Empty space in a shelf of a vodka section of a Pennsylvania liquor store after the Russian label was removed.
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In the spirit of choosing James Bond for the characters in “Mad Men” and “Sex and the City,” vodka has long held a dominant position in the US liquor market.
The best-selling vodka in the US since the 1970s, vodka generated more than $7.3 billion in sales by 2021, $2 billion more than the second best-selling spirits, tequila and mezcal, according to the Society. United States spirits. More than 78.1 million cases of 9-liter vodka were sold in the US in 2021, roughly as many US 9-liter cases of whiskey, tequila and mezcal, and rum combined.
Initially found a foothold in the US in the 1940s when World War II missions led whiskey distilleries to turn to alcohol production for products such as ammunition and rubber and then take off in the in the 1950s before climbing to the top in the 1970s, spirits and cocktail historian David Wondrich says there was a period of about 40 years where “everything went the vodka way.”
“What you have is a spirits market, where people either drink vodka or they drink everything else,” Wondrich said.
That has raised the bar for brands like DiageoSmirnoff and Ketel One, Constellation brand‘Svedka, Pernod Ricard’s Absolut, Bacardi’s Gray Goose, and E&J Gallo’s New Amsterdam.
Tito’s, produced by Austin-based Fifth Generation, is the best-selling brand across all spirits in the US, selling more than 11 million boxes in 2021 with 6.3% growth over the same period. period last year, according to data from Impact Databank.
But over the past few years, vodka’s popularity has begun to wane due to a variety of factors, whether it’s the introduction of more spirits like tequila and mezcal into the market, the growth of the craft cocktail movement. The company focuses more on spirits such as whiskey. and bourbon, or consumer desire towards other spirits that simply offer more flavor.
“There was a point where vodka was on a trajectory to outsell all the other things combined, and that’s definitely reversed and a lot of other things are growing at the expense of vodka,” Wondrich said. “It was the driving force that they found the least offensive way of marketing the product that most people would accept, and then people get bored.”
The evolution of whiskey and tequila
In 2010, vodka accounted for 33% of the volume of the entire U.S. spirits market, according to data from IWSR Beverage Market Analysis, while the broader whiskey category (including American whiskey, scotch and whiskey) Irish) accounted for 24.6%. and agave spirits such as tequila and mezcal accounted for 6.1%.
By comparison, vodka accounts for 32.1% of the market in 2020 while whiskey is at 30.5% and agave spirits is at 9.4%, according to IWSR Beverage Market Analysis.
Brandy Rand, COO of the Americas at IWSR Beverage Market Analysis, says that from 2000 to 2020, vodka has a compound annual growth rate of 4.2% compared to 3% for whiskey. However, in the last 5 years, whiskey has outgrown vodka, by 5.1% to 1.7%, respectively.
“We expect the whiskey category to overtake vodka in volume by the end of 2022,” Rand said, adding that when looking at the revenue generated by the overall category, “whiskeys are significantly higher than vodkas. Current (and years old) vodkas as most whiskeys tend to be premium priced while standard price vodkas make up the bulk of the vodka’s value. “
The explosion in popularity of tequila and mezcal has also come in part with vodka. The U.S. spirits industry grew 12% in 2021 to $35.8 billion, with tequila and mezcal accounting for more than 31% of total spirits sales.
“Tequila has a very good ability to outpace vodka because of its ability to outpace vodka,” said John Coyle, director of sales and engagement for T Edward Wines & Spirits, a New York-based importer and distributor of spirits and liquors. it’s no longer a margarine-only thing. “For someone who enjoys a cocktail or is running a cocktail show, tequila gives you so much to play with, there are so many flavors that you can go with all sorts of other drinks. each other – vodka, it’s just one.”
Part of the growth can be attributed to celebrity investing and the rise of tequila and mezcal, most notably with Diageo’s $1 billion acquisition of Casamigos in 2017, led by George Clooney founded. Celebrities from model Kendall Jenner to actor Dwayne ‘The Rock’ Johnson tequilas launch in 2021, while the Constellation Brand invest in mezcal started by actors Bryan Cranston and Aaron Paul in “Breaking Bad”.
Diageo, which also owns the premium tequila brand Don Julio, reports that tequila sales are up 56% in the first half of fiscal 2022 from the previous year and forecasts that tequila sales will grow faster. compared to the rest of the spirits industry. in the next 5 to 10 years.
“The appeal of the category across demographics is substantial. It’s overtaken, the cross-cultural growth has been very strong,” Diageo CEO Ivan Menezes said of tequila on an autumn conference call The company’s most recent entry was in January. “It’s broken down by age, by gender, by time of day, by occasion and by nature of the drink. It’s not just beer and margaritas like it was years ago.”
Connect with Russia
Vodka is also currently facing another challenge – its historic relationship with Russia.
In the wake of Russia’s invasion of Ukraine, lawmakers, bar owners, retailers and consumers looking to show support for Ukraine have called for a boycott of brands with links to Russia, or in the combines several brands of vodka, which is considered to have links with Russia.
US President Joe Biden issued an executive order on Friday that block the US from importing some Russian productsincluding vodka and other alcoholic beverages.
“Our whole set of sanctions and export controls are crushing the Russian economy,” Biden said.
Several states, including North Carolina and West Virginia, have banned the sale of Russian-made alcohol. The Pennsylvania Liquor Control Commission has asked all licensed stores to remove Russian-made products, with Board Chairman Tim Holden saying, “Given the evolving political-economic situation , that’s the right thing to do.”
However, while some vodka brands are tied to Russian heritage through marketing or branding, most vodka consumed in the US is not of Russian origin.
According to Rand, Russian vodka imports make up less than 1% of all vodkas in the United States, which she says is “not an important factor in the evolution of the category.” According to IWSR Beverage Market Analysis, almost half of all vodka consumed in the US is produced in the US.
While Russia is the largest vodka producer in the world, accounting for more than 30% of global production, more than 90% is consumed domestically.
Vodka brand Stolichnaya, which roughly translates to ‘capital city’ in Russian, took the step of officially changing its name to Stoli last week to further distance itself from Russia. Luxembourg-based Stoli Group, a vodka producer in Latvia, says its brand is driven by “the founder’s vehement stance towards the Putin regime; Stoli employees are determined to act. and the desire to accurately represent Stoli’s roots in Latvia.”
Workers prepare shipping crates for Stolichnaya vodka operated by SPI Group on a production line in Riga, Latvia.
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Yuri Shefler, founder of the Stoli Group, said: “Although I have been in exile from Russia since 2002 due to my opposition to Putin, I am still proud of the Stolichnaya brand.” “Today, we have decided to completely change our name because the name no longer represents our organization. More than anything, I want ‘Stoli’ to represent peace in Europe and solidarity. with Ukraine.”
Shefler has battled with the Russian government in recent years over global trademarks for vodka when Russia claimed that the trademarks had been incorrectly sold by a company amid Russia’s privatization after the United Nations. The bucket disintegrated.
The vodka industry has been shaken by its ties to Russia in the past. In the 1980s, when Stolichnaya was still under Russian control, it became the most imported vodka in the US in “huge amounts”, according to Wondrich. However, between the Cold War and the backlash after the Soviets shot down Korean Air Lines Flight 007 in 1983, the brand’s popularity in the US dwindled significantly. In the same time frame, Swedish vodka brand Absolut made its US debut, spurred on by an advertising campaign featuring Andy Warhol.
“Russian ties have always had a bit of a loophole for vodka even though almost no tie in the US is Russian,” Mr Wondrich said. “But people work on widespread symbolism and it’s not going to help.”
For example, Smirnoff was founded by a Russian resident who fled the country during the October Revolution, eventually opened a distillery in Connecticut after ban was lifted in 1933 and was later sold to Diageo. However, the perception of Russian ties persists – Smirnoff’s website now features a large graphic documenting the company’s history and that it is “proudly made in the USA.”
Wondrich says that while vodka will likely remain the top-selling category of spirits in the US for the next few years, it likely won’t regain its position as the bulk of the market it once was.
Coyle agreed, noting that vodka was “pushed out of center stage.”
“If you go to a cocktail bar, there will always be a vodka cocktail,” says Coyle. “But in James Bond’s time calling for a specific vodka brand, that’s waning, it’s not going to be the next wave of growth in the spirits industry.”
