Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

{audio:0:00:01} Can you just share some context to your role and responsibilities at Southern?

{audio:0:00:06} I worked with Southern Glazer’s for almost 12 years. When I had Fever-Tree under my portfolio I was the Vice President of Sales. We had five sales divisions, so I was the Vice President of one of those divisions. Within that, we had Vice Presidents by region for on premise and other avenues but my job, as the leader of that division, was to get execution and architect our programming and deliver both out of each one of those arms, which is why we’ve discussed I handled the off-prem, the on-prem, the independent and so on. Overall, in that responsibility, I represented $140 million of revenue annually in my book, 50 plus suppliers. The goal would be not only to grow all my portfolios with respect to Fever-Tree and others, but certainly development and management, sales personnel, the health of brands, commercial strategy, culture. But beyond that, not just did they do well or not, but really, what do we need to do strategically to program, what’s the point of sale, what are the combos, the pricing model, what’s the interaction with the supplier themselves to ensure that we’re successful and stand out above the rest. 

{audio:0:01:24} Budget management, forecasting, production, my role in the business was 1,800 off-premise accounts, 4,500 on-premise accounts, in terms of the total net of what I really was involved with. The specific role as the Vice President was a four-year chapter for me. I had Fever-Tree for a couple of years of that, not the entire time, but certainly had them when they came into the building and began the relationship with Southern Glazer’s in the State of Washington. I wish I could still be selling them today because it’s a pretty remarkable book. I’ve had some very close friends that have gone on to work for Fever-Tree and watching their success and seeing how the portfolio has continued to evolve with them in it, it’s an inspirational brand. It’s lucky when you can be one of those. 

{audio:0:02:18} How did Southern Glazer’s approach programming mixers before the Fever-Tree agreement?

{audio:0:02:29} It’s interesting, I guess the closest example I would have is a portfolio called Daily’s which is largely a pouch brand, but they did have some pre-mix Bloody Mary and a few other things that were in their line-up. I would say that is a singular example from me, it felt like a plus one to a presentation but never a lead item. I think when Fever-Tree came in – and we even had Q for a while as in a book, in a different division – Fever-Tree was the first portfolio that felt like it was the lead of these presentations. A lot of mixer brands would throw money out to just get attention and be a part of it; $25 to $30 mid placement or something. But Fever-Tree was the one that built it where it had some actual stick, where you could tell the quality was there. You didn’t have to continue to force-feed it in; it was more of a pull once it got in there. I think that was the first mixer – at least in my experience with Southern that I represented or that I saw represented in the portfolio – that had that kind of impact. 

{audio:0:03:36} What do you mean leader presentation?

{audio:0:03:39} In terms of, this would be an item that you could go out with and say, I have three priorities today, I’m going to present this wine by the glass, I’m going to present this spirit and I’m going to present Fever-Tree as the [N/A 0:03:53] option for this account. Whereas I think, in other presentations, you might have three distinct other priorities and then you might remember, at the end, by the way what’s the status with your mixers. But it would be an afterthought as opposed to a lead item. 

{audio:0:04:08} When did you first come across Fever-Tree at Southern?

{audio:0:04:14} I believe they came onboard with us in either late 2017 or sometime in 2018. When it came into the book, we were excited. We were trying to define what the success measures would be. There was certainly an unknown in terms of, by grocery chain, and certainly by on sale, what doing a good job was, which was always the commercial strategy piece, so that is aligning with the supplier. I remember them being very ambitious with what they wanted to achieve, which was great because the quality matched that ambition. But we had some lumps in the off sale keeping pace with consumer demand, just because we didn’t know what SKU would be most popular. We were sending people into a new area in the stores from a merchandizing standpoint. My team was still used to working the wine department, the spirit department, but now you’re going into this mixer and non-alcoholic section and so just getting the mindset around how big this business can be was the first big hurdle for our group. Once we overcame that and they saw the revenue turns and the rate of sale, they were eager to add that additional stuff into the mix. 

{audio:0:05:31} Were you stocking Q Mixers in your division before?

{audio:0:05:37} No, there was no redundancy in our division outside of the Daily stuff that was more of a Bloody Mary mix style, which is not really the space that Fever-Tree plays in. They at least kept the mixers within the Southern divisions separated, which is traditional too if you look at their bigger models of spirits. You’re not going to have Pernod Ricard in the same book as Jim Beam and the same book as Bacardi. 

{audio:0:06:08} That obviously must have been a big change for you, having some mixer with your Diageo and Pernod brands. 

{audio:0:06:17} It absolutely was and I think that’s why it took a little while to get the board to understand the value of it because it’s a lower ring by four pack than a traditional bottle that we would sell in another avenue. But then you start working together with these combos where you’re starting to package it with spirits, or you’re starting to get introductory deals to get it into the on sale. Some of the questions you have, does the off-prem help the on-prem and is there a risk either way, I think once the on-prem really got going it was insane how much it helped the off-premise continue its path. 

{audio:0:07:03} That’s a core part of Fever-Tree’s strategy; in the UK they build the brand on-premise with bartenders and then drive off-prem. In your mind, if that strategy was to not work in the US, what would have to happen for on-premise brand equity not to translate into off-premise volume?

{audio:0:07:29} I think it works; I think you’ve already unlocked it. One of the things I was thinking about before the call is, what could actually be a true risk to Fever-Tree in the on-sale, because the on-sale and off-sale thing is converting. The only answer I came up with is, if one of your lead flavors, like your number one SKU – whether it’s ginger or tonic –  if because of the success of the breadth of the book, if you’ve got 15 priorities that, all of a sudden were all pretty important, somebody, in theory, could come in and just say, I’m going after just ginger and I’m going to build a better quality product than Fever-Tree by a little bit. I don’t want all of it; they can have the elderflower and they can have the soda; I’m just going after this one thing. That’s the only exposure I see.   

{audio:0:08:24} They would still have to convince people of that and convince people to buy just one from them and Fever-Tree or something else from somebody else, so there are other dominoes that would have to fall. It would have to be a special effort. But that’s possible; if somebody had enough money, they could build something of craft. But I think, overall, as long as you stay hyper-focused on a core three or five, really intensive on what you consistently want to do, I think you have massive runway. It’s not so expensive that accounts say, I’m trying to shave down on the dollars, and it’s become a mixer that people will call, let alone one that’s consistently displayed on stock boards or menus. It gives people a comfort, which is rare. It’s almost like a Tito’s, if you look at it from the vodka application in the sense of, I’m just really confident when I make that call that it’s going to be what I’m looking for. 

{audio:0:09:28} Let’s say I’m a new upstart and I’ve got unlimited pockets, I create a great ginger beer; how would I distribute it in the US to compete with Fever-Tree?

{audio:0:09:46} I think the first thing you’ve have to do is create a story that had validity. The why. You might even take the approach that Fever-Tree wants to have it all; we want to be the best at this. I’m just going off-the-cuff. We want to show you how good it is by all kinds of trials, demos. 

{audio:0:10:08} Let’s say they’ve got the product and the story and the packaging, actually distributing it, how would that work?

{audio:0:10:15} They’d have to find a distributor. They’d have to make a presentation. If they said, Southern is with an exclusive on-sale agreement nationally with Fever-Tree, so we’re going to go to Southern’s biggest competitors in these other markets; that’s where I would start.

{audio:0:10:34} Exactly, Johnson Brothers. You would probably pick the opponent and say, we can do some damage with this and not if we do, but when we do, we do have a plan to launch a second or a third SKU to go after the tonic or go after the soda. At least from a macro level, I think that’s where the conversations would start, but you would still have to hit the price point, the quality and you would have to really pay. That’s because the one thing about Fever-Tree, it’s like an annuity in an account; once they’re on it and customer satisfaction is there, it’s more than just this is a little bit better or this is a little bit cheaper. There’s got to be a reason where you’re going to disrupt that and it’s going to be expensive to do that at a couple of different levels. You’d have to have somebody who doesn’t care about that spend. 

{audio:0:11:27} It’s a mix of having the story, the product and then the distribution is possible via an RNDC or a bigger national distributor. 

{audio:0:11:39} I think so. It would be like the Pepsi Challenge where you’re saying, we’ll stack these up, you’re going to love this as much or more, I promise you that. Here’s my deal to get you started. I just want to do one thing really well with you and earn your trust and build the equity. And that’s not even a guarantee; they could say it’s great, but we’re good. 

{audio:0:12:01} What about if someone purchased Q, one of the big spirit companies. 

{audio:0:12:13} Let’s play that out. If somebody purchases a Beam or a Campari or a Pernod, one of the major players, a lot of those portfolios are pretty well tied with Southern, with national deals already, so I don’t think that pencil is for Q probably. If I’m Q, the first thing I’m asking is, how is this going to work in a house where you’ve already built a national distribution alignment with Fever-Tree. I wouldn’t do that if I was Q. 

{audio:0:12:50} Let’s say Diageo wants to have a mixer internally and they don’t want to buy Fever-Tree, they buy Q; how would that work with the dynamics?

{audio:0:13:08} If they bought Q and they were in a lot of Southern houses, they have the Coastal Pacific, they have their separate brands within Southern houses, then they could say we’re combo-ing out Q. We respect you have Fever-Tree, great product, good for you; this is our brand now. Just like anybody buying multiple tequilas; there is more than one tequila sold. If I’m Diageo, then I’m putting together packages that are very aggressive that tie my mixers with deals on my most popular spirit brands to get distribution or, basically, to force an account to say, even if I don’t want this, the way you’ve built the model on Crown Royal I’m essentially getting this for free. We’ll just see and I’ll pour it off. 

{audio:0:13:54} The other risk for Fever-Tree – and it happened a little bit this year on something like Pink Grapefruit – would be supply. That’s the only other major risk. If this stuff happened and then all of a sudden it was, they can’t tell the difference, and you guys are always here and you can always supply me and I love my Diageo rep than that could, in theory, translate. 

{audio:0:14:16} Let’s say Diageo buy Q, they go to Southern and say, I’ve got my mixer now, I’m pushing Q. What do Southern do if they’ve got an exclusive with Fever-Tree?

{audio:0:14:33} Well I think that Southern would have to watch that closely and if there were states where they started to see a dramatic shift, where they were losing more than a handful of accounts, and hundreds of accounts are transitioning into Q as a result, it would be a major issue. It would be really tricky. 

{audio:0:14:53} But Diageo seems to have the power to actually tell Southern what to do. 

{audio:0:15:01} It would be tricky because, if Diageo made that kind of play they, in essence, would be telling the rest of Southern, we know this is going to be inflammatory and we don’t care. If they’re making that kind of a bet, the psychology is unique. How big of an idea could Q be to them that they would start that fire with Southern over it, being that they’re still within this mega billion-dollar type franchise connectivity. I don’t see it, but these things have happened before. I think that I would like to believe that somebody like Diageo or somebody that would make a play like that would say this is not worth it, with what we currently have. 

{audio:0:15:56} Back to the point when Fever-Tree comes in, you get the Fever-Tree portfolio, you are thinking about how you market this, how you sell. What are the type of metrics or commercial targets Fever-Tree gives you and you are aiming for when you take on a portfolio like that?

{audio:0:16:22} I think there was some discovery on both sides when they came inside to Southern. I think they were trying to figure out what was doable in our landscape and every state is a little bit different in terms of merchandising and how you can price model. The first priority was just get in business, get these re-sets handled and get full on the shelf. The second avenue was selling and display programs, whether we had racking or merchandising supporting, getting to the floor. The third vehicle was, how do we tie this together with brands that can help us get to the floor faster or stay on the floor more consistently. Part of that is not just a brand identification but from a point of sale identification and what hits a quality measure that once it goes up it’s less likely to come down. 

{audio:0:17:13} So far off-prem, and then going into on sale. What are accounts needing to consider making a position on a premium mixer, because a lot of accounts back then might just go soda off the gun. There is a first step to establishing we are going to take our costs up a little bit but this is going to help our drinks up as well and you’re going to sell more because it tastes better and so on. The earliest things that we did were that Fever-Tree would say, what is it going to cost to get the attention of the team to get a new placement of each one of these points of distribution into this set of accounts that we want to target. Once we have that, what’s the best way of retention. Are we paying a percentage over last quarter on growth, by case? Are we paying a by case amount? Are we picking a couple of key consumer groups or events where we say, we really want to invest and make this count and we’re going to invest in some sponsorship stuff or some extra elements to those accounts from a support level. 

{audio:0:18:23} That’s how it started, which isn’t commercially ground-breaking by any means but it was an important foundation standpoint of, let’s go with the playbook that we know we can learn from and then let’s start to get more and more tactical when the consumer starts responding and the buyers start responding to what’s working here. 

{audio:0:18:45} Did you start off-prem or on-prem first?

{audio:0:18:48} We were going at the same time. Off-premise just happened quicker because, all of a sudden, we had it and then we immediately had to get it out there. For on-premise, you didn’t have stores calling you saying, my entire shelving at Fred Meyer is empty; I need this product. On-prem you have to get going, but if it wasn’t there before then they’re not missing something that they haven’t got. 

{audio:0:19:19} Let’s focus on on-premise for a moment then. Just to be clear, this exclusive relationship with Southern signed in 2018, why is it only on-premise and not off-premise as well?

{audio:0:19:40} It’s a great question. I think the deal is really unique. I think it’s very smart for Fever-Tree because it puts a commitment on the table on a national scope which Southern is huge on, that really shapes their relationships and their attentions. But I believe – at least from my experience with the portfolio – that there are still accounts that Fever-Tree believes they can service direct and make more money and be more confident in their fill rates. 

{audio:0:20:18} Like selling to Walmart directly?

{audio:0:20:21} Yes, and so, for me, it’s a win-win because you have Southern’s attention nationally and I do believe that one of Southern’s biggest strengths – and they are the biggest distributor in the country in terms of volumetrically and revenue and so on – but I think they are better in the on sale in terms of the way they deploy not only their own people, but now this Proof 360 model that they have, which is on online order platform that makes it super easy to get goods at any time of day and it’s the only thing like that in the country from a distributor model. They’re just best in class at on sale and their investment in it.

{audio:0:21:04} I think that Fever-Tree has probably got the best, not only in terms the direct ability role and they can pick and choose where they do that. They can always go back to Southern and say, we want you now to handle Trader Joe’s and Southern will almost certainly say yes, because it’s the natural agreement. They can also say, if you ever wanted to get our business on a national level for off-premise as well, here are our expectations in the next three to five years of metrics we need to see in the on sale. I think they have Southern leveraged beautifully. I think Southern are still happy because they’re making a ton of money on the partnership. But I think, from a positional standpoint, how Fever-Tree has played it is very strategic. 

{audio:0:21:48} What is the value of having an exclusive relationship exactly. You mention you have Southern pushing you; what does that mean?

{audio:0:22:00} When you’re with them universally, there is a different level I have felt and seen from a leadership standpoint from the Chaplin family of more of a must hit or a must deliver expectation. Not just for a month or a quarter, but that these are national partners and this is not an optional exercise. National partners always eat first in terms of the hierarchy of what needs to be taken care of and that’s not a hidden thing; that’s on the record. 

{audio:0:22:41} The other element, specific to on sale, that really helps Fever-Tree in a national alignment with Southern is, if you were only in 60% to 75% of the country with Fever-Tree there might be national account partners from an on-premise chain standpoint, multi-hundred-unit outlets across the country, like an Applebee’s or a huge chain franchise, that they might be less apt to present to because they don’t represent that brand in 30 states or half the country. Now it’s in front of every major buyer; they know if they land at one place and it touches anywhere in the country, the revenue is coming in. It does get you that jump ball to where they say, if we had Q in half the country and Fever-Tree in half the country, we might not show either of them. We have Fever-Tree everywhere. We know this is dollars in, dollars out, so we want to make sure it’s at the top of our list to have these conversations. 

{audio:0:23:48} Southern used to hold Q and other mixers, historically, and they still have some. 

{audio:0:23:57} I believe they do; I don’t know it on a state-by-state level. I know, without a doubt, Fever-Tree is their dominant player. I don’t know if they’ve actually cut relationships with Q, or if Q has decided in some capacity to take their business elsewhere because what they’ve seen with Fever- Tree. I’m sure they’re still out there in a few markets. 

{audio:0:24:17} Did you get your boss say to you, we need to hit X number of cases per year of Fever-Tree and this is the gross profit you need per case? What was the guidance you got?

{audio:0:24:29} My boss really left a lot more of that stuff in my hands. He didn’t want to get a call saying, you’re failing on Fever-Tree or you’re not meeting expectations. His check in would be more a matter of, are we hitting the initial benchmarks? Are they happy after 90 days? Are we hitting their targets? It was my job to say our targets are 100% fill rate in grocery, X amount of displays in this chain, a secure program call out for a 60-day window in Safeway, within three to six months of us getting the program and so on. In the on sale, the same thing, where I would say, I’ve worked with the supplier part of Fever-Tree, we’ve built an expectation that we need to be in 100 new accounts with ginger by the end of this cycle. If we do, we’re going to pay X and if we don’t, we’d better understand where the gaps were because we’re not going to start off a new relationship where we’re missing targets. 

{audio:0:25:25} If I signed this agreement with you, I would have a 90-day target and it would be granular; I want to get this SKU in this many channels or points of sale in 90 days. What would be the incentive structure? Would it just be a target gross margin or how would that look, typically?

{audio:0:25:46} Yes; that looks a little different with each market. I was always of the mindset that anything is possible that a supplier would want to do. You could say, I want to be in 1,000 accounts in 30 days and I could say all right, that’s a big ask, not impossible. So then, if we want to get that done, let’s look at our pricing model for introduction, let’s look at incentive for achievement, let’s look at a blitz in terms of, are we going to bring in dedicated bodies to really get out there and do something special with more than just the standardized sales route. It would depend on what you wanted to achieve, but I can promise you, with national alignment, you’re going to get achievement and if, for some reason, we didn’t get it done in that 90-day period, the pressure to make it up plus more in whatever that next cycle would be felt. 

{audio:0:26:43} Let’s walk through how you pitch a brand like Fever-Tree on premise. You mention this Proof 360 of Southern’s; what exactly is that?

{audio:0:26:55} Southern is looking at the model of all the restaurants out there and how we call on them. They did some pretty intensive studies that told people, based on the size of the portfolio that Southern represents, they were spending up to 30% to 40% of their time just inputting orders. You go into a customer, I need two cases of these spirits, I will need a couple of cases of wine, and they would sit on their computer device and it would take an administrator to look it up.  

{audio:0:27:30} The customer or Southern’s?

{audio:0:27:32} The Southern sales reps. They looked at, how much time are we losing telling a story and presenting a Fever-Tree, or a reason why you should carry a wine, but if 40-plus per cent of the day is just on a computer how can we cut that out. Proof was the concept that was launched to create an online platform – very similar to an Amazon – where you go on and you tool around and you unlock certain deals. For example, you type in Absolut Vodka that you need a case of. Somebody on the back end may have triggered in that we’ve got Fever-Tree tied to this; would you want to get a case of ginger beer with this, it’s 30% off. 

{audio:0:28:22} You could co-market Fever-Tree on the webpage? 

{audio:0:28:26} Absolutely. They’ve made it a profit center in terms of your advertising on the banners; the homepage, the clicks. As a customer, you have to be, at least decently versed, to navigate Proof, but it is very simple from a platform standpoint. Once you’ve figured it, out any deal where, in the past, I would have to come in and say, let’s talk Fever-Tree, here’s our deal on one case, here’s our deal on five, it’s all in there. The model was built to eliminate that 40% and now an on-premise rep or manager should be focusing 95% on telling the story, building new business. I think Southern has the best model because nobody else has anything even close to this Proof thing. They invested a ton of money to get there which has helped them continue to hold this strength of being able to be in there in a big way. 

{audio:0:29:34} When was that rolled out?

{audio:0:29:37} It started actually in probably 2018 in a few test markets; Washington was one of them, in the sense that we were using it, we were looking at it, we were going out on a couple of examples and trialing it. It just got into probably every single Southern state by the end of 2020. 

{audio:0:30:05} Yes, which helped. Restaurants got destroyed in Covid, so many shut down, a lot haven’t come back. But this did provide an avenue for people to not have to have face to face contact or to be able to come in on an off day and just write their order without having to do the normal checkpoints. 

{audio:0:30:23} Is Fever-Tree displayed predominantly on there?

{audio:0:30:28} I would imagine. I’d have to look at it, as a non-Fever-Tree supplier, just to see how it interfaces, but I’d be stunned if it wasn’t. It’s going to be a lead item on a page, but I would also bet there are some tie-ins and banner activity; it would surprise me if there wasn’t. 

{audio:0:30:55} Let’s assume I’m a restaurant/bar in the on-premise channel and I need to submit an order; what’s the typical order flow? Do I do this every week? Am I ordering spirits and mixers? What’s the typical order flow you see?

{audio:0:31:19} I think that it depends on what style of account you are. If you’re Italian fine dining, your wine orders may equal that of spirits. I would say that most Southern Glazer’s overall restaurant accounts are going to be a spirits over wine flow of ordering because they have such a big share of the business. This, again, is where Proof again is a nice asset. You may have a rep go into an account with a once a week cadence of flow, take the order, have the conversation, talk about a couple of new things happening, get whatever they need that day that hasn’t been put on Proof and then, if somebody has a huge night and a big party comes in and they blow it out they can always just rewrite an order online, or call the rep and say this happened. Not everybody wants to do the online thing; it’s there as an ease, but it’s not everybody’s jam. 

{audio:0:32:25} Traditionally, sales reps have had up to 75 accounts which is a lot of restaurants. They’ve thinned that down; I think the model now is closer to 50. But even at 50, that’s a lot of stops each week, trying to get into ten or 12 accounts, especially because restaurateurs don’t typically get in until 10:00AM or 11:00AM. Even your buyers don’t get in until 1:00PM or 2:00PM, so you’re trying to figure out the mix. But you’re spot on, when I ran the on-premise channel for Southern Glazer’s, my expectations were that people would be into their top accounts at least twice a week, or at least on the phone with them; once live, one other touch point, if not more, because you want to continue to build those As and A-pluses. But then you had to be at least in front of your accounts every two weeks at a minimum in person. What I mean by that is not just dropping in; you’re having a conversation like we’re talking, even if it’s five minutes, we’re live. 

{audio:0:33:35} In terms of the typical order, do spirits in Southern Glazer’s mainly lead the order, so they need to do the whiskey or vodka; is that typically on a weekly or bi-weekly basis? Has Proof changed that so now you could order anytime? How has that changed?

{audio:0:33:56} I can’t speak to it fully on how often they’ll run a truck to the same account in a week. I think, for now, with the costs of everything – gas, logistics and so on – they’re probably not seeing an account more than once a week. Accounts are building habits to say, if I’ve been running really tight on Fever-Tree, I’m going to start ordering what I need two weeks at a time and hedging my bets. But I would say that every account is built into the system to be able to be delivered once a week, and then things just work out where they understand this one is probably two a month, for example. 

{audio:0:34:38} The psychology of the restaurant owner or bar owner, is it predominantly spirits first 100% of the time and then mixers on top or could it even be mixers first?

{audio:0:34:51} I think it’s whatever they need. It could easily be mixers first. If they were hosting a huge event and Fever-Tree was the only thing they needed, we’ll send a truck of Fever-Tree. It doesn’t have to be a combo; it’s truly a need basis and that’s what that Proof has helped with; they don’t have to bet on all the categories for weeks and weeks at a time. 

{audio:0:35:17} If I was a restaurant or bar owner, how many distributors do I work with? Do I have Southern, RNDC and local? What do I typically use?

{audio:0:35:27} I would say, if you’re looking on a national landscape, you’re certainly going to work with the two to five biggest distributors. Some states, with franchise laws, have a lot of distributors in there. You’re at least going to work with the big two or three because they’re going to have the stuff that you really need and the things customers are going to expect that you have most of the time. There are examples where, if you want to be a little more boutique or you really want to have a great range – and there’s a ton of distributors in a state – you may have 10 or 15. It’s whatever the buyer’s appetite is because that’s up to 10 more people that they would have to give time to – or be rude and blow off – to handle their business. I would say, on average, as an on-premise account, you’re probably not seeing over five to seven distributors. I think beyond that, you’re probably a little bit lost on what your model is. 

{audio:0:36:20} How does Proof actually change or consolidate accounts?

{audio:0:36:28} Proof can make it a one-stop-shop where if you elect to say, I don’t have time for any of this, I’ve got a crisis in my home life, I’ve got personal stuff going on, I can’t meet anybody, you could just walk away and say, I’m going to do it all here. I don’t really care to talk to anybody and if I do, I’ll call you, but don’t come in anymore. There are accounts like that. 

{audio:0:36:48} For of RNDC, Breakthru and so on, you have to actually call to make the order? No one else has a Proof 360 where I can order online? 

{audio:0:36:58} I think those companies are actively trying to figure out a way to keep pace, but they are behind. 

{audio:0:37:13} If I’m a restaurant or an on-premise account, who is top of mind for me as a distributor. If I want to get mixers, I might get Diageo brands or Pernod brands from Southern; I might get other brands from RNDC. If RNDC carries Q, if you carry Fever, how do I choose my mixer? How does that work?

{audio:0:37:44} I think that truly is on the value of the rep and that’s the Facetime moment of impact. That’s the strength of your people to get the Southern message, which should be Fever-Tree is our absolute number one and that is the expectation for every single account that we deem is a target account. Maybe every single thing is a go, but I would still imagine there’s a tiering system of how you’re going after the high velocity accounts, where you want to be with certain cocktail partners; that’s how I would build it. But I think that it is also the discipline of leadership for Southern in different markets, that when they’re out at accounts they support and they’re entertaining clients, they’re hosting business meetings, they need to be looking at and confirming, we appreciate your Fever-Tree support; we’re here to thank you for that business. How’s it going? How are you activating it?

{audio:0:38:47} In my past role, and as leaders for the organization, you have to make these other categories as important to you and as top of mind to the buyer as the stuff they’re consistently going through on a wine and spirit aspect. 

{audio:0:39:05} How do you incentivize your sales people to shift Fever-Tree given it’s a relatively low dollar case amount relative to whiskey or vodka?

{audio:0:39:17} I think one thing that I’ve heard that they’ve done well – at least in the Northwest because I still live up here and am connected to the teams – they’ve done some experience-based things out here where top performers for a quarter qualify for a Fever-Tree golf tournament. Or there are other ways – I’m such an advocate of this now – where everybody can say, I’ll pay you $10 for a new distribution or I’ll pay you $2 for every case sold. That’s great and sometimes you need that, but it’s discovering what is the unique thing, what is the experiential thing that you can tie together and maybe it’s taking out the key people in the market every quarter for something as simple as going to Top Golf and you’re drinking Fever-Tree cocktails and you’re just hanging out. You’re talking business but you’re in a way where you’re celebrating the growth.

{audio:0:40:16} I can’t recommend enough breaking out of the mold, because the laundry list, whether it’s non-alcoholics to anything you’re selling, there’s a thousand incentives and everyone’s getting paid for something; it’s got to matter for them. And it does because it’s a national thing. But still, a new sales rep is going to say, where am I making my money? What’s the easiest or the coolest, and I think they’ve done a good job with that. 

{audio:0:40:48} They have also made it easier. With Fever-Tree, in conjunction with Southern, I believe they have done a really good job on a key account level, so you see a lot of programming in stores. There’s always racks up; there’s always things going on in accounts that, once a consultant understands that if I get this up, not only does it have a home but everybody is supporting it and behind it and I don’t care as much about the money because it’s just a great revenue turn. And then if I can get a little bit above and beyond and do something special, I’m going to do that. 

{audio:0:41:24} How did you train your sales people to pitch Fever-Tree?

{audio:0:41:39} The quality was the lead. This is an absolute premium product; we want to taste it; we want to make some cocktails with you and your team and we want you to understand the value of incremental revenue this can bring you. And not just with a singular SKU, but that the whole line-up is amazing. There’s always egos in these accounts, so for them to hear this is going to continue to prop you up and view you as a base and for your customers and your quality, I think it starts there. Usually, even with all that and the story and the history of Fever-Tree, the rep is still going to want to show you our commitment. Here’s an introductory yield; we’ve built in a model where it’s one case on five or if you’ve committed to feature this out we’ll do X. They’re greedy too. 

{audio:0:42:45} Are they displacing a brand or the gun, or do these accounts typically not have a premium mixer?

{audio:0:42:53} Yes, and if it was on my team I would say, do your homework; we’re going in here to replace a key competitor. There were also times where it got contentious in our building because you can’t control it all. I would get a call from the divisional lead who was selling Q and he would say, you knocked me out of here, or vice versa. That’s almost like the Diageo model we were talking about earlier where you say, are we really going to have to babysit what’s going on here. We tried, at least at first, from a respect standpoint, to not go in and take over another Southern product, just because. But sometimes there was a slippage or service wasn’t there or they preferred Fever-Tree. 

{audio:0:43:40} When did they get knocked out though? Can you remember any times when Fever-Tree got knocked out by Q and why that was?

{audio:0:43:46} Rarely. I think there might have been one deal where a guy was getting paid a ton of money for Q. I mean it was $25 a case or something and he just went in there with the better relationship at the account for the overall relationship and just said, make the switch. That was more of a selfish act instead of a smart business act. But there’s also people that will do that. 

{audio:0:44:11} The pitch is about leading with the quality of the product and pitch that they’re going to earn incremental revenue from their cocktails and, obviously, it’s a great brand and opportunity to their customers. How important is the range of SKUs and number of SKUs?

{audio:0:44:35} This is something we talked about earlier. For a very high-end mixology style account, I think it’s great because you can cover every single need now with the foundation you’ve built. I would just caution the state of the roots. You don’t want to get too far away from what brought you to the dance and just make sure that what’s carrying 85% of the business in total is always healthy and you’re always pushing that and always driving that forward. You can always get cute and add other things and should if the revenue is good and it’s not distracting from the ask. 

{audio:0:45:17} The other thing to figure out too is, as you look at what you’re selling to grocery, there is a saturation point where you might only get five or six items into a store, and so are there enough homes for what’s being created, where it’s still worth the energy to push them and drive them and seed them? Or do you run into a point where you might get it out but there’s just not enough traction long-term to keep it, and then you’re cycling it out and now you have excess goods.

{audio:0:45:47} What you never want to do with Fever-Tree is be in a spot where you’re having to liquidate goods at a discounted price because that is so against the model of what they’ve built. I’m not saying that’s never happened but the only risk with a massive SKU proliferation is, do you bet wrong on something and now you’re in a spot. 

{audio:0:46:07} What was the SKU that you used to lead with?

{audio:0:46:11} We had tons of success early with ginger, soda and tonic, just the majors. When we had it early, we didn’t have all that; I think we had elderflower and a few others, I think there was five or six we were selling. I don’t know how many there are now but it’s well into the double digits. 

{audio:0:46:30} I still think ginger is the biggest in the US at least. Who was the main competitor for ginger?

Fever Tree: Southern Glazer's US Distribution Relationship

Former VP at Southern Glazer's Wine & Spirits

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Former VP at Southern Glazer's Wine & Spirits

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Fever Tree: Southern Glazer's US Distribution Relationship(November 17, 2022)

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