Increasing Demand for Domestic Vodka Seen Continuing Through 2020

Demand for vodka is expected to grow at a 6% pace through 2020, according to Technovio, a market research firm.

“There has been a significant increase in per capita incomes,” at least since the Great Recession, the firm says.

With increased spending power, consumers now demand premium products, including premium alcohol. The per capita expenditure on alcohol by the population aged above 15 years has also increased.

“There had been a significant growth of over 5% in the premium and super-premium categories of vodka in 2014, as a result of which companies continue to introduce new products in these categories,” says Vijay Sarathi, a lead analyst at Technavio for alcoholic beverages research.

The quality of water used determines vodka quality. Premium vodkas contain superior-quality water, and this differentiates them from the regular varieties. Also, premium vodkas are made from potatoes, the distilling of which is expensive and difficult. In 2014, Stolichnaya launched its Andean Edition, an ultra-premium limited-edition vodka made from the waters of Colico Lake in Chile. In 2015, Diageo launched the Cîroc Ten, an exclusive, limited-edition vodka made from French grapes.

Increasing demand for domestic vodka

Increased demand for domestic vodka brands has been another feature of the US market. Flavored and unflavored variants of domestic brands like Burnett from Heaven Hill Brands and E&J Gallo’s New Amsterdam vodka are seeing significant demand. The sales of New Amsterdam vodka rose to 22.32 million liters in 2014 from 17.73 million liters in 2013, and those of Burnett rose to 23.49 million liters in 2014 from 21.15 million liters in 2013.

“Domestic vodka makers employ new marketing channels such as mobile and online media to attract young consumers. In 2013, for instance, Burnett launched a mobile application that listed over 400 recipes to mix drinks at home. Similarly, in December 2014, Texas-based Deep Eddy launched lemon vodka made from lemon juice and Texas aquifer water,” says Vijay.

New product launches

Existing players and new entrants are introducing new products and variants in an attempt to gain market share and improve profit margins. In 2015, Pernod Ricard launched Oak by Absolut, a vodka infused with the flavor of oak chips and rested in oak barrels.

In 2015, Svedka launched Svedka Grapefruit Jalapeño, a blend of grapefruit and jalapeno flavors. It also launched Svedka 100 Proof, containing 50% alcohol; traditional vodkas have an alcohol content of 40%. In May 2015, Star Industries’ Georgi brand launched the first-ever apple cider-flavored vodka in the US.

In April 2015, Campari launched the Skyy Barcraft, a cocktail-inspired vodka line available in watermelon fresca, margarita lime, and white sangria. Blue Ice Vodka launched three limited-edition vodka lines in 2015, and Sidney Frank Importing launched its American Harvest Organic Spirit, also in 2015, the report says.

Innovations in packaging

Unique packaging attracts attention, and vendors increasingly leverage this to gain market share. In April 2015, Absolut Vodka launched its new bottle design with an updated logo and script, new medallion design, reduced glass weight, and new brand signifier.

Packaging of Aristocrat Group’s Big Box vodka is made of microflute cardboard, making it convenient and portable. In 2015, Medea Vodka employed Bluetooth technology to display messages on its vodka bottles. Outer Space Vodka, a new brand, made forays into the market with a distinctive green-alien-shaped bottle.

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