Summer Spirits Bonanza

0206ss16

Quench your customers’
summer thirst with
fast-growing white spirits.

By Michael Sherer

Summer’s the season for backyard barbecues, picnics in the park or just kicking back on the porch with a tall, cold drink, watching the world go by. About the only thing as hot as the summer sun are the white spirits consumers are using to build those frosty cocktails.

White spirits — vodka, gin, rum and tequila — are experiencing tremendous consumer interest, and for the most part constitute a growing category. There were some big bumps in the road last year for the industry as a whole as well as individual brands. The ride looks smoother this year, though, allowing a number of brands to step back on the gas and grow faster again.

Last year’s mixed bag was the result of factors as varied as they were numerous, ranging from recession and industry consolidation to terrorist attacks in New York and Washington, D.C. But consumer trends and enthusiasm dampened much of the negative effect of outside forces. Stoli.Butterfly

Stolichnaya, from Allied Domecq Spirits USA, has debuted its new “See what unfolds” ad campaign.

The surge in growth of white spirits in recent years, especially above-premium and imported brands, has been largely due to the economic boom times of the ’90s.

“We enjoyed 10 years of the longest economic expansion in U.S. history with a corresponding expansion of personal income,” said Douglas McCreadie, vice president of marketing, Nolet Spirits USA. “Consumers have discovered new ways to express themselves in the things and brands they buy.”

For the past decade, consumers have been trading up, and even the recession didn’t changed their behavior. A recent Wall Street Journal article noted that even middle income consumers are buying more luxury brands. Consumers consider high-priced goods such as ultrapremium spirits and even bigger ticket items like cars, to be affordable luxuries, even in a down economy. That is putting a squeeze on middle-of-the-road brands, though.

Younger consumers, from legal drinking age to their 30s, are perhaps even more brand- and image-conscious than older generations. The growth of this group also has helped fuel growth of higher-end brands.

The biggest wrench in the works last year was the events of September 11. The terrorist attacks put an immediate damper on the travel and hospitality industries. People stopped going to restaurants and bars where so many spirits brands are discovered and consumed. Mandrin bottle/bkgd

Absolut Mandrin, introduced to great success last year by The Absolut Spirits Co./Future Brands, has continued its positive sales momentum.

Surprisingly, even that didn’t slow spirits sales much. A side benefit of people’s fear of going out has been a corresponding increase in the amount of time they spend at home.

“One of the positive repercussions of September 11 was a pick-up in off-premise business because people started entertaining at home more,” said Steve Meyers, senior brand manager for Tanqueray at Schieffelin & Somerset.

The shift to more “cocooning” also fueled another trend that has been growing in recent years. Consumers exposed to the explosion of flavored cocktails appearing in restaurants and bars are now trying to recreate them at home.

“It’s curious how people walk in to someone’s home and ask for their usual drink — a glass of white wine or Scotch on the rocks — but put it down when they see a martini shaker come out and someone offering Cosmopolitans,” McCreadie said. “People aren’t willing to give up luxuries, but they may be willing to change where they consume them.”

Also surprising is how quickly consumers have shown a willingness to return to “normal.” According to the National Restaurant Association, restaurant sales started to rebound in December, and exceeded year-earlier figures in January and February, too. The strongest gains, however, have been in casual dining, presenting a challenge to ultra-premium brands. 6807PRD04

Finlandia, from Brown-Forman, introduced both lime- and cranberry-flavored vodkas last year.

“White tablecloth restaurants saw the biggest hit from September 11,” said Dennis Greenwood, national brand manager for Finlandia Vodka Americas, Inc., “but family-style restaurants saw growth. Finlandia saw growth because it’s not priced as high as ultras.”

Vodka Volume Up

Vodka, which accounts for about 25% of industry volume, is still a hot category. Total volume last year was up 4.0% to more than 37 million 9-liter cases.

Much of the growth has been the result of consumer interest in high-end products and flavored vodkas. The resurgence of classic cocktails like the Martini has spurred interest in high-end brands. Younger consumers, though, are taking those classics to new places by demanding different flavors and experiences.

“Younger consumers have grown up on a lot of different flavors even in products like cereal,” said Susan Overton, director of marketing for Heaven Hill Distilleries, Inc. “They want those choices.”

Vodka is an ideal spirit to use in mixed cocktails because of its neutral taste. Flavored vodkas have given consumers that much more to play with in terms of drink combinations. Because flavored vodkas are not as sweet as liqueurs, they create a “more sophisticated cocktail than a drink with a paper umbrella in it,” according to Overton.

Flavored vodkas also appear to be adding incremental volume to the segment rather than stealing volume from core brands. Top brand Smirnoff led the pack last year in growth with an impressive 9.6% volume increase. The brand was helped by incremental sales of new flavors it introduced last year, as well as the buzz generated by its “malternative” brand, Smirnoff Ice. SkyyLORES

Skyy Citrus joined the vodka flavor parade last year, adding to the growth of the superpremium Skyy Vodka.

Number-two brand Absolut saw sales dip slightly last year, falling about 1.1%, as it adjusted to new ownership and a new sales force. It continues its award-winning ad campaign, however, with new executions that help keep the brand relevant with consumers.

A brand that fared well under new ownership last year was Stolichnaya. Overlooked in recent years, the brand is getting fresh attention from Allied-Domecq, which took over the brand in January 2001. Sales last year ended up 10.4%. A new ad campaign tagged “See what unfolds” features the Stoli label folded into origami “animals” in natural settings. It’s the first new campaign for the brand in five years, and initial print ads are being supplemented by radio and new p-o-s materials this spring.

A summer program focusing on Stoli’s flavored vodkas features a patio umbrella display, drink cards and more to remind consumers that Stoli was the first vodka to introduce flavored varieties. VOX.palms

The ultra-premium VOX Vodka, from Jim Beam Brands/Future Brands, recently introduced two new sizes to its lineup.

Another hot brand is Skyy. Up about 18.8% last year, the brand continues on a roll with its “cinematic moments” campaign. Seven new executions are expected this year. Skyy Citrus also was a big factor in building both consumer calls and volume for the brand.

Like many brands, Skyy is focusing a lot of effort in on-premise accounts to build awareness. It’s distributing a “great Martini moments” kit to accounts this spring that contains disposable cameras so bar patrons can take pictures of their martini moments. Off-premise sales will be supported with point-of-sale materials that tie into the ad campaign.

Finlandia is pushing its infusion program heavily in on-premise accounts in hopes of driving more consumers to off-premise. There, the brand is featuring lots of new p-o-s materials, including bins and racks, with a metal theme. This month, the brand is launching a new package and ad campaign for Finlandia Lime. MRC03LORES

Sidney Frank Importing just added Grey Goose Le Citron to its ultra-premium Grey Goose and Grey Goose L’Orange vodka line.

“It’s a challenging time for vodka,” Greenwood said. “You always have to be on the cutting edge. The category is very different than it was five years ago with all the flavors and ultras and packaging.”

The smaller ultra-premium brands are counting on continued word-of-mouth to help build sales. Using grassroots education programs like brand ambassadors and bartender and waitstaff training, they’re trying to build a ripple effect with small budgets.

Ketel One is leveraging its heritage as hand-crafted product that has been handed down from father to son. In time for Father’s Day, the brand is creating a micro-CD featuring a video story of how the brand was created. The CD will be given away on a bottle-necker. Thors Monde Award Case Card

Barton Brands’ Thor’s Hammer, another fairly new superpremium import, just debuted a national radio campaign.

Grey Goose, imported from France, continues to tout its taste in print ads, having won a blind taste test conducted by the Beverage Testing Institute in Chicago. The brand has grown dramatically in the last few years, jumping from sales of 100,000 9-liter cases nationally in 1999 to 600,000 last year, an increase that was “goosed” by the successful debut of the flavored Grey Goose L’Orange. Indeed, the brand just introduced Grey Goose Le Citron, a lemon-flavored line extension.

Rather than push flavors, brands like Belvedere, Chopin and Wyborowa leverage their heritage. All three are marketed as authentic Polish vodkas, with Belvedere and Chopin positioned as ultra-premiums and Wyborowa a little more attainable. The former, marketed by Millennium, use event marketing at elegant functions like last year’s wedding ceremony for actress Angie Harmon and New York Giants defensive back Jason Sehorn.

Wyborowa, recently purchased by Pernod-Ricard, is concentrating on getting word out to the trade this year, and has plans for a consumer ad campaign next year. 6811A2301

The Millennium Import Co. has staked out solid ultra-premium positioning with its Polish vodkas, Chopin and Belvedere.

Vox, in just a short time, has grown to the number-three ultra-premium behind Belvedere and Grey Goose. It recently introduced two new sizes and will increase its sampling push this year. “Vox Martini Week” will celebrate the classic cocktail, not its flavored cousins, in top restaurants around the country. New p-o-s is designed to highlight the virtues of pure and clear Martinis made with Vox.

Sazerac’s Rain Vodka also is eschewing flavors in favor of straight vodka for people who appreciate the subtle nuances among really fine vodkas. The brand is concentrating on education programs, explaining the brand’s point of difference to bartenders, waitstaff and retailers, and giving consumers the opportunity to sample the product where legal.

“You can’t really tell the brand story in ads,” said Rain brand manager Rebecca Green. “You have to have time to explain and give consumers the opportunity to taste. When you talk about volume, though, you have to have off-premise sales. We hope the ripple effect will drive those sales.”

Leading Brands of Vodka
(Thousands of 9-Liter Cases)

Brand Supplier 2000 2001(p) % Chg
Smirnoff Guinness UDV 5,783 6,340 9.6%
Absolut Absolut/Future Brands 4,500 4,450 -1.1%
Popov Vodka Guinness UDV 1,910 1,830 -4.2%
McCormick Vodka McCormick Distilling 1,595 1,700 6.6%
Gordon’s Vodka Guinness UDV 1,759 1,590 -9.6%
Stolichnaya Allied Domecq Spirits USA 1,350 1,490 10.4%
Barton Vodka Barton Brands 1,383 1,459 5.5%
Skyy Skyy Spirits 1,090 1,295 18.8%
Skol Vodka Barton Brands 1,108 1,157 4.4%
Kamchatka Guinness UDV/Jim Beam Brands 1,050 1,086 3.4%
Total Leading Brands 21,528 24,312 4.0%
Others 14,499 15,055 3.8%
Total Vodka 36,027 37,452 4.0%

(p) 2001 Preliminary. Source: Adams Handbook Advance 2002

Another relatively new superpremium, Thor’s Hammer, imported and marketed by Barton Brands, has taken a more ambitious tack. Last year, Barton supported the brand with a fairly heavy schedule in The Wall Street Journal. And it features a full line of off-premise merchandising materials as well as a line of quality on-premise materials. In addition, “in 28 markets we run Viking Night promotions, where we feature various giveaways (T-shirts, etc.) and make it fun for bartenders and consumers,” said Ed Gualtieri, Barton’s director of marketing. Searching for more brand awareness, Thor’s Hammer debuted a national radio campaign on the Howard Stern show last month.

Gualtieri believes the brand, introduced a year and a half ago and available nationally, has a distinctive story to tell. Made from 100% wheat, Thor’s Hammer is produced with water from an underground lake that has a unique chemical composition, including a high ph. “The result is a vodka with a very smooth mouthfeel and lots of clarity,” he said. “Depletion percentage gains have been in the solid duble-digits; however, the brand is still in its infancy.” Because of its clarity and smoothness, Gualtieri said the brand is most popular in Martinis, “but it is also good in Cosmopolitans and Gimlets.”


Evaluating Vodka

Vodkas, especially the ultra-premiums, are in a war of words over which is better. Finlandia, for example, is in the process of using independent labs to prove that it is the “purest” vodka available. Why all the fuss over a spirit that by definition is supposed to be odorless, colorless and have no taste at all?

Even though vodka is a neutral grain spirit, it does have a certain taste and mouthfeel. The objective of a good vodka is to be as smooth as possible on the palate. A number of factors will affect both smoothness and taste.

PRIMARY INGREDIENT. The ingredient with which vodka is made will have an influence on taste. Traditional Polish vodkas such as Belvedere and Wyborowa, for example, are made with rye. Absolut boasts about its Swedish wheat. Stoli is made with winter wheat. Finlandia uses six-row barley. Rain uses only organically grown grains. Some vodkas are made with potatoes. Each will impart its own subtle flavor.

DISTILLATION. How vodka is distilled, as well as how many times, can have an effect on vodka’s smoothness. Some claim continuous distillation is better than distillation in a pot or column still, and there’s disagreement about which of those two types of stills is best. Some, like Vox, are distilled as many as five times, the idea being that each distillation removes more impurities from the alcohol. Several, such as Rain, discard the “heads” and “tails” of each distillation, again to remove impurities.

FILTRATION. Once vodka has been distilled, it’s usually filtered to remove even more impurities, often through charcoal. Wyborowa is triple-filtered. Stolichnaya is filtered first through quartz sand, then through birch charcoal.

WATER. The other main ingredient of any spirit is water. The mineral content certainly can have an effect on taste. Thor’s Hammer, for instance, draws its water from an underground lake in Sweden, 200 feet beneath the surface, which provides a unique chemical composition. Glacial water is big with a number of brands. Limestone is another. Again, each brand will suggest its water results in a superior, distinctive taste.

Ultimately, taste is on the tongue of the beholder. When you sample vodka, however, look for flavor notes when it first touches your tongue such as sweetness, citrus or floral tones, or a hint of grain such as rye. Next, look for mouthfeel of the alcohol and smoothness as it hits the back of your mouth and throat. Is it soft or harsh? Finally, look for a minimum of aftertaste in the finish.

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