Vodkas vie for position
It’s amazing. Vodka has achieved everything on the “to do” list. Becoming the most fashionable spirit, as well as retaining a certain audience, is a major achievement, while constant specialisation and innovation cater for a more progressive crowd. Moreover, its supreme mixability means everyone’s happy, with vodka offering a wider range of cocktails than any other spirit, and also inspiring more new cocktails than any other rivals.
It all sounds great. But with the market saturated, and more brands continually launching, it’s getting harder than ever to stand out from the crowd. The good news is that a growing number of consumers consider it cool to have brand knowledge, with word-of-mouth recommendations among friends proving a vital way of driving awareness and trial usage. But what does it take to actually engage the consumer??Sam Galsworthy, co-founder of Sip-smith vodka, says: “In the past three to four years there’s been a transition towards where, when and how things are made. Consumers love following the story right back to the source and know more about what they’re buying. Brands are having to dig deeper into their brand story to differentiate themselves.” One example of this is that more brands now promote technical details of the production process. But fitting a detailed story into a marketing campaign is hardly an easy feat.
“People are buying into genuine provenance and quality,” says William Chase, founder of Chase vodka. “The hardest part is there’s an awful lot to tell, you can only tell so much of it in the marketing.” Meanwhile, the economic situation is having its own effect.
“An economic downturn is a real test for a brand, as consumers become more discerning and test brands by challenging their stories,” says Andrey Skuri-?khin, partner of the SPI Group. “If a brand provides the right answers, and the price point is justified by the quality, a brand can continue growing, as Stolichnaya Elit has done.” One way of checking out “local” English brands such as Sipsmith and Chase is to make a visit.
“We bring as many consumers as possible to the distillery in London,” says Galsworthy. “Once they’re on site there’s time to explain the message and the distillation regime – they want to learn about distilling. I’m taken aback by the word-of-mouth feedback we’re getting, a few people call every week saying they want to bring a team down.”
Meanwhile, some consumers may prefer to base their purchasing decision on a brand’s personality, or attractive packaging.
There’s always the potential for these consumers to develop their relationship with a brand, if they want to. After all, it only takes a trip to the website for consumers to learn more about any brand. And that raises the issue of brand awareness and visibility, which, of course, depends on distribution.
Brands have never had such a range of outlets to target, from high street shops to chic department stores and local pubs to style bars. As consumers now visit a broader range of on-trade venues, depending on the occasion, there have never been so many opportunities for consumers to discover brands, or so many opportunities for brands to track their target audience.
Economic uncertainty has also led to more local drinking (as opposed to city centre venues), with a growing number of bars increasing their choice of brands. As there are also far more brands chasing the same shelf space, getting listed is just as competitive as it always was.
In addition to consumers discovering brands in the on-trade, they also encounter long drinks and cocktails which, in turn, influences at-home drinking. Style bars, for example, have inspired more consumers to shake or stir at home, with sales of cocktail kits rising. The large number of cocktail books available can also be supplemented by online advice.
“Our website offers 1,000 recipes and 50-60 videos showing how to make cocktails. It’s a case of empowering the consumer,” says Tim Francis, managing director of online retailer the Drink Shop. “Traffic to cocktail recipes peaks on Mother’s Day, Father’s Day, Valentine’s Day and at Christmas, then it goes off the scale on New Year’s Eve.” John Bradbury, Whyte & Mackay’s off-trade sales director, adds: “In pubs and clubs, more of the on-trade is selling long serves. With a high volume of people to serve, you can still give them something that’s special but not complicated – and that’s filtering through to home consumption.” The recent rise of at-home drinking raises a number of questions. Are consumers trading up, down, or pouring the same brands at home that they usually order when going out? It depends. If catering for themselves it could be either option, but when entertaining friends they’d like to impress, consumers are far more likely to “pay and display”. They’re displaying discernment and status.
Sampling sessions?Retail specialists, which can be visited in person or online, are an obvious destination for anyone wanting to trade up, and consumers expect to discover new brands here. Sampling sessions provide an ideal opportunity for a deeper dialogue. The time between brands launching in the on-trade and being stocked by specialist retailers is much shorter than it used to be, with??premium and super-premium brands meeting the same consumer profile in specialist retail as in style bars.
“Retail staff are very well educated and are able to inform consumers about brands, so we work closely with retailers to make sure they have the training they require,” says Richard Beaumont, brand manager of luxury portfolio Reserve Brands at Diageo.
The opportunities to inform via a website have increased significantly too. “We have consumers looking for new vodka brands –
a lot come
to the site to find the next big thing in vodka,” says Francis.
“When we went online in May 2000, an all-singing, all-dancing website plus a retail option cost a lot of money as you couldn’t get an off-the-shelf system. Now you can get one for £1,500.” But, adds Francis, the question is, how do you then market yourself, get seen, and try to get some market share from other retailers? “We’ve now got hundreds of links going in and out. We’re very strong on Google and other search engines, but it takes a long time for that to happen.” Another significant development is the growth of gifting, with deluxe vodka increasingly being seen as a viable alternative to Champagne, for example.
“People buy beautiful packaging as a gift which they know will make the recipient happy,” says Mark Holmes, founder of the Polish brand
U’Luvka. “So you’re getting a whole new sector of the market which may not have drunk luxury vodka before. Our miniature gift pack retails at £20, with the full-size U’Luvka at £50.”
As vodka has been such a success story, the inevitable question is whether the category can maintain its momentum.
Consumers are becoming more interested in other spirit categories such as gin, malt whisky and tequila, and the UK’s most popular cocktail is the Mojito, which provides rum with an amazing platform. But do any of these pose a serious threat? “Vodka drinkers of yesterday are the vodka drinkers of today. For consumers aged 20 to 24, vodka is their major category and they will keep that in their repertoire,” says Neil Skinner, Smirnoff’s marketing manager.
Francis adds: “We haven’t really seen any change from the recession except that growth has slowed – but we’re still seeing growth. Interest in vodka is definitely steady.” One thing’s for sure, we’re bound to see more brands launching and more variety. “I think there’ll be more innovation to keep people interested in the category. Brands will bring out more variants, and there’ll be more one-off uses of gift packs,” says Bradbury.
With vodka catering for every budget, from economy to deluxe brands, one prediction is that the current underlying trend of trading up will continue once the recession ends.
But it remains to be seen where the greatest movement will be, from standard to premium, or premium to super-premium.
Another issue is whether sustained economic uncertainty will result in consumers polarising at particular price points or particular brands.
“I think it will be the brands they believe in, and what a brand stands for, rather than polarising on price points,” predicts Chase.
Skinner adds: “Trust is the biggest point that plays across all levels, some consumers will polarise at price points but it will be to brands they can trust.”