VODKA: The American Way

There can be no doubt that the UK takes many of its cultural cues from the US. But what of the rise of vodka? Is that simply another Stateside import? Ben Grant thinks not

The “special relationship” between the UK and the US is a well-documented alliance. From top-level power politics to popular cultural nuances, when it comes to neighbourly relations, Britain has traditionally been far closer to our brothers across the pond than our European cousins. As an Englishman, it would be nice to view this as a healthy two-way relationship characterised by give and take in equal measure. But as pretty much anyone else in the world would rightly tell me, the reality is rather more of a one-way street. Whether you’re talking ideology or art, Disney or disco, ever since the end of The Beatles the US has been a net exporter of trends and the UK has been happy to follow in Uncle Sam’s oversized footsteps.  
While proud Brits may be reluctant to face up to the reality, there is no doubting that virtually every aspect of our lives is influenced by America – just consider how readily we devour Hollywood movies as we guzzle popcorn and cola at the local multiplex. Our diet is no exception: fast food chains – colonial outposts of the US empire – have found fertile soil in Britain, while our passion for pizza has little to do with Italy. But what of our drinking habits? Is this another area where we look westwards for inspiration?
The runaway success story on both sides of the Atlantic in the last decade has, of course, been vodka. Generally speaking – and with obvious exceptions – the other spirits categories have been relatively stagnant over this period, but the colourless, tasteless, odourless liquor has enjoyed terrific growth, with both volume and value riding a seemingly endless upward curve. The US was the first territory to generate such growth, with the image-driven premium segment taking hold way back in the dark days of fashion in the early 1980s. It took a long time for the category to catch on in the UK and, to a lesser extent, mainland Europe. It would be easy, therefore, to conclude that the stellar rise of high-priced vodka on this side of the pond was a direct imitation of the prevalent market development in America. But in reality this is simply not the case: both markets are undoubtedly moving in the same direction, but the factors that are driving this trend are an ocean apart. We may be exhibiting similar behaviour patterns, but we are doing so for very different reasons.

Source: Euromonitor International

Price polarisation
As the Euromonitor tables on page 40 illustrate, vodka sales in both the US and the UK are in the process of polarising to either end of the price spectrum. The economy segment continues to be the dominant volume driver, standard sales are pretty much stagnant, and the super premium spirits are generating impressive growth – notably this last area is growing at a faster rate in the UK, albeit from a far smaller base. This trend, however, is by no means exclusively evident on either side of the Atlantic, as Russian Standard marketing director Chris Lucas explains, “the underlying factors of this trend are global”. Claire White, global brand ambassador for Belvedere, agrees with this assessment, pointing out that “around the world all the growth is at the top and bottom of the price scale”.

One factor that cannot be disputed, however, is that the US was the first market where the trend towards premiumisation really began to take root. The longevity and extent of the US vodka boom means that it attracts a far greater number of products to launch in the market than anywhere else. As a result, says Worldwide Cocktail Club managing director Henry Besant, the US has “almost reached saturation point. There are so many brands fighting for share the category is like a war zone”. With such fierce competition for market share, the US is much more rigidly segmented than the UK, according to Lucas. This segmentation has been prevalent Stateside since the early 80s but only really began to register in the UK much more recently. “Five years ago nobody other than Smirnoff was really investing heavily in Europe.” In the last five years, however, “more and more brands have turned their attention” to European territories, including the UK, which are thus “becoming more sophisticated and segmented”. But will there be room for such a broad portfolio of brands outside of North America? The answer seems to be a resounding “no”. Put simply, no other individual country could sustain such a plethora of products. Besant predicts that outside of the US each market will be dominated by the elite club of global brands with global budgets plus a small selection of niche products that will vary from one place to another, and White agrees, suggesting each country will “cherry pick” a more modest selection.

Style versus substance
Perhaps the most striking difference between the two nations is the principle factors that motivate consumers to buy. In America, vodka is all about image so brands invest enormous sums of money in building positive lifestyle association. “Americans tend to select a brand based on sexy, glamorous attributes, rather than the product itself,” says Lucas. Americans “are much more label-oriented”, continues White, “they are more ostentatious and use their brand choices to celebrate their image”. British consumers, on the other hand, “are more discreet” and tend to be far more subtle in their displays of wealth.

Operating within such a congested marketplace, vodka producers have become ever more inventive in devising USPs that define their brands. Products are continuously coming to market boasting that they are made with water of unparalleled purity and filtered through increasingly precious and/or bizarre compounds (irrespective of the filtration capabilities of said materials). The constant roll out of such products in the US infers that consumers clearly buy into the claims of the brands, but, says White, “in the UK we are more cynical, we have an innate understanding that claims such as diamond filtration are like the emperor’s new clothes”.
Stateside image is all, but in the UK there appears to be more of an emphasis on the liquid within the bottle. “There is much more need for a convincing product truth in the UK than in the US,” says Besant. British consumers “are looking for elements of authenticity”. It’s a factor that the team behind Russian Standard were careful to bear in mind when they devised the launch strategy. After conducting extensive research they discovered that: “There is much more interest in the product itself in the UK, and in particular place of origin is far more relevant. Brands like Ketel One or Grey Goose – where they come from is totally irrelevant in the US … I’ve heard numerous US consumers say they don’t care where a brand’s from.” Provenance is, of course, central to Russian Standard’s identity – but, reflecting the different market’s attitudes to this factor, there was a different emphasis on the brand’s place of origin within the two markets. In the US the brand’s Russian-ness was “occupying an emotional territory”, whereas in the UK “it’s all about coming from a traditional vodka producing country”. This may appear to be a very minor change in emphasis – but it suggests that consumers in the two markets are attracted to very different aspects of the brand.

British cynicism
Given the different purchasing incentives, it follows that they should be marketed differently. Lucas stresses that the variation is subtle – “it’s not a black and white thing, just a slight difference in the tone of voice and emphasis” – but there are differences nonetheless. Cynicism appears to be a standard character trait in the average Brit, and this is a factor that brand owners ignore at their peril. In fact, so wary are we of being sold to, the very word “marketing” has rather negative connotations. “We are very sensitive to feeling like we are being marketed to,” says White, “so brand owners must be more creative to make consumers feel like they aren’t being sold to.” The situation in the US is very different, she explains. “You can talk much more directly to consumers about why your brand is the best without alienating them. [But if you did this in the UK] it would appear to be a bit desperate.”
According to Besant, brands tend to utilise very different strategies to spread their brand message in the two territories. “In the US, brands speak directly to consumers, particularly through lifestyle magazines.” Notably, not only do suppliers invest far greater budgets in advertising in the American glossies, but the editorial in these magazines also tends to give far more prominence to spirits, as opposed to the UK mags, which are far more interested in wine. On the other hand, he explains, “The marketing strategies in the UK tend to be aimed from the ground up, focusing on education and reaching the bartenders in particular.”

When Tony Blair came to office in 1997 he famously outlined his top priority as “education, education, education” and while it’s questionable as to whether this objective was borne out by his government, it certainly struck a chord with the UK drinks industry: converse with anybody in the UK trade about building brands and you can almost always count the seconds before the E-word crops up, particularly with regard to bartenders. According to White, US consumers like to increase their knowledge in order “to look intelligent and informed”, whereas for UK drinkers, “it’s more about private awareness”. She argues that bartenders, too, have different objectives when seeking education: British barmen “thrive on having an anorak-grade knowledge of the brand, they obsess over the ingredients and production process,” whereas their American counterparts “have a much broader, lifestyle-oriented view; they are more interested in the celebrities that drink it than the facts about production”.
All of which brings us to perhaps the most fundamental difference between the two markets – and an area where the industry must wish the Brits would be more compliant in following an American lead. It is, of course, that Holy Grail of the trade, brand call. As Besant explains, “There is a well established brand call culture in the US, and this is the cornerstone of the success of the big brands.” Consumers may not be able to justify why they opt for a specific brand at the bar, he says, but they select one nonetheless. Drinkers on this side of the pond are far less inclined to name their brand, opting instead to order a generic vodka and tonic, for example. There are small indications that the more sophisticated British drinkers are beginning to name their brand, but, says Lucas, “it will never become the norm like it is in the US. It’s a very different culture and I don’t think that brand call will catch on”. It’s interesting to note, however, that even those UK consumers who have picked up the habit do so for different reasons – as Besant puts it, “the [British] people who are calling brands do it because they know the brand and understand why it is good quality, not just because they have been well marketed”.

Source: Euromonitor International

Trendsetting
At first sight it would be easy to assume that British vodka drinkers are walking a path that has been well trodden by their American counterparts – we are, after all, in the midst of a premiumisation boom that undoubtedly commenced over there. A look at the facts, however, suggests that what’s going on is not as simple as following a trend. The category in the UK is evolving along similar lines, but it is certainly not just mimicking what’s going on in the States. According to Besant, it could be argued that the very opposite is taking place. “The US leads in terms of volumes, but it doesn’t lead the trends. There’s more space for products with authenticity in the UK, and this is the direction that many of the suppliers seem to be moving in. I’d say the US is actually behind in terms of the culture of vodka drinking. The direction the category is moving in is more in line with the UK.” It’s a bold assertion – and you could bet your bottom dollar that a US bar consultant would scoff at the idea – but this particular Union Jack-waving drinks journalist is happy to support Besant’s argument. We may follow our Yankee brothers in virtually every other aspect of modern living, but when it comes to vodka trends, the UK is leading the way.

© db February 2008