The fighting Norse Vanir and the Aesir gods decided to make a truce, so each side spat in a vat to seal their peace. The gods removed the spittle from the vat to keep the compact safe, then shaped the spittle into the form of a man, whom they named Kvasir. Kvasir was the wisest man on earth. He spent his days instructing humans and answering every question posed to him. In one particularly brilliant display of his intellect Kvasir helped the gods, who were hunting Loki, because he could even read ash residue.
One day, Kvasir received an invitation from Fjalar and Galarr, a couple of dwarves, so he visited them. Being evil dwarves, they, of course, killed Kvasir, but being practical dwarves, they then preserved his precious blood in two vats (Són and Bodn) and a kettle (Ódrerir). Then they mixed honey with the blood and so produced mead, which would keep better than plain blood.
Not yet finished with their mischief, the dwarves invited over the giant Gillingr and his wife. They took Gillingr out in a boat, deliberately capsized it, and then left Gillingr to drown, which he could easily do since he didn't know how to swim. The two dwarves straightened their boat, rowed back home, and reported to the giantess widow. She wailed until they offered to take her to see where her husband had drowned. On her way out, Fjalar let a millstone fall and crush the poor widow.
The dwarves were not to get away scot-free. The giant pair had a grown son named Suttungr who heard what had happened. He lifted and carried the dwarves out to sea and set them on a reef where they frantically begged for their lives. They offered the giant the poetic mead as a price for his father's death.
Suttungr accepted the retribution.