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Vodka Carves Out Growth, As Smirnoff Rebounds While Upstarts Thrive

April 15, 2016

Vodka faces a host of steep challenges—including changing consumer tastes and premiumization trends favoring brown spirits—but that hasn’t stopped the category from adding volume in the U.S. market. Last year, vodka in the U.S. grew 2.2% from its sizeable base to hit 73.5 million nine-liter cases. The category’s top 25 brands comprised 57.4 million cases of that total, rising an aggregate 2.7%, according to Impact Databank.

While 14 of those top 25 vodkas declined or were flat last year, the top 25 has still managed to add more than 10 million cases in aggregate since 2010, as entries like New Amsterdam and Tito’s have skyrocketed.

Category leader Smirnoff returned to growth last year with a 1.5% increase to 9.7 million cases in the U.S. market. The brand’s outlook continues to brighten, with organic volume up 2% and net sales up 4% in Diageo’s fiscal first half. Smirnoff’s marketers have been hard at work sparking new interest in the brand. In addition to a multi-year sponsorship with entertainment group Live Nation, signed last spring, the franchise recently launched Smirnoff Sourced ($14), a new range of gluten-free, 60-proof vodkas made with real fruit juice and without high fructose corn syrup. Intended to be served over ice, the Sourced line includes Ruby Red Grapefruit, Pineapple and Cranberry Apple. Meanwhile, Smirnoff has targeted the shot occasion with its Sours lineup, including Berry Lemon, Green Apple, Watermelon and Fruit Punch flavors.

“We believe that bringing continuous and compelling experiences will play a key role in recruiting Millennial consumers to Smirnoff. For example, Smirnoff Sourced is re-energizing weekend daytime drinking occasions, whether it’s brunch or lounging by the pool,” says Smirnoff vice president Brad Essig. “We’ve brought back the challenger mindset to the Smirnoff brand in order to develop a more lifestyle-marketing model providing relevant connections between Millennials and Smirnoff.”

While Smirnoff’s U.S. volume is approaching 10 million cases, E.&J. Gallo’s New Amsterdam, retailing a few dollars lower, continues to add about 1 million cases annually. Last year, New Amsterdam ballooned to 3.7 million cases on 25.2% growth. The brand ($15 a 750-ml.) features a smaller flavor stable than many top vodka brands, with Peach, Pineapple, Mango, Red Berry, Coconut, Orange and Citron offerings. Tito’s also continues to thrive. Now the U.S. market’s seventh-ranked vodka brand, Tito’s last year shot up to 2.8 million cases on 40.5% growth.

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