Let’s start with a little quiz: Which fruit keeps Andrew King, chief executive of Funkin, up at night in a state of worry?
“From a sourcing perspective, the one fruit I lose most sleep over is passion fruit,” answers King, who has been at the helm of the cocktail mixers and syrups firm since March 2006. “It is hugely volatile. Prices on any index fluctuate on a daily basis. The one drink that is massive now is a Porn Star Martini, the fastest growing cocktail for many bar groups, and what’s the main ingredient? Passion fruit. So suddenly we have all sorts of dilemmas keeping that in stock. If a harvest is washed out or collapses, in a way your customers don’t want to hear about that.”
The sleepless nights in the King household have not been helped by the Brexit vote. The group’s labour, packaging and fruit is all paid for in euros. King says: “We will do everything we can to take a long-term view on that. Every business has its own complexities and that is one of ours.”
Pricing issues aside, Funkin is operating in a buoyant market at present, which was one of the reasons AG Barr, the soft drinks company that makes Irn Bru, acquired the business in a deal worth up to £21m, last year. More than three quarters of the country’s bars now sell cocktails, with healthier and premium mixed drinks among the big trends driving the flourishing market. CGA Strategy’s latest Mixed Drinks Report found that 78% of British bars now sell cocktails. Across the licensed trade as a whole – including pubs, restaurants and hotels as well as bars – penetration is now at 28% of sites, up by more than four percentage points on last year. Cocktails are most popular in London, where 36% of outlets now sell them.
The developing years
Funkin has been there from the start and now most bar and restaurant chains that make cocktails from scratch will be using its fruit purées. King says: “We gradually started to furnish our customers with more insight and more products. This was when we started to get into a number of bars, where the number of staff and their confidence to make cocktails, or make cocktails at speed, was becoming an issue.
“Some of our customers wanted mixers, so around 2008, we launched our mixers range. That did very well and complements our core offer. We have certainly benefited from the sweet spot of cocktails and are now seeing more and more operators moving into the segment for the first time. People are also looking for a premium, authentic offer.”
King highlights 2008 as a critical year for the business when it started working with national distributors, such as Matthew Clark, who saw the potential in the cock-tail market. “It was also around the time when early bar concepts were looking to become national chains. We then had to get outside of London ourselves and that route to market allowed us to expand our footprint,” he says.
Managing your expectations
The premiumisation of venues, with more high street operators focusing on a higher quality food and drink offer has also helped Funkin. King continues: “So did the movement toward having ‘an experience’ – the theatre of making a cocktail – we benefited from all of that. You got that experience with food and drink envy, the creativity that then followed meant that cocktails changed visually. We think we helped with that and benefited from it equally.”
He believes that there is still a huge amount of growth to come, but that new operators to the segment need to manage expectations and what they can deliver.
He says: “People who are offering food primarily with a cocktail offer only stands at a quarter of the market, but that is growing at 30%. People need to understand what they can offer. Some of our customers have high ambitions for this segment for what they want to offer, but suddenly they find themselves with a logjam at the bar, because they haven’t got the space or the right staff member to execute that offer. When delivering cocktails into those chains entering the market, there needs to be some controlling of expectations, so that means starting with a tight list of five or six cocktails that are easy to deliver. It is a complementary business to what they offer. Now if it takes off from there, you can then add to it and differentiate it, but there needs to be a strong and consistent base.
“One of the big issues for many of the restaurants looking to come into this space is that they don’t have a bar as such. What we have found in this instance is just take one product, such as a Bellini – adding an ingredient into a Prosecco – and deliver a very small range. It is an entry level, staff will start to feel comfortable delivering that offer and you can add from there. Pick those drinks or a menu you can deliver and deliver it well.”
The importance of collaboration
Innovation is critical, and King says that the company can only do that successfully through working with its customers.
He says: “We have launched 11 or 12 new products this year. Out ethos is set around the word EPIC – entrepreneurial, people, innovation and collaboration. Collaboration is absolutely essential to what we do. For example, we are launching a beetroot shrub mixer and will test that with both a spirits company and a bar group.
“In our conversations, because we sit at the heart of many of our customers’ development cycles, they will say, we are seeing this is a trend, can you do this. Jalapeno as an ingredient is one such example, especially with the growth, started in the US,
of the jalapeno Margarita. We have done some bizarre stuff over the years in the name of innovation, things that have been massive for a month!”
King says that New York and Berlin remain cities where the bar scene can still inspire innovation, “but I do believe that London has the best bars in the world at the moment and there are places in the Northern Quarter in Manchester that are really pushing things forward”.
International expansion
As the relationship with AG Barr gives Funkin access to new markets and with potential to grow in established business-es in the US and France, the thirst for Funkin’s products seems undiminished.
King says: “For 17 years, we have been producing 100% natural fruit purées and cocktail mixers, so I think we ought to be good at it by now. “We are looking to help bars and consumers drink better cocktails, as every cocktail should be an amazing taste experience. We would like to think that in five years we will be doing more of the same, but in more countries.”
