Velez concurs: “Brands/product features must be put into context for the consumer. The idea has to be something that establishes importance and resonates with the consumer as one they can relate to. Brands need to define and communicate the unique characteristics that make them attractive to their customers.
“As a luxury purchase, super-premium spirits must stand out from the crowd. Aspirational/lifestyle advertising is still important for super-premium brands. We are seeing a trend towards excitement and (as in other categories), creating greater emotional engagement in drinks advertising.”
Diageo recently acknowledged its failures in the US with its premium vodka at its Capital Market Day. Smirnoff global brand director Matt Bruhn said: “It’s not enough to have the best ad campaign – we must have the best products that meet their every changing needs.”
Bruhn added: “We and vodka got lazy, we made mistakes. Adding 42 flavours, all of which are almost the same, was a bad decision. As our competitors entered the market and took prices down it left us open to attack. We stop bringing on new consumers, stop challenging the market and offering new experiences for new occasions. Vodka followed our lead – more flavours, more copycat brands, less true innovation – and allowed other products to take the lead.”
He said globally the vodka category is not dying, it’s just not growing. “Smirnoff is not looking into vodka for the answers; they aren’t there and haven’t been there for years. The answer to growth lies with consumers, an empowered generation of change agents demanding new products, new experiences – they won’t be settling for our 45th flavour drunk with soda.”
After bottoming, US volume growth has improved for flavoured and unflavoured vodkas, according to Bruhn. It remains to be seen how, but the global brand director said the company needs to reimagine the brand “not as a tired ‘leader’ but as a true challenger, a change agent relentless for growth.”
The US vodka market is the premium cautionary tale. Companies are eager not to make the same mistake.
William Grant’s O’Connor says: “Investment will always chase growth, so in the future we can expect to see continued innovation in super-premium spirits segments – especially in those categories with lower barriers to entry – and a shrinking of the playing field in premium segments. This effect will be accelerated by retailers (and bartenders) with limited shelf space – as they make room for more upmarket brands by whittling down their premium ranges, they’ll increase the competitive pressure on the brands that are left with a knock-on effect on margins.”
Chivas Brothers’ Iglesias is encouraged: “By all indications, we expect to see continuous growth in both the premium and super-premium segments, similar to what we have seen over the past five to 10 years. We also expect to see growth in emerging gin markets as well as those that are developed, such as Spain and the US. Globally the gin category is only the eighth largest international spirits category in volume, but it is also one of the fastest growing. This would indicate gin is going in a positive direction as category tastes continue to evolve around the world.”
Bacardi’s Vergara adds: “Premium/super-premium spirits weathered the great recession pretty much intact, therefore, there is little from an economic or demographic standpoint to suggest any meaningful slowdown in growth on the horizon.”
Super news.
