Is vodka in a race to the bottom in travel retail?
Should vodka brands use the travel retail channel as an opportunity to offer discounts to travellers, or could that cheapen the category?
*This feature was originally published in the June 2025 issue of The Spirits Business magazine.
As travellers make their way through airports, returning home or on their way to sunnier places, plenty stop by duty-free outlets to peruse spirits bargains and exclusive bottlings. Yet, when buying vodka on their travels, the question stands whether the category is attracting bargain shoppers only. Are vodka brands engaging in a race to the bottom with travel retail pricing?
“It is notable that 75% of sales of standard vodka brands are generated by special offers,” Manuel Schilling, head of buying spirits at Gebr Heinemann, says.
Smirnoff owner Diageo, for instance, has been seen offering two bottles from its portfolio for £20 (US$27.02) in UK travel retail, while the nation’s duty-free purchase allowance is generous, at four litres.
Schilling worries this “value-led” approach severely damages brand image, cautioning that “constant dumping offers” may lead to long-term brand dilution. “Promotions should be strategic, not habitual,” he warns.
Despite this, Rae Gibson, brand director at Pernod Ricard Global Travel Retail (GTR), agrees that shoppers “actively seek” promotions in duty-free shops, but promotions do not “cheapen the category”.
“Shoppers see it as competitive pricing rather than brand devaluation,” she says, adding that brand reputation and quality perception help to mitigate negative effects.
Meanwhile, John McDonnell, international managing director at Tito’s Handmade Vodka, admits “some of the leading vodka brands discount aggressively”, but Tito’s sticks by its pricing strategy of maintaining its retail price of €27 (US$30.59) in travel retail. “We will not chase them,” he says of rival brands. “We let the other brands do the discounting.” Tito’s instead focuses on “in-store tastings and gondola displays”.
While Finlandia vodka is positioned as a premium brand in travel retail, Yannis Athanasiadis, premium spirits director at Finlandia’s parent firm, Coca-Cola HBC, says it maintains “a high-quality perception globally” through engaging customers.
With “frequent” promotions of vodka in GTR, there is a risk of “race to the bottom” pricing, Athanasiadis says, but Finlandia battles this with its marketing strategy. “Our ‘It’s Soooooo Fine’ campaign highlights our brand as an indulgent drink, which helps elevate the brand’s relevance,” he says.
Some brands will lean into premium travel retail launches instead – Bacardi-owned Grey Goose is launching its Altius bottling this year, aimed at high-end white spirits shoppers in airports worldwide, with a price to reflect this, according to the brand.
In a similar vein, Gibson says pre-releases for the channel, in advance of the domestic market, are “working well” for Absolut, with the limited edition Absolut Warhol, which came out in July 2024, an example of this.
“We’ve also had success with customer exclusives, like the travel retail-exclusive pilot of our ‘phygital’ bottle, Absolut Gift, with Heinemann, allowing shoppers to create a personalised gift,” she adds. “Travel retail provides the space for the brand to elevate its relevance and flavour range.”
While Schilling insists there is “no qualitative demand for flavoured vodka in travel retail yet”, Gibson contends there is evidence of this being explored in duty free – “actually the four-litre allowance encourages some to explore new flavours”.
However, that allowance isn’t seen as an elevation for premium vodka by everyone.
Changing behaviour
Athanasiadis says the increased allowances in the UK have “significantly changed consumer behaviour”, with “stocking up” on spirits when travelling becoming a “relevant part of the journey. One of the main barriers to premiumisation is the perception of vodka as a commodity rather than a luxury item.”
This could come hand in hand with the notion of basket filling in the category. Schilling contends that the allowance has led to “larger basket sizes, especially in value segments. This encourages bulk buying, particularly for gifting or stocking up.”
However, Schilling acknowledges that while this favours value-driven brands, it also “opens space for multi-bottle premium offers”, and provides an opportunity for upselling – bundling premium and standard bottles.
When looking at the possible devaluation of vodka in travel retail, it is essential to maintain consistent pricing and explore promotional strategies and premium bottlings, says Athanasiadis.
McDonnell also encourages this approach for Tito’s, careful to point out that its customers are “brand loyal”, with travellers looking out for specific exclusive bottlings and packaging from the brand, such as its annual ‘ugly sweater’ release.
Looking to the future, it seems there is an opportunity for vodka brands to lean into higher pricing if they so wish. “Premium interest is growing, particularly among younger consumers,” Schilling says, but advises those who want to be seen as premium “should avoid deep discounting and focus on added value instead”.
It’s also important to consider applying different strategies to different regions – while Eastern Europe and the Nordics remain strongholds for vodka, both value and premium, price-sensitive shoppers still dominate in high-traffic hubs like the UK and Spain, according to Schilling.
“Premium interest is rising in Asia and the Middle East, especially among affluent Millennial travellers,” he says, “but it is important to acknowledge that vodka has a long journey ahead to reach the esteemed status that whisky currently enjoys.”
Boost the category
That being said, sometimes it’s also important to focus on what the consumer wants, as opposed to the buyers who have “a negative perception of the vodka category”, McDonnell says. “They often think that consumers aren’t interested in the category, and it’s not true at all. When travel retail retailers stock Tito’s, the entire category does better.”
With innovation and limited editions “less prominent” in the vodka sector, Schilling says, there is still potential to explore the possibilities here, and test the category’s potential in travel retail. But it may be that this exploration takes place alongside the spirit maintaining its reputation as a reasonably priced commodity among some brands, especially with Gibson clocking “a growing desire for novelties in the travel retail environment”.
Meanwhile, the concept of promotions in the category remains open to debate, but in the spirit of erring on the side of optimism, Gibson argues that promotions “generally positively impact perceptions” of vodka, increasing the likelihood of purchase and willingness to try new brands.
The future of vodka pricing in travel retail is not straightforward, but it is clear that the playing field is a diverse and exciting one.
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