Smirnoff has struck gold. The vodka has emerged as Britain’s fastest growing drinks brand, with growth worth a whopping £33.4m [IRI 52 w/e 19 July 2014] as the UK booze market continues to polarise. Smirnoff’s value sales are up 8.7% to £416.5m; volumes are up 5.7%.
The growth has been driven partly by the launch of Gold, a premium brand extension containing gold leaf, and a move into frozen cocktails. Gold and the range of three ‘freeze and squeeze’ Smirnoff Sorbets have helped drive the overall brand’s average price up 2.8%, from £18.40 to £18.93 per litre.
This is part of our Alcohol Report 2014.
“Consumer demand for premium vodkas continues to grow, with flavoured vodkas helping to drive this trend,” says Nick Temperley, head of reserve brands at Diageo, adding that cinnamon flavoured Gold has delivered £3.7m since launch in August 2013.
The push into more premium products comes as Smirnoff continues to lose share of the overall vodka market as cheaper rivals promote aggressively to drive volume growth.
Look no further than Russian Standard (see below), which has realised the third biggest value gain of the past year, for proof of how keeping a tight lid on prices and investing in featured space promotions can pay off.
TOP 10 BRANDS BY VALUE GROWTH
| VALUE | VOLUME | PRICE | ||||||
|---|---|---|---|---|---|---|---|---|
| £m | change £m | change % | litres(m) | change l(m) | change % | £/l | change % | |
| Smirnoff | 416.5 | 33.4 | 8.7 | 22.0 | 1.2 | 5.7 | 18.93 | 2.8% |
| Budweiser | 308.2 | 29.9 | 10.7 | 141.0 | 15.7 | 12.5 | 2.19 | -1.6% |
| Russian Standard | 94.5 | 29.7 | 45.8 | 5.3 | 1.7 | 45.5 | 17.88 | 0.2% |
| Strongbow | 289.4 | 27.0 | 10.3 | 160.3 | 13.0 | 8.8 | 1.81 | 1.3% |
| Hardys | 284.4 | 26.0 | 10.1 | 40.5 | 2.1 | 5.4 | 7.02 | 4.5% |
| Kopparberg | 99.7 | 18.5 | 22.8 | 27.7 | 4.5 | 19.5 | 3.60 | 2.8% |
| Jack Daniels | 133.6 | 17.9 | 15.5 | 4.8 | 0.7 | 18.4 | 28.07 | -2.4% |
| Kumala | 82.5 | 12.6 | 18.0 | 12.4 | 1.8 | 16.7 | 6.64 | 1.1% |
| Valdo | 22.4 | 12.5 | 126.6 | 2.1 | 1.3 | 149.2 | 10.58 | -9.1% |
| Whyte & Mackay | 74.8 | 11.8 | 18.8 | 4.2 | 0.6 | 17.6 | 17.74 | 1.0% |
Source: IRI 52 w/e 19 July 2014
Russian Standard’s billionaire owner Roustam Tariko vowed to overtake Diageo as the number-one vodka manufacturer within three years in February. If it carries on its blistering rate of growth, it could just do it.
“Russian Standard has been the standout performer within all of spirits, accounting for 19% of total market growth in the last 12 months and delivering more growth to the market than the whole whisky sector this year,” says Toby Magill, head of beers, wine and spirits at IRI.
Miss Russia contestants have helped. Growth has been driven by marketing stunts including travelling groups of Miss Russia hopefuls, who promote Russian Standard at bars and events such as the UK’s Lovebox music festival, as well as a $1.1bn injection from Tariko.
Green Mark Vodka, also owned by Tariko, is chipping away at Smirnoff’s dominance too. The brand lowered its abv from 40% abv to 38% earlier this year to allow it to keep prices low and has enjoyed value growth of 37.8% on volumes up 33,8%.
Keeping prices down has also contributed to Budweiser’s impressive growth. Although the average price of the brand is down 1.6% for the full year, in the run-up to this year’s FIFA World Cup (of which Budweiser is sponsor) fierce deals led to a 9.7% fall in price, making it cheaper than it was at the start of the previous tournament in 2010 [Brandview.com 7 d/e 12 June 2010 vs 12 June 2014].
Promotional activity in the four weeks before the start of the World Cup in June also paid off for Hardys, which was the top-promoting wine brand with 121 deals compared with 50 during the same period the previous year [Assosia 4 w/e 15 June 2014].
Hardys remains the UK’s largest wine brand with value sales of £284.4m, and although shoppers could bag a bottle of Hardys at bargain prices for four weeks in June the brand’s average price per litre has in fact risen 4.5% to £7.02.
It has also launched a direct-to-consumer retail service for its premium wines, which went live in May. Members of the Hardys 1853 Club can sign up for notifications of new rare and premium wines from its collection and are offered the first chance to buy direct from the website.
Focussing on the niche has put Kopparberg hot on the heels of market-leading cider brand Strongbow. The brand cites its elderflower & lime offering as key to its success in 2014, leading to value growth worth £18.5m, or 22.8%.
“Our elderflower & lime variant is in value growth of over 40% year on year,” says Rob Calder, head of marketing at Kopparberg. “We believe in innovation, not variation. This means focusing attention on the more niche variants.”
Yet it is variation that has made rival Strongbow the country’s fastest growing cider brand. Following the launch of Strongbow Dark Fruit in June 2013 the Heineken-owned brand added lemon & lime flavoured Citrus Edge to its portfolio in March.
“Strongbow has been on a transformational journey,” says Martin Porter, MD for off-trade at Heineken. “It has had a new brand identity with a focus on Strongbow’s quality credentials and the launch of Strongbow Dark Fruit, which has clocked up £51m in off-trade sales in just over a year.”
And it looks like Philippines-based Emperador Distillers is on to a winner after shelling out £430m for Whyte & Mackay and taking the Scotch whisky brand on its own transformational journey, making it the fastest growing whisky player.
Keeping prices low has been central to Whyte & Mackay’s growth. More proof, if proof were needed, of the market’s polarisation can be seen in Diageo’s response. While there’s been little activity for budget brand Bell’s, which continues to haemorrhage sales, the drinks giant has got behind pricier Johnny Walker and launched Haig Club, a single grain whisky backed by David Beckham with an rsp of £45 a bottle.
This is part of our Alcohol Report 2014.
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