As Asia continues to fall in love with vodka, is there room in the market for yet more brands? Zara Horner finds out
The APAC region is increasingly seeing new high-end vodka brands such as Snow Leopard and Ciroc flooding the market, joining more established makes, including Grey Goose, and classics like Smirnoff and Absolut.
With this seemingly infinite stream of new luxury vodkas available, beverage professionals are having to adjust their purchasing decisions.
Brisbane’s Bar Pacino is the city’s newest bar-restaurant. The Sicilian family-owned property boasts “a bespoke design of floor to ceiling glass, custom-created cocktails that tell more stories than a Corleone family member, fine Italian wines, a charcuterie menu that would make an Italiano sausage maker’s mouth water, and magnificent views,” according to its brochure.
Giuseppe Petroccitto runs Bar Pacino and believes vodka’s popularity, for drinkers and mixologists alike, lies in its versatility and subtlety.
“Vodka is the perfect all-rounder for men and woman. Easy drinking, subtle flavours and the options are endless from a simple vodka lime soda, to shots, to the most exquisite, elaborate cocktails.
“The marketing behind vodka brands is definitely helping and is a contributing factor to the success and growing love of vodka. When you have some of the biggest artists, Rick Ross, Drake, PDiddy, etc, singing about it, it definitely sways people’s choice!”
Choosing to stock Ciroc vodka, Petroccitto says there is still room in the market for new brands, “but I think they really need to have a point of difference as the main vodka brands really have the edge.
“Marketing as much as product is important, as image is everything these days and you see that in all forms of beverage. Brand alignment and association with certain events and sports can see your product surpass the rest.”
Petroccitto says he keeps a close eye on what is happening in and around brands to ensure he stocks his bar with what patrons are looking for.
“We keep abreast of trends, you have to in order to be ahead of them all the time. Some decisions are made on price but most are made on what the customer really wants.”
Ciroc is “walking out the door”, he observes.
“There are other good new brands out there, but Ciroc’s flavour is a point of difference which has made people change their vodka of choice, which had largely been Grey Goose and Belvedere up to now.
“Two of our most popular cocktails feature Ciroc vodka. Gates of Paradise uses fresh seasonal berries, juxtaposed with a citric vodka infusion, topped with sparkling wine and basil and Profane Love uses it combined with fresh fruit juices to create the perfect summer cocktail.”
Making it happen
“Our success is based on the quality and heritage of our product,” says Alexi Lambrou, Stoli group brand manager.
“Stoli is the bartenders’ vodka and has been for years. The growth and excitement in Asian cocktail culture is what seems to fuel this popularity, with recipe innovation coming from all sides.
“The market is indeed flooded with brands trading on image or gimmicks but consumers and bartenders place increasing importance on intrinsic qualities.”
But, according to a study by global marketing technology company, Affinnova, package design, particularly with vodka brands, plays a vital role in consumer perception and shelf impact.
It found that up-and-coming brands such as Pinnacle and Svedka are using “bold and unique package designs” with gimmicky inserts, moulded bottles and glass colourings to attract consumer attention.
And it’s paying off.
The new brands are gaining market share on established labels such as Smirnoff and Stolichnaya, and are significantly outperforming the industry average.
According to the report, poorly perceived packaging can quickly undermine any advertising spend to build a unique brand personality.
As an example, Absolut’s current bottle design is cited as eroding its brand equity.
While it successfully positions the brand as “fun, friendly and approachable”, among consumers 35 years and older, it’s less effective with Millennial (21 – 34 year olds) drinkers, who perceive Smirnoff as leading in those categories.
To maintain competitive share, vodka brands can no longer rely solely on their marketing mix or even existing brand equity, says the report, and must consider changing demographics, and adjust accordingly.
Support and commitment from a brand to its customers, as well as taste and consumer demand are key for Lambrou.
“You have to earn the word ‘luxury’,” he suggests.
“Despite being a ‘simpler’ spirit than say a whiskey or a cognac, there is still much to do to vodka to make it a luxury expression.
“For example, elit by Stolichnaya is consistently commended … thanks to its single source of grain, freeze filtration and hands-on bottling process.”
Lambrou says Stoli is “definitely showing our commitment to the region in lots of ways. In the off-trade we are running some exciting new promotions in partnership with key regional events. From an on trade perspective we are planning to expand our already very successful bartender engagement programmes.”
More on the market
Analysts at Moody’s Investors Service say consumer demand for pricier vodka brands and innovations such as new flavours are driving sales growth globally.
But in Russia, the place many would perceive to be the home of vodka, there’s been a marked decline in consumption.
Analysts believe this is driven by changes to domestic taxation, and to the fast-growing whisky, tequila and rum categories.
Vodka consumption in Russia is expected to continue its decline from 11.9 litres per capita in 2011, down to a eight litres per capita in 2015.
Globally the pinch is being felt, too.
But for Robin Chu, assistant brand manager Moet Hennessy Diageo Hong Kong, demand for vodka is increasing and will continue to do so because of its versatility and the number of ways vodka may then be presented to consumers.
“On top of this the growing mixology and cocktail trend in key cities in Asia has helped fuel this growing demand for vodka,” he says.
Chu concedes, “The luxury vodka market is a crowded one. But established brands such as Belvedere have seen considerable success particularly in Hong Kong, Australia and Singapore.
Chu says consumers nowadays are looking for brands to trust. “Strong product credentials and an international following is what consumers want.”
Product quality and taste are the “starting point” for purchasing decisions, says Chu.
“While some people may think all vodkas have a similar taste there is actually a marked difference depending on the raw materials used.
“Polish vodka, such as our own Belvedere is made using rye, which gives the vodka more character and flavour than a more neutral vodka made from wheat,” Chu explains.
“2016 is going to be a landmark year for Belvedere with the announcement of the partnership with the James Bond movies franchise. Belvedere is James Bond’s vodka of choice.
“Alongside this Belvedere will be doing a range of marketing activities to promote martinis and the new film’s premieres across the region.”
The team of specialist researchers and analysts at IWSR produce monthly and annual reports and forecasts.
They say that, “despite the recent well-documented slowdown in China and other emerging markets, Asia remains the key region for the long-term development of the global alcohol market”.
According to the IWSR Forecast Report 2014-2019, Asia is expected to see the largest volume increase of any region across the beer, wine, spirits and mixed drinks categories.
Total yearly consumption is set to surge by almost 1.2 billion nine-litre cases by 2019.
In contrast, consumption in Europe is projected to contract by 27.2 million cases over this time.
Two Asian markets – China and India – are forecast to be the largest-growing spirits markets between 2013 and 2019, together accounting for a rise of 120.5 million cases in yearly spirits consumption.
- Global spirits sales increased by a marginal 0.1% to 3.09 billion nine-litre cases in 2013 over 2012
- Chiefly attributable to big growth slowdown in China and India
- Whisky was the largest-growing spirits category (globally and each region) in 2013
- Vodka was second largest growing by 2.3 million cases globally in 2013
- Asia-Pacific remained the largest region for spirits at 1.93 billion cases
- China was the largest individual market, gaining 0.8% to 1.18 billion cases
- China alone now accounts for 38% of global spirits consumption, and India 9.8%
“Despite a slowdown in the economic growth of some Asian markets, wealth is still rising and a new generation of consumers emerging. The IMF has cut its growth rate forecast for China and although the spirits market has slowed, it is still experiencing strong growth, particularly compared with Western markets.”