Posted on | June 23, 2015
Written by | Jeff Cioletti
Popular, mixable and marketable, vodka remains the uber white spirit.
Despite the spirit’s decidedly Eastern European origins, the story of vodka in the United States is like a metaphor for the American Dream: essentially making something out of nothing. The “nothing” in question is the notion that vodka is, by definition, a neutral spirit without color, flavor or odor. It’s the ultimate blank canvas; its value is derived from savvy marketing and being able to tell a good brand story.
It’s also among the easiest and most efficient to produce. There are no standards dictating what its base ingredient must be; a producer has as much a right to call a product “vodka” if it’s distilled from fruit as one that makes it from wheat or potatoes. There’s also no aging involved, so it can go right from the still to the bottle. It doesn’t have to spend months or years sitting in barrels before the distiller’s able to make a dime off of it.
But being in today’s vodka market isn’t as easy as it may sound. In fact, it’s grown increasingly challenging to differentiate one’s brand in a category in which, it seems, anyone with an entrepreneurial inclination wants to play.
“Vodka remains a highly competitive category within the spirits industry as more brands are continuing to come to market with new products in both flavored and unflavored segments,” says Brad Essig, Vice President of Vodka at Diageo, whose vodka brands include Smirnoff, Ketel One and Cîroc. “With so many options available to consumers, it’s important for a brand to stand out.”
The added challenge the category faces is that whiskey has stolen much of its mojo. Volume-wise, vodka remains the top spirits category, totaling 66.9 million cases in 2014, while whiskey accounted for about 56.6 million cases, according to the Distilled Spirits Council of the U.S. (DISCUS). Nearly 32% of all spirits sold were vodkas, versus whiskey’s 27% share. However, in terms of revenue, whiskey bested vodka by a considerable margin ( $7.5 billion to $5.8 billion), and with whiskey volume growing significantly faster than vodka, 7.3% and 1.6%, respectively.
All the more reason that image is as important as ever in the category. Finding a vodka brand’s intrinsic value isn’t a one-size-fits-all proposition; marketers are taking a variety of routes to carve out their own niche in the marketplace.
Of Icons & Luxury
Three decades ago Absolut defined premium. Its minimalist print ads playing up its iconic bottle shape wallpapered many a twentysomething’s bedroom wall. The dynamics of the market changed as new entries at new, super-premium prices started to chip away at the Swedish brand’s market share. But now, Absolut is looking to reclaim the nightlife through its Absolut Nights campaign, replete with the limited-edition illuminated Absolut Spark bottle. Absolut’s successful use of creative packaging is well-known; with their latest innovation—Oak by Absolut—the focus is inside the bottle. Oak by Absolut combines original Absolut vodka with vodka rested in oak barrels. For a little extra panache, the initial roll-out in San Diego, Denver and Minneapolis was handled exclusively through the Minibar delivery app.
Consumers always will be looking for a V.I.P. experience with their spirits and cocktails, and few brands embody that vibe as well as Diageo’s Cîroc. And few people actually evoke that lifestyle better than Sean “Diddy” Combs, so it was a match made in heaven when Diageo enlisted the multimedia mogul as a partner. Ingredient-wise, the French-born brand distinguishes itself by using grapes as its base (giving it much in common with unaged brandy). “At the ultra-premium end, we’re focused on demonstrating the unequivocal liquid quality and luxury credentials intrinsic to Cîroc,” Essig notes. “With the inclusive, yet elevated approach, we capture the celebratory, sophisticated occasion that the vodka consumer enjoys.”
A great deal of the credit for the existence of an upper echelon of vodka price- and image- tiers for brands like Cîroc to inhabit goes to Grey Goose—even though Cîroc predates Grey Goose by about four years. When Sidney Frank Importing Co. introduced the brand to the states in 1997, there really was no super-premium segment. Nearly two decades later, the now Bacardi-owned brand (Bacardi acquired it in 2004 for a cool $2.2 billion) continues to remain relevant in the top-shelf sphere through its glitz-and-glamor partnerships. Grey Goose is a visible presence at red carpet events. And, thanks to an adventurous deal with Richard Branson’s civilian space travel project, Virgin Galactic, Grey Goose could end up being the first vodka commercially available in space. All of those initiatives have helped solidify its position as a go-to brand for aspirational consumers.
Long before either of those brands existed, Stolichnaya epitomized the finest of the fine in vodka. Of course, much has changed and Stoli has had to deal with so many new competitors, especially on the high end of the market, and even controversy. However, the brand—which first came to the states via a trade agreement with PepsiCo in 1972—has demonstrated that it’s quite game to perform in the luxury space; a little over a decade ago, elit by Stoli, a single-estate vodka gave the brand a foothold at the “ultra-luxury” level. Meanwhile, Stoli has been aggressive on the marketing front, notably becoming a leader in supporting LGBT events and issues. Cocktail-driven initiatives have included the Moscow Mule, Lemonade and, this summer, Stoli Crushes. Also, Galactic Martinis aside, this summer also marks the 40th anniversary of Stoli being the first vodka brand in space (as part of the Apollo-Soyuz mission in 1975); expect some promotion around that.
Beam Suntory is a credible player in the luxury space as well with their ultra-premium Effen brand. The Dutch import, packaged in a sleek, cylindrical bottle, is designed to appeal to the aspirational nightclub-goer and mixologist alike (with the easy-grip sleeve). Beam Suntory positions it as a vodka designed “by bartenders for bartenders.” Its flavor extensions also skew a little more premium than has been the norm. Its cucumber variety taps into the savory cocktail movement; it also markets salted caramel, a flavor trending across the culinary world.
Effen’s brand image contrasts starkly with that of Pinnacle, which Beam acquired in 2012. The French-made, wheat-based vodka prides itself on its playfulness, characterized by its prolific participation in the flavor space. In the past handful of years the brand has launched confection-inspired flavors from Cookie Dough to Rainbow Sherbet to Cinnabon. Perpetual innovation is in the brand’s DNA. “While Pinnacle Original continues to be a fan favorite and a big driver for growth, our fruit flavors always consistently deliver strong results,” says Jason Dolenga, Senior Director of Vodka for Beam Suntory. Dolenga adds that many Pinnacle flavors are growing at a double-digit rate. “There is clearly a demand for flavored spirits across the industry, and we don’t see that changing any time soon,” he notes.
Sazerac-owned Wave Vodka certainly hopes not, as the brand has been known for some fairly over-the-top flavors. In addition to straightforward fruit flavors like grape, cherry and peach, Wave has marketed varieties like Cake, Chocolate-Covered Pretzel and Frosted Cinnamon Bun. Burnett’s remains a category leader, relied upon by merchants from coast to coast both for scope of offerings and consistent quality.
And then there’s Krü 82 Vodka, which mixes trending, culinary-inspired flavor—cucumber again, plus with more offbeat flights of fancy like Pistachio, Wintergreen and Chocolate Truffle. Van Gogh Vodka’s flavor portfolio runs the gamut as well. In addition to standard fare like Vanilla, Melon, Mango and Raspberry, Van Gogh, imported by 375 Park, offers an Espresso and Double Espresso flavor and, most curiously, PB&J-flavored vodka. Figenza—bringing the humble fig into the spirits world—is going strong, demonstrating how an exotic and intensely flavored vodka can become a bartender favorite.
One brand that has always seemed to have a finger on the pulse of flavor trends is Sweden-sourced Svedka. Svedka Grapefruit Jalapeño, a 70 proof combination of bright tropical refreshment and spicy heat, launched in January, in tandem with Svedka 100 Proof, a higher-strength version of its flagship unflavored spirit, packaged in a premium silver bottle. Svedka has made a successful habit of releasing an original-design “Stars and Stripes” bottling each summer, dubbed a “Limited Party Edition” as it only comes in the 1.75L size.
Star Industries’ Georgi brand is seizing on a significant recent trend: hard cider, which has been the fastest-growing alcohol segment, up nearly 70% year on year. Georgi announced it has tapped into that concept, launching Georgi Apple Cider Vodka. While consumers can enjoy it neat or on the rocks, Star Industries also recommends a proprietary Flaming Apple cocktail, combining Georgi Apple Cider Vodka with the supplier’s Wild Flame Cinnamon Whiskey.
Sobieski, known as budget-friendly straight vodka, also offers evocatively designed flavors like Cynamon, Karamel, Cytron, Espresso and Bizon Grass (a traditional Polish specialty). ZU (Zubrowka) Vodka is all-in on the bison grass; every bottle contains a pristine blade of the tall native grass.
A Sense of Place
It’s hard to think of a brand the size of Tito’s Vodka as a local brand, but before it conquered America and took to the friendly skies onboard United Airlines flights, a big part of its brand story has been the fact that it’s produced at Texas’s first and oldest legal distillery. Being gluten-free (it’s made from 100% corn) hasn’t hurt either. Tito’s is quickly closing in on the 2 million case milestone in annual volume.
Meanwhile, Texas is home to other attention-earning vodkas. Deep Eddy has caught fire, emphasizing Austin roots, small-batch production (distilled ten times, charcoal-filtered six times) and all-natural ingredients, including their flavored vodkas. Dripping Springs has expanded rapidly, thanks in large part to aggressive sampling; brand reps pour at about 300 events per year, on top of in-store sampling at 350 accounts in 14 states.
Another fast-growing brand, New Amsterdam, leverages the iconography of vintage New York City—quite the feat, considering the company is based three time zones away, in Modesto, CA. Launched in 2011 to build on the momentum of New Amsterdam Gin, the vodka boasts an art-deco-inspired image of the city’s skyline. The brand extended its reach with the campaign #ItsYourTown, encouraging consumers to bring a little of the New York state of mind to their own cities. Playing up its smoothness with the tagline, “five times distilled, five times smooth” also helped propel the brand to become one of the fastest vodkas to reach 1 million cases, doing so in its first year on the market.
Campari-owned Skyy Vodka has taken location-consciousness in a different direction with some varieties in the Skyy Infusions line. For instance, its Peach Infusion isn’t just called “Peach,” it’s “Georgia Peach;” and blueberry is “Pacific Blueberry.” “Texas Grapefruit” evokes the Lone Star State, known for its red grapefruit. Skyy’s most recent innovation, the Barcraft line, is positioned as a home mixologist’s modern cocktail “hack”—the three 60-proof flavors just need two parts club soda added to become instant tall drinks.
One context where place matters little with vodka is when price matters more, at the less expensive end of the spectrum. Voda, relatively new to market, has a subtle Euro look and touts its “5X Distilled,” attracting the attention of shoppers who are looking for something that won’t break the bank and is something their dad and granddad did not drink.
Across virtually every food and beverage category, there’s been movement toward “natural” positioning. That’s tricky business in alcohol, but many vodka brands manage to pull it off by touting the purity and authenticity of ingredients. Case in point: the Finnish vodka Finlandia’s label proudly declares that it’s “made from pure glacial water and the finest six-row barley” and its bottle contours echo the texture of a glacial landscape. The notion of a vodka’s source being “untouched,” has propelled many brands that have come after Finlandia.
Leaf Vodka—produced by Temperance Distilling under license from Global Spirits USA—has made water the central component of its identity. It offers two varieties, each distinguished by its water source. The green-labeled Leaf is made from Alaskan glacial water and the blue-labeled offering derives from Rocky Mountain mineral water.
Water sourcing is also one of American Harvest’s principal selling points. The brand declares that its water comes from “deep beneath” Idaho’s Snake River Plain. It also promotes the fact that its wheat is grown and harvested at a local family-owned farm. Perhaps its biggest draw is that the spirit is certified organic.
The greener the better?
Organic is the primary driver for the Crop brand as well. With the tagline “Harvest Earth,” the USDA-certified organic product line sources its grain from “healthy soil, free of artificial fertilizers, pesticides and chemicals” on America’s plains. Its flavored offerings keep it close to the garden, with tomato, cucumber and Meyer lemon variations.
Tru, Square One, Prairie, Ocean and Rain are other entrants in the organic arena. From Italy, Punzoné is based on organic Piemonte wheat and Alpine water; straight 80-proof vodka is the base for the brand’s intensely flavored 34-proof Lemoncino and flagship blood-orange Originale.
360, while not organic, has taken up the eco-friendly banner impressively, with multiple green initiatives. For instance, the distinctive swing-top bottles are designed for re-use. Through 360’s “Close the Loop” program, the supplier has received and re-used over 50,000 swing-top caps and donated $1 per cap to Global Green USA.
Base ingredients, of course, are a fertile way for vodkas to distinguish themselves and make a statement. Belvedere and Sobieski swear by Dankowski Rye. Absolut’s luxury bottling, Elyx, is based on single-estate wheat from the Råbelöf Castle, where they have been producing wheat since the 1400s. Devotion trumpets using non-GMO corn; Chopin recently released a trio of single-ingredient vodkas (potato, rye, wheat).
Among the most intriguing offbeat base ingredients is quinoa. Fair Quinoa Vodka is the result of research between French distillers and Andean farmers. Fair’s organic quinoa comes from the 3,000-meter-high Altiplano plateau. Using this naturally gluten-free “super food” as a base helps it stand out; ditto the brand’s commitment to fair farming practices. And Fair’s track record in competitions has proved their vodka belongs.
Back to Basics
When marketers talk about Millennials, the buzzword “authenticity” is never far behind. Millennials, researchers are convinced, crave authentic products and experiences. This notion is a core component of Diageo’s strategy for Ketel One. Central to this approach is the visibility of the Nolet family, founders of Ketel One’s Nolet Distillery back in 1691. Tenth- and 11th-generation Nolets are the current faces of the operation, positioned as the modern-day stewards of distilling techniques that have evolved over nearly 325 years.
At the end of the day, the vast majority of consumers aren’t concerned with living the luxury lifestyle, drinking a product sourced from remote locations or fancy packaging. Sometimes they just want to drink a quality vodka for its own sake. Leave it to the largest vodka brand in the world, Diageo’s Smirnoff, to tap into that attitude with its latest tagline, “Exclusively for Everybody,” and an ad campaign that pokes fun at the velvet-rope pretentions of some of the higher-end vodkas. “Smirnoff Vodka has shifted gears in recent years to tap into that inherent truth of the spirit,” says Diageo’s Essig.
Sometimes getting back to basics involves romanticizing elements that, in the minds of most people in the world, made vodka vodka in the first place. And that means embracing a brand’s Russian-ness, a tactic that has worked just fine for Russian Standard. Marketed under the tagline “Vodka As It Should Be,” Russian Standard stands out on the shelf, with “Russian Standard” written in Cyrillic characters, noticeably larger than the English translation beneath it.
Vodka, over the decades, may have evolved into a broad and vibrant American category, but its roots remain decidedly foreign-born. And it was the spirit’s once-exotic origins that started America’s love affair with the spirit in the first place.