Vodka

Vodka can be all things to all people. Christian Davis reports on the premiumisation of the most global of spirits


VODKA COMES IN ALL FORMS, as we know. Pure and international. Local and characteristic. And then there are flavours – aren’t things getting a bit silly when we start getting wedding cake, cotton candy, cookie dough and chocolate? Has there been a mass defection of creatives from Häagen Dazs and Ben & Jerry’s to vodka companies?

Absolut has been at the forefront of flavours. The Pernod Ricard-owned Swedish vodka has just unveiled its latest flavour, Cherrykran, a combination of cherry, white cranberries and plum. Jonas Tåhlin, Absolut’s VP global marketing, says: “We believe the interest in flavoured vodkas is a strong trend that is here to stay.”

Nick Gillett, head of Mangrove, which handles Beluga vodka, rejoins: “We are seeing a lot of different and quirky vodka flavours. I don’t think the trend will necessarily run out of steam but it does seem that some of these are rushed to market. Unstable, unbalanced, poor liquids will ultimately damage the parent brand. Some craft distillers are getting carried away with the concept rather than focusing on quality.”

Being the most contemporary of spirits, the most universal and versatile base for long drinks and cocktails, vodka leads the drinks industry’s onslaught on the masses via the social media. It is now not just the name, bottle and label, it is the website as well. One can foresee a vodka version of The Hunger Games (book and film) in which bartenders and consumers fight to the death for their vodka brand.  A racier version could be Fifty Shades of Vodka

Tåhlin says: “Our consumer patterns have changed and people are spending more time at Youtube and Facebook than in front of the TV. Marketing today is about creating a context and not only displaying a message.

“If the message is interesting enough, consumers make it theirs by spreading it through their own channels: word of mouth, mail, Facebook, Twitter or blogs,” he says.

“We hope to create these interesting contexts through collaborations. We are engaging with artists working across different media with the support to bring people together through art and music. For example, our collaboration with Swedish House Mafia (music) and Documenta (art),” says Tåhlin.

SPI Group’s Stolichnaya has just launched a global advertising campaign, The Most Original Moments Deserve The Most Original Vodka.

SPI CEO Val Mendeleev joins in: “Stoli continues to push the boundaries of how it connects and engages with its audience. We look forward to seeing this campaign evolve throughout the year across a variety of media around the world as Stoli engages with its fans particularly through an up-weighted presence on the digital sphere.”

We are talking about getting people to drink vodka here? 

But on to the numbers. Vodka grew by 1% volume in 2011, according to Euromonitor International (DI Vodka supplement, March, 2012). For 2010, it was 0.5%. Vodka’s ‘problem’ is eastern Europe, and specifically Russia. If you take out Russia, which accounts for approximately 40% of the vodka market, volumes grew by 3%. Recession-hit western Europe only grew by 1% but Africa and the Middle East were up 2% and Latin America a healthy 8%. 

Just imagine if the major brand owners –  Diageo with Smirnoff, Ciroc with Ketel One, Pernod Ricard with Absolut and Bacardi with Grey Goose – could get the Chinese, Japanese and Koreans to switch from their local white spirits, baijiu, soju and shochu…

Rising consumption

Back to basics. Vodka is around 50% larger than whisk(e)y and 165% larger than rum. Euromonitor predicts global vodka consumption to rise by 3% between 2010 and 2015, excluding eastern Europe. The top five companies account for 24% of global vodka volumes. Inevitably, Diageo dominates with a 7% volume share thanks to a sales growth of 5%, but what is interesting is that its huge umbrella vodka brand, Smirnoff, is, to a certain extent, treading water.

But given that the top five scotch brands account for 74% of global volumes, plus the fact that vodka needs nowhere near the same capital investment in terms of land for warehousing, buildings and barrels for ageing, there is room for smaller and craft distillers.

Premiumisation

The big guns are not having it all their own way when it comes to premium vodkas. Pernod is still working Absolut through its extensive global distribution network. Neither Bacardi’s Grey Goose nor Campari’s Skyy are exactly tearing up trees. Both are perceived struggling in the key US market, possibly because Americans have retreated to their homes and – as there isn’t anyone to impress except their partners – downgraded their drinks choices.

Gail Graham, director at Drinks 21, which has the Heavy Water vodka in its portfolio, says: “The lure of boutique vodka brands begins with how easy they are to buy into. It has become cool to ask for smaller labels to show you are in the know, brand-savvy and actually care about what you are drinking – putting the consumer very much in control.”

With many vodka brands historically appealing to women, or to men who want to impress women, Graham sees Heavy Water as commanding a “masculine, bolder presence”. 

Similarly, Russian vodka White Gold Original also pitches at alpha males. CEO Kirill Kirakozov sees the marketing as appealing to “true original man”. He continues: “He is sincere, unintimidated and truthful. He is not trying to be special. He already is. He has a strong character and isn’t afraid of himself. His style is more an inherited quality than a tribute to fashion.” It reads like it was lifted from Russian leader Vladimir Putin’s personal manifesto to the Russian people.

Otherwise, along with flavours, the move to premium continues unabated, as that is where the margins lie. Gillett at Mangrove says: “The growth of premium vodka is interesting and, although driven by Grey Goose and Belvedere, other more niche players, such as Beluga and Konik’s Tail, are proving popular in the on-trade.”

On the definitions of premium, super-premium etc (see panel), Nick Ambridge of ‘super-premium’ Belvedere, says: “I don’t think consumers define it (vodka) like that but internally it helps. Consumers probably understand luxury, boutique/artisanal and standard. Potentially, we get bogged down with definitions in the trade.”

Distillation and filtration

To an extent some of these definitions are based, spuriously, on the number of distillations and filtrations. Gillett says: “The number of distillations was the big selling point until it became absurd. Among the trade it is a bit of a joke with regards to some of the claims. Consumers, however, believe that more distillation and filtration through rare filters make it better. There are global brands that use this info and a nice bottle very successfully.”

Absolut’s Tåhlin says: “The distillation process is very important to ensure the quality and is often used in marketing as a claim of quality. However, the numbers of distillations vary and it is important that consumers are aware of the differences. Absolut is continuously distilled, which means it has been distilled several hundred times.”

At the recent International Spirits Challenge judging, chairman Ian Wisniewski, widely acknowledged as a world expert on vodka, grouped the entries into ingredients then sub-divided into flights of standard, premium, and super-premium (Drinks International, July 2012).

Wisniewski concludes: “This approach showed just how much individuality there is among vodkas distilled from the same ingredient and marketed within the same price position. Having such focused flights also meant discussions among the judges were very specific, going into considerable detail and often at great length.

“Our many discussions included the merits of brands that had different personalities, for example elegance compared with a richer style, and also how brands could deliver the ‘classic’ characteristics associated with a particular ingredient but in their own individual way.” 

So who says vodka is bland, tasteless and just about the name, the bottle and now the social networking?