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Premium Vodkas Fight To Make Headway In Competitive $15-$25 Segment

August 9, 2016

The U.S. vodka market faces a competitive pricing landscape and intense pressure from brown spirits, but its volumes are still growing—particularly on the premium side.While total vodka volume grew 2.2% in the U.S. last year to 73.5 million nine-liter cases, the premium segment ($10-$25) advanced by 4.6% to over 40 million cases. Premium vodka’s category share now stands at more than 55%.

The premium segment has been lifted by a couple of standout performers—most notably Tito’s Handmade Vodka ($20-$25). Tito’s buoyed the segment last year with 41% growth to 2.8 million cases. Since 2010, the brand has shown an average annual growth rate of 50%.

Stolichnaya ($15-$20), meanwhile, posted a second straight growth year in 2015, rising 5% to 1.7 million cases. Stoli Group USA, formed by parent group SPI in 2014 to handle its flagship brand, has sought to revitalize Stolichnaya with efforts including a repackaging that’s meant to boost the brand’s appeal among Millennials, and a recently launched #DrinkWhatYouWant digital and social media campaign targeting male drinkers.

Diageo’s Ketel One slipped 2% last year, but in Diageo’s full fiscal year through June, the brand returned to growth, with volume up 2% and net sales up 4% on an organic basis, the company said. Proximo’s Three Olives, meanwhile, has averaged 3% annual volume growth since 2010, but has been flat for the past two years.

Absolut, the market leader in the $15-$25 arena by more than 1 million cases, was down 2.4% last year to just over 4 million cases. But brand owner Pernod Ricard is confident a revamped commercial and marketing strategy will change the brand’s direction. Pernod has moved focus to Absolut’s “classic” flavors, Citron and Mandrin, as well as the core unflavored Blue expression. “The next step for us is to go back big on media with Absolut,” says Joao Rozario, vice president, vodkas at Pernod Ricard USA, noting a $10 million media spend on the brand from April-September.

In IRI channels for the 28 weeks ending July 10, Absolut’s core unflavored and Citron labels were down a combined 0.7%. However, in NABCA channels for the six months ending in June, the total Absolut brand showed 3.2% growth compared with a year earlier. —Kimberly Tharel

SND will take a look at the vodka market’s super-premium tier in an upcoming issue.

U.S. – Leading Vodka Brands Priced $15-$25 per 750ml Bottle1
(millions of nine-liter case depletions)
Brand2 Company 2010 2014 2015 Growth
Rate3
2010-2015
Absolut Pernod Ricard USA 4.63 4.14 4.04 -2.7%
Tito’s Fifth Generation Inc 0.37 1.98 2.78 50.0
Ketel One Diageo North America 1.90 2.12 2.08 1.8
Stolichnaya Stoli Group USA 1.80 1.59 1.67 -1.5
Three Olives Proximo Spirits 1.36 1.57 1.57 2.9
Total Leading $15-$254 10.06 11.39 12.14 3.8%
1 average retail price for the entire line, equivalized to 750-ml.
2 includes flavors
3 average annual compound growth rate
4 addition of columns may not agree due to rounding

Source: IMPACT DATABANK

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