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On-Premise Gains Key To Continuing Svedka Surge

January 19, 2012

Svedka vodka is on a remarkable run, having added roughly a half-million cases each year since 2006. And even though other accessibly priced vodka imports (notably Pinnacle and Sobieski) have turned up the heat, Svedka continues to roll. The brand’s double-digit rise last year to more than 3.6 million cases has moved it past Grey Goose, putting it within striking distance of the only imported vodka that still outsells it: Absolut, which sold 4.5 million cases on a 1% decline in 2011, according to Impact Databank.

Last year Svedka, owned by Constellation Brands, saw its biggest gains in the southwestern U.S., including Arizona, New Mexico and Nevada. It also achieved double-digit growth in California (and its biggest overall volume increase), as well as in Florida, Texas, Colorado and Minnesota.

Marina Hahn, Svedka’s senior vice president of marketing, says an on-premise surge has been key to the brand’s recent momentum. “We doubled on-premise accounts sold and nearly doubled volume in the channel in 2011,” she says. Svedka added several national on-premise accounts during the year, including Outback Steakhouse, Hyatt Hotels, Pizzeria Uno and Fleming’s Prime Steakhouse.

While flavored vodkas are responsible for much of the current excitement in the $10-$15 vodka segment, Hahn says flavors are only part of the growth plan for Svedka, which sells near the top of that price tier. “Based on the sustained success of the core unflavored vodka, we don’t need to rely on flavors to grow the brand,” she says, citing other recent innovations like a limited-edition “Party Bottle” this past holiday season that featured op-art designs and QR technology on each bottle.

The rollout of Svedka’s new (still undisclosed) flavor for this year will take cues from that project, and other packaging innovations are in the works, Hahn says. Svedka’s current top-selling flavors are its Citron and Clementine extensions, while Grape is newest to the fold, launched last year.

With pricing still hyper-competitive in the $10-$15 segment, Hahn says Constellation will continue spending above the line on the brand with a new campaign and a new TV ad upcoming this year. “Pricing within vodka remains highly competitive with no signs of easing in 2012,” she adds.

Even in an increasingly crowded category, Hahn expects Svedka to stay on its current growth trajectory in 2012, meaning it would approach the 4-million-case threshold. But as it nears Absolut’s volume levels, Svedka has itself become a target for hungry smaller competitors like Pinnacle and Sobieski.

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