Spirit of the glitz

04 May, 2007

With the ingredients of a vodka with ice fast becoming debatable, Laura Clark investigates the fashion for add-ons in the off-trade

Diva Vodka is, quite literally, bling in a bottle. Filtered through diamonds, rubies and emeralds, the drink comes bottled complete with a removable rod packed with hand-selected crystals.

And this ostentatious accessory has a price tag to match its niche positioning. For anything from £500 to a staggering £2,000, customers can have a personalised choice of gems inside their very own bespoke bottle.

Claiming to put the "va va voom back into vodka", Diva, many would argue , is more at home in a chic style bar packed with fashionable VIP wannabes sporting iced-out jewellery than it is sitting on an off-licence shelf alongside bottles of Smirnoff and Red Square.

But Diva is, in fact, just one of a raft of super-premium niche vodka brands that are seeing sales in the off-trade outstrip those in the on-trade. And, as these ultra-cool names gain ground in the take-home market, it's clear the sector has finally woken up to the reality that novelty doesn't just belong in cocktail bars and trendy nightclubs.

Diva was launched by Blackwood ­Distillers 18 months ago in the off-trade and the majority of sales are through ­specialist off-licences and top-end department stores such as Harvey Nichols and House of Fraser, according to sales director Tara Benson.

With a non-bespoke bottle retailing for around £35, drinkers are choosing to buy Diva from the off-trade rather than swallowing higher margins and paying in excess of £100 in a bar or club, Benson says.

"Off-trade sales are vital to the life of a super-premium vodka, as quite simply the very highest quality drinks and packaging can never be profitable only in the on-trade," she adds.

Supermarkets are in large part responsible for boosting niche vodka sales in the off-trade as more chains list specialist brands such as Wyborowa, Belvedere, Grey Goose and 42 Below, according to Edwin Atkinson, director general of the Gin & Vodka Association.

"Margins in the off-trade at the premium end are not to be sniffed at. Premiumisation of the off-trade and moving up-market has come from the supermarkets themselves. Supermarkets encourage that, in part to recover margins," he says.

Atkinson sees the smoking ban as another vital factor: "With the smoking ban, the on-trade is becoming increasingly food orient ed and you tend to see more wine being drunk and less spirits. So vodka sales in the off-trade are continuing upwards as we see a shift to home consumption."

The trend for consumers to seek niche drinking experiences at home will continue to accelerate, Atkinson predicts.

Helen Tungland, Global Brands' public relations manager, says that, despite the growing number of specialist brands gaining ground in the off-trade, the on-trade still remains the established arena for brand-building: "It's interesting to consider that 72 per cent of premium vodka sales are actually made in the off-trade despite most marketing and focus of activity being in the on-trade. On-trade marketing of vodka is therefore key in driving off-trade demand and sales."

Getting the message across

Focusing advertising on the off-trade is vital for growing brand awareness, but it has to be done at the right time in a brand 's development, according to Justin Smyth, brand manager for Ketel One Vodka at InSpirit Brands.

"It's important you get the correct message across about your brand and what makes it different to it s competitors, making sure your brand's message is consistent and continuous," he says. Smyth counsels against launching a niche brand in the take-home market before it is established in the on-trade.

"The UK is not as brand aware - unlike the US - when it comes to buying vodka and will often buy the cheapest. The premium sector is a very tough market and accounts for a very small proportion of volume. Once you have built up a strong presence in the on-trade this will help as a platform for the off-trade," he says.

An emphasis on premium and being different from the crowd has given

Ketel One the niche cult factor that so many new brands struggle to obtain, Smyth adds.

But just what is it that's driving this momentum for trading up to novelty niche in the off-trade, and how do brands create that all-important "cool " factor without spending vast amounts on marketing?

For Benson, the answer is packaging: "Consumers want the brands they choose to help define themselves. Packaging is key to differentiation - it says 'look at what I consume, my vodka brand is unique and so am I'."

But with so many brands competing for space on retailers' shelves, sceptics argue that vodka is becoming a status symbol, with designer brand names becoming more important than the taste of the liquid .

Benson insists that, even though packaging plays a key role in consumer choice, if the vodka isn't up to scratch, drinkers won't buy the product a second time round. "In terms of taste profile, there is no point producing a superb piece of packaging if the drink literally leaves a bad taste in the mouth," she says.

For Tungland, the niche trend has been propelled by brands that promote technicalities as part of their personality. "Premiumisation within the vodka ­market has been occurring over recent years as consumers increasingly attach value to the number of distillations and/or the range of varieties, be they rye, grain or potato.

"Given that vodka is perceived by many to be a tasteless spirit, styling and image would also play a very important part in consumer decision-making," she says.

Waitrose spirits buyer Giles Fisher predicts that in the future a larger number of specialist brands will gain market share. "Core brands are still important, but niche brands seem to be gaining ground too, which is great to see as their quality is usually a lot better.

"I hope and believe the market will diversify, breaking the stranglehold the big brands have and increasing the quality for consumers," he says.

Despite the recent surge of smaller, more eclectic brands launching into the off-trade, the question remains whether any of them can mount a serious challenge to Smirnoff's crown?

Looking at the top 20 spirits, which is dominated by clear leader Smirnoff, Glen Catrine's Glen's Vodka, Booker own-label brand Chekov and Halewood's Red Square, the likelihood of a niche brand breaking into the line-up looks remote - but the momentum for trading up to novelty niche could be about to change all that.

What's new? A round-up of this year's vodka news

Absolut has added grapefruit-flavoured Ruby Red to its range in 70cl frosted bottles . This is the ninth member of the Absolut vodka family. In January the Swedish government announced its vodka company Vin & Sprit will be put up for sale - sparking speculation that drinks giants Pernod Ricard, Diageo and Constellation Brands will be in the running to take over the Absolut brand.

Pernod Ricard's Stolichnaya has linked up with Xfm - a regional station covering London, Manchester and Scotland. The deal includes sponsorship of Music:Response shows, Xfm's unsigned band network Uploaded and a bespoke website.

Global Brands has added Poland's number one premium vodka Sobieski to its portfolio.

As part of a £1 million marketing campaign, Diageo hosted six music events in Scotland in March and April under the banner of Smirnoff & the Electric Cabaret. Brit nominees the Guillemots and The Go! Team were among guests performing live at venues in Edinburgh and Glasgow.

Whyte & Mackay is spending £5 million on Vladivar as part of a long-term repositioning strategy, including a link-up with Grazia magazine, sponsorship of the Black Wall art exhibition in London's Subway Gallery and setting up The

Vladivar Foundation to nurture emerging talent for a variety of future projects such as looking for an unsigned musician or band.

Smirnoff has spent £1.5 million on a new TV ad and on-pack promotion for its relaunched Diamonds giveaway. Targeting female drinkers, the campaign includes national press ads, digital advertising and a programme of in-store sampling.

Penderyn Distillery has launched Brecon Five Vodka. Distilled on-site at the Penderyn Distillery in the Welsh Brecon Beacons, it is a 100 per cent wheat grain spirit that is column distilled five times.

Parliament has added three flavours to its range - Mandarin, Pepper and Blackcurrant - which are all made from natural ingredients.

Everyone's a vodka-maker

As vodkas from as far afield as New Zealand and Mongoli a are rolled out to the off-trade, OLN asks: just how important is country of origin and what role does it play in branding?

"There is currently a strong trend among UK consumers to buy authentic products from the country of origin," says Michal Gierak, joint managing director of Ocean Spirits, wh ich distributes Polish vodka Soplica in the UK. "Poland is the birthplace of vodka and we can see that UK customers, when choosing food , are discerning to go for the products that are original," he adds. Soplica is currently listed in Somerfield, Thresher, Spar Scotland and Nisa-Today's.

The off-trade has seen a surge in Polish vodka sales as an increasing number of retailers capitalise on the UK's growing Polish population . This month Asda is bringing two Polish vodkas - Wyborowa and Belvedere - to selected stores. Morrisons has also added Polish vodka brands Graduate and Grasovka to its spirits offering - the latter only going on sale in stores in areas that have large Polish populations. An estimated 600,000 Poles now live in the UK.

Waitrose this week added three new vodkas to its range in a move to "express the varying styles and heritage of vodka from around the world". Nemiroff Black Label vodka is from the Ukraine (£12.99, down to £9.69 until May 20), 42 Below is from New Zealand (£18.99) and Green Mark is from Russia (£11.99).

It also stocks Polish brands Belvedere, Wyborowa, Zubrowka and Luksusowa. "Consumers seem to warm to vodkas that come from a country with some vodka heritage. Polish vodkas are selling well, as is Stolichnaya from Russia," says Waitrose spirits buyer Giles Fisher.

Heritage and country of origin are an essential component of a brand's personality, according to Justin Smyth, brand manager at InSpirit Brands - which has recently launched Ketel One from Holland into the off-trade. "I think consumers are becoming aware of what is available and that there are differences from product to product based on their origins, production methods and raw materials, but there is still a lot of work to be done to educate consumers of these differences," Smyth says.

What will you be stocking this year?

As the off-trade is flooded with niche vodka brand s, OLN asks a selection of independent retailers whether there's still a core range that off-licences need to stock to cater for consumer demand .

Weavers of Nottingham predominantly stocks mainstream brands such as Stolichnaya and Smirnoff. For director Philip Trease this is because niche brands need to be hand-sold . "We're really a wine merchant rather than an off-licence so we concentrate on wine sales. The big vodka brands will sell themselves but the quirky smaller names require attention," he says.

Derby-based Red Zebra doesn't sell any big brand names - it stocks a specialist range such as pepper vodka Pertsovka, cherry vodka Wisniowka, or Starka - a vodka infused with apple and pear tree leaves. Manager Jonathon Poore says: "We've been fiercely independent for so long that people don't even ask for brands like Smirnoff anymore. We've built a reputation on highly individual and hard to find products - that's one of the reasons people come to us ."

For customers of Spirits Off-licence in Newry, County Down, there's no question of niche versus premium - it's all down to price. "A lot of people go for brands like Nordoff because it's cheaper - price attracts people," says retailer Sinaid Campbell.

St Andrews-based online drinks specialist Drinkon.com sells a wide range of niche vodkas including Kauffman Selected Vintage Vodka (£60.25), Effen Black Cherry Vodka (£30.75) and Iganoff Cannabis Vodka (£18.99). Founder Lucy Mitchell says you need to find a balance: "We tend to sell more niche brands and the super-premium is the best sector for us, but you also have to have the mainstream brands in there."

Online Vinceremos Wines has seen the popularity of mainstream vodka brands drop in recent years. "People are wanting more specialist brands - there's a definite move away from the commercial ones. More consumers are experimenting, especially as prices become more competitive," says staff member Sarah Mitchell.

Organic Utkins UK5 is a top seller. "There's a definite trend towards healthy eating and drinking, influenced by programmes like Gillian McKeith's You Are What You Eat," Mitchell adds.




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