As the Wall Street Journal recently reported, Diageo brand Smirnoff is trying to reverse declining sales of its leading vodka by focusing on … music?
According to Journal reporter Saabira Chaudhuri,
Frankly, I found Smirnoff’s previous ads starring Adam Scott and Alison Brie to be spot on. In one commercial, the two actors are shopping in a liquor store. Brie picks up a few varieties of vodka such as one that’s “filtered through uncut volcano diamonds” (a not-so-subtle reference to Crystal Head, which is filtered through Herkimer diamonds) and another made “only from potatoes that look like famous people’s faces.” Scott takes a bottle of Smirnoff, explaining, “It’s just really good vodka.” The tagline is “Smirnoff: Exclusively for Everybody.” (It’s not quite as iconic as “Smirnoff Leaves You Breathless” but it’s nevertheless clear and concise.)
Apparently, in order to attract millenials, Smirnoff’s “core customers,” that isn’t good enough. The brand’s global director, Matt Bruhn, tells the Journal approximately 62 million customers range in age from 21-34 but only 11 percent have sampled Smirnoff in the span of a month. So, as Chaudhuri, explains, “Rather than highlighting Smirnoff’s 151-year-old history—a tactic Diageo has recently employed on a number of its brands that are facing competition from craft spirits—the company is hoping to win over customers aged 21 to 34 by plunging into the electronic-music scene and taking a stand for LGBT rights through its sponsorship of pride parades and ‘voguing,’ a stylized dance form that has roots in Harlem’s LGBT community.”
I’m still not sure how listening to music will compel you to drink a certain brand of spirit that is, by definition, colorless, odorless, and flavorless (aside from being the only vodka available at the concert venue). Keep in mind Smirnoff still dominates the U.S. market with a 13 percent share (in a distant second is Absolut at 5.8 percent). But what Diageo clearly finds alarming is Smirnoff’s decline from a year ago—a drop of 0.39 percentage points (Absolut did worse with a 0.45 slide). And overall the industry has taken a hit. As noted previously in Fortune, “Between 2010 and 2014, vodka consumption declined almost 2 percent. In the same period, whiskey sales rose 2.7 percent, and American bourbon and Tennessee whiskey both climbed nearly 17 percent. In the U.S. alone vodka sales went down 0.3 percent, whiskey went up 2.7 percent, and American bourbon and Tennessee whiskey rose 7.4 percent.”
What is also interesting is the chart accompanying the Journal story, for not all vodka brands are in a slump. Five of the top 10 brands rose in U.S. market share in 2014: Svedka, an affordable import alternative (and one that I find gives me a not-so-good feeling the next morning), is now in third place, behind Smirnoff and Absolut and surpassing bottle-service darling Grey Goose. New Amsterdam, another less pricey variety is now tied at 3.5 percent of the U.S. market with flavor king Pinnacle. Burnett’s, a “value brand” that can be found in a plastic container, has a 3.4 percent share, and P. Diddy’s top-shelf grape-distilled Ciroc, is in 10th place, at 3.1 percent.
Most remarkably, however, is Tito’s Handmade Vodka, which grew the most, by 1.47 percent, and has a 3.3 percent market share. In 2014, the Texas vodka, which the distiller himself described to me as “filet mignon at a pot-roast price,” grew in sales by a staggering 82 percent. The label isn’t fancy, the price has remained relatively stable (Smirnoff prices, on the other hand, were raised), and it only comes in one variety (whereas Smirnoff introduced 42 flavors including Kissed Caramel). And having met founder Tito Beveridge, a no-nonsense fifth-generation Texan, something tells me he isn’t into electronic-dance music.
