Vvodka Was Once Just Vodka. Not Anymore
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VODKA’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 vodkas 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 Stolichnaya, 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 Smirnoff 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, Russian Standard 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 liquor 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 Ketel One. 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 Sobieski, 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, Finlandia 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 gin 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.