Vodka Volume Slips As RTDs Offer Heightened Competition

While still the largest segment of the U.S. spirits industry by a wide margin, the vodka category has slipped some over the past few years from its high-water mark of approximately 80 million cases. Last year, the vodka category declined 2% to 77 million cases in the U.S., according to Impact Databank, falling below its pre-pandemic level in the process.

Over the past year, vodka has followed the general market trend of consumers shifting to premium brands over both higher- and lower-end items, noted Zach Poelma, senior vice president of supplier strategy and insights at leading distributor Southern Glazer’s. “In vodka, the largest category by volume, you’re seeing the premium price tier, which is flattish, outpace both the super-premium and mid-priced/value-priced tiers, which are all declining,” he told SND.

That dynamic has been driven by the ongoing growth of market leader Tito’s, which resides in the premium segment, retailing at around $20. Last year, Tito’s churned forward at a rate of 5% to eclipse 12 million cases, according to Impact Databank, up from 7.4 million cases five years ago. Its U.S. retail value is now approaching $2.5 billion annually, commanding the top position among all spirits brands. Amid ongoing growth, Tito’s has become more aggressive on the marketing front in recent years as RTDs have spread their wings in the spirits category. The brand has poked fun at seltzers with a “Tito’s in a Can” campaign among other moves.

Aside from Tito’s, the only top 25 vodka brand to post positive growth last year was Gallo’s New Amsterdam, which eked out a 0.3% increase. Others, like Smirnoff, Grey Goose, and Ketel One, held relatively steady amid the tough climate, each slipping by 1% or less, while Absolut and Svedka suffered larger declines, excluding their RTD offshoots.

Smirnoff remains the second-largest label in the category at 8.7 million cases, more than 3 million cases ahead of third-ranked New Amsterdam, and has U.S. retail value of $1.25 billion, second only to Tito’s in the category. Smirnoff posted a 2% value increase in the U.S. in Diageo’s fiscal first half through December, led by its flavor portfolio. Ketel One, meanwhile, was down 4% over the same period, as its Botanical lineup declined, although Diageo said the brand still expanded its share in the vodka category, backed by its ‘Made to Cocktail’ campaign.

While vodka declined overall last year, Grey Goose vice president of marketing Aleco Azqueta expects that in the longer-term “premiumization will continue to be a strong trend for the vodka market. Even in these uncertain times, people are practicing discretionary spending in which they are splurging a bit on experiences, such as a Grey Goose cocktail in a high-image bar or restaurant.”

Absolut vice president of marketing Matt Foley adds that the return of cocktail consumption on-premise is a positive sign. “We’re seeing some of the highest trending cocktails being made with vodka,” he says. “The Espresso Martini has taken the industry by storm and the momentum just keeps continuing.” Pernod Ricard is leveraging the trend by marketing Absolut along with Kahlua to highlight their combination in the Espresso Martini.

Tagged : Absolut, Grey Goose, Ketel One, New Amsterdam, Smirnoff, Svedka, Tito's

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