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Vodka continues its dominance of the spirits category, unchecked by . . . well, by anything.  The economy has shuffled the deck a bit on what brands are growing and what price points and niches are successful at the moment.  More than ever, two things are crucial to a particular brand’s success or failure: image and price.  If a brand’s image – its perceived authenticity, reputation, quality – is not a good match for its price, it’s not going to have a good year.

“Superficial brands are not doing well right now.  Consumers don’t want to spend money on vacuous brands with no authentic story.  Americans are more interested in that information than ever, and that’s great for us.”

That image has become more polished, more in-depth than ever; it has to be in the internet age.  More information is available, more questions can be answered, and that’s leading to a customer who’s more self-directed than ever.  This represents a golden opportunity for marketers to give an inquiring consumer more story than ever on a brand, and it’s been acted upon.  “If you look at our marketing practices over the recent past, you can see an increased emphasis on content,” said Ian Crystal, Brand Director for Absolut.  “In this new dynamic and digital world, engaging consumers with content that they seek versus forcing messages is the key to success.”  But that ease of finding answers also represents the possibility that the consumer might find outdated information, rumors or outright misinformation – a marketer’s nightmare.  On the balance, however, more information helps everyone.

“The consumer’s much more educated.  The computer has helped everybody.  ‘I had this last night at Finn’s, I’ll go online and see what it costs,’ and they come in and buy it.  That makes our job easier.  Vodka, craft beer, bourbon, Scotch: they’re not buying blind so much, and that’s better for everyone.”

You can ask: just how much does a consumer need to know about a spirit that’s as neutral as it gets, a spirit that is, by definition and by law, (all together now, we all know the creed) “colorless, odorless, and tasteless”?  That all depends on the individual consumer.  Are they looking for a cheap buzz, are they aspirational and looking for a status symbol, are they looking for a gift, are they looking for links to their heritage?  Are they, maybe, really looking for the subtle differences that vodkas have, the differences that people who truly cherish vodka know and celebrate?
see for the purist sidebar

“For the guy who drinks it straight, it really is different.”
ryan maloney

“Colorless, odorless and tasteless” is all by the boards when you get into flavored vodkas, of course, and they’re a growing part of the market – anywhere from 11% to 25% of the market, depending on who you ask and how you define your terms.  (“You can tag gin as the original flavored vodka,” said Dylan Black at Green Street Grille in Cambridge, “but there are a lot of people in Russia who’d disagree.”)  Flavors transform vodka from blank slate to bold color.  The cocktail options become even more varied, and best of all, from an off-premise perspective, they become easy: you want orange flavor in a cocktail, cherry, grape, açai berry?  There’s a flavored vodka you can use.

“People know how to drink vodka, we don’t have to tell them.”

Clear glass and vibrant color; anonymous buzz in a Bloody Mary and teasing subtlety in a ritual glass; faceless Slavic liquor and storied European spirit; bottom shelf rocket fuel, solid reasonable value, and high-priced luxury badge; anesthetic, inspiration, refreshment, amusement, tasty temptation, and effortlessly sophisticated companion to the finest caviar . . . To call this protean liquor “colorless, odorless, and tasteless” sells it terribly short.  If you’ve been pushing it without romance, maybe it’s time to think again about what vodka is, and what it can be.

“When you first come into the world of vodka, you may think it’s all the same.  But the more you learn, the more you realize how complex and diverse it is.”

Vodka’s clarity of color and taste – like glass, crystal, like the pure water that is the Slavic root of its name – may have been seen as a liability sixty years ago, but it has propelled vodka to the top of the heap in spirits, right over the heads of the whiskies.  Like water, it’s become something the retailer – both on- and off-premise – must have; the consumer, too.

“Grey Goose is the most valuable on-premise brand in the US, it drives the highest check,” said Shane Graber.  “It’s something consumers are looking for, and that delivers to the bottom line.  We’re seeing a trend in the industry where retailers are focusing on fewer but more important brands, and Grey Goose is doing well in that climate.  I was in a package store in Tallahassee when the manager told me it was like water; customers had to have it.  There were so many other brands with odd-colored stickers: they were on clearance, he was clearing stock because they were holding up capital.”

Grey Goose was built on value, quality and prestige.  It is made in the Cognac region of France from French-grown winter wheat.  “We’re all familiar with French bread,” said Graber.  “The soil, the climate, the wind: this creates a wheat that creates a smooth, creamy vodka. 

It is only available in this region.  It’s much different from wheat from Sweden or the US, and it leads to a better vodka.  We use the whole wheat.  Others may buy commodity wheat, parts of wheat.  We have a proprietary mill – when you use the same wheat from the same region, in the same mill, in the same place, the outcome is obvious.”  That’s only part of the carefully crafted structure of the brand, wrapped around the image – and substance – of quality.

Smirnoff, however, brings to mind something a famous Russian once said: quantity has a quality all its own (Stalin was actually a Georgian, but . . . close enough).  Smirnoff is by far the best-selling vodka, and its longevity and ubiquity count for a lot in uncertain times, with consumers and with on-premise managers.

“Consumers want good value for their money,” said Simon Burch, Vice-President of Marketing for Diageo North America, “and they are turning to brands they know and trust – like Smirnoff.  We have seen some consumer trade-down in price point but not in quality.  Brands that have remained true to their commitment to quality, tradition and innovation – such as Smirnoff – will continue to assist the category.”  Smirnoff continues to be a benchmark for other brands to measure themselves against.

Svedka, on the other hand, is new, up-and-coming, and winning customers with quality, a Scandinavian point of difference, value pricing, and a youthful energy embodied in their animated “spokesbot” face.  “Our strategy and formula for success has never waived, to give the consumer all: high quality + style + great value,” said a Svedka spokesperson (The ’bot?  Who knows?). “We created Svedka to democratize the vodka category, and introduced the concept of ‘cheap chic’ into the spirits industry.”  Not long on humility, but with results like Svedka has punched out in a remarkably fast climb to the number four spot in vodka sales, there’s no apparent need for it.

Svedka’s rise was enough to bring a response from Diageo.  The company is rolling out two brands this summer to compete in the same category: Rökk and Ursus.  Rökk is Swedish-made (by a “third-party distiller”) and uses a proprietary freeze filtration process.  It will be priced around $13 a bottle.  Ursus is already sold in Europe, and is made in the Netherlands; they’ll be bringing it in with a range of flavors, priced around $11.  Diageo apparently hopes that the Scandinavian pedigree of Rökk will woo customers away from Svedka; time will tell.

The top imported vodka, and world’s third largest-selling spirit, Absolut, stumbled in 2OO8 and 2OO9.  There was an ownership change, which is always perilous; Pernod Ricard bought the category giant from the Swedish government-owned Vin & Spirit.  A stumble was almost to be expected with the ownership change, but as Ian Crystal pointed out, it could not have happened at a less auspicious time.

“When you look at the timing of the transition, it was extremely challenging,” he said.  “The brand was officially handed over in the fall of 2OO8, at exactly the same time as the economic recession hit the US.  It was a perfect storm of obstacles all at the same time.  While sales have been challenging over the last six to twelve months, indicators such as AC Nielsen, DISCUS, etc.,  are beginning to turn around as the programming from Pernod Ricard has hit the market and the sales/marketing teams hit their stride.”

Absolut’s performance is a good segue into looking at the pricing changes that have hit the category, a “blurring of tiers”, as Crystal put it, “due to increased pressure, competition and more price-sensitive consumer.  As people have tightened their spending habits, brands have responded by offering deeper and more frequent discounts.  The result is that what were once well-defined price tiers are now constantly changing.  Super-premiums are dipping into the premium segment, premiums into standard segments, etc.”

The size of the vodka category – not just the sales, but the huge number of brands that need to identify themselves – has led to slicing-and-dicing of pricepoints.  That’s the driver for Absolut.  “We have maintained our pricing strategy,” said Crystal, “which is to be the top of the premium segment.  That being said, we have adjusted our pricing where the market has adjusted around us.  For example, if our goal is to be at the top of the premium segment, and the super-premium segment has come too close to our pricing on a consistent basis, then the entire vodka dynamic has shifted and we would need to evaluate what the right pricing and promotional strategy is.  Our partners will notice continued investment in the retail environment.  We aim to continue to build this brand by building affinity with both the consumer and trade.” 

Finlandia, the oldest imported vodka in the market and for years a solid brand, has played in the lower end of the premium price-band.  They saw sales slipping with the economy over the past 2O months, saw competitors moving down, and acted.  “We adjusted our price to be extremely competitive,” said Nick Nelson, Senior Brand Manager for Finlandia.  “Without question, we are the best value in the premium category now.  We have returned to growth this year.”

Dean Phillips, President and CEO of Phillips Distilling, where UV Vodka has seen solid success, nails down some numbers on the shifting vodka dynamic.  “The recession has inspired many consumers to trade down and to seek better value,” he said, “even as the vodka category continues to grow in volume terms.  According to the most recent data we’ve seen, value brands volume grew 1O.7% and dollar sales gained 6.7%.

Premiums grew 5% in volume and 4% in sales.  High-end brands, meanwhile, saw volumes decline 2.3% and sales fall 1.2%, while super-premium vodkas dropped 5.8% in volume and 1.9% in sales.  Clearly, the growth is occurring at lower price points.”  Phillips knows this from experience: UV Vodka grew 3O% in 2OO9, to just under a million cases.

As Crystal mentioned, discounting was widespread.  Phillips saw it, too.  “We’ve certainly seen a tremendous increase in couponing and price promotion from large, established brands that are intent on maintaining share,” he said.  “There’s no question that price discounting rapidly destroys brand equity, quickly dissolving years of effort and investment.  I suspect that as consumers trade down to less expensive vodka brands and discover equal and sometimes superior quality, they’ll be less inclined to trade back up to “luxury” brands.  In fact, there’s a chorus of people far smarter than me saying that value is the new luxury.”

That’s the question of the hour, really: has discounting taken the profit out of vodka?  There’s still plenty of strength in the value brands, and they haven’t had to discount, but a luxury brand that drops its price through promotions and discounts will find it hard to get consumers to buy at the old “regular” price.

In a situation like that, much depends on how deep and long the discounts are, and how a brand positions itself on the “value” definition. 
Pricing strategies – pricepoints, discounting, promotions – are crucial to this category, and Three Olives Brand Manager Gino Luci warns that “discounting is a short-term fix.  When you start discounting too deeply, you risk the brand.  When you start enticing consumers to purchase your product at a certain price – it’s not brain surgery; they won’t want to pay more!  Price should be a secondary thought.  We want people to buy Three Olives for other reasons, not “this is the cheapest vodka.”  There’s no long-term value in that.  Pricing can be copied very easily, whereas a brand’s identity cannot.”  That last line should be printed in big red letters, framed and hung in every marketer’s office.

Lisa Pfenning, Category Director for Stolichnaya at William Grant & Sons (who recently added Stoli to their portfolio), offered this perspective on the “value” proposition: value is a function of both price and perceived quality.  “As we moved into an economic slowdown, many consumers ‘traded down’ to budget brands,” she said, “choosing a lower price point as their ‘sweet spot’.  It’s important to remember that “value” is not necessarily defined as the lowest price for goods, but for the quality inherent in them.”  Prime beef selling at $6 a pound is still a better value than liverwurst at $3.

Vodka’s a funny category, though.  Even when prices are under attack, a novel brand can slip into a narrow niche and do well, even at the very high end.  We’ve seen that happen with the startling packaging of Crystal Head vodka, the Canadian spirit owned by actor Dan Ackroyd.  Crystal Head comes in a gleaming, clear and solid skull-shaped bottle – the kind of presence that drives both on-premise experimenting and off-premise attention. 

Bill Anderson, the President of Crystal Head’s importer, Infinium Spirits, noted that the brand launched in the US right into the teeth of the gathering recession, in November of 2OO8.  Ackroyd supported the launch with five Blues Brothers concerts at the House of Blues venues.  “It was a huge success,” Anderson said.  “At $5O a bottle, it was a phenomenal, mind-boggling success.  We thought we’d do well, but we had no idea.  We projected 5OOO cases; we did 9O,OOO.”

Is it a gimmick bottle?  Well, yeah; Anderson said the empty bottles alone go for $4O on eBay!  But, he said, “The liquid really is the key.  It’s a wonderful vodka: clean, unadulterated.  The distillery’s way up in Newfoundland.  It’s made with glacier water – very pure and clean – and from Canadian grain, with nothing additional: no sugar, no glycerin, no citrus.  A lot of vodkas will add stuff like that to smooth it out.  It’s also filtered through Herkimer diamonds, a unique step, but the legend is in the liquid.  That’s what sells the second bottle.”

Julio’s Ryan Maloney agrees with Anderson.  “Some of the other novelty bottles, you try the vodka, and it’s whooo, yow!” he said.  “But that one backs it up.  Double Cross, the same thing: you look at it and think, is this vodka or perfume?  But you open it, and it’s good, good vodka.  Someone thought, ‘Let’s make a great vodka and put it in a great package.’ That’s the way to do it.”

Purity of ingredients is the hook 42 Below’s hanging its marketing on.  Their point of difference is origin: The vodka is made in New Zealand, an island country with a reputation for being unspoiled.  “Purity is the key selling point,” said Shane Graber, who, yes, is the brand manager for 42 Below as well as Grey Goose.  “New Zealand is known for some of the purest sources of water in the world, its pristine air.  42 Below is relatively new in the US, but it’s building a loyal following.  We’re seeing activity in key markets, and we’re going to see a lot more activity in the market this year.  We have a clear point of difference.”

36O Vodka has an interesting point of difference: sustainability.  “As the world’s only sustainable vodka, 36O has a unique position in both the marketplace and in the mind of the consumer,” said Vic Morrison, the Vice-President of Marketing for McCormick Distilling.  36O is made with locally-sourced grain, distilled in cutting-edge, energy-efficient stills, and sold in a returnable bottle, labeled with recycled paper using soy inks, and packaged in re-usable cases.  “Our excellent price point and quality, plus our commitment to the environment resonates with customers.”

Morrison noted that 36O had recently added the first two flavors to the brand: 36O Cola and 36O Double Chocolate.  “They are exceeding our sales expectations daily,” he said, “and we plan to launch five additional 36O Vodka flavors this year.”  In a nod to the social marketing that every brand has been using, he noted that 36O’s Facebook page has sprouted a number of cocktails using the flavors, submitted by fans.

Value brands do well, some high-end brands do well, and there always niche brands.  But flavored vodka is a large and growing segment that’s doing well through a variety of pricepoints.  “The vodka category continues to grow in volume terms,” said Maura McGinn, Group Director of Vodka and Cordials at Skyy Spirits, “however, it is down in value.  Flavored vodka is an exception, where the segment is growing in both volume and value sales.  Flavored vodkas remain on-trend and, versus unflavored vodka, they appear to be less price sensitive.” 

Lisa Pfenning had some numbers to back that up.  “According to Nielsen scan data,” she quoted, “dollar sales of flavored vodka grew 9.9% in the 52 weeks to January 9 and volume grew 1O.5%, which far out-paced growth for unflavored vodka.

In many cases, some companies are actually doing a larger percentage of on-premise business with their flavored vodkas line than their core unflavored vodkas.”  She noted that the top-selling flavors in Stoli’s portfolio included the established Ohranj, Razberi, Vanil, Blueberi, and the new Gala Applik, “a true, natural red Gala apple taste . . . and it has been very well received by consumers.” 

Numbers like that are great news for producers (and retailers!), and probably why you continue to see a rainbow of new flavors.  Skyy has launched a whole new line of flavors, the All Natural Skyy Infusions line.  “We’ve seen a big increase in on-premise sales,” McGinn noted, crediting the Infusions.  “The response from bar managers to an all-natural infused vodka has been very positive.  Skyy Spirits has been successful at catching a healthy share of the flavored vodka segment through this innovation.”  Their latest introduction is Ginger, a natural for cocktails to accompany popular Asian fusion cuisine.

Talk about innovation: Absolut flavor-focused in on the Massachusetts market with Absolut Boston, infused with black tea and elderflower, and it turned out to be a much more than regional success (I even saw it in Mexico City at the duty-free recently).  “Our recent innovations have been some of the most successful in our history,” said Ian Crystal.  “Absolut Boston became a national success where consumers couldn’t get enough.  The velocity of the new product was so strong that the product was the #1 ACN new product despite its thought-to-be regional relevance.”

Say “flavored vodka” and one brand leaps to mind, though: Three Olives.  “While other brands are launching safe flavors,” said Gino Luci, “we like to push the envelope and have some fun, because we can; we’re the brand that does that.  I have a really fun job!” The fun flavors include the new RangTang (a blend of orange and tangerine), Tomato, Root Beer, and Bubble.  From a brand that was originally a quite good, straight-up martini vodka – hence the brand name – Three-O has morphed into a full spectrum, shelf-filling billboard of colors and flavors. 

Flavors are somewhat like baby food, too: you can’t think of them in terms of what you like, but in terms of what their target customer likes.  “Some of these flavors you think, eewww,” said Joe Gomes, at Blanchard’s in Allston.  “But the mid-2Os crowd runs in looking for it.  You have to have them.  Flavors have become a big part of our business, our vodka section has doubled in size because of flavors.” 

Finlandia’s owners see that potential and have put out two new flavors to help further their return to growth: Grapefruit and Tangerine.  They’re supporting them with an interesting promotion they’re calling ‘Finlandia Crush’.  “We encourage both on- and off-premise accounts to pair Finlandia and its flavors with fresh juices,” said Nick Nelson.  “Finlandia is made with naturally pure ingredients, and when paired with other natural fruits and juices, it makes a beautiful cocktail.  POS will be used to support the program and juicers will be positioned in various accounts to help extract the juices from real fruit to mix with.”

“The vodka market is about 88% straight vodka,” Luci said, and then followed up with the obvious corollary: “There’s certainly more room for flavors.  Flavor is growing much faster than straight, and it will be interesting to see where things go 1O to 2O years from now; and interesting to see where Three Olives is in all that.  Flavors are really what’s put the brand on the map.”

Flavors do very well on-premise, and though that part of sales has been struggling, it’s best not to indulge in schadenfreude; taking pleasure in competitors’ pain isn’t a good idea when it hurts your business in the long run.  Without on-premise sampling, for instance, new brands are a much harder sell.  “I want them healthy, I want us healthy,” said Ryan Maloney.  “I want everyone to do well.  If on-premise is not doing well, that’s not good.”

Vodka can be as simple as a splash and a mixer, and that’s something that always works on-premise.  Dylan Black at Green Street Grill in Cambridge sees vodka as “a category that, as of late, some bars tend to overlook because of the multitude of flavors, and the few classic cocktails.  But here, we like to have spirits that show off differences and versatility.  We like vodkas with small, subtle differences in their flavor.  Vodka with soda and a little citrus is a great refresher as we move into warmer weather.”

But he did have some good vodka cocktails to pass on, some simple and classic, and two new ones.  “We do a Moscow Mule, using a local ginger beer, AJ Stephans from Fall River, that uses cane sugar.  Put an ounce and a half of vodka (Black uses Svedka as Green Street’s well vodka), and half an ounce of fresh lime juice in a tall glass filled with ice, then top off with the ginger beer.”

The other classic cocktail is the Aqueduct.  “We use Reyka, the Icelandic vodka with a big bright, somewhat smoky flavor to it.  Take an ounce and a half of Reyka, and half an ounce each of Rothman & Winter Orchard Apricot liqueur and Cointreau, and fresh lime juice; shake with ice, and serve up with a lime wedge.  That’s very nice.”

Black also had two new cocktails.  The first is the Rose Cocktail, but not the mix of grenadine and gin you may expect.  “It’s very simple: two ounces of Reyka, half an ounce each of lemon juice and simple syrup, and four drops of roseflower water.”  Stir with ice and strain.

“One or our best-sellers is the Parisian Orchid, created by one of our former bar managers, Misty Kalkofen,” Black said.  “She cares about all her cocktails.  It has simple notes that everyone enjoys.  We mix an ounce each of Reyka and St. Germain, with half an ounce each of fresh lemon and pineapple juices, shake with ice and strain; no garnish.”

Customers can get recipes on these cocktails either online or from bartenders.  (I found the bartenders at Green Street to be quite forthcoming with recipes, and suggestions for tweaking them.)  But the truth is, as Skyy’s McGinn put it, “in the off-trade, most people stick to simple drinks.  They are not comfortable with complicated recipes or buying miscellaneous ingredients or cordials with which to create eclectic drinks.  Nonetheless, the average person is getting more creative with simple drinks.  As mixers and nonalcoholic beverages become more innovative, consumers can easily create a new drink by mixing Skyy with one of the fresh juice blends we are seeing in the market lately.” 

That’s vodka’s strength.
As Chopin’s Guillaume Grillon put it, “It’s the combination of three things: mixability, flexibility and diversity.  You can mix it with anything.  Bartenders are constantly playing with it.” 

You should think about playing with it too.  Vodka’s a big category and deserves more than just piling it high and parking it on the shelf for customers to grab.  There are differences, real ones, and putting some Slavic romance back into the category, some flavored fun and some niche brand novelty can only help make your job more fun – and more profitable.

Back in the day, I was a straight-up vodka man.  I’d started swilling vodka mixed with anything sweet, but then I met a Russian girl who challenged me to drink chilled half-ounce shots of Smirnoff with her.  I was hooked.  I never saw her again, but I retained a love for the subtleties of straight vodka. 

There’s not a lot of us.  “1O% of my clients drink it straight,” said Ryan Maloney at Julio’s Liquors, “and I’m probably exaggerating.”  But the rewards are there, because they really are different.  Take Chopin, the brand I keep in my own freezer.  “We do not have a flavored vodka, just straight,” said Brand Manager Guillaume Grillon, in a defiant tone, and then explained why Chopin was so distinctive: Podlasie potatoes.

“Everything with vodka comes back to the core ingredient,” he said.  “Nowadays, most vodkas are made with grain, because what’s looked for is a neutral, crisp vodka, and that’s what grain gives you.  Grain vodka has much more of a neutral character; fruit-based has an aromatic, citrus flavor.  Potatoes give the final result of a very rich, full-bodied and creamy vodka.  Centuries ago, most vodkas were made from potatoes.  Most are made with grains today, whatever you can lay your hands on in vast quantities at low price.  Less than 2% of vodkas are made from potatoes – they are ridiculously expensive, and distilling them is expensive.

“At Chopin, they are using only one kind of potato,” he said, “a specific one grown for making vodka: the Podlasie.  It has a much higher starch content, and that’s why the vodka is rich in the mouth.  You need about 4O of them to make a bottle of Chopin.”

Strong stuff, but it’s just the kind of thing a straight-up guy wants to hear.  We also want to hear about Good Life Boston (28 Kingston Street), where Peter and Christopher Fiumara have assembled about 16O different vodkas in their underground lounge.  “I went to visit Chris in London,” said Peter, “and we went to a Polish vodka bar, Wodka.  They did freezing cold shots of buffalo grass vodka and it was great.  We thought, ‘wouldn’t it be great to open a vodka bar?’  Five years later, we did.  We kept buying them and putting them in the lounge downstairs.  We have the flavored stuff, the potato vodkas, all the selection.  We keep them in the freezers, serve them in flutes.  It’s a little overwhelming.

“It’s funny,” he said.  “Some people come down, they want to try one or two, then they go back to their usual.  But some people come with a checklist.  Going into a place and seeing that kind of selection is just great.  We don’t do a lot of cocktails.  I’m a straight Ketel One guy, putting it with something else kind of kills it.”

Some of his favorites include the Slovak-sourced Double Cross (“They’re super-cool guys; they used to come in here and try all the vodkas.  The package is real nice, the vodka’s pretty decent.”), Luksusowa and “we’ve been digging the Cold River stuff from Maine.  It’s small batch, and they label each one, which is awesome, but one may be good and the next one, well, not.”

Peter describes the lounge’s décor as concrete – but cozy; “feels kind of like this place in Prague that I know; like somewhere in the Cold War.” 
It’s nice to know there are still people who take their vodka as the Vodka Gods intended: in one searingly pure sip, defying those who say vodka is a neutral spirit, “colorless, odorless and tasteless.”  Grillon gets it.  “When the government defines vodka . . . it doesn’t take brain surgery to see that they couldn’t be further from the truth.  Take fifteen vodkas from different countries and price points: they’ll all be the same color, but they’ll taste and smell different.”  Yes, they do.   

Vodka’s managed to maintain a small amount of growth, even in the worst economy in 7O years, but it’s come at a cost: discounting and wads of promotional money.  It’s propping up volume sales of some high-end brands.  But a substantial number of consumers are reversing a decade-long trend: instead of trading up to a premium brand, they’re trading down to save money.  Everyone loves trading up, but most people in the industry talk about “down-trading” like it was a loathsome skin disease.  It’s not ever something you want happening to your brand or even brands in your pricepoint. 

When it happens with vodka, there’s sometimes an additional little hint of wide-eyed fear that people might just discover a brand that’s odorless, colorless, smooth, and crisp like yours . . . that costs half as much.  You don’t always get those people back when the economy picks up again. 
At least, that’s what the folks who sell the brands further down the pricepoint ladder are hoping.  “Those brands that have been heavily discounting their product over a long period of time to stay relevant,” observed Lucillia Crowe, Vice-President of Marketing at Infinium Spirits, “will have a harder time of regaining their margins and their core consumers once the economy stabilizes.”  Crowe, who markets the Seagram’s Vodka brand among others, clearly figures that some of those core consumers will be grabbing Seagram’s instead.

“The value section has been a bright spot for many categories, including vodka,” she said, “because consumers are looking for value, regardless of their current economic situation.  In their quest to find value, new consumers have discovered that Seagram’s Vodka is high quality vodka at a premium price.”

That’s probably why impact’s top growing premium spirits brands in the world by volume include five value vodkas (including Seagram’s).  The top spot was held by White Rock’s Pinnacle Vodka, up 67.5% in 2OO9.  Pinnacle, distilled in France, holds a value spot in imported vodkas.

White Rock’s President, Bill Dabbelt, commented on Pinnacle’s continued success (they were up over 1OO% in 2OO8).  “It’s become obvious that consumers are trading down,” he said.  “They do see value in premium imports, but at about one-third less price.  All the big growth in imports is coming in the lower third of the price category; the more expensive ones are flat.  That’s been to our benefit.  I wish I could say we were marketing geniuses, but it’s just not true.”

He will admit that while it wasn’t about genius, it was hard work.  “We’ve been working on that brand for eight years now,” he said.  “It’s a lot of distribution work.  People think it’s easy to get distribution: it’s vodka, everyone likes it, everyone will stock it.  Well, no, it’s hard work.  You need a nice package, you need good POS materials, you need on-premise positioning.  It’s very competitive.”

There are value vodkas that haven’t really noticed any benefit from the economy . . . because things were already going so well before the banks tanked.  “The economy effect doesn’t pan out,” said Reid Hafer, Senior Brand Manager for Burnett’s Vodka.  “Our growth has been exceptional for the last decade; we’ve been getting awards for years.  We have growth in the šŸ˜Æ proof in double digits, but the flavor gains are great; we have 2O flavors now.  That’s up 2O to 25% every year.  It’s not just growth in new flavors but in every flavor –  Strawberry was up over 1OO%, Pomegranate was up 81%, and not on small bases.  Burnett’s is the 14th best-selling spirit in the US; not vodka, spirit.  People are starting to realize what we have.”

Include Ryan Maloney with those people.  The owner of Julio’s Liquors in Westborough was ticking off value vodkas when he suddenly stopped.  “Burnett’s – there is the best vodka at the best price,” he said.  “And I take full margin on them at ten bucks a bottle, so I’m making the same dollar amount as I do on some brands that sell for $15 a bottle.  If you can find a brand that helps you and is a good value for the customer, that’s a win-win.  You might be seeing more support on value brands from on-premise, too.  Your customers aren’t the only ones looking for value.  “Pinnacle’s largely an off-premise brand,” Dabbelt said.  “Our on-premise percentages have doubled in each of the last few years, though that’s on a small base.  But we’re seeing on-premise management looking for more value, just like the off-premise consumer.” 

Any price can come down, of course: it all depends on where you want to be.  “Vodka is more price-sensitive than most spirits,” Maloney said.  “So the companies are asking themselves, Where do we want to be long-term?  Some will want to be ultra-premium, so they have to keep the price up.  But some may think: we wanted it to sell at $35, but maybe we should sell at $3O.  It’s a change of philosophy, not just price.  You can’t sustain growth while raising the price.  But can you make the same money – or better – by lowering the price a little and increasing the volume?”

Hafer doesn’t see that as a real threat to the success of the brands that are already established in the value arena.  “We’ve seen higher pricepoints near us being targeted at us, coming down,” she said, “and that’s helped them, but we don’t see them maintaining them over the long haul.  Above our price, you are almost in a position where the competitive set is so vast . . . that you see the price position as a definition.  We’re insulated from that: we have a great product at a great price.  The major players will come out okay.  But it’s going to be an interesting year.”  Nicely understated, Ms. Hafer.  

There are symbols of the South that have spread nationwide: NASCAR, Little Debbie snacks, barbecue, and mullets.  Add one more, thanks to McDonald’s: sweet tea. 

“Consumers, especially younger consumers, love sweet things,” said Reid Hafer, Senior Brand Manager for Burnett’s Vodka.  “I’m from the South, and I loved sweet tea; I still do.”  I’m generally an unsweetened guy, myself – I like the tannic bite with a splash of lemon – but when I’m in the South, I do get sweet tea.  They do it right there: strong tea, packed with so much sugar that it gets noticeably thicker and makes your teeth ache a bit.  It’s a rush. 

So is the latest big hit for flavored vodka: sweet tea.  It’s such a natural that it seems hard to believe no one thought of it before.  I used to drink a lot of sweet tea and vodka 3O years ago; we’d buy a carton of the local dairy’s sweetened iced tea, drink off about a pint of it, top it up with vodka, and give it a good shake.  We called it an Ice Pick, and it was about all we drank the summer I was 23.

This is a different proposition, and unlike a lot of spirits ideas, sweet tea vodka can actually be traced to the idea of one man . . . mostly.  That man is Scott Newitt, who created Firefly Sweet Tea Vodka back in 2OO8.  He’d worked for Gallo, developing brands, then took a job as the general manager of a large wholesaler, where they handled specialty spirits, Red Bull, and wine.  That’s when he got the idea of doing his own, setting up a spirit label in the South.

“I liked what Charbay and Tito’s were doing,” Newitt said, “and I knew it had to be authentic.  So my partner Jim Irvin and I bought a still, and we made the first muscadine wine-flavored vodka.  (He laughed.) We sold about 3OOO cases of it in two years.”

Then he was hanging out with some industry people, and Marko Karakasevic, the distiller at Charbay, came rolling in with some green tea vodka he’d made.  “I tasted it,” Scott said, “it was the first vodka I’d tasted with tea.  I called Jim, and said, ‘We’re five miles from the only tea plantation in America, we could make sweet tea vodka!’”

Jim got to work on formulation, using cane sugar and Charleston Tea Plantation tea, and came up with a vodka that Newitt says “tasted just like sweet tea with a little burn behind it.  About half the people I told it to thought it was stupid, the others thought it was brilliant.”  Guess which half were right?

They introduced it on Tax Day in 2OO8, just in South Carolina.  “It exploded,” Newitt said, and he’s not exaggerating.  “We were the number 5 top-selling spirit in South Carolina by August.  There were folks from bars in Georgia coming across the line and buying ten cases, taking it back and selling it illegally. 

“September hit,” he recalled, “and we heard some big companies were taking notice and going to come out with copycat brands.  But we were out of money, and that’s when all the banks were going down.  We were at a crucial point.  I knew the Sazerac company, and they approached us that month about a joint venture.  Did we want to be a regional brand and maybe get squashed, or go national with Sazerac?  Well, they’re great guys, people of their word, so we went with them.  We still control the brand, make all the decisions, and they do production and distribution.”

Newitt sighed.  “I’d like to say it was brilliant planning, but half of it was luck,” he said.  “It’s just the right flavor: people understand tea.  It’s not pretentious, it’s just tea, sugar and vodka.  But I haven’t seen anything like it in twenty years in the business.  There are twelve imitators out already!  If you taste them against ours, you can see they did it the usual way: go to a flavor house and get a tea essence.  We did it backwards: we got fresh tea, and you can taste it.”

Burnett’s Sweet Tea is one of those “imitators,” and they’re doing just fine.  “The Sweet Tea’s doing pretty well across the country,” Hafer said.  “Some flavors have a regional skew.  The sweet tea was our number one flavor in Texas in its first year, and in Arizona and Kansas, too.  That surprised us.”

Seagram’s has a Sweet Tea vodka as well, which got off to a booming launch last year.  “Consumers have responded very favorably to Seagram’s Sweet Tea,” said Lucillia Crowe, Vice-President of Marketing at Infinium Spirits.  “It sold over 74,OOO cases in 2OO9 in only eight months!  Seagram’s Sweet tea is an all natural product that marries Seagram’s five-times distilled vodka with naturally flavored sweet tea.”

Crowe said that a line extension is already in the works.  “We are launching Seagram’s Peach Tea made with “Summer White Pearl” and “Laurel” peaches,” she said.

Burnett’s plans to keep the Sweet Tea singular in their line.  “We don’t intend to add other flavored teas,” Hafer said.  “I wouldn’t want four of the twenty brands to be teas.  We don’t want to over-saturate.”

Firefly doesn’t have that problem, of course, and the flavors are flying.  “There’s a mint tea, made with fresh mint,” Newitt said, “there’s peach, raspberry, and lemon, and we’re just introduced a sweet tea bourbon: 4-year-old Buffalo Trace bourbon with our tea.”

Some of the success is that the stuff’s just so easy to drink.  “Sweet Tea is 6O proof,” said Hafer, “the only one in our line; the rest are 7O proof.  It’s a little bit too easy to drink, really.  You can just pour it over ice and sip it.” 

Newitt mentioned a joke I’d heard before, playing off Arnold Palmer’s signature drink of iced tea and lemonade.  “Most people will mix it half-and-half with fresh lemonade on the rocks: they call it a John Daly, you know, a spiked Arnold Palmer!”

Tea looks like one of the hot flavors for the vodka market, but will it be like so many others – blueberry, peach, pomegranate – hot for a year, and then forgotten?  Hafer doesn’t think so.  “I think it has legs,” she said.  “It’s not a fly-by-night flavor.  People have been drinking sweet tea for 1OO years.”

Newitt agrees.  “It’s tea; it’s not pomegranate,” he said.  “It’s got a history.  You can buy non-alcoholic iced tea in every restaurant in the country.  You can’t say that for the flavors in a lot of other vodkas.  It’s been hot for 23 months.  My goal is to be as big as Southern Comfort in five years.”

Another successful niche propelling a big, profitable category like vodka?  Sweet!