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Cîroc, New Amsterdam, Tito’s Fuel Vodka’s Rise While Category Leaders Carve Out Modest Gains

July 22, 2013

The U.S. vodka market continues to achieve solid growth, but its rise isn’t being driven by its leading brands, but instead by a few upstarts that are generating eye-catching gains. Vodka depletions advanced by 5% in the U.S. market last year, to 70.7 million nine-liter cases, according to Impact Databank. However, the category’s top 10 brands combined for an aggregate gain of just 3.2%. As such, even though they account for slightly more than half of the market’s total vodka volume, they were responsible for less than one-third of its growth in 2012.

Meanwhile, upstart brands like E.&J. Distillers’ New Amsterdam Vodka (up by more than 1 million cases in 2012), Diageo’s Cîroc (+555,000 cases), Phillips Distilling Co.’s UV (+410,000 cases) and Tito’s Handmade Vodka (+270,000 cases) have reshaped the U.S. vodka market with their success, stealing share from more established brands while adding incremental growth to the category.

With the exception of UV, which has cooled off this year after nearly doubling its sales volume from 2009 to 2012, these brands are continuing to charge hard in 2013. For the 52 weeks ending June 16, New Amsterdam is up by 235%, Tito’s is up by 101% and Cîroc is up by 61%, according to IRI. Other than explosive growth, the three share little in common. New Amsterdam is priced at the low end of the premium segment (retailing from $10-$15 a 750-ml.), while fellow domestic offering Tito’s, at $20-$25, is in a pricing tier dominated by import brands. Cîroc, meanwhile, generally sells for more than $30 per bottle, putting it on a level with ultra-premium players like rival French brand Grey Goose.

The trio has also taken different tacks on flavor extensions. While flavored vodka’s growth is far outpacing that of the overall vodka category, Tito’s has managed to achieve its impressive upswing without adding flavors, and founder and owner Tito Beveridge has said he has no plans to do so. After getting off to a blistering start in its first months on the market, New Amsterdam unveiled Peach and Red Berry editions in mid-2012, and has bolstered its lineup in recent weeks with Citron and Coconut extensions. Cîroc had already been rising fast for several years when it introduced its first flavor extensions—Coconut and Red Berry—in 2010, but to say the addition of flavors has accelerated the Diageo brand’s ascent would be an understatement. Indeed, Cîroc’s flavor range (which now also includes Peach and Amaretto) has become the brand’s growth engine. The Diageo label is on pace to surpass the 2-million-case mark this year—up from 340,000 cases in 2009.

The top 10 vodka brands may not be responsible for much of the category’s growth (Beam Inc.’s Pinnacle remains a notable exception, with 18% growth for the 52 weeks ending June 15, according to IRI), but with both Cîroc and New Amsterdam likely hurtling into the top 10 by year-end, that may well change soon.

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