Despite all the attention given to whisk(e)y and Tequila over recent years, vodka remains by far the largest spirits category in the U.S. market. Even so, it has been losing volume over the past few years from its peak of 80 million cases in 2020, and last year the category declined 2% to 77 million cases, according to Impact Databank.
Vodka sales have been following a familiar pattern over this period, as consumers shift up to premium brands over both higher- and lower-end products, says Zach Poelma, senior vice president of supplier strategy and insights at leading distributor Southern Glazer’s Wine and Spirits. “In vodka, the largest category by volume, you’re seeing the premium price tier, which is almost flat, outpace both the super-premium and mid- to value-priced tiers, which are all declining,” says Poelma.
On a brighter note, the total vodka pie has expanded remarkably in the nearly quarter century since 2000. Back then, volumes stood at just under 37 million cases. By 2010 it had risen to 62.4 million cases, and even though growth began to ease at around that time, there has still been a steady progression up to 2020, at least for some brands.
Unstoppable Tito’s
One brand in particular continues to be the star. Vodka’s top performer in 2023 was once again Tito’s, marketed by Austin, Texas-based Fifth Generation. The single-SKU brand built on its previously strong performance, which propelled it to the top of the category, with an additional 5% growth last year, pushing above 12 million cases for the first time.
“We had a great 2023 and we’re thankful to everyone who was a part of it, from our Tito’s team to distributors, account owners, bartenders, and waiters, and of course, our loyal Tito’s fans,” says vice president of trade marketing Frank Polley. “We’ve seen strong growth from both our 50-ml. SKU ($3) and 50-ml. 12-pack SKU ($25), and saw an opportunity for a package extension in the study we conducted. With that, a new 50-ml. 4-pack is coming in April for on-the-go, traveling, gifting, and small gathering occasions.
“In January, we launched our first brand platform, ‘With Tito’s.’” Polley continues. “As a part of ‘With Tito’s,’ we also recently launched our ‘Spokescart’ campaign. We’ve always let our product speak for itself. So, instead of hiring a spokesperson, we created one as a vehicle for that message: a friendly, autonomous bar cart made of equal parts charm, resourcefulness, and timely mixology. Spokescart spots are running across social, digital, and streaming advertising this year, and we’re exploring opportunities for it to show up in real life at events.”
Tito’s is in the premium segment, retailing at around $20 a 750-ml. Last year, Tito’s steamed ahead at a rate of 5% from its huge base, eclipsing 12 million cases, according to Impact Databank, up from 7.4 million cases five years ago. Its U.S. retail value is now approaching $2.5 billion annually, commanding the top position among all spirits brands. Amid such ongoing growth, Tito’s has become more aggressive on the marketing front in recent years as RTDs have spread their wings in the spirits category. The brand has poked fun at seltzers with a “Tito’s in a Can” campaign among other moves.
Smirnoff, displaced from its long reign at the top spot by Tito’s in recent years, remains the second-largest label in the vodka category at 8.7 million cases. While it was down 1% last year and has U.S. retail value of $1.25 billion—second only to Tito’s—Smirnoff did post a 2% value increase in Diageo’s fiscal first half through December, led by the Smirnoff flavors (the portfolio retails for $13 a 750-ml. and above).
In third place is New Amsterdam, which along with Tito’s and Seagram’s was a top 25 vodka brand to post positive growth last year. The Spirit of Gallo brand eked out a 0.3% increase to 5.35 million cases, helped by a line-up of 11 flavors including mango, apple, and watermelon, among others ($13 a 750-ml.).
Import Challenges
Imported vodka, which was once the star segment of the category, continues to search for new avenues of growth. Absolut showed the steepest losses last year, dropping by 11.3% to 2.8 million cases, according to Impact Databank. The brand has relied on line extensions like the lower-abv Absolut Juice to stabilize its performance. “Closing out 2023, it was great to see that Absolut outperformed the vodka category—excluding Tito’s—during the key holiday period, which comes on the heels of positive results last holiday, showing the continued success of our Espresso Martini programming,” notes Absolut’s vice president of marketing Matt Foley. “From showcasing Absolut Espresso Martinis on social and digital media to massive Absolut x Kahlúa Espresso Martini co-branded displays in store to an Absolut x Kahlúa fragrance that went viral, consumers could not go anywhere without associating the Espresso Martini with Absolut and Kahlúa this past holiday season.”
Absolut continues to try bold moves to reignite growth. It officially introduced the Absolut and Ocean Spray Vodka Cranberry cocktail in a ready-to-drink (RTD) format this year. The new Absolut and Ocean Spray Vodka Cranberry RTD range includes Vodka Cranberry, Vodka Cran-Grape, Vodka Cran-Pineapple, and Vodka Cran-Raspberry, which are available in 355-ml. cans in an 8-count variety pack ($18), single flavor 4-pack for Vodka Cranberry and Vodka Cran-Pineapple ($10), and single cans ($4). Absolut is also expanding in the ready-to-serve category with its new Absolut Cocktails line, which features flavors like Vodka Mojito and Raspberry Lemonade, adds Foley.
Meanwhile, Bacardi’s Grey Goose held firm at 2.5 million cases. Last April the brand launched a Martini in a bottle, capitalizing on the RTD trend. The Grey Goose Classic Martini Cocktail is a ready-to-serve entry that contains 8-10 servings a 750-ml., and it’s made with Grey Goose vodka, dry French vermouth, and orange bitters. Available nationwide in the U.S. and on the brand’s website, the Grey Goose Classic Martini Cocktail is available in 375-ml. ($17) and 750-ml. ($30) formats. Elsewhere, Seagram’s, from Infinium Spirits, grew 1.8% to nearly 1.2 million cases, and McCormick, from its eponymous Distilling Co. in Weston, Missouri, slipped 2% to 1.5 million cases. Along with vodka, McCormick’s portfolio includes Brokers gin, Platte Valley whiskey, and Tequila-based Tarantula Azul, among others.
Among other Diageo vodkas, Ketel One fell in 2023 as its Botanical lineup declined, although Diageo says the brand still expanded its share in the vodka category, backed by its “Made to Cocktail” campaign. Cîroc has been troubled in recent years, and last year was no different. The French vodka brand declined 9.5% to 1.2 million cases in 2023. Diageo recently announced Cîroc Limonata, the latest permanent addition to the brand’s flavor portfolio, bottled at 35% abv and flavored with Italian lemon and other citrus ($30 a 750-ml.). Cîroc faced challenges during Diageo’s fiscal first half ended in December, with the brand seeing a 21% decline.
While Heaven Hill is best known for its whiskey labels, it also has two vodkas in the top 20, Burnett’s and Deep Eddy, which were down 5.1% and 2.8%, respectively, last year. Deep Eddy made its own RTD play in 2023 following the success of Deep Eddy Vodka + Soda. The brand most recently launched Vodka + Tea Hard Seltzers in a variety of flavors including Lemon Tea, Sweet Tea, and Peach Tea. Each can of Deep Eddy Vodka + Tea Hard Seltzer is 180 calories, gluten free, and has 4.5% abv. The portfolio launched nationwide in a variety pack of six 12-ounce cans ($17). Deep Eddy RTDs were flat last year at 143,000 cases, according to Impact Databank.
While vodka declined overall last year, Grey Goose vice president of marketing Aleco Azqueta predicts premiumization will continue to be a strong trend for the vodka market. “Even in these uncertain times, people are practicing discretionary spending in which they are splurging a bit on experiences, such as a Grey Goose cocktail in a high-image bar or restaurant,” he says.
Absolut’s Foley reiterates that the return of cocktail consumption in the on-premise is a positive sign. “We’re seeing some of the highest trending cocktails being made with vodka,” he says. “The Espresso Martini has taken the industry by storm, and the momentum just keeps continuing.” Marketers hope these and other initiatives will create a path to long term growth.