Charles Rolls, who launched premium tonic brand with Tim Warrillow, cashes in on soaring stock market value
Fever-Tree, the upmarket tonic water maker, suffered the rarest of hiccups in its meteoric rise after co-founder Charles Rolls cashed in £73m of shares.
The sale left the company’s stock down 2% at £17.12 on Thursday – but that is still nearly 13 times its £1.34 price tag when it floated less than three years ago.
Demand for the shares from City investors was so great that Rolls offloaded 4.5m shares, a 3.9% stake, having initially planned to release 2.5m.
He retains an 11.2% holding worth £222m, and the company is valued at nearly £2bn.
That means Fever-Tree is worth more than Britvic, its 170-year old rival, more than the UK arm of Domino’s Pizza, and about three times as much as the Debenhams store chain.
That is astonishing for a business with sales of just £100m and only 46 full-time staff that has done little more than concoct a fancy mixer for gin. But it is testament to the super-speed growth the company has delivered since Rolls and co-founder Tim Warrillow launched it in 2005.
From a standing start, the duo became millionaires within a decade, selling £25m of stock between them when they floated the company on the AIM market in 2014.
Rolls has cashed out to the tune of £100m, because he also sold a £12m tranche of shares last year.
He owes not just his fortune but apparently his life to tonic water – or at least to its key medicinal ingredient, quinine. He once contracted malaria during a trip to Africa and has credited the chemical, obtained from the bark of the cinchona tree referenced in the company’s name, with saving his life.
Though the company started out with tonic water, it has expanded to include variants on the drink, as well as Sicilian lemonade and ginger ale.
It has managed to stand out from the crowd by consciously embracing luxury status, making much of the exotic origin of its ingredients and the great expense of getting them into your glass.
Its ginger comes from Ivory Coast and Nigeria, its lemons from Sicily, and Warrillow once braved checkpoints manned by militiamen to source quinine from a remote part of the Democratic Republic of the Congo.
These are the credentials that have ensured no luxury hotel or Michelin-starred restaurant is without a supply of Fever-Tree in its mixer cabinet.
Indeed, one of the company’s early customers was world-renowned chef Ferran Adrià, who made its tonic a firm fixture in his restaurant El Bulli, rated by many gastronomes as the world’s best and quirkiest restaurant before it served up its last liquid olive in 2011.
Posh tonic has also benefited from a serendipitous resurgence in gin, increasingly seen as a sophisticated spirit worth splashing out on.
Gin menus are a common feature of bars in countries where the spirit is particularly popular such as the UK, Spain and US. And premium gins demand to be mixed with premium tonics.
Fever-Tree has ridden the crest of this alcoholic wave like no other company, reporting pre-tax profits last year that more than doubled to £34.3m on sales of £102m.
This month, the company announced that its 2017 results would comfortably exceed City forecasts, indicating that the Fever-Tree star is still very much in the ascendancy.
Rolls, a former management consultant who revived the Plymouth Gin brand, and Warrilow, a former ad man, teamed up in an attempt to challenge the domination by Schweppes of the mixers market.
Rolls had noticed that the world’s finest gins were mixed with the same mass-produced tonic. “There’s no point having a good gin if the tonic isn’t right,” he said, pointing out that tonic makes up the lion’s share of a G&T, at least if it is made right.
This year, Rolls ended his day-to-day involvement in the company, moving from executive deputy chairman to a non-executive position.
That might explain why he feels able to start cashing in, a decision that might have given investors pause for thought if he were still engaged in building the business.
And with an extra £73m in the bank, Rolls has little reason to wait until the sun is past the yard-arm for his first G&T of the day.