Smirnoff Vodka losing share of US marketBy Becky Paskin
Smirnoff vodka is losing its share of the US vodka market as sales of its core expression are declining.
The Diageo-owned brand experienced a 7% decline in volume in the six months to 31 December 2013, impacted, according to the group, by its “price premium in an increasingly price competitive segment”.
The weak volume delivered by Smirnoff was blamed for Diageo’s overall 1% US Spirits & Wines decline, despite “good” performance from the brand’s Smirnoff Sorbet and Confectionary lines.
The results mirror predictions by Euromonitor drinks analyst Spiros Malandrakis last year that flavoured vodkas are “cannibalising” the vodka category.
Referring to figures that indicate flavoured vodka grew by 25m litres in 2012 while unflavoured vodka declined by 9m litres, Malandrakis said: “In the short term, flavoured vodka does provide a short term boost in the category. If you look at the top line figures without breaking it down, everything seems to be fine, but it isn’t.”
Vodka represents 12% of Diageo’s net sales, with North America the group’s largest vodka market, contributing to 60% of the its vodka sales.
Larry Schwartz, president of Diageo North America, said Smirnoff’s overall decline was due to a swell in the number of vodka brands now on the market. “Smirnoff’s volume declined as it maintained its price position in an increasingly competitive standard vodka category,” he said.
Diageo’s other leading vodka brands, Ciroc and Ketel One, both increased volume by 16% and 4%, a sign of a consumer shift in the States toward super-premium vodka brands.