STIRRING UP VODKA

In a way, the vodka market is not as clear-cut as it used to be. With what one supplier termed “a barrage” of new products entering the market, vodka is evolving into a category that not only represents huge sales volume but also dynamic change.


For many years, the vodka category could be divided among the superpremiums, which were all imports, and the premium and price/value brands, which were all domestics. The arrival of some upscale U.S.-produced brands, beginning with Skyy in 1992, began to complicate that simple division.


The more recent introduction of several brands, all priced higher than vodkas have ever been before, have muddied the waters even further. Some suppliers refer to these brands — such as Belvedere and Chopin from Millennium Import Company, Grey Goose from Sidney Frank, Cristall, now imported by McCormick, and Stolichnaya Gold from Carillon — as ultrapremiums. Other suppliers have shifted the terms around. They call this newest segment superpremium, while referring to brands such as Absolut and Stolichnaya, the top two imported vodkas, as premium.


In a way, however, the terminology is moot; it’s the trend toward upscale imagery and higher price positioning that is having an effect on the category.


Meanwhile, although the category as a whole is essentially flat — Adams Business Media Research projects a growth of 0.1% in vodka consumption for this year — vodka still stands as the largest-selling spirit in the U.S., by far, with a market share of 23.4%. Nationwide, much of the positive movement has been among the imports, with high-flying Absolut gaining almost 2.4% in 1997 to an impressive 3.42 million 9-liter cases. Stolichnaya’s sales were up 7.1%, to 1.13 million cases. And Ketel One, one of the first so-called ultrapremiums, exploded to more than 300,000 cases. Overall, the imported vodka segment gained 7% nationwide in 1997, while the entire vodka category declined 0.9%. Among American-made vodkas, Skyy grew by almost 19%, while three price/value brands from Barton, Barton Vodka, Fleischmann’s Royal and Crystal Palace, were all up, by 7.8%, 4.6% and 1.2%, respectively.


Activity in the control states was even more impressive. For example, vodka volume was up 0.8% in 1997 in the control states. Smirnoff, the largest-selling vodka in the U.S., sold nearly 900,000 mixed cases for a 3.6% increase. And imported vodka brands registered a 10.2% increase in the control states.


 


IMPORTS LEAD THE WAY


It was the first imported vodka brands that originally opened the public’s eyes to higher-image, higher-priced vodkas. “It was Absolut, Stolichnaya, Finlandia and Tanqueray Sterling that were first able to create a new category [in vodka],” said Ronald Lewos, vice president of marketing for Nolet Spirits USA, the company behind Ketel One.


Indeed, many suppliers say that the interest in superpremium and ultrapremium vodkas is just one result of general trends. “It’s very reflective of all the other spirit categories — whiskies, tequilas, brandy, even gin,” said John Vidal, senior brand manager for Finlandia at Brown-Forman. “It also reflects the growing affluence of the American market and consumers’ growing taste appreciation, a trend that, in the mid-1980s, led to the growth of the fighting varietals in wine. We see the same trends now in the movement toward fine cigars, tasty dishes, gourmet coffees and microbrewed beer. It’s a growing intellectual consumerism.”


Generally speaking, the ultrapremiums boast the highest prices in the category, generally $5 to $8 higher than the superpremiums. Some, such as Grey Goose, are stand-alone brands; others, such as Smirnoff Black and Stolichnaya Gold, are extensions of existing brands.


Each boasts a point, or several points, of differentiation. Grey Goose, for instance, is made in the Cognac region of France, while Smirnoff Black, unlike the other Smirnoff products, is an import, made in Russia using copper-pot stills. Ketel One, which also uses copper-pot stills, is made by the Nolet family in Holland, who have been producing vodka since 1691. Cristall, which, when introduced as Stolichnaya Cristall by Pepsico in the late ’80s, was one of the first ultrapremium vodkas on the market, has a history of being one of the most well-regarded vodkas in Russia, according to its present marketer, McCormick Distilling. Millennium positions its two brands, Belvedere, a single-grain vodka (made of rye), and Chopin, a potato vodka made in small batches and bottled by hand, both imported from Poland, as “luxury vodkas.”


These super- and ultrapremium brands are often marked by upscale packaging, such as the cork-finished bottles, designed in the Burgundy region of France, for Belvedere and Chopin. Suppliers say that these brands are most often consumed straight — neat, on the rocks and in martinis. And their consumers are people “who really want the best, who are a little older and who have higher disposable incomes,” according to Ernie Capria, senior vice president of marketing for Carillon, which imports Stolichnaya.


 


BRANDS OF DOMESTIC VODKA IN THE CONTROL STATES

(Mixed Cases)

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Brand
Supplier
1996r
1997
% Change Share
 Market
Share

Smirnoff
IDV North America
868,687
899,753
3.6%
14.3%

Popov
IDV North America
674,149
616,767
-8.5%
9.8%

Gordon’s
United Distillers USA
357,623
355,052
-0.7%
5.7%

Kamchatka
Jim Beam Brands
272,272
266,979
-1.9%
4.3%

Nikolai
Sazerac Co.
229,321
227,386
-0.8%
3.6%

Aristocrat
Heaven Hill Distilleries
208,387
204,819
-1.7%
3.3%

Five O’ Clock
Laird & Company
182,747
186,506
2.1%
3.0%

Bowman’s VA
A. Smith Bowman Distillery
171,492
181,520
5.8%
2.9%

Monarch
Monarch Imports
160,054
170,890
6.8%
2.7%

Aristocrat Supreme
Heaven Hill Distilleries
171,460
163,512
-4.6%
2.6%

Total Top Ten Domestic Vodka
3,296,192
3,273,184
-0.7%
 52.2%

Other Domestic Vodka
3,007,038
2,999,964
-0.2%
47.8%

Total Domestic Vodka, Control States
6,303,230
6,273,148
-0.5%
 100.0%

(r) Revised. Note: Flavored line extensions not included. Source: Adams Business Media Research Database from NABCA data.


Some ultrapremium brands seek to point out their differences, especially in price, from the others. “There are a lot of new products out there that say they are better and are more expensive,” said Ketel One’s Lewos, who noted the smooth taste and authentic history of his brand. Meanwhile, Sazerac positions Rain as an ultrapremium but prices it at about $16 to $18, compared with the approximate $25 price tags of some of the others. “With these brands, the consumer is paying for the packages, which are very nice,” said product manager Rebecca Green. “We didn’t feel we needed to go out that far.” Launched in the fall of 1996, Rain is a “harvest-dated” vodka made from organic grain. And Canadian Iceberg Vodka, introduced at the end of 1997 by 21 Brands, a division of Remy Amerique, touts its distinctiveness partly based on the purity of its water, which is obtained from icebergs floating off the coast of Newfoundland. The brand retails for about $16.


 


IT’S IN THE BOTTLE


Pointedly, Smirnoff — America’s best-selling vodka — has launched a new ad campaign, with the tagline, “All vodka, no pretense.”


“We feel that it very neatly captures what we are trying to say, which is that when choosing Smirnoff, consumers express confidence in their individuality,” said Nick Nocca, the marketing manager for Smirnoff at IDV North America. “Smirnoff isn’t necessarily caught up in the latest fashion trends; it transcends what’s fashionable at the moment. It’s a classic brand, we’ve heard that from consumers many times.”


Nocca, like many other suppliers, noted that as consumers grow more sophisticated not all are choosing the most fashionable or the most expensive vodka brand on the market. “There is a kind of dichotomy,” he said. “While there is some interest in designer packaging and fashionable claims, there is, on the other hand, growing interest in brands that reflect more enduring values.”


“Honestly, what I see is that [ultrapremium] is not being defined by the product in the bottle,” said Carolyn Ellison, senior brand manager of Tanqueray Sterling at Schieffelin & Somerset, “and Smirnoff is attacking that whole premise.”


Smirnoff is not the only one. According to Ellison, Tanqueray Sterling’s focus is on the quality of its product — and the recent awards it has received. Meanwhile, Melissa Lilly, director of marketing at Skyy Spirits, said, “We’ve seen the arrival of the $30 vodka and will use that interest in quality to highlight the great value Skyy represents.” And Rebecca Gordon, senior marketing manager for white spirits at UD USA, said of Gordon’s Vodka: “With so many brands on the market, with consumers being hit by a barrage all the time, Gordon’s is a known entity: a great value for the money.”


Barry Younkie, senior brand manager for Fr

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