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.
Increasing commoditisation at the budget end of the market masks strong premium growth. Indeed, non-premium vodka accounts for 94% of the market and has grown by more than 8% in volume over the last five years. Nevertheless, the greatest growth has emerged in the premium category, which diverges between Western brands defined by purity and Eastern European labels focusing on heritage and taste.
Despite premium vodka’s relatively low share of the total market, the drinks industry has signalled a clear vote of confidence in its potential from increased support for Smirnoff Black to the bidding war for Absolut and more recent market entrants such as Zubrowka. Super- and ultra-premium appeal to both health-conscious British consumers drinking less but trading up, ‘bling’ culture seeking aspirational brands (see Diageo and Puff Daddy’s Ciroc) and growing numbers of ‘drinks connoisseurs’ seeking less mainstream choice. In contrast to the US market, where image and prestige are all, UK consumers favour brands with authenticity and heritage.
In terms of distribution, sales of vodka are buoyant in the off-trade but suffering in the on-trade, with volumes down 4% as pubs and bars lose customers as a result of the recession, health concerns and the smoking ban.
Retail represents 77% volume and 43% value share of total UK vodka sales, and growing, led by supermarkets with both budget and premium sub-categories forging ahead.
Vodka is the fastest growing, and second bestseller, in spirit sales through travel retail, which offers opportunities for brands to showcase wider lines and new products.
According to exclusive consumer research, an estimated 12.6 million adults dislike the taste of vodka. This is the spirit’s biggest obstacle to tackle. Taste is most likely to be a turn-off for older drinkers, reflecting lack of knowledge about the different flavour profiles vodka can offer at the premium end.
Its association with cocktails enhances the youth image of vodka but may also be off-putting to people who do not have the confidence, ingredients or know-how to make their own cocktails at home.
Opportunities highlighted among thirtysomethings include greater interest in premium vodkas, and brand loyalty, as well as the low-calorie angle that particularly appeals to the weight-conscious.
Its youth image is off-putting for the over-45s, a dynamic demographic that is forecast to grow by 2 million by 2013. Attracting this group to vodka will be key to future growth. Nevertheless, projected growth among younger drinkers, vodka’s core market, bodes well for future growth.
Moderation is the new focus across alcohol categories, from responsible drinking campaigns to growth in lower-calorie variants of brands. Mintel’s consumer research highlights a positive response from mothers of young children to vodka as a good low-calorie alternative to other alcoholic drinks.
The obesity crisis continues to dominate the news at the same time as the obsession with dieting and fitness. The Fit or Fat trend explores how food is no longer just for taste, sating hunger and convenience – it is for health and wellness. Yet with between 50% and 80% of people in the UK on a diet at any given time there is clearly a polarisation going on. Positioning vodka within this context could open up new avenues of attraction for consumers and potential consumers.