ON-TRADE / VODKA: Bar Wars

From cash payments to lingerie vouchers, vodka brand owners will offer anything to get their brands stocked in bars. It’s a bottlefield out there, says Alice Lascelles

Vodka in the on-trade is a touchy subject. Virtually every bartender, brand owner and distributor I spoke to for this feature asked for certain comments to remain off the record for fear of offending valuable business partners. It’s hardly surprising, as the rewards on offer are greater than ever: this year saw the value of UK on-trade vodka sales hit more than £1.1 billion, up 4% on 2005 (ACNielsen).

This staggering figure rather puts paid to the oft-voiced view among bartenders that vodka has had its day. “It’s obviously not the case,” says Sam King, manager of style bar Aura. “The thing is most bartenders don’t think about the business side, they just think about what’s the latest trend in cocktails. Put it like this – we get through about 400 bottles of vodka a week and only 60 bottles of rum.”

With the mid-market sewn-up by Smirnoff, superpremium has become the battleground for new vodka brands wanting to enter the market. Competition for a place in the ranks alongside the likes of Grey Goose and Belvedere is fierce and newcomers are having to come up with increasingly unusual USPs to get our attention.

But before they get to us, they’ve got to get on the back bar. With this in mind, Dutch brand Effen, set to hit UK bars in December, is seeking to woo bartenders with high-design, user-friendly packaging.

“The concept was devised by a playboy-esque chap called Jon Deitelbaum who wanted to create a brand that wasn’t just aimed at consumers, but was aimed at bartenders as well,” says Jeremy Hill, managing director of Hi-Spirits, Effen’s distributor in the UK. “He started from the point of view that vodka is often served frozen or chilled, so its main feature is the grippy latex sleeve, which means that when it comes out of the chiller it’s not slippery, and also acts as insulation, keeping it cold.”

It’s a strategy which, along with the liquid itself, won over Sam King at Aura. He started importing Effen from the US before it even had a distributor in the UK. Now Hi-Spirits is working closely with Aura on a full UK launch for the brand, developing serves and featuring Effen at various events. And all of this without any money changing hands, Hill insists. “Aura does have a pouring contract, but that’s not with Effen, it’s with Stoli,” he says. “We haven’t paid them anything.” But money talks too, says the straight-talking King. “When I’m choosing which vodkas to stock, it’s about the quality of the liquid, but it’s also about which ones are paying us the most money.”

On the record
This was the kind of statement which most other people would only make off the record. But Neil Mathieson of Eaux de Vie, distributors for vintage vodka brand Kauffman, says we shouldn’t be so squeamish. “A lot of the bartenders pour what they’re paid to pour, and there’s nothing wrong with that. It’s just a fact of the industry that there are people making money all the way down the chain,” he says, before adding quickly, “We don’t pay to have people pour Kauffman, however.”

Incentives have been part of the on-trade strategy for new superpremium “rosé vodka” Pinky, as distributor Ints Haquani explains: “We incentivise the waitresses in the members’ clubs to show the brand to customers; when they sell six bottles they get a £50 voucher for Agent Provocateur.”

But Roast’s Andy Pearson maintains that neither ergonomics nor economics are enough to win a place on his back bar. “The more companies think about bartenders when they’re designing their packaging – not having plastic security seals on the lid, making it easier to fit a pourer and things – the better,” he says. “At the end of the day they can give us a free iPod or a mountain bike or whatever, but that won’t make me stock it if I don’t think it’s a good product.”

If your vodka comes with a good yarn attached, however, that can help, says Matchbar’s Tom Ward. “Bartenders are interested in a good back story, and bartenders like to chat,” he says. “It’s interesting for the customer and it looks good for the bartender to be knowledgeable too.”

Sam Thorburn at market analyst Euromonitor agrees: “People are now a lot more interested in how a product is made and how it arrives,” she says, adding that provenance and distillation methods will become increasingly important USPs in this competitive market.

But while many brands have responded to this trend by playing up their roots in more traditional vodka nations like Poland and Russia, William Grant distillers opted to create a whole new vodka heritage – in Iceland. Brand ambassador, Ian Rollason, says it was the purity of the water that swung it, but there’s no denying that the resulting superpremium vodka, Reyka, also benefits from Iceland’s current cultural hipness. “Iceland is hot at the moment, if you’ll pardon the pun,” says Rollason. “Some people may so, ‘Oh, vodka only comes from Russia and Poland,’ but if everyone said the same thing about wine, for example, we wouldn’t have any New World wines, we’d still all be drinking French.”

If you think this is all sounding a bit frivolous, Reyka also comes with a tech spec to satisfy the sternest distilling anorak; it is apparently distilled in a Carter Head still powered by geothermal energy, before being twice-filtered through lava rock and blended with spring water so pure it requires no demineralisation. (Try saying that after a few Reyka Martinis.)

Boutique bottles
Over at Blackwood Distillers, meanwhile, creative director Tara Benson decided that vodka was getting a bit too geeky for its own good. “The fact is most products are designed, created and marketed by men,” she says. “I say it’s a bit like selling a car engine, with all these geeky masculine USPs, saying that a vodka’s 10-times distilled, or whatever.” With this in mind she went on to launch Diva, a resolutely unserious boutique vodka containing a removable column of semi-precious gems. Unlike most superpremium vodkas, Diva’s way into the market has so far been through the top-end off-trade such as Harvey Nichols, but Benson is now turning her sights to the on-trade, and the growing trend for bottle sales which started out in Asia.

“There is one bar we are in in Singapore where it’s doing three cases a night,” says Benson. “In the UK it’s doing best in bars where there is what we call a display culture, private member bars and VIP areas in places like Windsor, Leeds and Manchester.”

Bottle sales have also been a key part of the strategy behind new Polish vodka brand U’Luvka, which is available in certain top-end bars complete with a set of 16th-century-style vodka glasses, bespoke ice bucket and even its own U’Luvka toast.
“It’s about complete brands; we approach the experience on many levels,” says creator Mark Holmes of The Brand Distillery. “Also people want the experience of looking after each other. It’s to encourage sharing with a ceremony a little like the Japanese tea ceremony, which has beauty to it.”

Like Diva’s Tara Benson, Holmes sees the female market as sorely underexploited. “The truth is that most of the vodka market is run by men for men, so much packaging is male-orientated, at which point you immediately lose 50% of your audience,” he says. “Women drink twice as many cocktails as men, and in the off-trade make most of the purchasing decisions, so we saw an opportunity there.” Hence nice curvy bottle shapes, which apparently woo us women, and 100ml miniatures “to go in your handbag”.

U’Luvka also comes with a very high-design website on every aspect of the product and its origins in 16th century Polish vodka drinking culture. “People want the story to continue, so we will keep adding to that,” says Holmes.

The cat’s whiskers
A never-ending story has also been the starting point for Snow Leopard, a Polish vodka created by former global vice president of Allied Domecq Stephen Sparrow, which donates 15% of all profits to saving the endangered big cat.

“There is longevity in Snow Leopard because, as sales increase, there will be an on-going story to tell,” says Sparrow. “I’ll also try and get cities being competitive, saying London raised this much, Miami raised this much et cetera.” And Sparrow has big ambitions: “I’m aiming to get to one tenth the size of Grey Goose in the next six or seven years.” With roll-out happening right now, the brand already seems to be catching people’s imagination, and is reportedly shifting two cases a week at St Martin’s Lane’s Light Bar.

For many of these brands, their potential strength paradoxically lies in their smallness. The laws of fashion state that it’s hard to be cult when, like Smirnoff, you’re already selling more than 17m bottles a year. “The last vodka to really impress me was Smirnoff’s superpremium spin-off Penka,” says Roast’s Andy Pearson. “It had a real point of difference and a great flavour profile, the back story was really good and the packaging was beautiful. But you’ve got the Smirnoff name on the label, and a lot of customers aren’t going to differentiate, so it just doesn’t prove as popular alongside other superpremium vodkas, which is a shame.”

Nonetheless, Grey Goose is still putting in double-digit growth, and remains the biggest-selling superpremium vodka in almost every bar I spoke to. And this is unlikely to change anytime soon, says Pearson. “For a lot of people they’re going to think, ‘I’m a Grey Goose drinker and that’s where I’ll stay. I know who I am, what I wear, what magazines I read, what music I listen to’. Whereas I don’t think a lot of people know what a Wyborowa Single Estate person is like.”

So what is the magic brand that’s going to change all this? Pearson laughs, “If I knew that I’d have invented it by now rather than making 500 bloody cappuccinos every lunchtime.”

We say potatoes, you say molasses

Not since the dying days of duty free in Europe has the EU Commission been lobbied so relentlessly by the drinks industry, writes Tom Bruce-Gardyne. This time the subject is vodka and how it will be defined under forthcoming regulations currently being drafted. There has been a formal attempt by Sweden, Poland, Finland and Estonia to alter the drinks’ definition and allow only grain or potatoes in the recipe. Present rules stipulate merely that vodka be made from “ethyl alcohol of agricultural origin” which includes sugar beat, molasses and even by-product from paper manufacturing in one instance. The status quo is being vehemently defended by big producers in France and the UK – including Smirnoff and Cîroc producer Diageo – who have formed the European Vodka Alliance (EVA) to fight their corner.

It was the US launch of superpremium Cîroc, produced from grape-skins in France, which sparked off the current dispute in 2003. Three years on, with the EU Parliament set to pronounce on the issue, feelings are running high. Those supporting a tighter definition accuse their opponents of double standards. “I have heard a lot of hypocrisy,” one Polish MEP told the parliament in Brussels. “I heard people saying wine has to be made from grapes, but vodka can’t be made from a certain product.” The EVA retort that efforts to restrict vodka’s ingredients are simply “driven by a desire to establish ownership of the name ‘vodka’, and to eliminate competition from producers in other Member States”. Either way, the stakes could not be higher with around a third of Europe’s vodka not made from grain or potatoes in a global market worth US$12 billion a year.

© db October 2006