New Opportunities for Vodka

What goes around comes around.

Ten years ago, vodka was a star at the bar, with consumers clamoring for the fruity new expressions that were debuting from top brands. For those who preferred to sip their spirits straight, premium brands rose to new prominence, aided by the marketing (in popular music and by suppliers themselves) of vodka bottle service as an ultimate night-out status symbol.

But then came the brown-spirits revolution, with new generations of adult beverage consumers turning on to the nuances especially of aged whiskeys from the U.S. and Ireland. Some consumers, including members of the fickle Millennial cohort, began rejecting the parade of new flavored vodkas as so much gimmickry. And as a Toronto Star story recently pointed out, it became cool in certain circles to opt for a cocktail made with anything other than vodka.

Still, this is hardly to say that vodka is off consumers’ or operators’ radar. Vodka remains the spirits category’s largest segment, with nearly one-third of the category’s volume, according to Technomic’s 2014 SpiritsTAB Report. And while vodka’s volume growth decelerated in 2013, it managed to eke out expansion of 0.8% (whereas rum and gin, among other spirits products, contracted). Vodka also remains the top ingredient in specialty drinks and cocktails menued at the bars and restaurants tracked by Technomic’s MenuMonitor online resource: More than 23% of the specialty drinks on the menu at these establishments feature vodka.

Vodka still has plenty of potential to regain momentum if suppliers can seize upon consumers’ evolving adult beverage interests. One of the signature traits of Millennials, for example, is their lack of strict loyalty to adult beverage brands or even to specific adult beverage categories. Twenty- and thirtysomethings are up for sampling a variety of new tastes and adjusting their beverage orders based on the drinking occasion and the season; vodkas that can appeal to their interests in exploring novel or unexpected flavor combinations and beverage formulations (think adult snow cones and wine-and-spirits cocktails) stand poised to build sales from this lucrative demographic group.

Flavor- and quality-conscious consumers, too, want to know what makes one product different from the rest. For suppliers, retailers and on-premise operators, providing tasting notes that describe a particular vodka’s flavor subtleties can help sway purchases.

Beverage consumers across demographic groups also are increasingly attuned to issues relating to product integrity. What’s trending in adult beverages, as in food, are the related concepts of authenticity and realness—authenticity of production methods and recipes, “realness” of ingredients (natural rather than artificial flavorings, etc.). It’s what was behind the push to get the country’s biggest brewers to list ingredients for their beers, and within vodka, it’s what has helped spur the growth of brands that play up their origin stories (such as Austin, TX-produced Tito’s Handmade, which saw volume and sales growth of nearly 59% in 2013) and/or their use of organic or all-natural ingredients (such as Square One, made from organic American rye).

So while vodka may have some ground to make up with consumers whose ever-changing tastes have led them away from the category, valuable opportunities exist for vodka makers to demonstrate that their products can be every bit as interesting (and at least as versatile) as other spirits.

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Christine LaFave Grace

Christine LaFave Grace writes for and produces Technomic's Trends & Directions e-newsletters. She joined Technomic in 2013 as an associate editor. Her previous roles include assistant digital editor for Crain Communications’ Modern Healthcare magazine and associate editor at Reed Business Information’s Restaurants & Institutions magazine.

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