It may have been inconceivable a decade ago, but Tito’s vodka is poised to become the No.-1 vodka brand—and therefore the No.-1 spirits brand—in the U.S. market. According to Impact Databank, longtime leader Smirnoff was running neck-and-neck with Tito’s at the close of 2019, clinging to a slim lead. For Smirnoff, it’s the result of a decade’s-long battle against the onslaught of “craft” vodkas like Tito’s.
Tito’s has been unstoppable. The mega-brand, which launched as Tito’s Handmade vodka in the mid-1990s from a “one-room distillery shack” in Austin, Texas, has somehow retained a craft image even while conquering some of the biggest spirits brands in the world. While Smirnoff’s competition and growth strategy centers on innovation, Tito’s doesn’t feel the need to diversify. After all these years, it remains a single-label brand with no flavors or other line extensions, as founder Tito Beveridge says he believes he should make only one product and make it well.
“Craft” Expansion Continues
Many other vodka brands are tapping into the consumer affinity for craft and artisan products that drove Tito’s to the top. Deep Eddy, another Texas vodka, has achieved national success, relying on its craft image to help drive sales. “While Deep Eddy is part of the Heaven Hill family, we maintain operations in Austin,” says Reid Hafer, group product director at Heaven Hill Brands, which is based in Kentucky. “The brand is authentically Austin and the consumer identifies with that.”
But Tito’s, priced in the $15-$25 price tier, has been by far the most successful of the craft-style brands, rising from less than half a million cases in 2010 to 8.8 million in 2019, according to Impact Databank. New Amsterdam, a lower-priced E. & J. Distillers-owned brand, met with instant success in the early 2010s, and has since stabilized at 5.2 million cases. Deep Eddy, also at the $15-$25 tier, has doubled its volume since 2015, reaching around 1.4 million cases in 2019, a 10% gain.
Many other brands are looking to join those ranks. Matti Anttila, founder and CEO of Florida-based Grain & Barrel Spirits, notes that Tito’s has “established the domestic category, especially on the craft side, as a real category that consumers are embracing.” Grain & Barrel is capitalizing on that momentum with Dixie vodka ($19 a 750-ml). “We launched Dixie in 2014, as people were shifting to domestic in a lot of categories both inside and outside of beverage alcohol,” Anttila says. “There was a gap in the Southeast in vodka, and we wanted to fill it. We took a lot of cues from beer, with people wanting local brands. We wanted to be the vodka of the South.”
Umberto Luchini, founder and proprietor of Wolf Spirit Distillery in Eugene, Oregon, is also chasing success in evolving his Blood x Sweat x Tears Vodka ($25 a 750-ml.) into a national brand; currently, it’s in 25 U.S. markets. “The story and quality of the liquid and the regional element are filling a void in the vodka market,” Luchini says. “Craft is important, but what we’re seeing is that vodka with character, a story, and people has a good feel. Hand-crafted is limited because it’s expensive and time-consuming to make it scalable. We can make a product with the same story, and make it national. There aren’t many craft brands with the scale to grow nationally, and the trade appreciates that a lot.”
Many other regional and craft vodkas are looking to capture some of the vitality of Tito’s. Josh Hammond, co-owner and president of Buster’s Liquors & Wines in Memphis, Tennessee, says Lit Ultra-Premium vodka ($19 a 750-ml.), produced by Indian Street Beverage Co. in Savannah, Georgia, is “making a huge impact” in Memphis due to heavy advertising. Hammond also sees growth from locally made Honeybell vodka ($22) from Old Dominick Distillery, and from Everett, Washington’s Artist Master Series Organic vodka ($28).
The Stalwarts
While those brands and a few others are capturing consumer attention, Hammond says that the big brands—particularly Tito’s—still rule. “Tito’s continues to grow—that’s the amazing thing,” he says. Behind the bar, it may be even more difficult for smaller brands to make headway. James MacInnes, bar manager at Miami restaurant Kyu, sees some “cool things in the works” with smaller brands, such as California-based Hangar 1 vodka which uses grape distillate in its production process. But customer affinity lies with the big brands. “Customers seem to gravitate toward the larger brands in their vodka orders,” MacInnes says. “Brands like Grey Goose, Ketel One, and now Tito’s have done a great job on holding that throne.” Kyu has two vodka-based drinks on its specialty cocktail list, both of which lead in popularity and time spent on the menu. The Pink Puppy ($13) features Absolut Elyx vodka, lychee, lemon, and yuzu juices, and Peychaud’s bitters, while the Wynwood Mule ($14), named after the neighborhood that Kyu calls home, includes Russian Standard vodka, house-made smoked pineapple syrup, and lime juice.
Benjamin Rouse, head bartender at Henley in Nashville, also sees an enduring demand for vodka, mainly for the larger brands. “Tito’s seems to be the standard for both sides of the bar here in Nashville,” Rouse says. “But we still get a lot of people asking for Ketel One or Grey Goose, and both brands do a lot for bartenders and guests alike.” Despite the fact that Tito’s isn’t listed on the cocktail menu, it’s still the No.-1 vodka in the restaurant. Ketel One, meanwhile, features in one of Henley’s signature cocktails, the Green Lands ($12), which also includes Pitaud pineau des Charentes, Don Ciccio & Figli limoncello, simple syrup, lime juice, nasturtium, and salt.
Brands like Ketel One and Grey Goose, along with a range of other vodka leaders, continue to command huge volumes and, in many cases, drive growth within the category. Total vodka consumption in the U.S. increased an estimated 1.5% to 78.9 million cases in 2019, according to Impact Databank. Growth has been steady in recent years, with volume increasing at an average annual rate of 2% between 2014 and 2019.
Smirnoff and Tito’s dominate the category by volume, with the next largest brand, New Amsterdam, coming in about 40% behind at roughly 5.2 million cases. Imports Svedka and Absolut round out the top five. Svedka managed to maintain momentum in 2019 with a 3% advance to 4.5 million cases, while Absolut slumped 2.5% to an estimated 3.5 million cases. And despite its status as the top vodka brand above $25 a 750-ml., Grey Goose declined slightly to 2.25 million cases last year.
Super-premium Belvedere has been at the forefront in seeking to create a craft space on the import side. The best example is its two single-estate offerings—from Poland’s Smogóry Forest and Lake Bartężek—that complement the core labels.
“What’s exciting for us is that these products are a demonstration of taste and character through terroir,” says Rodney Williams, president of Belvedere vodka at Moët Hennessy USA. “For the consumer, the idea of terroir is very familiar when it comes to wine, but it’s quite new with regard to vodka. We have the specific appellations of Bartężek in northeastern Poland and Smogóry in the west. It’s really a discovery opportunity.” The brand is also being supported by a tie-in campaign with singer and actress Janelle Monáe, which features a limited-edition bottle and partnership with Monáe’s Fem the Future organization, dedicated to improving work opportunities for women.
Williams asserts that most imported vodkas have been struggling in recent years “because they haven’t seen elevated offerings within vodka itself.” No matter the reason, consumers are no longer putting a premium on imports as they opt for American brands—proving a general affinity for regional or local products.
“While we do monitor the performance of the imported vodka category, it’s important to note that ‘imported’ doesn’t necessarily mean ‘better’ in the eyes of today’s consumers—we aren’t hearing them categorize vodka on this axis as much as we might have in the past,” says Jim Ruane, brand director for Ketel One, which increased 3.8% in 2019 to 2.4 million cases thanks to a repositioning effort over the last two years. “Instead, we see consumers choosing vodka brands based upon occasion, personal affinity, authenticity, and quality.”
Indeed, domestic brands are capitalizing on their American heritage now more than ever. Anttila notes that the success of Tito’s is telling. “There’s a perception about it being craft, but it’s more of an American independent company,” he says. “Brands that are perceived as American independents are seen as attractive.” Dixie, he says, is positioned to become that brand in the Southeast.
This summer, for the second year in a row, Deep Eddy will offer new “authentic American limited-edition” packaging that features American flag imagery, according to Hafer. Going national this year, the program includes charitable donations to Folds of Honor, a nonprofit that provides educational scholarships to spouses and children of fallen or disabled service-members. Skyy vodka, which is owned by Campari America is also relying heavily on its American heritage. “American-made vodkas are in a strong position within the category as a whole, and we see that continuing, so we will continue to lean into our DNA as a vodka born right here in America,” says Bernadette Knight, senior category marketing director for white spirits at Campari America. “Consumers are seeking authenticity, quality, and provenance. Our Proudly American campaign, which will continue this year, explores the values—and the evolution of those values—on which America was founded, and what they mean to today’s citizens.”
Flavor Identities
One area where marketers have conflicting opinions is the relevance of flavored vodkas to today’s consumer. Flavors were all the rage a decade ago and remain hugely popular for many brands, although a few eschew flavors altogether. Tito’s is famously one of the latter. Conversely, Smirnoff is all-in on line extensions. “Pushing boundaries and getting creative with flavors will continue to be a large growth area for us,” says Kiisk. “This includes diversifying our offerings to satisfy a full spectrum of taste preferences, from our staple Smirnoff No. 21 to our core flavors, such as Smirnoff Raspberry and Smirnoff Red, White and Berry vodka, to our Smirnoff Zero Sugar offerings.”
Kiisk adds that more is to come. “We plan to double down on innovations and FMBs across the Smirnoff portfolio with a strong push in the spiked seltzer category,” she says. “You’ll also see continued emphasis on our zero sugar portfolio, including Smirnoff Zero Sugar Infusions and Smirnoff Seltzer. We expect our performance to reflect the investments that we’re making.”
Flavors remain integral for both Deep Eddy and Burnett’s, also owned by Heaven Hill, although focus has narrowed. The three core three varieties for Deep Eddy are Original, Lemon, and grapefruit-flavored Ruby, and other flavors continue to become available. “There were several flavor launches back-to-back and we felt that we needed a bit of breathing room,” Hafer says. “We want to give them a chance to grow and thrive and achieve mass distribution before we add another flavor. Burnett’s is employing a similar tactic. There are four flavors where we’re really working on expanding distribution—Cherry, Citrus, Raspberry, and Orange should be in every store everywhere.”
Dixie vodka takes the flavor offering a step further, including information about the source of each individual flavor on the label. “Our most recent flavor is Dixie Peach,” Anttila says. “We source all of our peaches from Lane Southern Orchards outside Macon, Georgia. We can then tell their story along with ours and have a very visual experience as well. It helps us talk about what really makes the South unique as a region. Craft is flourishing in the South from a culinary standpoint and the flavors really allow us to tell that story.”
Flavored or not, both bar professionals and marketers are anticipating steady performances, if not growth, for vodka this year. “There’s still big demand, as vodka is a very popular spirit in American drinking culture,” says Thierry Sighel, regional director of operations at New York-based Restaurant Associates, which runs beverage programs at cultural centers, monuments, offices, and other venues across four states and Washington, D.C. “We’ve noticed the rise of certain new brands, but we haven’t seen a noticeable decline in overall vodka consumption in our venues.”
Heaven Hill’s Hafer is confident about the category’s future. “Vodka is so core to consumption,” she says. “I don’t see it diminishing just because it’s so versatile. Year after year, the questions of who’s growing, who’s not, and those dynamics are all interesting, but the category as a whole is very sustainable and will continue to be the top category for years to come.”