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Business News/ Industry / Retail/  Vodka sales improve after two-year lull
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Vodka sales improve after two-year lull

A bunch of new vodka launches are helping the drink regain popularity

Most of the growth this year in vodka sales was seen in the pricier segment. Photo: Hemant Mishra/MintPremium
Most of the growth this year in vodka sales was seen in the pricier segment. Photo: Hemant Mishra/Mint

Bangalore: Vodka sales have recovered this year after a two-year-lull following heavy promotional spending by Smirnoff which increased availability. Also, a bunch of new vodka launches are helping the drink regain popularity.

India is a nation of whisky drinkers, accounting for nearly 60% of liquor sales, but vodka emerged as the fastest-growing liquor in the 2000s as brands led by Smirnoff, owned by Diageo India Pvt Ltd, drew up marketing campaigns targeted at young people, especially women.

After a decade-long boom in sales, increased prices and lack of marketing caused a surprise drop in demand for vodka in 2012 and 2013. Vodka accounts for less than 5% of liquor sales.

Now, sales volumes of vodka have increased by roughly 10% so far this year, making it the fastest-growing liquor again, shows data gathered from executives at several liquor firms. Overall liquor sales volumes have risen by 3-5% so far.

“Vodka had taken a backseat for a couple of years partly because Smirnoff, which has built the vodka category in India, had not engaged enough with consumers," said Bhavesh Somaya, marketing and innovation director at Diageo India, which owns Smirnoff. “But over the past year, we have again started speaking with consumers through marketing campaigns and the results are clearly visible."

Smirnoff has been sponsoring popular electronic dance concerts, and marketing focused on partygoers, to re-establish its “connection with consumers," he said.

Smirnoff’s availability and that of other Diageo brands such as Johnny Walker and Rowson Reserve has increased significantly after it signed a distribution deal in October with United Spirits Ltd (USL), which has the largest distribution network in the country. Diageo, which owns a near 55% stake in USL, said in October 2013 that it would pay USL to distribute its products across India, freeing up its executives to focus on marketing.

Following the distribution deal with USL, Smirnoff has gained market share with sales volumes rising more than 25% this year, shows the data cited earlier. Other brands such as Radico Khaitan-owned Magic Moments and Pernod Ricard’s Fuel, too, have shown volume gains of over 20% this year.

Most of the growth this year in vodka sales was seen in the pricier segment. USL’s own vodka labels Romanov, White Mischief and Alcazar —despite these brands being cheaper—reported a drop in volumes of more than 25% this year, the data cited above shows.

Vodka sales have also been given a push by new brand launches such as Jagatjit Industries Ltd’s IICE and Kristal Spirits’ Fashion vodka over the past 18 months.

Diageo’s Somaya said his firm is launching a pricier variant of Smirnoff called Smirnoff Black. Costlier than Smirnoff by roughly 35%, it will be launched first in Maharashtra and Karnataka.

“New brands coming into India are helping grow sales of drinks like vodka and tequila, as they are also marketing heavily," said Rachna Nath, executive director at consulting firm PricewaterhouseCoopers. “With many brands marketing vodka as a versatile drink, it is used often in cocktails as well."

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Published: 26 Aug 2014, 11:43 PM IST
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