Why the fizz in the premium mixers market will continue

There’s a tinge of the old chicken-and-egg cliché in weighing up the reasons for the premium mixers boom of the past two decades. Has it been primarily driven by the move in many markets towards more sophisticated drinking experiences in bars, nightclubs and cafés? Or has the evolution of what has been dubbed ‘serious soft drinks’ been in itself a key contributor to the maturing of customer expectations in the on-premise (as well as for some at-home drinking occasions). Whatever the rationale, premium carbonated soft drink brands and flavour variants have proliferated. Now, with several major brands firmly established and newbies continuing to spring up – some from start-ups and others from established beverage producers including some not previously in soft drinks – the question is: can the phenomenon be sustained? Three or four years ago, I would have plumped for the likelihood of a plateau being reached by now. Today’s market indications are to the contrary: continued, if maybe slowing, growth seems to be much more likely, albeit dependent on overall market forces at the mercy of Covid-19 and other factors. One reason for this generally positive outlook for the category is, I feel, the fact that, for mixers, ‘premium’ refers more to perception and presentation rather than pricing. On-premise establishments may charge only 10-20% more for a mixed drink made with a premium brand while others are absorbing the extra cost, using the upmarket mixer as a positioning statement about quality and status. Stand-alone, premium, carbonated soft drinks appear to be usually priced above mainstream. However, the mark-up for mainstream CSDs already tends to be quite high, so a lower margin on premium despite higher wholesale prices can be worthwhile in total throughput. In grocery, prices are positioned 20-30% above mainstream carbonated soft drinks in most markets but, as the category gains more exposure in supermarket chains, I foresee prices stabilising. Some producers have been targeting at-home as much as, or even more than, the on-premise. They’ve built up the hype around people seeking enjoyment from more authentic mixed drinks on the home front, whether for themselves or in social circumstances, and there’s a good deal of substance behind this premise. The advent of Covid-19 saw premium mixers, along with many other soft drinks and other food/beverage products, have to increasingly target at-home consumption and, interestingly, the pandemic years have seen the birthing of several new premium mixers by both start-ups and established manufacturers. Are there now too many? I don’t think so but, inevitably, a few will fail, and some already have. Most brands now available are reporting confidence in the future, not only because of the on-premise renaissance but also the almost open-ended opportunities of e-commerce. What’s more, the very competitive pricing structures of e-commerce have contributed to keeping prices at bricks-and-mortar outlets stable. Producers have worked hard to build brand credibility. A good back story – the more factual the better – is a key building block. One example is South Africa’s Fitch & Leedes, a producer of what it describes as ‘bespoke mixers for the discerning individual’. Its classic bottles had gained solid ground in the on-premise on both its home turf and, increasingly, in far-flung world markets. These have been matched by cans sporting the brand’s evocative sailing ship logo, which manages to deliver a degree of sophistication while being more practical for some bars and well suited to e-commerce. Since Fever-Tree’s launch in 2005, it has been one of the principal builders (and now leaders) of the premium mixers market. The business undertook painstaking development work, especially in sourcing high-quality and sustainable ingredients. However, a few other brands were active in the premium mixers category before it even began to be tagged as such. Schweppes, for instance, had always portrayed itself as completing optimum mixed beverages in upmarket arenas. Using tools such as social media and sponsorships, Schweppes was able to build on a very firm foundation as premium mixers accelerated in the early years of the new millennium. Alongside Fever-Tree, there have been others, including Q Mixers and Double Dutch Drinks (which has this year broken into the US market), that have put in the hard yards in creating drinks with innovative flavours, authentic ingredients, a credible back-story, a willingness to be visibly active on the frontline – both in the trade and with consumers – and a determination to expand internationally. The successful players in the premium mixers market have made a point of adding new flavours and developing fresh concepts on a well-planned but not too frequent basis – no-one wants to swamp an increasingly competitive market. Q Mixers demonstrated its ongoing innovation recently with the Q Spectacular Bloody Mary and Margarita mixers; the latter made with lime juice and agave. And while much of the public chatter has been about mixing with gin, that’s only part of the story. Most producers have developed beverages that specifically target other spirits, an example being Franklin & Sons’ Pineapple & Almond and Mandarin & Ginger delivering combinations with rum, whisky (perhaps not one for the purists), bourbon and vermouth. A trend of the past few years has been a skew towards more healthy, lighter mixers, in line with the underlying consumer demand for healthier drinks and foods. The founders of India’s Malaki range have noted their aim is to deliver an ultra-low calorie ‘healthier and fitter option’. Fellow Indian brand Peer takes a similar approach; it is selling in India, the UAE, UK and elsewhere. The premium mixer movement is not yet fully global but it’s fast shaping up that way. Singapore, not surprisingly given its cocktail heritage, is espousing them. China, strong on premium waters, is gaining ground and has enormous potential with plenty of scope seemingly to hand also in Japan and Korea. Australia and New Zealand are proving enthusiasts for premium; New Zealand’s East Imperial range, with a beguiling back-story, has established itself in the UK and other markets as well as at home. This international spread will in itself strengthen existing premium brands and allow localised niche players to score worthwhile trade orders. So, a big movement. Too many brands? I don’t think so and while a few will inevitably fail, others seem likely to prosper, especially if they continue to align with frontline establishments wanting to differentiate themselves.