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Constellation Still Bullish On Flavored Vodka, Even As Category Growth Slows

January 30, 2017

Flavored vodka’s growth has slowed considerably in the U.S. market over the past few years, but the category’s top-selling import—Svedka—is bullish on the flavored segment. This week, Constellation Brands is launching Svedka Blue Raspberry, the 14th flavor extension in the brand’s range.

In 2015, Svedka ($13 a 750-ml.) leapfrogged Absolut ($19) to become the U.S. vodka market’s biggest import. That outcome represented a remarkable decade for the Constellation brand. In 2007, when Constellation acquired Svedka from Spirits Marque One (for $384 million), it trailed Absolut by well more than 3 million cases. Since then, though, Svedka’s yearly U.S. sales have increased by roughly fourfold.

In an effort to premiumize the Svedka franchise, Constellation introduced Svedka 100-Proof in 2015. Retailing at around $16—roughly 25% above the core product—100-Proof has thrived since its launch. Its sales jumped by more than 70% in IRI channels in the 52 weeks ending January 8, 2017.

Meanwhile, the addition of Svedka Blue Raspberry comes at a time when flavored vodka’s growth has fallen well behind that of the overall vodka category. While total vodka sales were up by 2.9% to 29.9 million cases in Nielsen channels in 2016, the flavored segment rose by only 0.1% to 4.8 million cases.

However, Svedka’s flavored business is flourishing. “Over the past five years, Svedka flavors have tripled as a share of the total brand,” says Diana Pawlik, Constellation’s vice president, marketing. Pawlik adds that flavors now account for nearly 20% of Svedka’s overall sales. “Despite some erosion of flavored volume in the total vodka category, Svedka continues to enjoy growth in the segment through recent successes like Cucumber Lime, Grapefruit Jalapeno and Mango Pineapple. Our Millennial consumer has embraced these flavors and actively engages with the array of offerings, most notably in the digital and social space.”

With Blue Raspberry, Pawlik says Svedka has created a product featuring “the most sought-after vodka flavors among LDA consumers,” citing IRI data.

While Svedka’s flavored segment (whose entries are all 70-proof) is achieving solid gains, Pawlik says the original 80-proof offering “continues to experience strong growth and remains at the core of our portfolio.” After averaging 5% annual growth from 2010-2015, last year Svedka rose by 3.6% to roughly 4.4 million cases (including flavors). —Peter Zwiebach

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