’s room to run by Garrett Peck

Vodka was once just vodka. Not anymore. As consumer interest in the spirit continues to grow, new vodka brands proliferate, many of them targeted at very specific interest groups with distinct attributes, running the spectrum from flavored and organic to micro-distilled and premium. The good news is that quality continues to improve at all levels.

“The today are so much better than they were in 1988 and launching Van Gogh in 2000, where he is the ten years ago – it really keeps you on your feet,” says Dave president and co-owner. Van Gogh positions itself as a Katz, president of Zyr Vodka. In 2007, vodka continued its high-end premium vodka and lifestyle brand. It uses very solid, unabated growth as the leading category in the dis- little advertising, instead relying on word-of-mouth. “The tilled spirits industry. Vodka sales were $4.3 billion, or 23.6% strength is that it was the consumer who made the brand of the $18.2 billion US spirits market, according to David big,” says van de Velde. “We didn’t pay a penny.” Ozgo, the chief economist at the Distilled Spirits Council, He points out that vodka has a demographic tailwind who calls vodka the “backbone of the industry.” He notes in young adults, who like its versatility: “Some want to vthat much of the growth is concentrated in high-end and drink it as shots, some want tall drinks, some like martinis super premium brands like , Absolut and Grey and others like it with juice. They want variety.” Goose. Those top three brands accounted for more than Mixologist Gary Regan sees why vodka is so popular. 17 million cases, or a third of all vodka volume in 2007. “It “Vodka continues on its upward path simply because it’s shows that vodka is a super value center and a profit center easy to drink, and although many consumers are brand for us,” he says. This high valuation touched off a bidding loyal, unless they are drinking it neat, or perhaps in a very war for vodka’s second-leading brand, Absolut. dry vodka martini, I doubt very much that many of them can tell the difference from one brand to the next. That What’s Driving Consumers? said, there are some stunning vodkas out there, and quality David van de Velde has a greater perspective of the vodka seems to be a buzzword throughout the industry. It’s about market than most, having founded Luctor International time, too,” he says. Consumers continue to to the cocktail game. Yet trade up to premium brands ultimately, consumers despite the slowing decide what they want. economy. “As in the past As actor Ron Howard six to seven years, the told Homer in an episode rule of thumb has been: of The Simpsons, “We the higher the price, the need more vodka!” better the growth,” says DISCUS’s Ozgo. He News from the reveals that the slowing Vodka Front economy has impacted Market leader how consumers drink: on- from Diageo is not only premise growth is stalling, the largest vodka brand, while off-premise volume it is the second largest is sprinting ahead. Rather spirit brand, surpassed than spend $12 on a martini at a only by Bacardi Rum. bar, consumers can make one at home for Boru Vodka from Ireland, Smirnoff sold an astounding 9 million cases a fraction of the cost. “When the economy Vodka from Russia, Orzel Vodka from Poland, and Blue Ice Vodka from Idaho in 2007, according to Adams Advance 2008, slows, one of the first things that people give prove that quality vodkas are coming from with a 6% increase in volume. It accounted up is going out to dinner,” Ozgo observes. around the world. for nearly one out of five bottles of vodka If they’re not going out to get their sold, and nearly twice as many as the second- vodka fix, then that means more attention Florida. When a brand makes it to the West leading vodka, Absolut (5 million cases.) will be paid to purchasing bottles of vodka. Coast, it usually starts in San Francisco. It’s no wonder Ozgo of DISCUS refers to it While this may mean it’s harder for brand That’s because New York, Miami and San as the “800-pound gorilla.” loyal vodka drinkers to step out of their Francisco are havens for sophisticated Smirnoff has earned its seat at the top. comfort zone, it also means that the array of vodka drinkers moving away from gimmicks It has a popular price, and bartenders like bottles awaiting curious consumers on their and seeking out fresh ingredients instead. it for its mixability. “We continue to ensure local store’s shelves can prove to be These are aspirational consumers who drink the quality of our product, communicate exciting, providing more variety than ever as a lifestyle choice, and their brands reflect that quality to consumers and support our before. This is a chance for other vodkas their values. retailers in getting product on the floor with to differentiate themselves and stand apart “The foodie craze has filtered into the bar the best possible visibility and the right price from the bigger brands usually getting the and cocktail creations,” adds Cecile Meunier point at key selling periods,” says Smirnoff most play. Customers can now look forward of Florida-based Orzel, a super premium brand director Kate Price. to buying a bottle of Irish vodka distilled five vodka recently launched in South Florida, In early 2008, Diageo acquired 50% times, like Boru; Russian Standard’s striking New York, Dallas and Atlanta. “They want of the Dutch brand . Yet that bell-shaped bottle hinting at a majestic the best vodka to be paired with the freshest news was overshadowed by Pernod Ricard past; or Poland’s leading premium brand, mixers for the ultimate taste experience.” winning the bidding war for Absolut after , made with rye harvested from the Consumer education often starts with the Swedish government auctioned off Vin country’s rich Mazowse fields. Whether bartenders. For example, offers & Spirits. It paid more than $8 billion for there’s a slowdown in the economy or not, a “Finnishing School,” a one-day course the widely-recognized global brand. customers seem poised to continue buying taught by master mixologists Dale DeGroff “We anticipate the brand will retain whichever brands of alcohol best fulfill their and Tony Abou-Ganim, that has been well- its distinct character and culture of bold, distinct needs. received in 40 cities throughout 6 countries. creative innovation,” remarks Sarah Phyllis Valenti of Georgi worries about “Lately I’ve been asking bartenders Bessette, an Absolut spokesperson. Absolut’s the slowing economy, though she believes and servers in my travels to recommend bottle-shaped advertising campaign built her brand is positioned to weather the storm. a vodka; so far, the same four brands it into a global brand, but after 27 years, “As time goes on, consumers will dictate what have been recommended over and over,” the company is replacing it with “In An they’re willing to pay,” she remarks. “There’s laments Kevin Egan of Blue Ice, a vodka ABSOLUT World.” no crystal ball. The industry is changing – made with Idaho Russet potatoes. “When Crossing over into popular culture, one you just don’t know. You just hold on.” the bartender/server is asked about other of the biggest 2008 vodka market campaigns American drinkers certainly aren’t brands, either they poo-poo them, have was SKYY’s promotion for the movie Sex & monolithic, and there are indeed key never tasted them or often have no real The City. It included magazine ads, an online markets that take to vodka quicker than knowledge of the product.” presence and consumer promotion. Kirsten others. One thing seems common to most Many mixologists say this is because Van Sickle, senior brand manager, calls the new vodkas: they get introduced in New popular classic cocktails are often made with show, “One of the pop icons of cocktail York and the Northeast, then jump down to and whiskey, and vodka is a latecomer culture,” noting its importance in making vodka, is what sets Sïku Glacier Ice Vodka crafted in small batches in the Netherlands, apart. And this doesn’t even count all the flavored line extensions. Is this proliferation sustainable? “Vodka somehow became like a dot.com,” remarks Lara Karakasevic of Charbay, noting that anyone with an idea can bring their vodka to market. Is vodka more like the craft beer phenomenon, where brands build small but loyal customer bases as the “long tail” gets New ad campaigns like ‘In An ABSOLUT World’ even longer? John Cooper of Pravda calls it and SKYY Vodka’s ‘Sex and the City’ promotion are utilizing pop culture to capture attention and the “segmenting of choice.” Time will tell. increase sales. “I don’t envy anybody right now trying to set up their cocktail list,” says Charbay’s Karakasevic. “People are shell-shocked by consumption markets where the demand for the number of choices!” Pichetto of Gold the Cosmopolitan popular. SKYY created ultra premium vodka is the highest,” adds Flakes echoes that sentiment: “It’s a huge cocktail recipes for all four lead characters Meunier, calling her Orzel “Poland’s best- market, it’s a crowded market, so you have plus Mr. Big. kept secret.” to bring something exciting and unique to Capitalizing upon one of the country’s Patrón acquired the Polish brand get the customer to switch from their usual most contested presidential races, Swedish Ultimat in 2007 which launched in 2002. brand to a new one.” premium brand launched the slogan The company developed a label to match You might think this proliferation crazy, “Svedka wants to put the “Party” Back in the Patrón label, hoping to replicate its but there is a logic to the growing number Politics,” blurring the line between one’s tequila success with vodka. It is the only of brands. “Consumers are always erring on political inclinations and social life. vodka made from wheat, rye and potato, the side of more choice. The genie is out of and includes a neck booklet explaining the bottle,” says Mic Zavarella of Anheuser- Flying the Goose With its distillation process. “We’re focusing on Busch’s Long Tail Libations. what makes our vodka different – it’s the “The good news is, the category is Super Premiums ingredients,” says Ultimat’s Ed Blinn. is the third-leading vodka, one growing leaps and bounds; the bad news is, that grew an eye-popping 25% in 2007 to everyone’s jumping in with their vodka,” 3.3 million cases. It’s now the defining super Proliferation: notes Blinn. Dean Phillips, president/CEO premium vodka, one that its competitors Vodka’s Gone Wild! of Prairie Vodka, isn’t worrying. “The more benchmark themselves against. That end of Vodka is easy to make, and you can bring brands that reach the market, the more fun the market is getting increasingly crowded the product quickly to market, unlike brown we can have,” he muses. with new entrants. spirits, which require aging. It’s an easy entrée Besides, young, affluent people keep Why the heady growth? “We continue point for new brands, which is why the market turning 21, and they’re turning to vodka. to see that consumers are looking for quality is cluttered. There are so many new brands The more unique a vodka, the more and luxury, and that they’re trading up in and line extensions that it can make your a chance it has to catch on with this brands and cocktails,” says Grey Goose head spin like Linda Blair in The Exorcist. important demographic. brand manager Emil Jattne. He Every kind of vodka imaginable is Rollouts of inventive products like the calls it “an aspirational luxury being produced, from Americana using energizing V2 Fresh Mint Vodka, infused brand that appeals to a broad water sourced from 300 feet below sea with caffeine and taurine is one distinctive range of consumers.” level, to Cîroc, distilled from addition, as is the sparkling Vodka O2. Gold Flakes Supreme was French grapes, to Pravda made introduced this spring, one with from late harvest Polish rye. Chasing the Flavor Dragon an unusual twist: 24 karat gold. Canadian Iceberg Vodka is Infusing vodka is not a new trend. Since the President Philippe Pichetto made from harvested icebergs 13th century, Polish noblemen began infusing got the idea when he noticed and triple-distilled natural their vodka with restorative bison grass. that some bartenders were grain spirits made from Today, Zubrowka keeps the tradition alive, sprinkling gold flakes atop Ontario-grown sweet with each bottle of their Bison Grass Vodka cocktails. “That should allow corn. Pure glacier ice up containing a blade of grass. Similarly, The us to compete in this very to 60,000 years old from Netherlands’ new Sonnema (pronounced crowded market,” he remarks. the Qalerallit Sermia Son’neh mah) VodkaHerb embraces good- “Our strategy is to roll-out glacier in Greenland, for-you herbs by incorporating a variety our brand in sophisticated transformed directly into of them in their product, sourced from doesn’t position the caffeinated vodka as an energy drink. “We’re really not in the energy drink business, but in the elegant cocktail business,” remarks van de Velde. In July, Van Gogh rolled out its grape vodka, and double Dutch chocolate will follow in September. “It’s a never-ending race. Everyone wants to come out with the next flavor.” Stoli Blakberi unveiled in May to considerable buzz. “Stoli Blueberi was a great success for us, and a top performer in our portfolio – we expect the same from Blakberi as well,” says Dolores Concepcion, Stolichnaya senior brand manager. She notes that mixologists are excited about mixing vodka with fresh herbs, such as basil Smirnoff, Van Gogh, Frïs, Stolichnaya, Skyy, Finlandia and Three Olives are among the with Blackberi. brands leading the flavor category. Georgi added two new flavors in June – grape and mango – expanding to 10 flavors; grasslands, jungles and mountains. However, flavored vodka. “We werenot going to launch Three Olives recently introduced tomato, this trend of infused vodkas seems to have another flavor!” declares Van Sickle. SKYY root beer and coffee-flavored vodka and especially gained momentum with real fruit introduced its iconic cobalt blue bottle in Cristall Lemon Twist subtly integrates infusions delivering stronger flavors and 1992, but was ready for a packaging change natural lemon extract. Kai, already natural coloring. in 2008, when it rolled out a new bottle – known for its distinct vodka distilled from What accounts for this proliferation of sleeker, taller, and more contemporary. rare yellow blossom rice grown in small flavors – and why do brands keep rolling Frïs Vodka, known for being freeze- Vietnamese villages, has now come out with them out? Kate Price of Smirnoff says it best: distilled in Denmark, also has two flavored the first lychee vodka on the market. “They make it easier to add fun and a kick to products in its portfolio: lime and apple “I call it ‘chasing the flavor dragon,’” says your favorite cocktails because not everyone made with real Mcintosh apples. SKYY spokesman Dave Karraker. “At some can be a liquid chef at home.” That’s the crux is also known for its flavored point, you’re just stealing from yourself as of it: consumers like the great variety that vodkas using all natural ingredients, like you cannibalize your own products.” make crafting cocktails a breeze. Smirnoff cranberry, rye honey and honey pepper. Some companies are deciding to focus added white grape and passion fruit-flavored Van Gogh has 19 flavors. Although on their original identity though. “We’re not vodkas in March, increasing its flavored double espresso is the bestseller, Van Gogh going to be in the flavor-of-the-month club vodka line to eleven flavors. – we don’t want it to interfere with our all- Absolut started the flavored vodka craze Purus, 360 and SnowQueen are taking a natural image,” says Mark Bacon, Finlandia several decades ago, and it continues adding more organic approach to vodka, while Kaí brand director, noting that the brand only to its line. Last year it launched is using original ingredients such as introduces new flavors every few years. Pears, as well as Absolut New Orleans, a yellow-blossom rice from Vietnam and Son- nema uses herbs from grasslands. limited-edition flavor that Going Micro, included donations to charities Green and Organic in the Gulf Coast. Small-batch vodkas are the latest Luxury leader Belvedere twist in the super premium has made its mark on the flavor category. It simply means category with two authentic “there’s not a continuous flavors: Cytrus, bursting with true button pressed to produce lemon flavor, and Pomarancza, these,” says Pravda’s Cooper. infused with orange blossom These aren’t huge brands, but water. Both are made with real specialty vodkas that appeal citrus peels. to very specific consumer SKYY, the number groups – those that want a one domestic brand, has hand-crafted product, an recently launched SKYY environmentally friendly Fusions, an entirely new beverage or an organic choice line of vodka infused – and sometimes all three. with fresh fruit – not just vodka continued

While consulting around the and artisan spring water from the California Bay Area, mixologist Dominic Himalayan foothills. Venegas sees bars adopting smaller, Vodka’s success has even attracted artisanal spirits. He rattles off the list some unexpected competitors, namely of what his customers prefer: Charbay, Anheuser-Busch, the country’s largest Hangar One, Square One, Sub Rossa brewer. Led by Mic Zavarella, its Long and Tito. Venegas acknowledges that Tail Libations unit rolled out two super San Francisco is ahead of most of the premium brands: Purus (made from country in adopting new vodka trends. organic Italian wheat) in November Since Square One introduced the 2007, and Swedish-distilled Cape North first 100% certified organic American in February 2008. Purus’s bottle is 70% rye vodka in 2006—they’re now onto a recycled glass, the cork is sustainable, cucumber flavored vodka—other small the adhesive is water-based and even the producers have pursued the green ink is made from soy. FPO trend. Charbay, produced in Napa, lies Both brands started in New York and at the intersection of both organic and Boston, and then expanded to Florida. infused, having added organic flavors “We’re exclusively taking these brands to its line, including Meyer lemon, through our beer wholesalers,” says strip-in blood orange and pomegranate. Much Zavarella. This is a different approach like how craft beers launched micro- than most, as Anheuser-Busch has a breweries, small distillers have begun national reach through its distributors. micro-distilleries, notes Phillips of 1/3 Prairie Vodka, whose family created Belvedere years ago. “It was inevitable Finding a Happy that it would reach distilleries,” he Vodka Medium notes. Prairie rolled down from the Vodka is on a strong growth path Grande Minnesota plains in May. It is both as American consumers continue organic and kosher. to appreciate its mixability. Yet not McCormick Distilling produces a every new brand or line extension will green brand, 360 Vodka. The distillation succeed. Vodka has had a long run at Absente is environmentally friendly, and the the top, and one wonders if consumer bottle made from 85% recycled glass. sentiment might change. Consumers “We’re doing everything we can to are funny that way: they like something make this an environmentally-friendly until they don’t. Remember Disco or the Ad product for the upscale vodka market,” sport utility vehicle? says chairman Ed Pechar. “As younger drinkers become more Qino One is made from organic, discriminating, more knowledgeable fair-trade quinoa grown in Bolivia and and better exposed, we in the industry t.c. will have to follow suit and offer a better distilled in the Cognac region. “Savvy consumers want to be green and honest selection,” observes Tony Abou-Ganim. but they still want their vodka to taste DISCUS’s Ozgo does worry about and look good,” remarks managing market saturation, yet he still sees strong partner Christine Cooney. “Our product growth in super premium vodka. “As and design grew out of these beliefs.” long as the market continues to grow It has introduced a raspberry-flavored that quickly, there’s more room for niche vodka as well, and will follow with players,” he predicts. kumquat in September. Vodka brands that shift their Blue Ice is developing a 100% market emphasis in this softening organic wheat vodka, as well as Idaho economy to on-premise sales may Mountain Berry flavor. “Consumers are continue to sell well, particularly as learning to appreciate more creative consumers shift toward consuming at mixology utilizing fresh and exotic home. “Things like vodka never seem ingredients to create tasteful cocktails,” to go away, it just grows and grows and says Blue Ice’s Egan. grows,” says 360’s Pechar. “There’s SnowQueen Vodka from Kazakhstan always a taste for vodka.” Vodka still is also produced from organic wheat has room to run. n