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  • Vodka: Clear And Present Danger

    And many cheap premium vodkas are now taking aim at vestiges of pre-Lehman excess.

    Upstart: Gamechangers

    The rise of the funny-named, sub-$20 super-premium cheap vodka.

    Standing amid pleather ottomans in a dimly lit Manhattan lounge, New York Giants defensive lineman Jason Pierre-Paul was mystified by the vodka bottle before him. It had a screw top; conspicuously absent from its label were a flock of gray geese, a mogul’s chateau, or any symbol of gratuitous wealth. Concerned, Pierre-Paul looked up Wódka Vodka on his smartphone and discovered that it retailed for $12. “What the f—k are you serving this for!” he barked at Matt Shendell, proprietor of The Hill bar and restaurant. In response, Shendell persuaded Pierre-Paul to taste the one-time Soviet favorite before passing judgment. He did. At the end of the night, he took a bottle home with him.

    Wódka’s journey from Polish tractor factories to American nightclubs is the result of vodka’s latest reinvention. After a decades-long march of absurdly expensive “ultra-premium” and “super-premium” vodkas (Belvedere, Grey Goose, Chopin), the industry has come up with a new recession-proof formula—absurdly cheap “premium” vodkas. Along with Wódka, more than 50 vodkas with sub-$20 price tags and ridiculous names—KU:L, Blue Feather, and L’Chaim, to name a few—have recently created a vodka niche in the affordable luxury category. “If you can put ‘ultra-premium’ on your label and sell it at a low price point,” says Agata Kaczanowska, a beverage analyst with researcher IBIS World, “you’re going to be well off.” According to Garima Goel Lal, a senior analyst at market research firm Mintel International Group, “Over one-quarter of all spirits drinkers reported moving to cheaper brands in 2010.” And many cheap premium vodkas are now taking aim at vestiges of pre-Lehman excess. “Smirnoff?” says James Dale, Wódka’s co-owner. “They can go f—k themselves, mate. You can print that!”

    Dale, a 40-year-old New Zealander, is at the center of the cheap premium vodka universe. In 2004 he helped introduce 42 Below to the U.S., where it rode the frosted-bottle bull market until Bacardi acquired it, three years later, for $91 million. That same year, one of Dale’s associates came across a bottle in a Bialystok, Poland, distillery with a hammer and sickle on its label. Wódka, the Communist Party-approved spirit during the 1950s, also happened to taste very good, and Dale believed it was ripe for an austerity-chic comeback. “We saw psychology change in the U.S. There’s a whole generation that’s now averse to spending more money than they have to,” Dale says. “The whole concept of ‘premium’ would have to be redefined.” In 2010, Wódka—”vodka” in Polish—entered the American market.

    Wódka is hoping to reach the heights of Sobieski, which was introduced to the U.S. in 2007. At about $11 per bottle, Sobieski expects to sell a million cases this year, which would make it the fastest-growing vodka in the country. And Sobieski is hoping to reach the heights of Svedka, the godfather of the cheap premium vodka movement. Svedka—a mash-up of the Swedish words for “Sweden” and “vodka”—says it sells around 3.5 million cases annually, with growth averaging 30 percent per year. “Our advantage over the others in what we call the $19.99 club was that we never positioned ourselves strictly as a price-based brand,” says Marina Hahn, chief marketing officer of Spirits Marque One, which owns Svedka. “Vodka is odorless, colorless, tasteless, and highly mixable. You need a strong image because it’s fairly commoditized.”

    Read More:

    http://www.businessweek.com/magazine/content/11_19/b4227072661615.htm

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