Growth ahead for mixers

25 January, 2023

New markets are emerging for premium mixers and providing major expansion opportunities.

Premium mixers have generally been in huge growth over the past decade, but supply chain issues and inflation have proven sizeable hurdles for some of the major players. Fever-Tree, the global market leader and chart-topper in Drinks International’s Brands Report, experienced a tough 2021 with its stock price dropping 61%. However, increasing business overseas suggests strong growth on the horizon.

One of the biggest driving forces behind the growth of premium mixers has been the boom in premium spirits. With that in mind, the overall mixer category is therefore expected to grow at a compound annual growth rate [CAGR] of 8.2% between 2018 and 2028 to reach $14.6bn and, according to a report by Finnoexpert, 60% of Fever-Tree’s sales are in Europe, so the largest potential for growth remains outside the EU.

“The US market is growing fast too, and expected to see an over 25% share in the company’s revenue in 2022. The market alone is expected to grow to $8.6bn by 2030, showing a 9.3% CAGR between 2022 and then,” says Samarth Pophale of Finnoexpert.

As well as a good performance in existing markets, new trade deals being struck between the UK and countries outside the EU are tickling the bellies of Fever-Tree’s accounting team. Most notably, the UK has penned its first new trade deal from scratch since leaving the EU after agreeing a deal with Australia. According to the British government website, the deal is expected to increase trade Down Under by 53%, boost the UK economy by £2.3bn and add £900m to household wages in the long run. However, more importantly to Fever-Tree, tariffs on both gin and tonic have been cut.

In Australia, Fever-Tree grew by 53% in the off -trade over the past year and is driving all the growth and premiumisation in the mixer category. The tonic category is doing particularly well as the G&T continues to lead the growth of long mixed drinks, especially at the premium end, and Fever-Tree Tonics are growing four times faster than the wider tonic category.

Head of marketing for ANZ at Fever-Tree, Caroline Wood says: “As the UK’s leading soft drink exporter and number one premium mixer brand across the globe, it’s been fantastic to see our sector-leading position evolve and expand as far afield as Australia and New Zealand. We look forward to the opportunities presented by the new trade deal to introduce even more Australians to great-tasting G&Ts.

“Both are set to become more competitive in the Australian market after the trade deal slashes tariffs on exports of gin and tonic water, currently set at 5%.”

On top of these favourable tax breaks, Fever-Tree has agreed a distribution deal with Asahi, which took effect in January. The deal gives the premium mixer a vast outlet across the Japanese market – a nation known for its Highballs and longer serves.

“We have seen that demand for premium long mixed drinks such as gin and tonics and Moscow Mules has been accelerating in many markets around the world and now we are seeing this trend come to Japan,” says Fever-Tree chief executive Tim Warrillow. “Alongside this is the size of the adult soft drink category, which continues to evolve and grow across the region.”

Growing market

Japan is part of Fever-Tree’s financial reports’ Rest of World section, which the company says grew by 20% in 2021 and now represents around 12% of total revenues for the group.

The FY22 report reads: “As we look to the long-term opportunity in Canada, we have also made a significant step-change in our route to market this year by transitioning to a new, much more powerful distributor, Tree of Life. With over 70 years of experience in the Canadian market, Tree of Life is well-positioned to support our growth ambitions in the market, with its strong sales team, broad, multi-channel coverage, and comprehensive geographic reach.

“We have extended our premium market-leading position in Australia and Canada and continue to take steps to position us for longer-term opportunities across markets as the long mixed drink trend gathers momentum globally.”

However while Fever-Tree’s success is significant, it’s not the only one breaking new ground outside Europe. The London Essence Company, also UK based, only came to market in 2016 but currently features in both the Bestselling and Top Trending lists in this year’s Annual Brands Report and is beginning to make waves around the world. Late last year the brand entered the Middle East with distribution of its five most popular expressions in the UAE through Dubai Refreshment Company.

Ounal Bailey, co-founder and chief marketing officer, tells Drinks International: “Dubai is an interesting market. Obviously it’s a dry state so the focus isn’t necessarily on mixing with a spirit, but being a drink in itself.

Also, given the amount of tourism and premium venues in the region we’re expecting it to be a great market for us.”

Building on the growing non-alcoholic trend, which may well suit the brand’s presence in the UAE, London Essence has recently launched its Gemstone Non-Alcoholic Cocktail Collection. This series of long serves was created by Jesus Ortega Neri, head of brand advocacy for Europe, and uses London Essence products as a key component in the drink – a roll reversal to the norm.

Yet despite positives oversees, one of the brand’s biggest focuses right now is the UK on-trade, where its patented mixer dispensary system is used – essentially tonic on tap, which Bailey says is ready to expand significantly across the nation. “The timing of its initial launch couldn’t have been any worse given the outbreak of the pandemic, but we’re really starting to push this into more venues.”

Of course, the bulk of growth for premium mixers has been piggybacking on the continued rise of premium spirits, particularly in Europe. But clearly demand is catching on outside the more traditional, mature markets, which is good news for major players such as Fever-Tree.

However given the current strength of UK-based brands (around 50% of the Annual Brands Report Bestselling list), it’ll be interesting to see if international mixer brands start going the other direction and infiltrating the market share of the UK and Europe.

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