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Special Report: With Volume Flat, Imported Vodka Marketers Focus On Increasing Value

April 14, 2015

Imported vodka continued its recent streak of dwindling volume gains in the U.S. last year, with a volume total that failed to move beyond the roughly 26.2 million cases reached in 2013, according to Impact Databank. The category’s flat performance in 2014 is a dramatic departure from just a few years ago. In 2011, for example, imported vodka enjoyed double-digit growth resulting in a gain of more than 2 million cases. The category’s lackluster results are coming from the top. Only one of the top five import brands grew more than 1% last year—Svedka—while the other four (Absolut, Grey Goose, Pinnacle and Ketel One) lost volume or barely advanced. While the top 10 brands still command a near 90% share of the category, they collectively lost ground in volume despite continued momentum behind competitively-priced Exclusiv and ultra-premium Cîroc, as well as a dramatic turnaround for Stolichnaya, which bounced back from a near 15% volume drop in 2013 to advance by 6% last year.

Challenges are arising, both from brown spirits—which have been stealing share over the past few years—and also from upstarts in the domestic vodka category, including New Amsterdam (+44% to 2.9 million cases in 2014), Burnett’s Vodka (+11.1% to 2.6 million cases), Tito’s (+54.9% to 2 million cases) and Deep Eddy (+128% to 330,000 cases). But rather than relying on fading trends like confectionary-flavored offshoots for growth, some top imported vodka marketers are moving up the pricing ladder to reach consumers increasingly drawn to spirits that represent premium options and category-crossing offerings.

While flavors were once the go-to innovation for vodka marketers, changing tastes among U.S. consumers and a growing interest in brands with compelling stories are leading companies such as Pernod Ricard to focus efforts on the high end of the category. In 2013, the company unveiled a series of releases on number-one imported vodka brand Absolut (which accounts for roughly 25% of Pernod’s U.S. spirits business, according to Impact Databank) geared toward various emerging trends, such as Elyx ($50 a 1-liter), a handcrafted luxury vodka available in just a handful of cities. The limited release offering has yet to reverse Absolut’s downward trend—last year Absolut fell 6.9% to 4.14 million cases in the U.S., and is in danger of losing the category leadership it’s held for decades to fellow Swedish import Svedka by year-end.

However, Pernod Ricard says it’s investing more on the marketing behind Elyx than it has for any of its other recent innovations. Elyx is currently available in 10 key cities including Miami, Los Angeles and New York City but will add another 10 markets around the country over the next year. Pernod Ricard says Elyx, which does about 70% of its business in the on-premise, is geared toward brown spirits drinkers who seek integrity and substance and can afford everyday luxury. “Elyx has a sipping, craft story, which is the key component behind the brown spirits boom,” says Jonas Tåhlin, Pernod Ricard managing director, Absolut Elyx. “Our aim is for Elyx to become the vodka that brown spirits drinkers want in their repertoire.”

The complete category report on imported vodka appears in the April 1&15 issue of Impact.

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