It’s no secret that today’s consumers are fickle, changing from one spirit to the next with regularity. Today, Bourbon and other American whiskies are soaring, but tomorrow it might be brandy, gin, mezcal or something else. Amidst all that flux, vodka has risen above the fray. While individual brand performances have varied, the underlying trend remains positive. In fact, vodka hasn’t had a down year since 1996, and volume is now approaching nearly 75 million cases annually, according to Impact Databank. “Consumers are still drinking vodka, and they’re drinking it regularly,” says Reid Hafer, senior brand manager for Burnett’s vodka at Heaven Hill Brands. “They just have other things going into their basket as well.”
Hugh Preece, operating partner of the five-unit Salt Creek Grille in California and New Jersey, says vodka continues to appeal across generations. “Baby boomers, Generation X and millennials all drink vodka—it’s just a matter of which brands,” Preece says. “The boomers are drinking Grey Goose, Ketel One and Stoli. Generation X loves Ketel One and Stoli, as well as Tito’s, while the millennials are into Tito’s, Sobieski Cytron and Stark Vatten.” At Salt Creek Grille locations, about 60 percent of the featured cocktails contain vodka.
Within the vodka category, a new generation of growth brands is now rivaling the category leaders. New Amsterdam and Tito’s Handmade, for example, are now both among the top five vodkas, pushing down more established brands like Burnett’s, Skyy and Pinnacle. Other labels with smaller but still dynamic gains in recent years include Exclusiv, Platinum 7X, Taaka and others.
New Amsterdam wasn’t even on the market in 2010, but last year it hit an estimated 5 million cases—a 15-percent rise from 2015, according to Impact Databank. Owned by E. & J. Distillers, it’s now the No.-2 vodka brand in the United States. It’s still a far cry from the estimated 9.35 million cases registered by category leader Smirnoff in 2016, but its growth has been impressive. Michael Sachs, director of marketing for New Amsterdam, says consumers now understand “that domestic vodka can compete at the same level as the top spirits producers throughout the world.” In fact, much of the most recent growth for vodka in the United States is fueled by domestic brands. Imported vodkas as a group saw depletions slump 1.8 percent to 23.4 million cases in 2015, according to Impact Databank.
Six years ago, domestically produced Tito’s was a regional Texas label at 400,000 cases, but it has since emerged as one of the most dynamic growth brands in the industry’s history. In 2016, Tito’s jumped 33 percent over the previous year to an estimated 3.7 million cases. It has quickly emerged as a favorite both in on- and off-premise venues. Jose Barrios, owner of the Vintage Liquor & Wine Bar retail chain in Miami, says his customers have never been put off by the cost of some super-premium and luxury vodka brands, but they’ve been embracing Tito’s, which carries a lower price tag. In his store, Grey Goose retails for $51.98 a 1.5-liter, while Tito’s costs $29.88 for the same size. “We’re selling high-end vodkas—that doesn’t stop,” Barrios says. “But the brand that’s really on fire is Tito’s.” Jeff Cirace, co-owner of Boston retailer V. Cirace & Son Inc., agrees. “People aren’t buying Tito’s just because it’s priced correctly,” he says. “That brand is a phenomenon.”
The success of Tito’s, coupled with the strong growth achieved by craft spirits of all types around the country, has sparked enthusiasm for smaller vodka brands. Deep Eddy vodka was launched in 2010 and purchased by Heaven Hill Brands in 2015. It just passed the million-case milestone, according to Deep Eddy president John Scarborough. He notes that the popularity of craft distillers and the growing importance of using fresh ingredients has benefited Deep Eddy, which emphasizes the incorporation of real fruit in flavoring its vodka. “Consumers are better educated about ingredients and quality,” he says. “They care about what’s going into their products, and Deep Eddy has benefited from that trend.”
Beach Whiskey Co. is hoping to create demand for a national organic craft vodka with American Harvest Organic vodka. The company purchased American Harvest in January from Sidney Frank Importing Co., which created the brand in 2011. Production has been halted since 2015, when Sidney Frank was acquired by Mast-Jägermeister. “We’re very bullish on American Harvest as a sub-segment of craft and organic spirits,” says Smoke Wallin, CEO of Beach Whiskey Co. “We think it’s got a big future.” Whether the overall vodka market grows or not, Wallin believes many consumers will shift to organic and craft offerings.
Pernod Ricard is also betting on domestic vodka. In March 2016, the company launched the Smithworks brand to capitalize on the consumer trend toward local products. Brand director Troy Gorczyca says all ingredients are sourced from the Great Plains, located within a day’s drive of the distillery in Fort Smith, Arkansas. Thus far, Smithworks is available in five markets. “As a product that comes from the heartland, it felt only right that our initial launch would be in Arkansas, Colorado, Missouri, Kansas and Oklahoma,” Gorczyca adds.
Of course, there are myriad other small vodka brands around the country with strong local or regional appeal. Ryan Maybee, co-owner and partner of The Rieger restaurant and Manifesto bar in Kansas City, Missouri, says consumer brand priorities have changed. “I’ve seen a dramatic decrease in customers calling for a specific luxury vodka or well-known brand, compared to what we saw when we opened six or seven years ago,” he says. “Back then, everybody had to have Grey Goose or Absolut. Today it’s a non-issue.”
Maybee says his venues have embraced the change. “Suggesting a local vodka producer adds hospitality,” he says. “If we’re just order-takers who provide the same big brands found elsewhere, then we’re not doing our jobs.” Maybee benefits directly from this strategy as the cofounder of J. Rieger & Co. Distillery, which launched Midwestern Premium vodka in 2015.
In many markets, local brands are giving their national counterparts some serious competition. For example, at Andy’s Liquor in Rochester, Minnesota, general manager Mike Sedor says local “value” vodka brands like Phillips and Karkov sell well, and the locally produced Prairie Organic vodka is currently resonating. “This trend has affected brands like Absolut, Grey Goose, Ketel One and Belvedere,” Sedor says. “These labels continued taking price increases and priced themselves out of the market.”
Some venues embrace local and craft brands because those products appeal to their customers, but many bar professionals say they also meet or exceed quality levels portrayed by the category leaders. At Datz in Tampa, Florida, bar manager Morgan Zuch recommends the “soft and smooth” Wheatley vodka from Sazerac Co.’s Buffalo Trace Distillery. The restaurant’s Bloody Mary ($10) blends Wheatley and Major Peters’ “The Works” Bloody Mary mix, served in a smoked salt–rimmed glass and garnished with celery and a slice of Nueske’s bacon.
But even with smaller brands taking share, many of the massive vodka category’s volume leaders remain solid performers. Smirnoff, by far the largest vodka brand in the United States, declined 0.5 percent to 9.35 million cases in 2016, according to Impact Databank. Smirnoff vice president of marketing at Diageo Jay Sethi says this year’s strategy will “challenge the consumer perception of what attributes really make a quality vodka,” noting that millennial consumers value brand authenticity and great quality. “Our goal this year is to drive more honesty in the vodka category,” Sethi says. “The rise in popularity of many regional and local brands has demonstrated that consumers want more transparency. We look forward to becoming a leader in driving a powerful and more authentic message.”
New Amsterdam displaced Constellation Brands’ Svedka in the No.-2 position in 2016, despite the latter label’s 3.6-percent gain to 4.4 million cases. Svedka’s growth in recent years has earned it the top spot among imported vodka brands, a position long held by Pernod Ricard’s Absolut. Now the No.-4 vodka brand, Absolut staunched the decline of the early 2010s with a 0.2-percent gain to an estimated 4.1 million cases last year.
Absolut director of marketing Nick Guastaferro says the brand’s heavy investment in national advertising will continue to be important, but Absolut is simultaneously upping its game in digital communications targeting millennial consumers. “The brand is focusing on bite-sized, snackable content, such as recipes and connections from a social purpose or mission perspective,” he explains. He also stresses the continuing interaction with bar professionals and retailers to make sure the brand stays top of mind. “It’s important that we’re connecting with the right bartenders in the on-premise, developing drinks recipes and helping gain menu support through our partnerships, as well as in the off-premise to make sure that we’re relevant at p-o-s,” Guastaferro adds.
Tito’s ranked fifth among vodka brands in 2016, overtaking Burnett’s on a 33-percent advance to 3.69 million cases. Burnett’s nevertheless had a strong year, growing 4 percent to an estimated 3 million cases. Like Absolut and many other brands, Burnett’s is investing to make sure it speaks to millennials in methods they embrace. “We have an active social and digital presence because that’s where millennials are spending their time,” Hafer says, adding that the brand’s core base is 21- to 30-year-old consumers.
Elsewhere, Campari America’s Skyy held steady at an estimated 2.8 million cases in 2016, while Beam Suntory’s Pinnacle fell 1.9 percent to 2.6 million cases, according to Impact Databank. Diageo’s Ketel One advanced 3.4 percent to 2.2 million cases, and the brand is hoping to capture some of the enthusiasm for artisanal spirits by highlighting its similarities with craft vodkas. “It’s less about imported versus domestic and more about ensuring a brand has authenticity and heritage,” say brand director Rodrigo Ortigosa. “Ketel One represents tradition, hard work and the pursuit of perfection, all themes that resonate with the craft spirits consumer.”
Another Diageo brand, Cîroc, is also tapping into the craze for local connections, albeit in a more experiential way. Brand director Ryan Robertson says Cîroc’s latest campaign, titled “Let’s Get It,” attempts to “empower and encourage entrepreneurs and creators to pursue their passions and live their dreams.” The vodka saw depletions rise 23.5 percent to an estimated 1.95 million cases in 2016, according to Impact Databank.
Future Of Flavors
Vodka’s 20-year growth trend can be attributed in part to the constant churn of flavor options offered by leading suppliers. Most major vodka brands have a stable of flavors—everything from citrus to cotton candy—that were responsible for expanding the category. But after hundreds of introductions over the past decade, the flavor game has lost steam. “Consumers are still interested in flavors, but the industry needs to continue bringing them reasons to embrace flavors in a big way,” says Tracey Clapp, vodka marketing director at Sazerac Co. The company owns Taaka vodka, which has a variety of flavors from Peach to King Cake, and its 375 Park Avenue subsidiary markets the prolific Van Gogh brand.
Smirnoff’s Sethi notes that consumer demands have changed somewhat. In 2016, Diageo launched Smirnoff Sourced, a line of flavored vodkas made with 10-percent fruit juice. “The brand was introduced to market as a way to answer the growing consumer demand for a quality flavored vodka that did not use high fructose corn syrup,” he says. On the flip side, Guastaferro says Absolut will discontinue some flavors to create “a more tightly defined flavor space” going forward. In January, Absolut extended its flavor portfolio with Absolut Lime ($20 a 750-ml. bottle).
Preece of Salt Creek Grille says he’s interested in flavors behind his bar, but offers a very selective and modest assortment of flavors. Salt Creek’s most popular cocktail is the French Pear Martini ($12), made with Absolut Pear vodka, St-Germain elderflower liqueur and a Zardetto Prosecco float. Zuch at Datz is also paring down. “I’m interested in having the basic, more common flavored vodkas behind the bar,” she says, citing citrus and vanilla. “These offerings can help add a bit of flavor without extra ingredients. More unique flavors like cherry, cotton candy, apple or strawberry are never requested anymore, and those unique flavors can also be tricky to work with in a cocktail.”
Retail stores have more space than the typical back bar, but Sedor of Andy’s Liquors says his frustration lies with the redundancy of flavors, noting that if one brand launches a new flavor, a half-dozen more will follow. “I’m looking to downsize the vodka flavors to have at least one of each flavor, with fewer companies involved,” Sedor says.
Flavors or not, vodka continues to expand its volume. While there has been some uncertainty in the category over recent years, many emerging brands are now showing strong growth and keeping the segment vibrant. “The category is healthy and strong,” Heaven Hill’s Hafer says. “I expect it will stay very relevant.”