Premium tonic water as a category has boomed over the past 20 years and Fever-Tree, created in 2005, has been at the epicentre of the movement. Prior to the UK brand’s inception, the tonic water sector was dominated by Schweppes, but Fever-Tree forged the new pathway for a wave of premium tonic and mixer brands to emerge. In fact, Fever-Tree’s rise to the top of the premium market is so significant that it’s been a regular fixture atop the bestselling and top trending lists in Drinks International’s Brands Report. Yet, despite the seemingly picture-perfect trajectory, global events such as the pandemic and its subsequent recession, as well as supply chain issues caused by Russia’s invasion of Ukraine, have taken their toll.
In a report by European Supermarket Magazine, Fever-Tree co-founder Tim Warrilow, said: “Looking ahead to 2023, we remain very confident in delivering strong top line growth, most notably in the US. While the initiatives we are implementing would have driven margin improvement during the year, the energy-related cost increases, which are particularly acute across the glass industry, mean we expect to deliver absolute EBITDA in line with 2022.”
Another fast riser is The London Essence Company, which recently announced itself as the fastest-growing mixer brand in the UK, having increased its on-trade sales value by 64% year on year. The brand has been on the market since 2016 and, while things appear rosy financially, it too has had to react to such troublesome times in the market.
“We have a team dedicated to managing our raw materials, so we work with our suppliers to manage these on a long-term basis,” says Ounal Bailey, co-founder of The London Essence Company. “But like all businesses, we are also facing the challenges of inflation during this exceptional time. Inflation was already high coming out of Covid-19 and the Russian invasion of Ukraine has only exacerbated the issues, pushing fuel and energy costs higher still. As well as the direct impact on consumers, fuel and energy are used by suppliers of every product – so the indirect impact will continue to be felt at least during 2023.
“However, our progressive outlook means that we have been working on broader sustainability challenges over a much longer-term period, and this has also helped us to mitigate some of the challenges. We are also currently adjusting our promotional programmes and driving efficiencies where possible so we can optimise returns and minimise costs to protect business profitability, while continuing to offer great value to our shoppers.”
Bright horizons
Premium tonic brands on the whole, particularly those in the UK – which is less protected outside the EU – will have been hit harder by supply chain issues and inflation rates than most other categories given the amount of glass and cans required for production. Looking further afield however, the wider international markets appear to be thriving.
