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Vodka - UK - March 2009

Vodka leads the UK spirits market in both sales and growth rate, surpassing Scotch whisky in 2007, with sales rising by 29% in volume to 79 million litres and 20% in value to over £1.8 billion between 2003 and 2008.

Strong appeal among young drinkers – and both budget and premium growth – is keeping the category buoyant during the economic downturn but growth is expected to slow in 2009.

Key themes
  • How will the buoyant vodka category perform as the recession deepens?

  • What is the impact of the responsible drinking lobby on the vodka market?

  • Which contenders are battling it out in the league tables?

  • How has share shifted across channels to market?

  • Do opportunities exist to expand vodka’s core base beyond young drinkers?

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definitions
        • Future Opportunities

          • All vodka is not the same
            • Question of age
              • Focusing in on the low calorie content
              • Market in Brief

                • Buoyant market survives economic downturn
                  • Rising costs and regulations among threats
                    • Robust premium growth
                      • Retail sales strong, but pubs and bars suffer
                        • Competition heats up below Smirnoff
                          • Premium makes a splash in NPD and marketing
                            • Consumer opportunities
                              • The future
                              • Internal Market Environment

                                • Key points
                                  • Alcohol consumption falls as health concerns rise
                                    • Figure 1: Trends for alcohol consumption, by frequency, 2003-08
                                  • Vodka drinkers like to party
                                    • Figure 2: Lifestyle attitudes – all adults and vodka drinkers, 2008
                                  • Antisocial behaviour results in greater regulation
                                    • Drinking and driving: incidents rise
                                      • Opportunities in cocktails
                                        • Seasonality a factor in vodka sales
                                        • Broader Market Environment

                                          • Key points
                                            • Duty taxes maxed out?
                                              • Figure 3: UK excise duty on spirits for every 1% of strength per 100 litres, 1998-2008
                                            • Raw material costs spiral
                                              • Impact of Polish population
                                                • Figure 4: Polish population in the UK, 2004-08
                                                • Figure 5: Structure of the UK adult population (18+), by age, 2003, 2005 and 20013
                                              • Trade bodies
                                                • UK regulation
                                                  • Government and industry tackle alcohol abuse
                                                    • Voluntary labelling
                                                      • The Portman Group self-regulates
                                                        • EU regulation
                                                          • EU Spirit Drinks Regulations
                                                          • Competitive Context

                                                            • Key points
                                                              • Vodka in context
                                                                • Figure 6: UK value sales of alcoholic drinks, by sector (excluding travel retail), 2003-08
                                                              • Fraud hits the market
                                                                • Credit crunch hits beleaguered on-trade
                                                                  • Retail discounting tarnishes brands
                                                                    • Smoking ban shifts focus to food
                                                                    • Strengths and Weaknesses in the Market

                                                                      • Strengths
                                                                        • Weaknesses
                                                                        • Who’s Innovating?

                                                                          • Key points
                                                                            • Vodka leads spirit NPD in 2008
                                                                              • Figure 7: Vodka in context of other alcoholic drink launches, 2004-08
                                                                            • Seasonality driving novelty innovation
                                                                              • Figure 8: New product launches and adpsend, percentage by month, cumulative, 2004-08
                                                                            • Premium claims lead NPD
                                                                              • Origin, heritage take centre stage
                                                                                • Figure 9: Global NPD in vodka, by country of launch, 2006-08
                                                                              • Competitively priced brands set their sights higher
                                                                                • Adding colour and sparkle to the marketplace
                                                                                  • A social conscience is the USP for some brands
                                                                                    • Getting a flavour across global launches?
                                                                                      • Flavoured vodkas lead international NPD
                                                                                        • For a conscience as clear as vodka
                                                                                        • Market Size and Forecast

                                                                                          • Key points
                                                                                            • Premiumisation pushing value growth forward
                                                                                              • Figure 10: Forecast of volume and value of vodka market, 2003-13
                                                                                            • Marketing maintains consumer
                                                                                              • The future of the market
                                                                                                • Factors used in the forecast
                                                                                                • Segment Performance

                                                                                                  • Key points
                                                                                                    • Growth continues in 2008
                                                                                                      • Figure 11: UK on- and off-trade volume sales of vodka, by type, 2006-08
                                                                                                    • A premium proposition
                                                                                                    • Market Share

                                                                                                      • Key points
                                                                                                        • Absolut growth but Smirnoff reigns
                                                                                                          • Figure 12: UK retail (off-trade) value sales of vodka, by brand, 2006-08
                                                                                                        • Marketing maintains drinkers
                                                                                                          • Distribution goes off for on-trade
                                                                                                            • If the price is right
                                                                                                              • Premium performs in the background
                                                                                                                • Own-label: Commoditisation of the market
                                                                                                                • Companies and Products

                                                                                                                  • Brand map
                                                                                                                    • Figure 13: Brand map, UK vodka market, 2008
                                                                                                                  • Bacardi-Martini
                                                                                                                    • Grey Goose
                                                                                                                      • Finlandia
                                                                                                                        • 42 Below
                                                                                                                          • Eristoff
                                                                                                                            • Cellar Trends
                                                                                                                              • Skyy
                                                                                                                                • Ultimat
                                                                                                                                  • Diageo
                                                                                                                                    • Strategies and cross-brand campaigns
                                                                                                                                      • Smirnoff
                                                                                                                                        • Smirnoff – marketing
                                                                                                                                          • Smirnoff Black
                                                                                                                                            • Ketel One
                                                                                                                                              • Ciroc
                                                                                                                                                • Emporia Brands
                                                                                                                                                  • Cape North Vodka
                                                                                                                                                    • First Drinks Brands/William Grant
                                                                                                                                                      • Russian Standard
                                                                                                                                                        • Reyka
                                                                                                                                                          • Glen Catrine
                                                                                                                                                            • Glen’s
                                                                                                                                                              • Global Brands
                                                                                                                                                                • VK Vodka
                                                                                                                                                                  • Sobieski
                                                                                                                                                                    • Danzka
                                                                                                                                                                      • G&J Greenall
                                                                                                                                                                        • Halewood International
                                                                                                                                                                          • Red Square
                                                                                                                                                                            • Parliament
                                                                                                                                                                              • Hayman Distillers
                                                                                                                                                                                • Kerenski Chocolate Vodka
                                                                                                                                                                                  • Skorppio Vodka
                                                                                                                                                                                    • Hi Spirits
                                                                                                                                                                                      • Effen
                                                                                                                                                                                        • Flagship
                                                                                                                                                                                          • Marblehead
                                                                                                                                                                                            • Zubrowka
                                                                                                                                                                                              • Luksusowa
                                                                                                                                                                                                • Polska
                                                                                                                                                                                                  • Siwucha
                                                                                                                                                                                                    • Maxxium
                                                                                                                                                                                                      • Stolichnaya
                                                                                                                                                                                                        • Moët Hennessy
                                                                                                                                                                                                          • Belvedere
                                                                                                                                                                                                            • Pernod Ricard
                                                                                                                                                                                                              • Absolut
                                                                                                                                                                                                                • Wyborowa
                                                                                                                                                                                                                  • Real Vodka Company
                                                                                                                                                                                                                    • Russian Alcohol
                                                                                                                                                                                                                      • UB Drinks
                                                                                                                                                                                                                        • Dannoff
                                                                                                                                                                                                                          • Boru
                                                                                                                                                                                                                            • Diva
                                                                                                                                                                                                                              • Whyte and Mackay
                                                                                                                                                                                                                                • Vladivar
                                                                                                                                                                                                                                  • Pinky
                                                                                                                                                                                                                                  • Brand Elements

                                                                                                                                                                                                                                      • Brand map
                                                                                                                                                                                                                                        • Figure 14: Attitudes and usage of vodka brands, February 2009
                                                                                                                                                                                                                                      • Smirnoff
                                                                                                                                                                                                                                        • What the consumer thinks
                                                                                                                                                                                                                                          • Figure 15: Attitudes towards the Smirnoff brand, February 2009
                                                                                                                                                                                                                                        • Russian Standard
                                                                                                                                                                                                                                          • What the consumer thinks
                                                                                                                                                                                                                                            • Figure 16: Attitudes towards the Russian Standard brand, February 2009
                                                                                                                                                                                                                                          • Absolut
                                                                                                                                                                                                                                            • What the consumer thinks
                                                                                                                                                                                                                                              • Figure 17: Attitudes towards the Absolut brand, February 2009
                                                                                                                                                                                                                                            • Grey Goose
                                                                                                                                                                                                                                              • What the consumer thinks
                                                                                                                                                                                                                                                • Figure 18: Attitudes towards the Grey Goose brand, February 2009
                                                                                                                                                                                                                                              • Brand qualities of vodka brands
                                                                                                                                                                                                                                                • Smirnoff leads the pack, but Absolut as cool
                                                                                                                                                                                                                                                  • Figure 19: Personalities of various vodka brands, February 2009
                                                                                                                                                                                                                                                • Experience of vodka brands
                                                                                                                                                                                                                                                  • Smirnoff commonly drunk, Stolichnaya and Grey Goose lack awareness
                                                                                                                                                                                                                                                    • Figure 20: Consumer usage of various vodka brands, February 2009
                                                                                                                                                                                                                                                  • Brand intentions for vodka brands
                                                                                                                                                                                                                                                    • Smirnoff has best retention, but consideration similar elsewhere
                                                                                                                                                                                                                                                      • Figure 21: Consideration of various vodka brands, February 2009
                                                                                                                                                                                                                                                    • Brand momentum for vodka brands
                                                                                                                                                                                                                                                      • Value Vladivar lagging behind
                                                                                                                                                                                                                                                        • Figure 22: Momentum of various vodka brands, February 2009
                                                                                                                                                                                                                                                      • Brand satisfaction for vodka brands
                                                                                                                                                                                                                                                        • Smirnoff and Absolut most positively endorsed
                                                                                                                                                                                                                                                          • Figure 23: Satisfaction with various vodka brands, February 2009
                                                                                                                                                                                                                                                        • Brand commitment to vodka brands
                                                                                                                                                                                                                                                          • Smirnoff, Absolut and Grey Goose most recommended
                                                                                                                                                                                                                                                            • Figure 24: Commitment to various vodka brands, February 2009
                                                                                                                                                                                                                                                          • Round up
                                                                                                                                                                                                                                                          • Brand Communication and Promotion

                                                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                                                              • Competitive marketplace bolsters adspend
                                                                                                                                                                                                                                                                • Figure 25: Main monitored media advertising spend on vodka, 2004-08
                                                                                                                                                                                                                                                              • Brands step up TV and press activity
                                                                                                                                                                                                                                                                • Figure 26: Advertising expenditure, by media type, 2004-08
                                                                                                                                                                                                                                                              • Seasonality
                                                                                                                                                                                                                                                                • Figure 27: Average monthly trends in above-the-line promotional spend on vodka, 2004-08
                                                                                                                                                                                                                                                              • Adspend by advertiser
                                                                                                                                                                                                                                                                • Figure 28: Main monitored media advertising spend on vodka, by advertiser, 2006-08
                                                                                                                                                                                                                                                              • Premium brands extend star-studded appeal
                                                                                                                                                                                                                                                                • Mixologists called in to boost drinking occasions
                                                                                                                                                                                                                                                                  • Marketing themes
                                                                                                                                                                                                                                                                    • Pure marketing
                                                                                                                                                                                                                                                                      • Brands seek authenticity through provenance and heritage
                                                                                                                                                                                                                                                                        • Targeting younger drinkers through music and movies
                                                                                                                                                                                                                                                                          • An Absolut statement: vodka goes ethical?
                                                                                                                                                                                                                                                                            • Regulations
                                                                                                                                                                                                                                                                              • Edgy vodka ads keep ASA busy
                                                                                                                                                                                                                                                                                • Government campaigns
                                                                                                                                                                                                                                                                                • Channels to Market

                                                                                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                                                                                    • Off-trade dominance grows
                                                                                                                                                                                                                                                                                      • Figure 29: UK volume distribution of vodka, by channel, 2006-08
                                                                                                                                                                                                                                                                                    • On-trade
                                                                                                                                                                                                                                                                                      • Figure 30: UK value distribution of vodka, by channel, 2006-08
                                                                                                                                                                                                                                                                                    • Pubs suffer but vodka bars grow in number
                                                                                                                                                                                                                                                                                      • Off-trade
                                                                                                                                                                                                                                                                                        • Supermarkets: An increasing monopoly of volume sales
                                                                                                                                                                                                                                                                                          • Independent grocers hold onto share
                                                                                                                                                                                                                                                                                            • Off-licences struggle to compete with supermarkets
                                                                                                                                                                                                                                                                                              • Travel retail
                                                                                                                                                                                                                                                                                                • A shop window to the world
                                                                                                                                                                                                                                                                                                • Consumer Usage and Frequency

                                                                                                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                                                                                                    • Vodka consumption
                                                                                                                                                                                                                                                                                                      • Figure 31: Trends in vodka consumption, 2004-08
                                                                                                                                                                                                                                                                                                    • Frequency of use
                                                                                                                                                                                                                                                                                                      • Figure 32: Trends in the frequency of drinking vodka, 2004-08
                                                                                                                                                                                                                                                                                                    • Consumption habits
                                                                                                                                                                                                                                                                                                      • Figure 33: Trends in frequency of drinking vodka in and out of home, 2004-08
                                                                                                                                                                                                                                                                                                  • Vodka Consumption in a Competitive Context

                                                                                                                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                                                                                                                      • Vodka is the preferred spirit amongst drinkers
                                                                                                                                                                                                                                                                                                        • Figure 34: Consumption of spirits, by type – vodka drinkers and those who drink alcohol, November 2008
                                                                                                                                                                                                                                                                                                      • Skewed towards younger drinkers
                                                                                                                                                                                                                                                                                                        • Dark spirits favoured by older drinkers
                                                                                                                                                                                                                                                                                                          • Rum: Competing with vodka for youth market
                                                                                                                                                                                                                                                                                                          • Consumer Perceptions of Vodka

                                                                                                                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                                                                                                                              • Key obstacles to vodka consumption
                                                                                                                                                                                                                                                                                                                  • Figure 35: Attitudes towards vodka by alcohol drinkers and vodka drinkers, November 2008
                                                                                                                                                                                                                                                                                                                • Taste is a turn-off
                                                                                                                                                                                                                                                                                                                  • Youth image doesn’t appeal to the over-45s
                                                                                                                                                                                                                                                                                                                    • Cocktails and long serves dominate usage
                                                                                                                                                                                                                                                                                                                      • The importance of mixers
                                                                                                                                                                                                                                                                                                                        • Confusion surrounds ‘premium’
                                                                                                                                                                                                                                                                                                                          • Eating’s cheating
                                                                                                                                                                                                                                                                                                                          • Targeting Opportunities

                                                                                                                                                                                                                                                                                                                            • Spirits
                                                                                                                                                                                                                                                                                                                              • Flavoured vodka holds strong appeal
                                                                                                                                                                                                                                                                                                                                • Figure 36: Cross-drinking of alcoholic drinks, November 2008
                                                                                                                                                                                                                                                                                                                              • Majority of spirits drinkers favour one type
                                                                                                                                                                                                                                                                                                                                • Figure 37: Cross-drinking of alcoholic drinks, November 2008
                                                                                                                                                                                                                                                                                                                              • Identifying targets
                                                                                                                                                                                                                                                                                                                                • Figure 38: Size of vodka attitudinal groups, November 2008
                                                                                                                                                                                                                                                                                                                                • Figure 39: How vodka attitudinal groups differentiate on key statements, November 2008
                                                                                                                                                                                                                                                                                                                              • Split between young and middle-aged drinkers
                                                                                                                                                                                                                                                                                                                              • Appendix

                                                                                                                                                                                                                                                                                                                                • Consumer research
                                                                                                                                                                                                                                                                                                                                  • ACORN
                                                                                                                                                                                                                                                                                                                                    • Advertising data
                                                                                                                                                                                                                                                                                                                                      • Abbreviations
                                                                                                                                                                                                                                                                                                                                      • Appendix – Consumer Usage and Frequency

                                                                                                                                                                                                                                                                                                                                          • Figure 40: Vodka usage frequency, by demographic sub-group, 2008
                                                                                                                                                                                                                                                                                                                                      • Appendix – Vodka Consumption in a Competitive Context

                                                                                                                                                                                                                                                                                                                                          • Figure 41: Type of spirits drunk, by demographic sub-group, November 2008
                                                                                                                                                                                                                                                                                                                                        • Profile of vodka drinkers
                                                                                                                                                                                                                                                                                                                                          • Figure 42: Profile of vodka and/or flavoured vodka drinkers, by demographic sub-group, November 2008
                                                                                                                                                                                                                                                                                                                                      • Appendix – Consumer Perceptions of Vodka

                                                                                                                                                                                                                                                                                                                                          • Figure 43: Attitudes towards vodka, by demographic sub-group, November 2008
                                                                                                                                                                                                                                                                                                                                          • Figure 44: Net of attitudes towards vodka, by demographic sub-group, November 2008
                                                                                                                                                                                                                                                                                                                                      • Appendix – Targeting Opportunities

                                                                                                                                                                                                                                                                                                                                          • Figure 45: Vodka attitudinal groups, by demographic sub-group, November 2008
                                                                                                                                                                                                                                                                                                                                          • Figure 46: Vodka attitudinal groups, by agreement with statements about vodka, November 2008
                                                                                                                                                                                                                                                                                                                                          • Figure 47: Vodka attitudinal groups, by what spirits they drink, November 2008

                                                                                                                                                                                                                                                                                                                                      Companies Covered

                                                                                                                                                                                                                                                                                                                                      • Absolut Spirits Company (USA)
                                                                                                                                                                                                                                                                                                                                      • Advertising Standards Authority
                                                                                                                                                                                                                                                                                                                                      • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                                                                                                                                                                                      • Asda Group Ltd
                                                                                                                                                                                                                                                                                                                                      • Boru Vodka Company
                                                                                                                                                                                                                                                                                                                                      • British Beer and Pub Association
                                                                                                                                                                                                                                                                                                                                      • British Market Research Bureau (BMRB)
                                                                                                                                                                                                                                                                                                                                      • Brown-Forman
                                                                                                                                                                                                                                                                                                                                      • CACI Limited
                                                                                                                                                                                                                                                                                                                                      • Co-operative Group
                                                                                                                                                                                                                                                                                                                                      • Costcutter Supermarkets Group
                                                                                                                                                                                                                                                                                                                                      • Daily Express
                                                                                                                                                                                                                                                                                                                                      • Daily Mail
                                                                                                                                                                                                                                                                                                                                      • Daily Mirror (The)
                                                                                                                                                                                                                                                                                                                                      • Diageo Plc
                                                                                                                                                                                                                                                                                                                                      • Diageo UK
                                                                                                                                                                                                                                                                                                                                      • Drinkaware Trust
                                                                                                                                                                                                                                                                                                                                      • Edrington Group (The)
                                                                                                                                                                                                                                                                                                                                      • Fortune Brands, Inc.
                                                                                                                                                                                                                                                                                                                                      • G&J Greenall
                                                                                                                                                                                                                                                                                                                                      • Gin & Vodka Association
                                                                                                                                                                                                                                                                                                                                      • Glenmorangie plc
                                                                                                                                                                                                                                                                                                                                      • Gordon's
                                                                                                                                                                                                                                                                                                                                      • Halewood International Ltd
                                                                                                                                                                                                                                                                                                                                      • Harvey Nichols UK
                                                                                                                                                                                                                                                                                                                                      • Hayman Distiller
                                                                                                                                                                                                                                                                                                                                      • Hotel Chocolat Ltd
                                                                                                                                                                                                                                                                                                                                      • House of Fraser Plc
                                                                                                                                                                                                                                                                                                                                      • Hugo Boss
                                                                                                                                                                                                                                                                                                                                      • J. Sainsbury
                                                                                                                                                                                                                                                                                                                                      • JD Wetherspoon
                                                                                                                                                                                                                                                                                                                                      • Lidl (UK)
                                                                                                                                                                                                                                                                                                                                      • Luxardo S.p.A.
                                                                                                                                                                                                                                                                                                                                      • Marblehead Brand Development
                                                                                                                                                                                                                                                                                                                                      • Marks & Spencer
                                                                                                                                                                                                                                                                                                                                      • Morrison Bowmore Distillers Ltd
                                                                                                                                                                                                                                                                                                                                      • Outdoor Advertising Association of Great Britain
                                                                                                                                                                                                                                                                                                                                      • Pernod Ricard
                                                                                                                                                                                                                                                                                                                                      • Real Vodka Company
                                                                                                                                                                                                                                                                                                                                      • Rémy Cointreau
                                                                                                                                                                                                                                                                                                                                      • Somerfield
                                                                                                                                                                                                                                                                                                                                      • Swarovski
                                                                                                                                                                                                                                                                                                                                      • Tesco Plc
                                                                                                                                                                                                                                                                                                                                      • The Portman Group
                                                                                                                                                                                                                                                                                                                                      • V&S Vin & Sprit AB
                                                                                                                                                                                                                                                                                                                                      • Waitrose
                                                                                                                                                                                                                                                                                                                                      • William Grant and Sons Distillers Ltd
                                                                                                                                                                                                                                                                                                                                      • Wm Morrison Supermarkets
                                                                                                                                                                                                                                                                                                                                      • Wyborowa SA
                                                                                                                                                                                                                                                                                                                                      • Zubrowka

                                                                                                                                                                                                                                                                                                                                      Vodka - UK - March 2009

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