An entity as large as the $5.8 billion vodka category in the U.S. is not monolithic, and it’s not surprising that it’s split like an iceberg into two divergent subcategories (regular and flavored), each with its own consumer demographic, drinking occasion and growth arc. Mimosa, habanero, cinnamon bun – the variations keep proliferating on retailers’ already crowded shelves as producers cast about for the next “it” flavor. But flavor fatigue seems to be setting in, or perhaps fickle customers are straying to categories other than vodka for their flavor fix.

The Split

Has the behemoth spirit category indeed fissured in twain following different paths? Retailers and producers are divided on the topic.

“There’s straight vodka and there’s flavors; they are two different segments,” declares Fredric Leighton, owner of Bayway World of Liquor in Elizabeth, NJ. “We are certainly seeing two different customers for regular and flavored vodkas,” echoes Louis Dachis, owner of three Merwin Liquors stores in Minneapolis, MN. Both retailers say the customer for unflavored vodka tends to be older and male, while more Millennials and females are purchasing the flavored variants.

“Yes, absolutely, the vodka category is definitely divided into two segments—flavored and straight—with consumers for both,” reports Norman Bonchick, chairman and CEO of 375 Park Avenue Spirits (formerly Van Gogh Imports; the name change is part of a recent integration into Sazerac Company).

“Certainly among younger legal-drinking age consumers, flavors are tremendously important, whereas older consumers may seek their own style of creativity with 80-proof vodka,” says Reid Hafer, senior brand manager for Burnett’s Vodka. Though the category may be divided, the brand covers both sides of the vodka aisle with a healthy split between flavored and regular.

“I think flavored and straight can coexist within a brand,” comments Marla Burke, marketing & creative director for Phillips Distilling Company, which owns the UV Vodka brand. “The two segments definitely have a shift in consumers: the straight gives us more opportunity to catch a wider net of consumers; the flavored category consumer remains the LDA-plus drinker who typically likes sweeter flavors and is more willing to experiment.”

“The flavor consumer tends to be younger, more versatile and less brand loyal,” says Nicolas Guillant, president of Imperial Brands, whose portfolio includes Sobieski Vodka. “Their point of entry is the flavor rather than the brand. The flavor consumer has a party or other occasion in mind while browsing the retail shelves.” Sobieski has 11 flavors but, Guillant says, 90 percent of its sales comes from base vodka.

No Divorce

Not everyone sees an irreconcilable rift in the vodka category, however.

“Consumers make different choices for different occasions rather than choosing one segment or another,” says Brad Essig, vice president of the vodka category at Diageo, whose portfolio includes flavor leader Smirnoff. “The same consumer may select a premium-priced straight vodka for a Martini at home one night and a confectionary-flavored vodka as a shot at a bar the next night.”

“We don’t see flavored and unflavored as having two different consumers or being two different categories with two different dynamics,” agrees Jason Dolenga, senior director of vodkas at Beam Suntory, whose portfolio includes flavor pioneer Pinnacle Vodka. “We’ve done a lot of work recently to nail down where the opportunity is for vodka. Our target consumer is clearly females aged 30 to 39. We have found that this consumer enjoys unflavored vodka as well as flavored, maybe on different occasions, but there is variety-seeking behavior,” he adds.

When Beam Suntory took over the Pinnacle brand, it was known as an innovator in flavored vodkas and its business was largely biased towards flavors. Still, the brand had a large unflavored business. “Categorywise, unflavored is about 80% of the market,” Dolenga says. “The opportunity lies mainly in growing that unflavored business at Pinnacle.”

Nonetheless, both Smirnoff and Pinnacle have been busy releasing new flavors recently, as have Burnett’s, UV Vodka and many other contenders.

Where’s “It” At?

The quest for the next great flavor has preoccupied innovators for nearly a decade. Flavors have come in and out of vogue as the subcategory has evolved, and favorites vary according to region. Earliest entrants were simple citrus or fruit flavors. Then came the confectionary phase with success stories like whipped and cake. Following those two hits came a plethora of flavor releases, some rather far-out, like pickle, glazed donut and sriracha, to name just a few.

“Sometimes I get the feeling that vodka manufacturers are just tossing out flavors to see what sticks,” says Edward Mulvihill, director of sales & marketing at Peco’s Liquors in Wilmington, DE.

A few flavors do stick around awhile. “Cake and Whipped flavors are still popular at our store,” says Jarett Young, a clerk at Davis Liquor Outlet in Wichita, KS. “There was that big blip with Cake and Whipped,” says Dachis at Merwin Liquors, “we still stock those.”

Now it seems flavors have circled back to fruit again. Of the leading 20 brand flavors only two are not fruit. (Pinnacle’s Whipped, the number-two flavor, and Sazerac’s Firefly Sweet Tea, according to NABCA data). New Amsterdam’s Peach leads with Ciroc Peach in third place, followed by Absolut Citron, New Amsterdam Berry and Smirnoff Raspberry.

So, what are the new “it” flavors? Fruit flavors mostly.

“Fruit flavors and combinations thereof are on trend,” says Tracey Clapp, Vodka Marketing Director at Sazerac Company, which produces Wave and Epic Vodkas. “Consumers’ love for exploration and flavor continues.”

“Pineapple is huge,” says Leighton at Bayway. “Peach and coconut are selling well right now. Those are flavors that all go well in classic cocktails.”

“Pineapple and peach are big sellers,” echoes Mulvihill at Peco’s. “The infusion-type flavors do well, too, because they are all-natural and that appeals to the cocktail folks.”

“The various citrus vodkas are the biggest sellers among flavors,” says Young at Davis Liquor Outlet; “Those mix well in vodka tonics.”

At Merwin’s, “New Amsterdam is killing it with Pineapple and Peach,” Dachis says. “UV’s Sriracha is going gangbusters too.”

Producers see similar popularity trends. “Sobieski’s most popular flavors are Orange, Raspberry and Citron, which is similar to the rest of the category,” says Guillant.

Regions and Seasons

“The top flavors do vary by market,” says Bonchick at 375 Park Avenue Spirits. However, the core top sellers within the Van Gogh Vodka portfolio are Double Espresso, Acai-Blueberry, Cool Peach and Espresso.

“There are definitely regional variations for flavors,” Dolenga says. Pinnacle has taken advantage of that with some smaller launches, as well as seasonal flavors. He cites a King Cake variant that sells out in Louisiana during Marde Gras. Texas is big on Pinnacle Grapefruit. “There will always be flavors that pop regionally but not at a national scale. We have flexibility and ability to be speedy to capitalize on those.” That includes limited-time offerings such as Pinnacle Pumpkin Pie in the fall.

Whiskey Rebellion

Perhaps inspired by the vodka segment, whiskey producers have started their own flavor revolution. Flavors such as honey, cherry, maple, vanilla and cinnamon are intended to lure younger drinking age consumers into the brown spirits fold. That’s the same customer targeted by flavored vodkas, and it seems to be having an impact.

“Brown spirits are making a huge comeback with both the consumers and mixologists and vodka has suffered because of that,” Bonchick says.

“Interestingly enough, it is flavored vodka that has helped drive the explosive growth of flavored whiskeys,” posits Pawlik at Svedka.

Flavored whiskeys are very popular at Bayway right now, Leighton says. “I would guess that’s drawing the same customer as flavored vodkas.” At Davis Liquor, Young sees a similar phenomenon: “Flavored whiskey is capturing that vodka demographic a little bit.”

“Flavored whiskeys have been able to blur lines between categories and show how consumers are looking to try new trends and are willing to experiment with their drinking choices,” points out Burke at Phillips Distilling.

Clapp at Sazerac is still hopeful regarding the future of the category and not fazed by flavored whiskey’s recent surge in popularity. “No doubt there will continue to be innovation in vodka,” she says. “I’m certain we’ll see more flavors, yet at a slower pace than previous years. Despite the attention that whiskey has received, consumers are still drinking all types of vodka. We remain very passionate about vodka and new possibilities.”

Flavor Fatigue

Despite all the recent launches, it seems that the rapid pace of proliferation has slowed somewhat, and perhaps sales as well. Some would argue that innovation became too outlandish. Retailers have had increasing difficulty shoehorning all the new entrants on already saturated shelves. That is being exacerbated by another whiskey entering the flavor fray.

“Right now, we’re seeing the flavor segment decline, most likely due to an over-saturated market and flavor fatigue,” Bonchick says. “There were far too many flavors introduced in a short time period, and although some had a modicum of success, they were short lived.”

At the recent reveal of 2014 industry statistics from the Distilled Spirits Council, chief economist David Ozgo reported that sales of flavored vodka had slowed. However, traditional vodka volumes were up 3.7%, according to DISCUS.

“While the growth of flavored vodka has slowed over the last 12 months, the unflavored vodka category is keeping pace with the rest of the industry,’ echoes Essig at Smirnoff.

“It’s the tipping point. My theory is that at some point the market will explode because there are one too many flavors,” quips retailer Leighton. At Bayway, vodka flavors have hit their peak and are on a slight downward trend. “There are all these crazy flavors, like Cinnabon; it tastes good but it’s based on a mall bakery concept.”

“The spectrum of vodka flavors ran the gamut from cereals to confectionary to fish to tobacco; the category started to border on the absurd,” Bonchick says.

“I wouldn’t say that any given flavor is too wacky, too crazy, if there are consumers with an interest in those flavors,” Dolenga counters. Pinnacle will continue to innovate, he adds, because consumers are naturally variety-seeking. But, Dolenga notes that the brand has launched fewer flavors year to year than it did a few years ago.

Retailers are using discretion to deal with the influx. “We stock all the new ones,” Mulvihill says; “See what sticks, what doesn’t and keep the inventory moving.” At Davis Liquor, “I try to stock just what sells. If a flavor doesn’t sell, I put it on clearance and get rid of that stock,” Young says. Dachis at Merwin Liquors agrees. “It’s up to us retailers to weed out the non-sellers.”

New and Notable Flavors

“I don’t know that there is one ‘it’ flavor,” Dolenga says. “The ones that continue to pop and grow are the mainstream flavors that people know what to do with, and those are generally fruit flavors—peach, coconut, raspberry, pineapple and citrus.” Pinnacle continues to put out new products at a regular clip.

“That’s what makes Pinnacle Pinnacle,” says Dolenga. Amaretto and CranApple were released last fall. This spring, the company launched two “brunch-inspired” vodkas—Mimosa and Habanero. “We want to be on the cutting edge of flavor,” he adds.

“Consumers are constantly looking to try new things,” says Essig. Last fall, Smirnoff introduced its latest innovation line, Smirnoff Sours, in three flavors—Green Apple, Watermelon and Fruit Punch. Not only are the fruit flavors intense, but in an unusual twist, the liquids are brightly colored. “Smirnoff Sours infuse new excitement and fun into the bar scene by redefining the shot occasion,” Essig notes.

“It isn’t about one particular flavor, but about dynamic flavor combinations,” according to Diana Pawlik, vice president of marketing for Svedka Vodka. “Consumers are seeking flavors that are multi-dimensional and sensory. So it isn’t as much about one ‘it ingredient’ or flavor, but rather the combination of interesting yet approachable complementary flavors.

She cites Svedka Mango Pineapple and Strawberry Lemonade released last year as examples. This March, the company launched Svedka Grapefruit Jalapeño, which fuses bright citrus flavor with a hint of heat.

“Trending flavors are a revolving door from fruity, savory, to confectionary,” says Burke, who sees a trend now towards savory flavors, like UV Sriracha. The company is debuting UV Ruby Red Grapefruit, also in March. Phillips was the first to formulate flavored vodkas in appropriate hues, which makes the products stand out on retailer shelves. UV’s perennial best seller since its introduction back in 2001 continues to be Blue Raspberry.

“We have flavors in our hip pocket prepared to launch when we see opportunity,” explains Hafer at Burnett’s, which tracks trends picking up across the packaged goods industry. Burnett’s has had good success with combination flavors; in 2014, it released Mango Pineapple, Ruby Red Grapefruit and Red Berry. “These combinations are flavors that consumers love and know how to consume.” This year will see the launches of Cherry Limeade and Apple Berry.

Campari America unveiled two additions to its Skyy vodka brand: Skyy Infusions Vanilla Bean and Skyy Infusions Georgia Peach. The infusions blend real ingredients such as vanilla beans and Georgia peaches.

Superpremium brand Belvedere released its newest flavor, Belvedere Mango Passion. The vodka is distilled with fresh mangos, passion fruit and citrus in an all-natural approach with no added sugar.

A newcomer to the scene is Trinchero Family Estates, which announced a line of vodkas under the Menage a Trois brand, which includes a straight, plus Triple Berry and Triple Citrus, each a blend of three flavors.


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