Is vodka the world’s most flexible spirit?

Richard Woodard explores the latest trends in the world’s ultimate chameleon spirit.

Vodka continues to be the world’s largest international spirits category

Vodka: The master of reinvention and supple enough to bend and flex to fit the developing demands of consumers worldwide. Critics may sniff at the spirit’s perceived lack of character – authenticity even – but you can’t argue with the numbers.

As Euromonitor International stats make clear, the category remains the biggest spirits sector in the world, driven by growth in markets mature and emerging. The only blip in the historic figures concern volumes in Eastern Europe, where increasing diversification is altering what was previously a vodka monoculture.

And even here there has been a surge in value as that much vaunted premiumisation trend gathers pace. All of this in a five-year period spanning the biggest economic meltdown in a lifetime.

If that makes owning a vodka brand seem like a relatively simple task – secure your route to market and wait for the cash to roll in – don’t be fooled. While some international vodka brands may be governed by grand-sounding global strategies, others have to be as malleable as the category they inhabit.

Case one: Smirnoff. Vodka accounts for 12% of global net sales for Diageo, and Smirnoff is the biggest premium spirits brand in the world, so there’s huge pressure to continue what has been a great success story for decades. The buck stops with Ed Pilkington, Diageo’s global category director for vodka, gin and rum.

“The [Smirnoff] recruitment strategy is consistent globally,” he insists, namechecking a string of familiar vodka marketing stand-bys, including catchy communications, nightlife events (a particular focus for the brand), great drinks and innovation. And he reckons it works pretty much everywhere. “In the last couple of years we’ve been excited by the growth of the category in markets as diverse as Argentina, Nigeria and South Korea. The growth formula might flex somewhat depending on vodka’s stage of development or advertising restrictions in any given market, but the principles remain the same.”

Claire Smith, head of spirit creation and mixology at Belvedere

Global domination

Case two: Poliakov. The La Martiniquaise-owned market leader in France can no longer be dismissed as a mere local hero. In February this year it was named as the fifth fastest-growing vodka in volume terms by Impact Databank.

Like Smirnoff, Poliakov follows an almost universal approach in all its markets, based on mainstream pricing and its tagline – “A Pure Extreme Experience”. What’s more, its new digital initiative – Poliakov Musik Challenge – is targeting 30,000 fans in four exceedingly diverse markets: Australia, Morocco, Belgium and Lebanon.

The global argument is echoed by many other companies. Russian Standard, which claims to be Russia’s “only global consumer brand”, aims at consistency in pricing, design and advertising, says CEO Stewart Hainsworth. While at Patrón, Greg Cohen talks of Ultimat’s “universal strategy” aimed at reaching consumers who appreciate all high-quality spirits and, emphatically, not just vodka.

Not everyone sees it quite the same way, however. “Mature vodka markets such as the US, UK and Europe have become fiercely competitive and innovation-driven to sustain and gain value market shares,” says Kathleen Schuart, global director for vodka at Gruppo Campari, owners of Skyy.

“In emerging vodka markets the focus is on building brand equity and awareness. While Skyy is a global brand, we adapt our inmarket strategies according to local insights and the particular life cycle the brand is in at the moment.”

Regional mindset

At Moët Hennessy, Belvedere’s head of spirit creation and mixology, Claire Smith, agrees. “It’s difficult to be general about a strategy for vodka because even though we have a global strategy, that strategy needs to implemented locally,” she points out. “And our local teams have their own priorities.”

Belvedere is a good example of a brand with a global strategy, but a mainly regional mindset. US-based and heavily reliant on that promised land of luxury vodka for the lion’s share of business, it’s hardly surprising Smith admits to a “slight US bias” in the brand’s communication strategy. This is born out in recent launches like Belvedere Bloody Mary – a response to the growing trend in at-home consumption, and Belvedere Lemon Tea to capitalise on the American love of iced tea. Both products were devised, created and marketed to appeal to the US market and palate.

For all the innovation in flavoured vodka Schuart at Gruppo Campari is keen to offer a correction. “One thing none of us should forget is that unflavoured vodka still makes up the great majority of sales around the world, so we are very careful to make sure our Skyy core unflavoured product gets the lion’s share of marketing support globally.”

Stewart Hainsworth, CEO of Russian Standard

Authenticity

At Russian Standard, Hainsworth is keener to talk about authenticity than “increasingly frivolous” flavours. “Taste and authenticity are particularly important mega-trends right now. Being number one in Russia, the homeland of vodka, gives the brand the strong credentials needed for global expansion. We have sought to reinforce our authentic provenance through our advertising creative and communications, as well as a focus on the quality of the product.

Taste is becoming more important to consumers, who now are realising that vodka is as complex from a taste perspective as many other spirit categories.”

Similarly, Cohen highlights Ultimat’s “unique” recipe of wheat, rye and potato, which informs all the brand’s marketing and promotion. Given Patrón’s strong presence in the US luxury spirits market, you might have expected an exotic flavor or two by now from Ultimat, but Cohen remains coy. “If at some point we introduce flavoured variants, they won’t be dessert flavoured.”

There’ll be no Ultimat Cupcake in other words. The question remains to what extent brand owners are being proactive or reactive when they innovate – are they responding to consumer behaviour, or leading it? After all, who would have predicted a few years ago that whipped cream and dessert vodkas would become so huge in the US?

Flavoured vodka’s longevity?

Claire Smith calls it a “white space opportunity” that can be hard to read. “You could launch a seaweed vodka tomorrow and it could be a huge hit, or it could die on its arse. Trends that excite and appeal to the trade are not necessarily the ones that consumers will buy into.”

“We almost need to moderate the communication to the consumer,” she continues, “so they don’t feel alienated or stretched by the fact that the trade wants them to drink Belvedere Bloody Mary, for instance. It’s really about understanding where the consumer’s at – and the trade will always be a couple of years ahead.”

It’s worth bearing this in mind the next time you hear a bartender yawn with boredom at the mention of vodka, only to be transformed into a passionate devotee of the latest hand-crafted mezcal. “But who’s going to be buying or drinking these artisanal mezcals?” asks Smith. “How do we get the real end user to actually buy into the mezcal, when they’re still at the point where they’re getting their heads around boutique gins?”

“What we all need to remember is the reason why those customers are buying a drink in the first place. Be respectful of the fact that they’re in a bar or club or restaurant, and they’re there to have a good time. They want this good time to be easy – they don’t want to do much in terms of negotiating with the bartender.

“We spend a little bit too much time telling them what they like, rather than listening,” she concludes. “The consumer is feeling quite empowered now and they’re making their own choices at the bar, so we have to find another way to communicate and differentiate.”

Finding new ways of exciting consumers around the world? If there’s one spirit with a strong, uninterrupted record of doing just that, it’s vodka.