Vodka is still the undisputed spirits favorite among American drinkers, and in the past year, domestic brands continued to deplete tens of millions of cases—even in a market struggling to balance expansive flavor ranges, growing craft brands and changing consumer tastes. Category leader Smirnoff outsells its runner-up New Amsterdam by more than three to one and depleted an estimated 9.45 million cases in 2014, according to Impact Databank. The Diageo brand remains the top-selling spirit in the United States despite a decline of about 3 percent last year.
Burnett’s from Heaven Hill Brands ($9.99 a 750-ml. bottle) is known for its broad palette of flavors, along with its core unflavored expression. The brand has experienced strong growth in the past few years, depleting an estimated 2.61 million cases in 2014, compared to 2013’s 2.35 million cases, according to Impact Databank. Burnett’s senior brand manager Reid Hafer notes that sales split almost evenly, with flavors accounting for 45 percent. “We have strong growth in both our unflavored and flavored variants,” she says. “Burnett’s competes in the mid-tier space but our pricing is more value-oriented, so consumers feel good about buying the brand.”
Up-and-coming brands are also playing a major role in domestic vodka’s success. E&J Gallo’s New Amsterdam vodka ($14.99 a 750-ml. bottle) launched four years ago and sales have taken off, rising from just 45,000 cases in 2011 to an estimated 2.9 million in 2014, according to Impact Databank. Todd Randall, vice president of the four-unit Randall’s Wines & Spirits based in St. Louis, notes that vodka makes up 30 percent to 40 percent of overall sales, with the brand at the top. “Our No.-1 vodka is New Amsterdam,” he says. “Its increase here has just been absurd over the past year or so.” Randall’s sells New Amsterdam for $9.99 a 750-ml. bottle, a step below the competitive price point that the brand’s senior director of marketing Gerard Thoukis notes is key to its success. “The vodka’s aspirational positioning, premium package, exceptional quality and approachable price are all characteristics which strongly resonate with our target millennial consumer,” he explains.
Among the most promising players on the domestic scene are two Texas-based craft brands: Tito’s Handmade and Deep Eddy. While Tito’s has been climbing consistently since its founding 18 years ago, Deep Eddy only hit the market in 2010. The brand has five variants—unflavored, Cranberry, Sweet Tea, Lemon and the grapefruit-flavored Ruby Red (all $19.99 a 750-ml. bottle)—and has quickly become popular in the off-premise. Deep Eddy founder and CEO Eric Dopkins notes that while 30 percent of sales now occur on-premise, the category is experiencing two-to-one growth over retail. Last year, Deep Eddy depleted 330,000 cases, more than double its 145,000 case depletions in 2013, according to Impact Databank. Sales are expected to increase with last October’s opening of a new distillery that can produce up to 1.5 million cases annually.
Like others, Deep Eddy targets young legal-drinking-age consumers and has found success in this demographic. “Our consumers’ passion leads them to spreading it to others, and word-of-mouth is the best advertising a young brand can get,” Dopkins says. “Our consumers, retailers and bartenders are extremely supportive.”
Other brands are also focusing their attentions on millennial consumers, with flavors designed to appeal to trends and marketing campaigns that center around parties and nightlife. Burnett’s launched a mobile application last year that has over 400 recipes to facilitate mixing drinks at home, and Hafer explains that 21- to 35-year-olds drive the brand’s new flavor releases. “They like having those options,” she says. Jason Connelly, vice president of sales at Phillips Distilling Co., notes that millennials also comprise the core audience for UV vodka ($11.99 a 750-ml. bottle). “They’re adventurous,” he says. “They look for savory flavors like UV Sriracha.”
Campari America’s Skyy ($18.49 a 750-ml. bottle) is taking a different approach. Last year it debuted updated packaging and launched the “West of Expected” marketing campaign. “We saw an opportunity to inject some freshness into vodka advertising and promotions that had become overloaded with clichés,” says Jason Daniel, category marketing director for vodka at Campari. “Our West of Expected activations invite millennial participation and are fueling far more digital buzz than past programming ever did.” Among the brand’s nontraditional marketing are such efforts as #ToastToMarriage, which supports legalizing same-sex marriage in states where it’s currently prohibited, and #DoubleTip, a program encouraging consumers to tip their bartenders twice as much during the holidays.
Mixing Up Flavors
While flavored vodkas were responsible for much of the category’s growth in the last decade and a half, demand for ever-expanding flavor options has slowed. David Jabour, president of the 75-unit retail chain Twin Liquors in Texas, says that while vodka overall continues to grow, “as a general rule, the flavored vodka category is weak with us.” Randall notes that while flavors offer visual appeal, most customers at his store feel overwhelmed when it comes to purchasing. “People want to see the vast array of flavors, yet they’re going to buy the regular Smirnoff,” he says. “They like looking at the flavors, but I don’t see as many people actually picking them up.”
Although their overall flavored sales continue to increase alongside the core expressions, flavor-heavy brands like Burnett’s and UV have also experienced a decline in consumer demand for certain styles, such as confectionery variants. Instead, consumers are reaching for tried-and-true standbys. “We’ve moved back to the traditional fruit flavors that are more appealing to our consumer audience,” Burnett’s Hafer explains. “They understand those offerings and know how to mix them.” UV’s Connelly agrees. “The core, staple flavors that we launched in 2001 continue to drive growth for the brand,” he notes. “New item innovation like UV Sriracha has also driven it, but UV Blue Raspberry has been our top-selling flavor since the day we started, and it continues to be today.” Indeed, UV Blue Raspberry makes up nearly a third of the brand’s overall sales.
Consumers are increasingly reaching for flavors that they can easily mix. The Skyy Infusions range, which includes Blood Orange and Pineapple variants, continues to post strong results, according to Daniel. “The marketplace is shifting toward flavored vodkas with more sophisticated taste profiles,” he says. Skyy released two new Infusions offerings in January—Pacific Blueberry and Texas Grapefruit. UV is also releasing a Ruby Red Grapefruit variant this month, a sign that both companies are aiming to take market share from the flavor’s leader, Deep Eddy Ruby Red.
Released in April 2013, Deep Eddy Ruby Red sold out its initial full-year goal in the first month and has since become the leading grapefruit-flavored vodka in the country, accounting for 44 percent of the brand’s total sales, according to Dopkins. He points to Deep Eddy’s straightforward taste profile—which comes from natural ingredients—as a key factor in the flavored variants’ success, noting that consumers can take a bottle home and mix it with club soda for a simple but tasty cocktail. Both Randall and Jabour have seen Deep Eddy Ruby Red outperform other flavored vodkas in their retail stores. “There’s not a flavored vodka that gets close to it other than Deep Eddy Cranberry,” Jabour adds.
David Morgan, vice president of food and beverage for the 56-unit Omni Hotels & Resorts, also appreciates Deep Eddy’s potential as a cocktail ingredient, particularly for busy bars. “This push toward mixology and craft cocktails is great, but it can get to an extreme where it has a negative impact on certain customers,” he explains. “Deep Eddy produces a spirit with such great flavor that bartenders can create simple drinks and make them quickly, which not only leads to more sales, but also to greater customer satisfaction.” Omni’s 2015 cocktail menu features the Peach Palmer ($12), combining Deep Eddy Sweet Tea, peach purée, iced tea and lemon juice with a lemon moon garnish.
In addition to exceeding expectations on the flavor front, Deep Eddy maintains distinction as a craft brand, which increasingly appeals to consumers. But the main craft competitor at the moment is another Texas label, the unflavored Tito’s Handmade vodka ($19.99 a 750-ml. bottle). Although the brand is currently facing a series of lawsuits challenging its use of the word “handmade,” sales figures indicate that its momentum is strong. The single-variant Tito’s has grown steadily over the last several years, depleting an estimated 1.98 million cases in 2014, an increase of more than 50 percent over 2013’s 1.28 million cases, according to Impact Databank. “Tito’s is by far the most dominant and prolific vodka within our stores,” Twin Liquors’ Jabour says.
Morgan of Omni Hotels has also seen an increase in calls for Tito’s, noting that it’s in the top two or three vodkas across the chain. “Tito’s has invested in the brand and in marketing, which allows us to charge more,” he says. “The reality is that people are now buying Tito’s as a premium spirit.” Omni bars and restaurants often feature Tito’s on the back bar, which Morgan says many patrons regard as a marker of quality.
At Trattoria Neapolis in Pasadena, California, head bartender Kris Johnson favors Tito’s as the house vodka. “We use Tito’s a lot,” he says. “Its pot still distillation gives it a nice flavor profile.” Trattoria Neapolis offers several signature drinks made with Tito’s, including the Darling Clementine ($12), featuring lemon and clementine juices and housemade grenadine, and the Pomegranate Smash ($13), made with St-Germain elderflower liqueur, pomegranate juice, lemon and mint. The restaurant also uses the brand for custom infusions, tailored to match the seasonal produce used in the kitchen. A ghost chili infusion is often used in Bloody Marys. “Tito’s is very versatile,” Johnson notes. “You can mix it with anything, from dessert cocktails to sour or spicy drinks.”
Although vodka is secure in its position as the nation’s favorite spirit, there’s still plenty of room for innovation, especially in the on-premise. Connelly says UV plans to concentrate its resources in this sector in 2015. “We’re upping tastings and on-premise promotions to get consumers to try our brand for the first time,” he explains. “We can reach them through social media, but we really need to speak to them at point of purchase as well.” Targeting the shot occasion, Smirnoff introduced an extension called Smirnoff Sours ($15.99 a 750-ml. bottle) last September. The sour-flavored line of 30-percent alcohol-by-volume (abv) vodkas includes Green Apple, Watermelon and Fruit Punch flavors and comes in neon colors designed to glow under black light.
On-premise trends are also inspiring brands to take new approaches with off-premise consumption. Campari will introduce a line of cocktail-inspired flavored vodkas called Skyy Barcraft this year. “On-premise mixology culture is driving off-premise flavor preferences, and consumers are looking for easy ways to entertain at home,” Daniel notes. “We’re filling this need by essentially hacking a cocktail experience using only two ingredients—Skyy Barcraft and a splash of soda.” The 30-percent abv Skyy Barcraft includes three flavors: Margarita Lime, White Sangria and Watermelon Fresca. Daniel describes the new range as a “full-flavored vodka experience” rather than a ready-to-drink (RTD) offering.
But many consumers looking for an RTD replacement have turned to Deep Eddy. “We’re seeing a crossover into the vodka category,” Twin Liquors’ Jabour explains. “Consumers who might have selected an RTD are enjoying Deep Eddy Ruby Red because of its flavor profile. It has aromatics and a flavor that you can enjoy basically on the rocks.”
Along with other retailers, Jabour sees no sign of vodka slowing down. The same holds true on-premise, where the spirit is making a comeback in craft cocktails. “Some mixologists who once shunned vodka are starting to proudly offer it again,” Campari’s Daniel notes. “The general public is comfortable with cocktail culture now, and bartenders are willing to let them steer the ship when it comes to ordering their favorite libation.” Vodka dominated at Omni hotels nationwide last year, with the Moscow Mule topping cocktail sales, according to Morgan.
Meanwhile, at Trattoria Neapolis, the spirit never fell out of favor. “The trends are consistent: Vodka is always going to be at the top,” Johnson says. “People know what they like, and they want to stick with vodka.”