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THERE WAS A TIME when vodka had the run of the place in global travel retail, at least when it came to white spirits. It might still top the charts in this channel, but things aren’t quite as easy nowadays.

In 2018, consumers are hungry for new spirit brands with craft credentials and provenance – and juniper included if possible. Producers are more than happy to oblige, meaning shelves and aisles are busier than ever, with launches and ever more creative activations. Which all means that it takes more effort than ever for vodka brands to make this channel work.

To look at the figures, vodka is holding its ground. The category overall made modest gains of 1.8% in travel retail between 2016 and 2017, according to the IWSR, which reports the category now accounts for just over 3.9m 9-litre cases.

According to Generation Research, vodka has kept its 6% market share steady within wines and spirits over the past five years, which also keeps it in the top spot ahead of other white spirits. Super-premium vodkas have made a strong contribution towards the category’s steady growth in recent years, the company says.

INFLUENCES

At Russian Standard, the strength of this higher-priced segment has influenced recent launches (see box). “The premiumisation trend continues to win ground – passengers are looking for better-quality products and they are ready to trade up and pay more for a vodka brand that meets their expectations,” says Irina Chirilescu, head of customer marketing at the brand’s owner Roust.

Tim Simmons, global head of travel retail for the IWSR, confirms this. “The vodka category generally is under pressure, but particularly in the ‘standard’ price bracket, as it is often commoditised,” he says. “However, super-premium vodka brands, particularly Grey Goose and those not needing flavour extensions to gain incremental volume sales, are performing quite well.”

Travel retail may be treating Grey Goose well, but that’s in no small part because the channel is valued by the team behind it at Bacardi. “Travel retail is a key brand-building channel and shop window for the business on a global scale,” says the company’s global marketing director for global travel retail, Julie Witherden.

She points out the brand’s summer campaign spanning airports in Europe, India and the US that set out to “encourage personal experience of the brand with photo opportunities and the chance to sample a Grey Goose Le Grand Fizz cocktail”.

This kind of activation obviously serves to not only drive sales, but also grow brand equity and awareness. There’s a lot more to travel retail than merely shifting bottles, as Simmons points out. “Brands are becoming more focused on having consumers see the brand in the airport shop but then wanting to tie in the travel retail activations with the domestic markets so they pick up the brand there too,” he says.

This is a sentiment echoed by Beluga Vodka’s export director Pavel Ulyukaev. “Duty free is a window display for our international business. Its input into building brand awareness of Beluga globally is huge,” he says. “For us, the channel is a priority as it forms a base for consumers’ choice in duty-paid channels too.”

Ulyukaev notes that one of the big changes for vodka in travel retail in recent times is the emergence of craft vodka as a category. Simmons agrees, saying: “There’s undoubtedly a greater focus on ‘craft’ and sense of place across all the spirits categories and vodka is no exception.”

Related to this greater focus on craft is the growing importance of millennial consumers to travel retail in general, and it’s something that a number of vodka brands are making a priority. McCann at Pernod Ricard acknowledges that the growing number of millennials among those who travel makes this an important demographic for the company, but that this presents its own challenges, with targeted campaigns required.

“For instance, this audience favours brevity from brand messaging. They are highly connected digitally and engrossed in their devices, and their brand choice drivers are different from others. To remain relevant among them we create and roll out innovative campaigns that enhance the travel experience,” she says.

MILLENNIAL MARKET

Russian Standard’s Chirilescu is in no doubt about the importance of this millennial market either. “Our main task is to talk to millennials about the Russian Standard brand in their own language, via social media and unique shop floor experiences that they can bring home and share with family and friends,” she says.

With this in mind, the brand is working on a new activation that, as Chirilescu puts it, “taps into the craftsmanship trend”. She adds: “We will provide millennials with a unique experience to create their own cocktails, and to educate consumers on the versatility of vodka.”

Adapting to changing consumer demographics isn’t all vodka has to worry about, though. Hitting the right note with marketing activity and new releases is one thing, but it seems the space for these within white spirits is more crowded than ever.

“There’s an issue around floor space given to activations. Some are literally crammed in and offer no value to anyone in the value chain,” according to Simmons. “Activations in vodka aren’t as widespread as they are across, say, scotch, probably because gin is stealing the limelight at the moment.”

Chirilescu agrees. “The number of gin brands is staggering. You may find more than 20 gin brands in a single airport store, which creates additional complexity and competition for vodka brands, as we target the same shoppers.”

And while these pressures from within the spirits category are very real, the category isn’t without external pressures too. The Duty Free World Council, whose role includes identifying challenges specific to this channel, is aware of regulatory changes when it comes to various aspects of alcohol sales around the world.

President of the council, Frank O’Connell, says. “There has been a growing tendency globally towards more governmental regulation of the alcohol industry in the areas of taxation, marketing, advertising, promotion and labelling with the view to combating alcohol-related harm, which potentially may restrict the ability of brands to flourish in this market.”

This, of course, has the potential to affect drinks brands in all categories in travel retail, but given its prominence in this channel, and its reliance on it too, vodka arguably has more at stake than most other categories.

It will remain to be seen whether vodka brands in travel retail can continue to innovate – both in terms of products and activations – to maintain its position, fending off pressures both from within the industry and without, while keeping on its toes to address changing consumer demands.

Whether it does or not, it seems that the days of the category’s unquestioned dominance in travel retail are behind it.

GTR EXCLUSIVES

There’s no doubt that global travel retail has become more challenging for vodka brands, not least as a result of the constant stream of new entrants across spirit categories, as well as changing consumer demands. The vodka brands that have traditionally prioritised this channel are rising to the challenge though, not only with increasingly creative activations, but with exclusive launches too.

Pernod Ricard didn’t hold back with the launch of Absolut World in April this year, its first travel retail exclusive in three years. At its core was a bottle design by Swedish illustrator Kari Modén, focusing on themes of global unity, “love, peace and togetherness”.

In addition to this limited-edition collectible bottle design, the company created an ambitious experiential platform around it. According to Lisa McCann, brand director for Pernod Ricard Global Travel Retail, the intention was “to bring travellers from across the world together, asking people to share the places they love in their home city via an online platform built specifically for the campaign”.

As consumers contributed selfies of local hotspots, they helped to create a global selfie spanning 36 countries, providing other travellers with insider tips. The campaign was backed by activations in airports, including merchandising and outdoor media.

Meanwhile, this past summer, Grey Goose accompanied its French Riviera-themed travel retail campaign, launched in both Mumbai Duty Free and Lagardère Travel Retail within Paris Duty Free at Paris Charles De Gaulle Airport, with a limited-edition bottled designed by illustrator Quentin Monge. The brand also has plans to launch a Christmas gifting tin this year exclusively within travel retail.

Russian Standard recently made its intentions for global travel retail clear too, with the exclusive launch of its reformulated and repackaged Russian Standard Platinum into the channel. With no shortage of premium cues, such as metallic silkscreening on the bottle, there’s little doubt about its positioning, and about the brand’s understanding of the importance of premium products in this global shopfront.

For head of customer marketing at parent company Roust, Irina Chirilescu, the intention is to appeal “to aspirational millennials looking for more authentic premium brands with a great taste”.

For good measure, the brand also introduced the sixth expression of its Russian Standard Limited Edition series exclusively into travel retail.

Winter Palace Limited Edition is distilled with “exotic extracts” and is presented in a limited-edition sleeve.

NEW TO TRAVEL RETAIL

Travel retail is a crucial channel for many established vodka brands, but it’s a priority for a very recent entrant to the flavoured vodka market too – Echo Falls Vodka Summer Berries. Not long after Accolade Wines introduced the Echo Falls wine brand’s first foray into vodka, starting with the UK market near the end of 2017, it began eyeing up travel retail.

“We are very active in travel retail with our wine portfolio and we also know the value of the channel to spirits. So when we launched Echo Falls Vodka Summer Berries in the UK domestic market we knew that it would also be an attractive line for the same consumers when they travel,” says Rupert Firbank, Accolade Wines commercial director, global travel retail. “By having this listed in travel retail as people are heading off on holiday it has enabled us to raise awareness of the product and to get thousands of passengers to trial it.”

Initial activity this summer included pop-up shops on P&O Ferries, with sampling, serving suggestions and branded merchandise such as stirrers, ice trays and flutes. The activity was then rolled out to Eurotunnel and DFDS.

While many others are focusing on more premium offerings in this channel, for Echo Falls it’s about offering accessible price points to consumers.

“We know that there is room for a strong brand to bring accessibly priced flavoured vodka to the category,” says Firbank. Consumers of Echo Falls’ Fruit Fusions wine products, he says, “are younger than the average BWS consumer, with a similar profile to the flavoured vodka drinker”, adding that they “feel they are priced out of the flavoured vodka market”.