Word has it that some in the cocktail elite are claiming vodka’s star is starting to sputter. With classic cocktails re-emerging, gin is poised to ascend, they say, while consumers’ flavor quest is bringing tequila, rums and whiskey to the fore, stifling vodka’s appeal in the process. One high-flying mixologist recently told me, “Vodka’s so over.”
While those categories are indeed growing, 2007 sales figures reveal that, to paraphrase Mark Twain, reports of vodka’s death are greatly exaggerated. Sure, its rate of growth slowed from 6.8 percent in 2006 to 6.4 percent in 2007, according to Cheers parent The Beverage Information Group, but consider that the 2007 gain was on a base of 49.4 million cases and its rate of growth exceeded that of the overall spirits industry, which grew 2.8 percent last year. The category may be maturing, but vodka is huge and getting bigger.
With sales of 52.2 million cases in 2007, vodka generated 28.9 percent of total distilled spirits sales. “It’s wishful thinking on their part,” says Alan Katz, director of mixology and spirits education for Southern Wine & Spirits of New York, about the vodka naysayers. “They’re looking toward the historical nature of gin and are excited about its resurgence. But vodka is tremendously versatile, so it’s dominant and will continue to grow.”
Vodka today is not behaving like the odorless, colorless, flavorless spirit of yore, however, and restaurant and bar operators are taking full advantage of new vibrancy and variation within the category. Key trends include a more discerning consumer, brands that are differentiating on origin and ingredients, the emergence of boutique brands, improved flavored vodka quality and the spirit’s calling card of inherent mixability, all of which add up to considerable consumer appeal and sales.
The vodka program at Martinis in the Las Vegas suburb of Summerlin may best exemplify what’s going on in the category and how savvy operators are maximizing the spirit’s innovation, marketing and profit potential. Open a little more than one year, 82-seat Martinis is an upscale bistro-style bar and restaurant already well-known for its 132 vodka offerings from 13 countries. The more unique bottles are displayed in a glass case above the bar; in-demand brands including Skyy, Grey Goose and Ketel One are kept handy behind the bar, according to general manager Erica Muse.
Two pages of the binder-style menu list vodkas by country of origin; two more pages present flavored vodkas by brand. Guests can select a vodka for one of the Classic Martinis or indulge in one of two Signature Martinis: the Blueberry More, featuring Stoli Blueberi, fresh blueberries, sugar and lime, or the Pear-fect Martini, highlighting Absolut Pears, fresh pear, sugar and lime, each $11. June’s Martini of the Month offering was Bitter Passion, made with Skyy Infusions Passion Fruit, Campari, simple syrup and mango, orange and fresh lemon juices. “There are fewer ‘artificial’ flavors out there and more fresh-tasting flavored vodkas today,” Muse observes. “Guests notice.
“Our clientele are locals and they’re fairly regular,” she adds. “They run from 25-year-olds to 50 and up, and everyone tries everything. We’ll have a 55-year-old gentleman ordering the Pear-fect Martini as often as we get a 20-something calling for a Contemporary Martini with an obscure brand like Jewel of Russia.”
Martinis’ five vodka flights demonstrate the increasing variety within vodka. The Varietals Flight, with 1.5 ounce pours and priced at $22, offers vodkas distilled from different ingredients—wheat (Absolut), rye (Belvedere), potato (Chopin) and grape (Cîroc)—while the Phillips Phlight, $32, showcases high-end vodkas: Jean-Marc XO, Roberto Cavalli, Stolichnaya Elit and Ultimat. The Viking Vodkas sampler includes Christiania, Finlandia, Level and Reyka for $20.
A vodka dinner is planned for late summer, says Muse, “because people are that interested in vodka and what they can do with it, where vodkas come from—especially exotic-sounding countries—what vodka is made from and how vodkas differ in flavor. Anyone who says vodka isn’t hot isn’t paying attention.”
Martinis offers sizable selections of other spirits, but vodka drives sales and profits, notes Muse. “Vodka is the most mixable spirit—you don’t do straight-up Martinis all day long. We can deliver lots of flavor with 1.5 to two ounces of spirits and price it at a premium. Vodka generates 80 percent of our spirits sales.”
Thanks to marketers advertising their brand’s origin, ingredients and/or characteristics, Americans are becoming more aware of the differences among vodkas. Still, the level of awareness depends on the venue. “The high-end mixologists say the difference between a potato vodka and a rye vodka is absolutely critical to the drink, but the average consumer walking into T.G.I. Friday’s or Chili’s or Outback is not nearly as discerning,” observes David Commer of Commer Beverage Consulting in Carrollton, Texas.
“But there is an opportunity there,” he says. “You can offer tasting flights or make drinks that accentuate the differences and what makes each unique. Guests love to learn.”
At The Bar at 74, located in 74 State Hotel in Albany, N.Y., 16 vodkas are listed with notes on the country of origin and primary ingredients; Svedka is the house vodka. Guests can select any four for the Vodka Sampler, $12. “People understand basic facts about their favorite brand—it’s from Holland or made from wheat—and if they can draw a link to another vodka based on that, then they’re willing to explore,” says Garrick Smith, executive vice president, food and beverage, for parent company Prestige Hospitality Group. “The vodka list and Sampler gets them curious. Our goal is to have the light bulb go off for someone that not all vodkas are created equal; they’re not all the same.”
Ahead of the curve on vodka knowledge is the club-going set. Charles Joly is executive general manager and chief mixologist at The Drawing Room in Chicago. He notes that patrons who come into The Drawing Room from the adjacent Le Passage nightclub “are going straight for the super-premium category. They know vodka. They know Cîroc is made from grapes and they’ll ask what we have in potato vodkas.”
Joly sees the emergence of boutique brands and marketers touting the origins and flavor attributes of vodkas as a positive. “It’s good for distillers to leave a little flavor, a little character in the vodka and not distill it a hundred times so it’s nothing. There are nuances and flavor notes now, which helps differentiate brands.”
Marketers calling out those differences also is seen as a good thing by operators. “Advertising drives brand calls,” says Martinis’ Muse. “The category is overwhelming; so many times people just say the first thing that pops into their heads. Our staff is pretty knowledgeable, and they’ll say, ‘If you like Grey Goose, try this wheat vodka.’ We’re not trying to make them switch, just experiment.”
While operators want guests to expand their vodka portfolios, they’re faced with constant pressure from vodka marketers and distributors to do the same. But shelf space is limited and the key to driving vodka profits is driving volume, so operators must be discerning when deciding which brands get a spot on the back bar.
“The first thing operators need to think about when considering a new vodka is profit potential, but it’s got to be in concert with quality,” says Southern Wine & Spirits’ Katz. “Too often, restaurateurs just take a vodka because the distributor says so. But you have to taste it—chilled on its own, in standard cocktails and against vodkas you already carry—then use it with intention so you can say with confidence, ‘We offer these vodkas because they enhance our cocktails.’ Convey the rationale to service staff so they can share it with guests.”
Commer agrees. “If a new vodka meets a need or fills a gap in your establishment and you can use it and promote it, make room on your back bar. Then, promote it! Tell staff and the guest what you’re bringing in and why, and use it properly,” he says. “It’s really bad to bring in a brand without a use for it because it will be misused, which won’t help the vodka brand or your own brand. In fact, it can do damage.”
Joly at The Drawing Room frequently plays with new vodkas, but only takes on those offering something “truly unique. The quality has to be there and a quality marketing campaign has to be there also so my guests will seek it out.” He’s currently experimenting with Purus, an organic wheat vodka introduced last fall.
While she sees room for 30 additional vodkas, Martinis’ Muse also applies strict criteria when considering a new vodka. “It must enhance our current list. We taste new vodkas and look at the rest of our list. I don’t add something just to add something; it must be something we don’t have already. For instance, I just added Kaí Lychee Vodka, which was a totally new flavor for us. It’s outstanding.”
Focus on Flavor
Flavored vodka accounts for 14 percent of all vodka sold in the U.S., or 7.1 million cases, according to the Distilled Spirits Council of the U.S., and marketers continue to drive excitement with a never-ending march of new products. The introduction of Acai-Blueberry and Banana last year brings Van Gogh Vodka’s flavored portfolio to 17; it will further expand with the launch of Double Dutch Chocolate and Grape this fall. Stoli Blakberi joined the Stolichnaya lineup in May, and Smirnoff now counts Passion Fruit and White Grape among its offerings. Skyy joined Charbay and Hangar One in asserting the use of real fruit infusions with the introduction of Skyy Infusions in early spring.
With flavors now running the gamut from the expected to the exotic, operators are again challenged to choose carefully. “Having a brand family on the back bar looks nice, but it’s unnecessary. Pick the flavor that makes the drink work regardless of brand,” advises Commer.
Katz recommends lemon, orange and vanilla as must-have flavors. Beyond that, he says, “exotics are fun, but you must find a solid way to use them.”
P.F. Chang’s China Bistro, the Scottsdale, Ariz.-based chain of 182 Asian eateries, did just that. The new cocktail menu rolling out this summer features three drinks involving unique flavored vodkas, including the Plum Collins, made with Pearl Plum Vodka, fresh lemon juice and a splash of Gekkeikan Plum Wine. “It’s unique and goes with our adventurous guest. It also ties to a classic drink—the Collins—and brings in plum wine, which is popular with our guests. The plum vodka is really different and it works here,” says Mary Melton, director of beverages.
The PF-X highlights X-Rated Fusion Liqueur, Pinnacle Mango Vodka and Pama Pomegranate Liqueur, and “the Tangier is refreshing and slightly exotic, but comfortable, too, because it features Stoli Ohranj, tangerine liqueur and fresh citrus juices,” she adds. “Flavored vodkas today are not as sweet or heavy as they once were; they’re lighter and easier to work with. Vodka fans are also getting away from everything having to be in a Martini glass and are open to other presentations.”
The signature cocktail at The Gage, a Chicago gastropub, involves Grey Goose La Poire, yuzu juice and white grape juice for a crisp, slightly sweet and tangy libation. “The pear flavor is noticeable but subtle enough to allow the other flavors to be present,” says Patrick Doyle, bar manager. “The drink works well because it incorporates an important aspect of our food: fresh and unique seasonal ingredients.”
The 70-unit, Orlando, Fla.-based Smokey Bones Barbeque & Grill chain is testing several cocktails where the kick comes from flavored vodkas. The Spicy Mango Mary gets its heat from Absolut Peppar and Monin Spicy Mango, while the Blueberry Posmo balances sweet and tangy flavors by combining Stoli Blueberi and Hiram Walker Pomegranate Schnapps. “Guests want a good-tasting drink, and quality flavored vodkas help deliver that,” says Commer, who developed the drinks for Smokey Bones.
With ongoing product innovation and operators aggressively using the spirit to their best advantage, vodka is poised for continued growth. The Beverage Information Group projects 3.4 percent annual compounded growth for the next five years.
“I dedicate the smallest percentage of our cocktail list to vodka cocktails—two or three drinks—but vodka is by far the dominant spirit. I’m not ordering multiple cases a week of any other spirit than Grey Goose,” says The Drawing Room’s Joly. l
The vibrant Blueberry More highlights Stoli Blueberi and fresh blueberries at Martinis in Summerlin, Nev.
Martinis’ five vodka flights entice guests with unique presentations and the opportunity to learn about different expressions of the spirit.
P.F. Chang’s China Bistro showcases Charbay Green Tea Vodka in its signature Asian Persuasion.
The Puretini involves Purus Organic Vodka.
Flavored vodkas bring seasonal and signature kicks to drinks. The Drawing Room in Chicago features Almost Summer (above), made with Ketel One Citroen, on its summer cocktail menu, while Grey Goose La Poire is the foundation of the Gage Cocktail (left), the signature libation at The Gage, also in Chicago.
The pace at which new vodkas hit the market seems to be now rivaled by the pace of marketer deal-making. In April, Pernod Ricard’s $8.83 billion winning bid for Vin & Sprit AB, owner of Absolut, indelibly altered the vodka landscape. Absolut had been sold in the U.S. by Future Brands, a joint venture created in 2001 between Vin & Sprit and Fortune Brands, parent company of Beam Global Spirits. The new deal ends Pernod Ricard’s efforts to purchase Stolichnaya from its Russian owner and puts that brand in play as Pernod cannot house both it and Absolut.
Pernod will take ownership of Absolut this summer, and early indications are that the company will shed some flavors and sharpen the focus on original Absolut. With Pernod Ricard now breathing down Diageo’s neck for billing as the largest global spirits company, Pernod likely will give Diageo’s Smirnoff brand tougher competition.
In June, Diageo and The Nolet Group, the family-owned distiller of Ketel One Vodka, announced that they had completed a transaction to form a new company that will own the perpetual exclusive global rights to sell, market and distribute Ketel One Vodka and Ketel One Citroen. Diageo paid $900 million for its 50 percent equity stake in the new company. Super-premium Ketel One, which was built on hand-selling, continued its personal marketing methods to grow the brand 4.5 percent in 2007 to reach 2.2 million cases, according to The Beverage Information Group. “The new arrangement with Diageo provides the Ketel One brands with incredible sales and marketing, and the distribution expertise and systems necessary to thrive long-term,” says William Eldien, Nolet Spirits U.S.A. president and CEO.
Meanwhile, Anheuser-Busch entered the vodka fray in November via its subsidiary, Long Tail Libations, launching Purus, an organic vodka made with Italian wheat. In February, it also released ultra-premium Cape North Vodka, made with French wheat and Swedish spring water. Its pomegranate and açaí-flavored Pomaçai Vodka launched in New York this June.
Even as the major players jockey for brands and position, the emergence of boutique brands is further refining the vodka landscape. From energy-infused brands such as the fast-growing p.i.n.k. to Vodka O2, a sparkling vodka, and from heritage-driven brands like Orzel and Sobieski, both from Poland, to the racy SV from Russia, vodka today comes in a range of styles.
On the domestic front, small producers are following the lead of Tito’s Handmade Vodka, which hit 213,000 cases in 2007 to be named a Fast Track Growth Brand by Cheers and The Beverage Information Group. Distribution now is national, and additional pot stills are being added to the Austin, Texas distillery, “but even as we grow, the vodka will still be hand-made,” asserts vice president of sales Peter Angus.
Idaho is a hot-bed source for potato vodkas. Blue Ice, made with Idaho Russet Burbank potatoes and spring water, promotes itself as an “American Vodka” on the label; the Idaho-distilled spirit is distributed in the western U.S. and select central and eastern seaboard states. Other Idaho vodkas include Zodiac, which sports astrologically-themed labels, and Spudka, which is expanding distribution. Another Idaho product, 44° North, touts its huckleberry infusion. On the high end of domestic boutique brands are Hangar One and Charbay, both distilled in California.
Vodkas of various hues now line the back bars around the country, including Van Gogh’s colorful Double Espresso, Acai-Blueberry, Pomegranate and, launching this fall, Double Dutch Chocolate; seven of UV Vodka’s nine expressions sport colored bottles. Skyy’s signature blue bottle now is joined by the Skyy Infusions line, and bottles of Bison Grass Vodka round out the spectrum with their green tint. Many flavors now skew toward exotics, but others are going retro, such as Three Olives with its Root Beer Vodka.No doubt, the vodka landscape will continue to evolve as both the major and minor brands grab for a share of the back bar and drink dollars