Flavoured vodka ‘no more than icing on a cake’ to Eastern brands

Facing strong competition from the west, traditional Eastern European vodka brands are stressing their pedigrees as a way to stand out, and are making a beeline for influential bartenders and mixologists.

*This article was first published in the June 2017 edition of The Spirits Business

A lot changes over the course of a millennium – especially in modern­-day Eastern Europe. For a quick history lesson, YouTube ‘1,000 Years of European Borders’ for a striking time­lapse video that shows how empires and battles have shifted borders in twists as dynamic as any Game of Thrones­-esque saga. Watching how countries have been changed by wars and revolutions, the comparative stability of the region today feels remarkable – and one also realises how incredibly complex the history of vodka is.

Vodka was supposedly born somewhere in a fertile grassland band stretching across today’s Poland, Ukraine and Russia – and for centuries this region was the undisputed world­-leading producer. Fast forward to today, after distillation spread and the 2010s trend for all things ‘craft’ took hold, producers in other parts of the world set up shop leading to a proliferation of ‘Western’ vodkas, recognised more for their innovative, often flavour­-led spirits.

This has left more traditional ‘Eastern’ styles – for the purposes of this feature, those made in Russia and Eastern Europe – to rely on playing the heritage card. But as consumer focus shifts towards quirkier brands, how can these classic players compete for mindshare?

A fitting starting point is to mull how important today’s vodka consumers consider the geography of the production region to be. “We’ve always proudly talked about Moskovskaya roots,” says Renatas Alekna, global brand director for Amber Beverage Group’s Moskovskaya Vodka. “Born in times of the Russian Empire, Moskovskaya vodka is one of the oldest Russian vodka brands that is produced in Riga, Latvia.”

When the brand’s facilities were established more than 100 years ago, Latvia was a part of the Russia. “Mind you, consumers do not ask often because the brand name clearly communicates the link to the capital city of the Russian Empire,” Alekna concedes.

For Yuri Sorochinsky, CEO at Ukraine­-based Nemiroff, it is today’s historically significant developments that have the biggest impact on consumers, and therefore the wider market, in 2017.

“A rather complicated situation has developed in the domestic market of Ukraine – the growth of excise taxes, and the cost of alcohol make the product expensive for the domestic consumer, whose purchasing power is constantly decreasing,” he says.

“All this leads to the fact that production output of legal alcohol is declining, while the grey alcohol market [that which is distributed through unofficial channels] is constantly growing, and has already reached more than 50%.”

Despite this, Nemiroff has a domestic retail market share of 15.4%, and exports in the first quarter of 2017 rose by 14% year­-on­-year, he adds.

Russian-­made Tovaritch! has adapted to challenges, too. “For historical and political reasons we do not sell Tovaritch! in Russia, except in the duty free market,” says Eugenio Litta Modignani, Tovaritch Spirits International CEO.

“Too much competition and bad debtors convinced us that we would be better off directing our energies to the export market instead of trying to survive in the local spirits scene.” He is now focusing efforts in Slovakia, Bulgaria and Romania, where sales are growing.

A relatively new player on the block, Goral Vodka Master has found that playing up its Slovakian roots has driven interest, including in Russia, it’s main growth driver, according to Veronika Karlova co-­founder of Karla & Co which distributes the brand in the UK.

“Goral combines a luxury design, premium­ quality ingredients and long Slovakian distilling tradition into one bottle,” she says. “There are three key differences for our brand: it is Slovakian; its premium quality and unique design; and its farm­-to­-bottle heritage.”

It’s this farm­-to-­bottle concept, along with its Slovak roots, that sees Goral straddle both Eastern­-style heritage and a Western­-style focus on provenance as a new player. This best­-of-both­-worlds approach has helped build its distribution network.

“Our strongest markets are in Central and Eastern Europe, where people are still loyal to traditional ways of drinking vodka, giving us an advantage over western­-style and new­-world vodkas that are trying to break into Eastern and Central European markets,” she continues.

“People here want a neutral, smooth and clean taste, and Goral Vodka Master has it all. On the other hand, markets like the UK or US, where the perception of vodka is completely different, are challenging for us. But we see it as an opportunity to change the current ‘vodka­-coke, vodka­-lemonade culture’ into ‘straight­-up vodka culture’. We want consumers to enjoy the smooth and clean taste of vodka.”

With current production and distribution holding limited meaning for vodka consumers, how does the rich history of Eastern­-style products measure up to the pizzazz of their Western­-led competitors?

For Moskovskaya’s Alekna, the fact that centuries­-old brands are still flourishing today speaks for itself. “That means a lot, and consumers are the decision makers in this world – will the brand live or be forgotten?” It seems Moskovskaya is well remembered. The brand posted 9% volume growth in 2016 and hopes to achieve further 50% gains this year, with the US, Central America, Italy, Spain, and the UK (via Cellar Trends) key focuses.

Likewise, Robert Zajaczkowski, global brand manager at Poland­made U’Luvka, says heritage is “the first and most important question”. History, an original recipe and a real live master distiller are all compelling propositions for bartenders and consumers alike. “If the brand has stories and can invite consumers to the distillery that really produces the vodka, this is the most important aspects that bartenders are interested in,” he says.

At Marie Brizard Wine & Spirits (MBWS), the Slavic roots of Krupnik and traditional consumption occasions are critical for the brand. “Polish­-origin Krupnik vodka is an authentic one, and reaches to ancient recipes of making meads and delicious liqueurs called ‘krupnikas’,” says Stanislas de Parcevaux, group chief marketing and digital officer.

“Being ‘Eastern­-style’ is clearly an opportunity for Krupnik and [sister Polish vodka brand] Sobieski, since it communicates ‘authenticity’, a major trend among consumer in general and millennials in particular.”

While it is important, for Modignani this historical factor is far from everything. “To this day, Russian vodka ranks high in terms of quality in consumers’ minds, and this is where opportunity lies for us considering that Russia has just 3% of the global market,” he says. “But in general, good bartenders want to know much more than just the location of the production facilities.”

With ‘flavour fatigue’ taking hold in a number of key markets, most notably the US, far fewer ‘Eastern­style’ players have dabbled in the colourful world of flavoured vodkas. For some, there is simply no place in the traditional category for such contemporary experimentation.

“Flavours are no more than an icing on the cake, and are not particularly popular in Russia,” says Tovarich!’s Modignani. “A professional bartender would rather use a neutral vodka featuring natural ingredients to create a specially flavoured product.”

Alekna echoes this sentiment: “If we talk about Moskovskaya as the classics of Eastern­-style vodka, it is remaining faithful to Russian vodka production: traditional methods and purity, focusing on providing simple, classical vodka. Our strategic choice is to focus on the perfection of vodka when it comes to portfolio development, rather than play with flavours.”

But some have made it work: most notably Roust’s Żubrówka, which has ramped up growth of 15.45% in 2016 with its bison grass­ flavoured expression, according to The Brand Champions figures. Others, too, see them as a strategic addition to a wider portfolio. “Flavours in vodkas are being reinvented, which is where the future lies,” says U’Luvka’s Zajaczkowski.

“I am not saying that we need another lemon vodka, but almost everywhere the home­made trend is a very popular. Therefore, U’Luvka Vodka decided for the first time in its 10­-year history to create a new line of products dedicated exclusively to the bartenders who will be able to create innovative drinks.” Expressions include Watermelon & Pepper, flavours that Zajaczkowski says are closely associated with both Polish tradition and reference ‘garden­-style’ ingredients.

MBWS’s de Parcevaux even goes as far to label flavours as a “dynamically growing” vodka segment. “Many new products, with better and better tastes, are drunk very often in shots – these are chosen most often by younger consumers looking for indulgence. We predict this growth to continue, and we are active player.”

One Eastern brand particularly known for its flavoured portfolio is Nemiroff, and, in similar way to U’Luvka, its locally­-inspired variants are seen as a path to growth. The company has launched Nemiroff ExoticCollection, featuring varieties specially developed for the local market.

“Exotic ‘classics’ for traditional markets are well­known tropical flavours: coconut, mango, pineapple, peach,” says Sorochinsky. “But for those markets where these tastes are traditional, Nemiroff offered something that will definitely be exotic for them: strawberry with pepper, birch buds, and even pear with apple. Understanding the nature of these berries and fruits and the ability to work with them when creating alcoholic beverage is our distinctive feature and the advantage we have over local competitors.”

This is all well and good – but how does the popularity of Eastern-­style vodkas carry over into the on­trade? With bartenders typically opting for one speed rail and, realistically, a handful at most on the back bar, how can these more neutral names make headway in a sector where point of difference is often critical?

“I agree with bartenders,” says Modignani. “It is not realistic to have so many brands. To come out the winner, a brand needs to have a great USP.” For him, the Tovaritch! claim of being the world’s most awarded Russian vodka sets it apart. “Even so, getting Tovaritch! on the speed rail is a goal that will require time and patience.”

MBWS is also targeting speed­rail opportunities with Sobieski and Krupnik. “We believe that quality wins – a good bartender ensures that clients can fully trust in the vodka offered in a bar,” de Parcevaux says. “The mainstream vodka that will survive will be the best quality at a reasonable price, the way we position Sobieski and Krupnik.”

Others, including Nemiroff, are looking to mixing opportunities. “Cocktail culture and the bar industry are actively developing in Ukraine,” says Sorochinsky. “Many bars have opened and we have very sensible bartenders who don’t just mix a couple of ingredients, but are real mixologists.” He claims Nemiroff is the first Ukrainian vodka brand to actively join in with bar culture and promote its development.

And it’s this involvement that is winning the brand fans and influence – and is challenging preconceptions. “We have developed the NemiroffBarCrew concept – a team of experienced mixologists; a fresh breath in the professional bar community,” he continues.

“They prove that vodka is not tacky, and complex recipes are tastier than the banal ‘vodka tonic’. We found these guys across the country, so mixes from Nemiroff have become available in any major city.”

Part of the programme sees brand ambassadors sharing recipes with other bartenders for an honorary title, a clever tactic to spread the Nemiroff word throughout the country.

Despite efforts to keep up with the modern industry, it is the timeless quality of Eastern-­style vodkas that prevails as an identifying feature.

“It is because Eastern­-style vodkas are perceived as classic or not ‘trendy’ that they are relevant,” De Parcevaux declares. “They have been the same for decades and are not perceived as being subject to marketing.” But he does think there’s room for all. “There is enough space for changing trends that can exist alongside this.”

While Eastern­-style vodkas have had to compete hard, in the long­-term, these names aren’t going anywhere.