Annabel Palmer talks to Mike Brehme, who is transforming hot drinks for the second time
WHAT do you do when you’ve already transformed that most British of pastimes – drinking tea? That was the conundrum facing Mike Brehme – co-founder of Clipper Teas, whose newest venture FruitBroo has recently come onto the shelves at Sainsbury’s – back in 2007, when he sold the former company for a reported £30m.
FruitBroo is the fruit of four years’ hard work. Made from juices, herbs and spices, the product is a super-concentrate specifically blended to be served hot – customers just have to add one or two teaspoons to a mug of hot water. It comes in a variety of flavours, from elderflower and lime to honey and lemon, and is sold in 100ml bottles for £2.25.
With news from the Food and Drink Federation yesterday that, in the first half of 2013, soft drink exports rose 5.5 per cent to £187m (not to mention £700m annual tea sales), it’s little wonder that, rather than rest on his laurels, Brehme “wanted back in”.
LEADING THE MARCH
Clipper is a widely-acclaimed story: aged 20, Brehme had just £50 capital and two chests of Assam tea. But he created a global brand that still has the largest UK market share for organic hot drinks. Indeed, the business revolutionised its industry, leading the move towards green tea, Fairtrade tea, white tea, and so on. It was a market in dire need of some creativity. While teabags have been around since 1904 – when New York tea importer Thomas Sullivan began sending out samples in silk bags – coffee has dominated innovation in hot drinks in recent years.
With Clipper, the gap in the market was a lack of single, unblended tea. This time, Brehme believes the gap stems from a widespread appreciation for the idea of fruit teas, but a dislike of their actual flavour. But rather than taking on the tea or coffee industries, Brehme sees this venture as in direct competition with snack companies.
KNOW YOUR INDUSTRY
Hot drinks have always been Brehme’s passion. After leaving school, he became a tea merchant, where he learned the art of tasting, blending and sales. Soon after, having discovered he “didn’t like working for other people,” he started marketing tea from his mother’s kitchen in Lewisham.
It was a stressful time, largely because he struggled financially, having decided not to seek investment. Instead, “I was solely relying on bank loans, meaning I had to be obsessive about the bottom line”.
And although he thinks the climate for entrepreneurship has brightened since Clipper was founded in 1983 – particularly in terms of access to capital – he has yet to approach investors for his new venture. Luckily, this time, he doesn’t have to earn a living.
Nonetheless, in some respects his timing for Clipper was lucky. The 1980s witnessed the beginning of the UK health food obsession. He gained access to retail outlets, where for a very low entry cost, he could weigh up tea, and get it to a market willing to try new products. “Decades ago, households would have just a jar of instant coffee and a box of PG Tips, but when I began to build Clipper, this grew to a dozen different brands and varieties in kitchen cupboards.”
A NEW BRAND
Fortunately for FruitBroo, this remains true today. Of those dozen brands, at least one will likely be a fruit tea, despite less than 10 per cent of people ever drinking it regularly. Indeed, Brehme’s poll of 4,000 tea drinkers supported his theory that consumers felt they lacked taste. So he spent three years creating a recipe that solved this problem, with his super-concentrate offering “flavour for not very many calories”.
His three decades of experience have been “essential” to getting FruitBroo off the ground. They taught him to “stay focused – as an entrepreneur it is easy to get distracted,” and “know the importance of having the right people on the bus with you”. But equally important to knowing your industry, says Brehme, is knowing your customer. Earlier this year, he conducted a directly-managed tasting test of 19,000 consumers. “The reaction was overwhelming,” he says.
Certainly, his market research helped convince Sainsbury’s to stock his product, and it was launched in the supermarket last week. “It is always a question of getting the decision-makers to see you, and then a question of whether they believe in the work you’ve done.” Industry limitations can make it difficult for new entrants. A handful of experts will decide what gets stocked, and range reviews take place annually – so if you miss out on a pitch, you will have to wait another year. “It is still a challenge, but I’m optimistic that, within two years, we’ll have 80 per cent distribution in the UK through supermarkets.”
THE WAITING GAME
But getting onto those shelves is only half the battle. For the next three to six months, Brehme will be waiting on tenterhooks to see if FruitBroo’s popularity will reflect his research and optimism. Can he replicate Clipper’s success?
On the one hand, he is not deterred by the fact that no-one else has tried to do this before. “Speciality food products are dominated by the big brands – who tend not to be entrepreneurial – and the smaller guys – who tend to lack the insight to be creative against the big brands, so resort to creating premium versions of what is already out there. Olive oil is a classic example,” he says.
But on the other, customers could find the product “too revolutionary – and if they don’t understand a product, adoption can be slow”. Nonetheless, Brehme thinks entrepreneurs must be prepared to put their ideas to the test. “You have to have a lot of determination and willpower to go through with the idea, even when people tell you it won’t work. But blind faith isn’t enough: you must know your customer.” With Britons drinking 164m cups of tea each day, and 70m cups of coffee, the market is there. Only time will tell whether it’s ready for such a revolutionary new entrant.
CV MIKE BREHME
Company name: FruitBroo
Company turnover: £1m-£2m (expected)
Number of staff: Less than six
Job title: Managing director
Studied: Secondary education, London
Drinking: FruitBroo, Clipper Tea and excellent coffee. Laphroaig whisky
Eating: Everything, as long as it’s rich and it’s in good company
Reading: Good to Great, by Jim Collins
Talents: I’m a quick learner. And I always win monopoly at Christmas
Motto: “Do no harm”
First ambition: To be a black belt
Heroes: Sir Richard Branson, Sir Ranulph Fiennes, John Pontin