was by far the largest maker of tonic around the world and so its strategy was more about protecting its market share – ‘if it ain’t broke, don’t fix it’.
Britvic, on the other hand, had the chance to be a bit riskier, something it should have been doing if it had any genuine intention of usurping Keurig, Dr Pepper-owned Schweppes.
With those two giants of the tonic game resting on their laurels, Fevertree swept in with its simple philosophy: if three-quarters of your drink is the mixer, “mix with the best”.
Schweppes and Britvic continued to almost dismiss the newbie for several years despite their now-rival’s rapid growth, failing to bring out their own premium versions and ward off any threat from Fevertree.
Their approach seemed to be that tonic wasn’t the key part of a drink, that people weren’t prepared to pay more for a better mixer and that they’d developed their product as much as was worthwhile.
By this point, Fevertree was seeing sales soar in the UK, riding the wave of gin’s renaissance. It also began to attract the fancy bars and restaurants which didn’t want to be seen as stocking the ‘cheap’ options.
It was when Fevertree surpassed the £1bn mark that incumbent giants got their acts together. Britvic “refreshed” its tonic water and other mixers in late 2016, while Schweppes brought out its own premium mixers under the ‘1783’ name the following year.
Schweppes used to be the byword for tonic, not anymore
Truth be told, they were too late to the party. The shift towards ‘premiumisation’ had already happened and Fevertree was the now go-to brand in the world of fancy mixers.
The company, which was only founded in 2005, is now the most popular mixer brand in UK supermarkets, accounting for almost half of all off-trade tonic sales.
Even in its latest interim results after several years of strong growth, Fevertree’s sales still jumped by 45% and it is targeting America next, where the estimated market size is several times that of the UK.
How the big boys must regret underestimating the competition and misreading consumer trends.
Moreover, Fevertree, which is now worth twice as much as Britvic, could’ve been taken out for a relative pittance only a couple of years ago. They must regret that even more.