E C K Y
P S T E I N
the turn of the millennium we are all
future-oriented. Design in all areas, from cars to
sunglasses to furnishings, favors cool, sleek,
clear colors, like this clear spirit.
Environmentalism plays into this with an emphasis
on purity: clear beverages and pure flavors are
winning shelf space everywhere, including in the
liquor store where purity is a large part of
According to figures released in January, vodka
category growth in Massachusetts is a very healthy
11% (in the most common measure, 9 liter cases).
Domestic vodka shows a 9% increase in the past
year, and imported vodka continues its trend with a
very bright 15% growth in this segment of the
category. Massachusetts is moving in tandem with
the rest of the country - and perhaps a bit ahead
of the US trends in some areas. Lower- and
mid-price vodkas are loosing market share, while
premium and superpremiums are more than making up
for this, for a total increase in sales.
Incidentally, this also reflects similar growth in
the white spirits category in general.
Why is this growth in the vodka market
occurring? The reason is the economy. After the
excesses of the 1980s, even the rich eschewed
conspicuous consumption for while, in deference to
those of us unfortunates who were suffering in the
recession years. But all that is over now,
especially in Massachusetts where the unemployment
rate is at a historic low. In addition, many of the
newly-rich are young enough not to have been in the
workplace during the recent recession.
MARKET NOW In this country, total
consumption of distilled spirits increased nearly
2% last year over the year before. Non-whiskeys led
this march with a 3.3% increase. The vodka category
led this increase with a total improvement in sales
of 2.3%. Most significantly, imported vodkas grew
at 9% last year, which was ten times the domestic
improvement in the market.
US leaders in the growth category were Absolut
(6.1%), Stolichnaya (8.8%) and Ketel One (41.7%).
Domestic Smirnoff showed an increase of 5.4%,
leading Gordon's (4.3%), McCormick (7.1%), Skyy
(17.3%), followed by Burnett's (19.2%).
In Massachusetts, the leaders were Smirnoff,
Gordon and Barton for domestic brands, followed by
Popov, Wofschmidt, Fleischman, Relska, Old Mr.
Boston and Kamchatka. Imports show leaders Absolut,
Stolichnaya, Ketel One and Finlandia, in that
Massachusetts ranks ninth in the nation in terms
of vodka share of distilled spirits. Currently
there are about 200 vodkas in the marketplace in
OF THIS DECADE If there was a story of
the decade, looking back from the near-millennium
vantage point, it would be the unprecedented
skyrocketing market share of newly-introduced
vodkas and vodka brand extensions, which has taken
place during the 1990s.
The domestic product, Skyy vodka, is the prime
example of a new brand ascending to prominence in
consumer perception, as well as in sales during the
past few years.
Today Skyy is growing at the rate of 20% per
year. "In the past year Skyy has stepped up its
investment and variety of activities around the
brand," explains Brand Director Teresa Zepeda. The
company is focusing on and supporting the film
community because this reflects the target
consumer's interests, and film is quite influential
in this upscale, young market of 21-35 year olds.
Last summer Skyy debuted a new promotional
campaign of images without copy entitled
"Skyycinema" which shows alluring scenes resembling
old movies. A new set of five images appears every
6 months, with the 3rd set of ads beginning in
TRENDS AND CAMPAIGNS For the rest of the
domestic market, most of the major selling products
are found under one roof: United Distillers and
Vintners, North America. UDVNA's Northeast Director
of Marketing for White Spirits is the often-quoted
Steve Wallet, who explains that his territory, the
Northeast, mirrors the rest of the country. "It's a
highly developed market," he says. Superpremiums
are up 4%-5%, like his imported Stolichnaya brand.
Premiums such as Smirnoff are also up 4%-5%, while
mid-low brands have been losing a couple of points.
For these products, the category in his region
shows a total of a 2% increase. In terms of
products, Stolichnaya has been adding flavored
vodkas. The core flavors are Orange, Raspberry,
Vanil and Limonaya. The Vanil is currently showing
a 30% growth in the market - consumers are mixing
it with colas, for the most part. But Orange is
still in first place, however. In the Northeast,
the orange flavor is very popular - have you seen
the "creamsicle" shelf tag? Flavored vodka is
growing overall at a 13% rate.
Wallet is pleased with Smirnoff's growth as
well. In the US, Stoli has 3% of the market and
Smirnoff a very large 17%, according to Wallet. The
company continues to support its current
"Silhouettes" ad campaign, targeted to core users
25-40, in print and outdoor ads. Advertising
focuses primarily on on-premise brands, both
nationally and regionally. Smirnoff has a quality
image, Wallet says, while Stolichnaya has more of a
fashion image. Of these two products, Smirnoff is
referred to as their on-premise brand, while Stoli
is the favored off-premise brand. Mid-priced
Gordon's is primarily an off-premise brand, as is
Popov, but Gordon's is the larger seller in
Though UDVNA finds the same trend in losing
share in mid-low price brands, the company's
mid-priced brands command an extremely respectable
share of the total market: Popov has an 8% share of
total vodka in the US, and Gordon's has a 6% share.
Wallet asserts that "Consumers are trading up to
superpremium and premium because of the health of
Anecdotally, a local retailer in an upscale
Boston suburb remarks, "Even the Zhenka people are
going to Gordon's. It doesn't happen often, but
once in a while" - enough to get noticed. And this
is at a store where they've also found sales
consistent with market trends, with superpremium
sales "slightly above average." However, in this
retail establishment "flavored vodka sales are
stagnant," is the report, perhaps reflecting an
older clientele or other interests of the
consumers, such as beer and wine, outside of the
urban area. This store had 15 brands on the shelf
early in the summer, with only one or two flavored
vodkas at any given time.
Barton, Inc. remains solidly in the race in a
different price range. Their Mr. Boston brand is a
representative of the solid domestic mid-low range
product. This is Barton's biggest seller. According
to Barton, Inc.'s Marketing Manager Sharon Keld,
this is where they position their biggest promotion
- in price/value. Recently, they submitted Mr.
Boston to the Beverage Testing Institute, where
they received both "recommended" and "best buy"
labels. They now have case cards and shelf talkers
touting this status. This year's sales were up 15%
in the first quarter - while last year, in keeping
with trends in the industry, sales were flat.
Mr. Boston is a big seller in New England
because of its name, of course. And because it is
known through the Mr. Boston Bartender Guide, which
Barton puts out in partnership with Warner Books.
This brand was originally developed in Boston, and
Barton acquired it about three years ago.
Barton's next biggest brand is Fleischmann. This
has more marketing support, with a big summer pull
topper which will turn into a winter pull topper.
It's considered a value brand, and sales have been
flat this year, but it "has been grabbing market
share," says Keld, "because sales overall in this
category are declining."
SUPERPREMIUMS In the imported
superpremiums, as noted above, we see tremendous
growth, and Absolut is the leader. Not only is it a
major seller in the vodka category, but Absolut is
the third largest brand of all distilled spirits in
the US," according to Marketing Manager Drew
DeSarno. This year, Absolut will mark its 20th
anniversary in the US, and Boston was the first
city where this Swedish import was introduced in
1979. "Boston was, and is, one of the key imported
vodka markets," explains DeSarno. Apparently this
was the correct way to introduce the product to the
US: Absolut has maintained its growth, and last
year was up 6.1% over the year before.
Absolut has only one line: vodka in various
sizes. However, there is also a brand extension of
flavored vodkas. This summer the company has
introduced its first new flavor in seven years,
Mandrin. The choice of a tangerine-orange flavor
follows Kurant (black currant), introduced in 1992,
and Citron and Peppar before that. "We've been
looking at doing a new flavor for a while," says
DeSarno cautiously. "Two of the most vital areas
within vodka growth are superpremiums and flavors."
For Mandrin, there were two-page national ads in
books in July with "Absolut sighting" followed by
the "Absolut arrival" page. "We're also converting
the limited outdoor schedule we have to Mandrin,"
adds DeSarno. PR and event support are part of the
package, along with more off-premise support and
on-premise tasting in the states that allow it.
Nolet Spirits has an entirely different emphasis
in its marketing campaign for superpremium import
Ketel One: its history - distilled by the same
family in Holland for over 300 years, since 1691.
Currently, the company is run by a 10th generation
Nolet, with his two sons already making sizeable
contributions to the company.
Introduced to the US only in 1992, Ketel One
quickly took off here, and also become a favorite
of wine-drinkers. Indeed, Marketing VP Ron Lewos
likens selling Ketel One to selling wines with its
romance and history, and its secret family recipe.
"Handmade in small batches" is the vodka's proud
Growth in Massachusetts is a little ahead of the
national trend in both restaurants and retail. This
year, with imports up 6-8%, Ketel One has seen much
more dramatic growth, with an astounding increase
close to 40% so far.
Lewos says that bartenders nationally have been
very supportive of the brand. Ketel One was one of
the first to educate bartenders and waitstaff, with
on-premise tastings and seminars.
Finally, we turn to Finlandia, the fourth
largest imported premium in our market. Last summer
Finlandia was repackaged which increased its
positioning potential, relates Brown Forman's Brand
General Manager of Finlandia Vodka, John Vidal.
With this "renaissance plan," the brand grew an
astonishing 30% in the first nine months. The
company is "planning for 30%-40% growth in the next
few years in our quest to double our market share,"
Vidal reveals. Currently Finlandia has 2% of the
imported market share and aims to grown to 4% in
the next couple years. He's pleased that in
Massachusetts they have done an outstanding job in
gaining retail support.
Finlandia was the first of the post-modern
imported vodkas, before Stoli and Absolut, Vidal
reminds us. It was introduced in 1972, at only a
few dollars more than Smirnoff. Since then,
Finlandia's pricing has increased to near parity
with other superpremiums such as Absolut.
Finlandia is also reintroducing a flavored line
extension of the brand - a newly formulated,
naturally flavored cranberry vodka will go on the
market September 1.
FUTURE? In an extremely informal survey
of recent literature on white spirit sales, I've
found that everyone sees more superpremium growth
at the expense of mid-low range product in the near
future, as the economy continues to be strong.
However, there's an even spread in what people
think will happen if the economy collapses. Some
great minds believe superpremium sales will remain
strong - as high-end luxuries do. Some believe
these sales will be strong because once people have
tasted the best they will insist on it. And some
believe that trends will be reversed and mid-low
range product will experience the greatest growth.
When might this happen? No one can say.
And what about flavored vodkas? We are not yet
in the position of the UK, where I understand city
pubs are catering to younger patrons with a "candy
store" of a drinks cabinet: chilled, glass-fronted
refrigerators have started appearing, carrying all
flavors of vodka, from the traditional fruit
flavors such as black currant, to more extreme
sweet experiences such as chocolate and creme de
menthe. With the largest selling brands introducing
flavored extensions of their lines, it seems this
product is here to stay for a while. I'm sure
everyone is monitoring the situation, but this
summer, it's all about consumer enjoyment. Whatever
the customer wants: that's the right product to
can't sort anything out without vodka"
allegedly an old Polish saying.