One of Warren Buffet’s regularly quoted slices of investment wisdom is to invest in businesses you understand. With that in mind, it is perhaps no surprise that companies earning profits from the kind of beverages closely associated with hot summer days are currently flying high on the stock market. It’s safe to say that over the course of this summer, many Brits investing online in ISAs and SIPPs have gotten to know the products of listed companies selling their favourite tipples that little bit better.
While Thomas Cook’s share price has been taking a beating as Brits opt to stay at home to soak up the sun, companies such as Diagio, which owns Gordons Gin, Booth’s Gin and Tanqueray, as well as supermarkets like Tesco, have been booming as shoppers stock up on drinks and BBQ supplies. One major beneficiary of the UK’s re-blossoming love affair with the G&T has been London-listed premium mixer company Fever-Tree.
Since floating in 2014, the company’s share price has risen from 165p to 3628p and a market capitalisation of almost £4 billion. Taking advantage of the summer high, co-founders Charles Rolls and Tim Warrillow has just sold off £103 million of shares between them. That takes their total divestment to £330 million over 4 years. The buyers are said to have been institutional investors enamoured by the companies still quickly growing sales.
The company has proven to be a real UK success story grown out of the painstaking efforts of its founders to create the best product they possibly could. The two have proven to be a perfect business marriage, with Mr Rolls and former managing director of Plymouth Gin and Mr Warrillow a luxury food and beverage brands marketer. When launching the business they are said to have bunkered down in the British Library to research sources of quinine, the bitter-tasting ingredient that gives tonic its specific taste. The pair then spent 18 months travelling in far flung outposts such as Tanzania and the Democratic Republic of Congo in the quest to source the finest ingredients such as quinine and bitter orange oil. The former is extracted from the bark of the cinchona or “fever tree”, native to the Andes but also grown in the Congo.
Whether entirely accurate, or a slightly embellished narrative to the ‘story’ a luxury goods marketer such as Mr Warrillow may have spun around the brand, the public has been seduced by the quality of the Fever-Tree mixers, that now also include a ‘Sicilian lemonade’ and ‘Madagascan cola’. Investors in the company certainly don’t seem to begrudge or be concerned about the two gradually selling down their stake, with share price just off its record high, where it closed last Friday.