Trade urged to harness premium potential

Offering quality and value for money key to boosting vodka sales, suppliers say

INCREASES in VAT, duty, raw materials and distribution costs – vodka, like most other drinks categories, has not had its troubles to seek in recent months.

But it seems it will take more than a few price rises to dent vodka’s popularity north of the border.
In fact, suppliers contacted by SLTN last week said that despite the continuing economic gloom the category is in rude health – and the potential to encourage consumers to trade up to premium brands remains strong.
For bars to realise this potential it takes more than just stocking a couple of pricier alternatives, however.
In what is considered a mature market, with no shortage of brands, choosing vodkas that offer genuine quality and a point of difference is key, according to Simon van Moppes, commercial director for spirits at Pernod Ricard UK, whose recently-launched Premium Edge initiative aims to help operators drive sales of premium spirits.
“Aside from being popular, premium spirits also create choice, add value to the overall on-trade experience and enhance the image of an outlet,” he said. “When deciding what to stock licensees should, therefore, be aware that premium spirits are growing faster than standard spirits in both value and volume across the total trade – this is a robust category.
“Consumer understanding of premium is based on more than taste and colour.
“Our survey of more than 2500 premium spirits consumers identified that provenance and heritage, stylish presentation and communication of exclusivity are also key drivers of consumer perception of a spirit as being premium; by targeting these levers, we can create a convincing trade-up in any category.”
Agreeing that consumers are “just as likely to trade up” to a premium vodka as any other spirit, Finlandia brand manager Chris White advised operators to consider how they display bottles on the gantry.
“Consumers are much more likely to trade up to more profitable products they can see rather than default to a less profitable alternative, so position premium alternatives next to house brands,” he said.
“As many consumers don’t know what they are going to order until they reach the bar, one of the simplest things licensees can do to boost sales of vodka all year round is maximise their spirits display. Highlight categories and showcase leading brands to increase sales and impact.
“More often than not, consumers want a brand they know and trust, and stocking quality premium alternatives will widen your appeal.”
Neil Skinner, marketing manager for Smirnoff at Diageo GB, said as consumers have become “more selective” in their spending, they are seeking a “quality experience” in the on-trade when they do go out.
“We believe the quality of Smirnoff compares with any ultra-premium vodka and, therefore, it will remain the most popular consumer choice as it offers extraordinary quality at a fair price,” he said.
“We recognise that there will always be some individuals who want to make a differentiated choice but as vodka is defined by its clean taste profile, it will be brands that have an interesting or differentiated product story, such as Smirnoff Black or Ketel One, that will be a more compelling up-sell offer rather than ‘just another vodka’ that’s only differentiated by its bottle or packaging.”
Fraser McGuire, on-trade director at Whyte & Mackay, said offering quality and value for money has helped drive sales of Vladivar, which is said to have increased its market share by 3%.
Warning that the recent duty and VAT rises could have a “real negative impact” on pubs, he said operators and consumers will seek quality brands that offer value.
“That is particularly true of a versatile spirit like vodka, which has little brand loyalty and is primarily used as a base spirit flavoured with other drinks,” said Fraser.
“In high-end outlets where people pay a premium, having a range of vodkas can work. But in mainstream pubs and feeder bars we would advise sticking to one quality but good value vodka, which will keep drinkers happy.
“But providing quality and value are not the only reason for our success at the moment.
“We have made the conscious decision to focus our brand investment on our customers and not consumers. The trade is suffering and it needs all the help it can get so we are doing all we can with outlets to drive rate of sale in a number of different ways, including offering preferred commercial terms and staff incentives. And it’s working.”