The vodka brands to watch in 2016

Turbulence continued to shake the vodka sector in 2015, but which brands are set to navigate geopolitical tensions and dominate the sector in the year ahead?

This is our selection of the vodka brands to watch in 2016

The excitement surrounding the abundance of flavours that have flooded the vodka market over the last couple of years has fizzled out somewhat, and flavour fatigue has well and truly taken hold. While there are producers that are continuing to innovate within the flavour sector, such as Pinnacle

and Cîroc – the latter of which enjoyed 18% sales growth largely attributable to the success of its new pineapple variant – consumers have turned their attention to authenticity, provenance and heritage. But some brands are now paying the price for blindly riding the flavour phenomenon.

Smirnoff’s brand director admitted last month it “got lazy” and made the mistake of releasing an array of flavours that were “almost all the same”. In Diageo’s 2014/15 financial year, sales of Smirnoff fell 3% as a result of weakness of the flavoured vodka market in the US.

Speaking at a conference in New York for Diageo’s investors, Matt Bruhn, global brand director for Smirnoff, said: “[Let’s] clear something very important up: yes, we and vodka got lazy, we made mistakes. Adding 42 flavours, all of which are almost the same, was a bad decision, taking price up year-on-year as our competition entered and took price down left us open to attack.”

Rival vodka giant Absolut has also had a tempestuous 2015, as French drinks group Pernod Ricard took a €404m (£283m) impairment charge on Absolut as the brand continued to struggle in its key US market.

Craft takeover

At the opposite end of the spectrum, however, “craft” vodka brands have demonstrated enormous success, with Tito’s Handmade Vodka named as the fastest growing vodka brand in the US this year, leaping forward with a 44.4% sales increase from 2013-14. “The craft movement is a bellwether of the rebirth of American pride in making things and has permeated not only our industry, but everything from furniture to clothing to energy bars,” said Nicole Portwood, VP brand marketing for Tito’s Handmade Vodka.

In France, vodka exports overtook Cognac this year to become the most exported French spirit by volume, according to figures by the Federation of Wine and Spirits Exporters (FEVS). Meanwhile, Russia and Eastern Europe have continued to prove problematic for both the domestic and international vodka brands.

The Russian government’s crusade to raise the minimum unit price (MUP) of vodka has resulted in a surge of black market brands. In an attempt to alleviate the situation, the government reduced the MUP by 16% to 185 rubles per half a litre. Even so, many brands are still steering clear of the market.

“We are choosing our battlegrounds and where to invest the most of our resources, and right now we don’t see Russia as a big opportunity,” Rudy Aldana, global marketing manager for Cîroc, told The Spirits Business earlier this year.

Click through the following pages to discover which brands and trends we have predicted will dominate the vodka sector in 2016.

Absolut Elyx

Pernod Ricard’s Absolut vodka brand reported a 5% sales decline in the US in its 2014/15 results. Following a €404m (£283m) “impairment charge” on the brand, the company has pledged to “stabilise” the brand in the US with an increased focus on super-premium Absolut Elyx. It comes as part of the company’s medium-term plan to see the brand return to growth in the country.

Deep Eddy Vodka

Heaven Hill Brands completed the acquisition of Deep Eddy Vodka in September this year and made clear its plans to make the brand the best-selling super-premium domestic vodka in the US. Since launching in 2011, the brand has amassed sales of more than 500,000 cases. And since launching its Ruby Red expression in 2013, Deep Eddy sales have grown 300%. Now, with a new owner at the helm of the company, the spirits world will be watching closely to see if its rapid rise to success can continue.

Golovkine Vodka

Anglo-French spirits company Sagittarius released a new wheat-based French vodka last month, which it claims can rival established labels Grey Goose and Belvedere. It will be interesting to see whether the newcomer can cause a stir among its established counterparts with its thermochromic label and combination of “Russian tradition” and French “expertise and sophistication”.

Key trends

• Producers will continue to find new ways to inject flavour into their vodka, focusing on raw base materials.

• Increasingly discerning consumers will seek greater understanding of distillation and filtration methods.
• Geopolitical and economic tensions will push producers to put more focus on emerging markets like Africa and Asia.