This article was initially published in the October issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
Vodka may have been outshone by gin of late, but the category is putting its own spin on market trends to woo European consumers. Richard Woodard reports.
Vodka’s much-publicised travails in the US market, where the trends for many historically-strong brands have been difficult for some time, have tended to overshadow the category’s gains and continued health elsewhere — and Europe is a prime example of this phenomenon.
According to Chanhy Bastos, international brand manager of La Martiniquaise-owned Poliakov, the continent remains “dynamic” in terms of vodka sales, with figures from IWSR Drinks Market Analysis showing a 5.2% volume increase for the category across Europe during 2021.
“This is a key continent for Poliakov, where we are in the top ten of the bestselling vodkas [IWSR 2022],” she adds. “We have a lot of strategic countries there.”
A spin on the botanical trend
Nonetheless, the feeling has persisted in recent years that vodka had begun to look tired in some mature markets, often in painful contrast to the dynamism and innovation that has become endemic in the gin category — from exotic botanicals to imaginative packaging designs, flavours and RTDs. One of the key advantages that vodka enjoys, however, is its adaptability — by its nature, the spirit provides brand owners with a blank canvas on which to paint pretty much anything they like. As such, it’s been relatively straightforward for vodka brands to put their own spin on the botanical trend, through innovations such as Ketel One Botanical, Grey Goose Essences and Belvedere Organic Infusions.
Although gin continues to explore growth opportunities in a number of emerging destinations, the juniper boom of recent years is plateauing and even receding in mature markets, such as the UK and Spain. That could provide vodka with some promising opportunities in the future.
Gin slowdown boosts interest
“We’re starting to see a slowdown in gin, giving way to more interest in vodka, especially craft vodkas like Tito’s [Handmade Vodka],” says the brand's MD of international, John McDonnell. It’s clear he's also a fan of traditional and proven marketing techniques. “One of the best strategies for keeping people engaged, and for introducing our brand to new consumers, is the tried and true 'liquid-to-lips',” he says. “Tastings are the best way to reinforce the quality and authenticity of our product.”
Beyond this simple but effective approach, brands are thinking in ever more original and innovative ways about how to reinvent vodka for today’s consumers, whether that’s through championing the spirit’s role in popular serves, or tapping into the consumer zeitgeist around health & wellness and mindful drinking.
“It's the moment and consumption modes that drive the category,” says Bastos. “It's up to the brands to innovate and challenge themselves. Poliakov highlights its flagship cocktail, the 'Poliakov Mule', in our press, outdoor communication, in shops on neck tags, or on our social networks.”
The brand also positions itself via its ‘Born in the Ice Dimension’ strapline, and through regular participation in high-energy festivals and music events. Poliakov has invested strongly in its flavoured line-up, which now encompasses variants such as Strawberry, Lemon, Caramel, Mandarin, Cranberry, Green Apple, Peach and the recently-launched Chocolate Vodka.
The right innovation at the right time
Vodka’s malleability means brand owners are spoilt for choice when trying to come up with new ways of connecting with consumers — the key is choosing the right one for the right moment. “Reinvigoration usually happens through category innovations, changing drink trends and changing consumer behaviour,” observes Amber Beverage Group [which owns the Moskovskaya brand] CMO & Americas MD Pepijn Janssens. “The vodka category ticks all three of those boxes."
He adds: “Drinks trends aren’t something you can always fully control, but trending serves, such as Moscow Mules and Espresso Martinis, have been helping the category to stay visible and front of mind. Through the versatility of the liquid, we can even adapt drinks trends from other spirits categories and make them work with vodka as the core spirit instead — a 'Caipiroska', for example.”
While it’s important for vodka brands to target fresh consumption occasions, NPD remains a key part of the marketing playbook too. “Innovations are crucial to stand out, recruit and drive impulse purchase,” says Janssens. “This can happen through new flavours, new SKUs or cross-collaborations. This adds new value, it can encourage extra shelf space and can help recruit new consumers.
“Our Moskovskaya Pink, for example, isn't just a flavoured vodka, it's also a great tool to recruit consumers from the pink gin trend to help us access a broader audience.”
COVID shift in Europe’s markets
The scope and diversity of Europe’s vodka markets is another positive attribute for the category — from the traditionally on-premise-dominated destinations of Southern Europe to more retail-focused markets like Germany and the UK. While the pandemic brought a shift in the mix of markets and channels, there are now signs of [relative] normality returning.
Even the imposition of health-related restrictions on the beverage alcohol market can provide opportunities, according to McDonnell. “In Ireland, since they’ve instituted Minimum Unit Pricing, Tito’s is up double digits. So, that’s definitely an opportunity market for us. We’re also seeing nice growth in the Balkans, where we’ve recently appointed new distributors.”
Given the strong market position of La Martiniquaise domestically, it’s little surprise that France is a top priority for Poliakov — the brand is the country's category leader with a 40% market share (IRI figures). “In this country, we showcase a lot of great communication: press, parties, in POS and promotions, limited editions and displays, but also a lot of advertising on metro or bus,” says Bastos.
“Benelux is also a very interesting area for the brand — we have the opportunity to do some great activations, such as partnerships with TagMag or Vice to organise student parties. Spain is also very dynamic, participating in festivals throughout the summer, which is a great opportunity for Poliakov to be close to its target audience.”
Janssens references Italy and Spain as providing a “particularly strong” opportunity for Amber’s flagship Moskovskaya brand because of the strong influence of bar culture in the two markets. “Following the long period of COVID-19 restrictions," he notes, "we see a strong comeback in on-trade consumption in Southern Europe.”
But that’s not all. “The UK is also interesting for us,” Janssens reports. “It's by far the biggest mainstream vodka market in Europe, yet it's also one of the most competitive.” Here, the company hopes to leverage the route-to-market strength of its own distribution business, Amber Beverage UK.
Nor should companies forget the potential of markets further east, argues Janssens. “We see significant potential for growth in Eastern European countries, where a strong bar scene is currently developing and consumers are trading up to premium international brands.”
Russian heritage: It’s complicated
Mention of Eastern Europe raises the spectre of the Russian invasion of Ukraine. Beyond the obviously devastating human consequences of the conflict, the ramifications for Russian vodka brands — or even those that only appear to be Russian — have been serious. Some, such as Russian Standard and Beluga, have been removed from retailers' shelves and back bars, and there have been reports of a consumer backlash against brands with a Russian backstory, or even those that use retro Soviet imagery and packaging cues.
McDonnell sees a positive in that consumers have learned more about the origins of vodkas, loosening the traditional association with one particular part of the world and discovering that modern vodka is a cosmopolitan category.
“People have definitely come to realise that great vodka doesn’t only come from Eastern Europe,” he says. “Retailers have discovered that too — we've gained more shelf space in stores that have discontinued Russian vodkas.”
The situation is more complicated for a brand with an explicitly Russian name and heritage, such as Moskovskaya — even if it's made in the European Union. “There have been heavy delistings of Russian products across the globe,” says Janssens. “It took us a lot of proactive communication and full transparency to clarify our EU provenance for Moskovskaya.
“Now, the trade and many consumers understand the product they can buy around the world is produced in Latvia and made with ingredients sourced entirely from the EU. I'm happy to share that we were able to protect our business and stay on track.”
Opportunities for growth also encompass the Global Travel Retail channel, which is beginning to recover from the pandemic's worst restrictions. While airline passenger numbers in Asia continue to be impacted, traffic in Europe returned to near-normal levels this summer — even if the airport and flight experiences for many were still far from smooth.
Consumers seeking substance
The craft spirits segment has also wrought changes in the types of vodka hitting the market, and — although this is a gradual process — in consumer perceptions of the category. Blank neutrality is, at least to some extent, being swapped for character, provenance and authenticity.
This phenomenon is in part built on a changing consumer mindset that hankers after products with identity and substance, and — among younger drinkers in particular — prioritises issues such as sustainability, high ethical standards and mindful drinking, with an eye on sugar levels, calories and alcohol intake.
“Consumer behaviour has obviously changed,” says Janssens. “They want to live healthier lives and consume more consciously, and vodka can fit in with the desire to consume low-calorie spirits.
“As well as being one of the lowest-calorie spirits available, vodka-based serves don’t need a lot of sugar as the spirit has quite a neutral flavour, while being smooth enough to drink in simple classics like a Martini or a Vodka & Tonic.”
The rise of responsible brands
McDonnell ticks off three main priorities for Tito’s: digital convenience, social responsibility and sustainability. He says: “That’s particularly important, because 70% of Gen Z consumers say they’re more interested in supporting brands that are socially responsible — and they’re more willing to pay more for those products.”
For Janssens, the most influential ‘meta’ trends include no- & low-alcohol, health, sustainability and escapism. “We’re looking into all of them and, with Moskovskaya, we are looking to underline the green brand identity by establishing more environmentally-friendly credentials, and therefore to provide tangible value to our consumers (rather than marketing whitewash, which young consumers fail to fall for),” he says.
There’s no doubt that Europe remains an important and potentially lucrative destination for vodka brand owners. However, the marketplace is extremely crowded; carving out a niche here is supremely challenging. In 2022, there’s a growing feeling that the often showy and glitzy vodka marketing of yesteryear is increasingly out of place — and being usurped by a simpler, ‘less is more’ approach.
“In a highly competitive category like vodka," says Janssens, "it's hard to stand out by flavour or quality alone. With Moskovskaya, we aim to be at eye level with our younger target audience by making the brand approachable, sharing the same ideals and adding tangible value. Less marketing fuss, more transparency, more real value. Young consumers embrace authentic brands."
This article was initially published in the October issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
