Vodka’s Journey: The Bumpy Road Ahead

Is the largest spirit category in the US heading for tough times?

15663595_mlDespite the massive size of the vodka market at 70 million 9-liter cases, there are signs that the rate of growth will steadily decline in the years ahead. If nothing else, all products have life cycles (think bell-shaped curve) and tastes and preferences are subject to change over time. After all, what got vodka to its height in the first place were the changing preferences away from whiskies. Now, it’s Whiskey’s turn to move back into favor. But, that’s only part of the story.

Vodka History

Who invented vodka is the subject of some debate – the Russians, Swedes or Poles – it really doesn’t matter for this analysis, so let’s fast forward to the US and the post WWII period.

Prior to the 1960s, whiskies (imported or domestic) were dominant with a smattering of gin preferences. Many distillers at the time looked down their noses at vodka, partly because “odorless, colorless and tasteless” was not in the distiller’s blending art and, partly because it was seen as the alcohol preference of excessive drinkers. Maybe I’m wrong, but I think the Smirnoff (or was it Popov) ad slogan “leaves you breathless” was a signal to have a drink anytime/anyplace and no one will know.

By the 1970s preferences among drinkers began to change in favor of vodka thanks to: James Bond, changing tastes of women (preferring mixable, sweet drinks), drinkers who wanted the effect of alcohol without the “silent shudder” and the emergence of interesting and fun concoctions (cocktails, such as the Moscow Mule).

The 1980s and 1990s brought further accelerated growth with vodka cocktails (think Sex and The City) and the advent and growth of imported 9924372_mlbrands led by Absolut and it’s advertising. At the beginning of this period there were only a handful of imports, most notably Stoli, Finlandia and Absolut. But, a number of important factors changed the picture.

In the 1980s, based on Russian misadventures (Korean Airline, Olympic boycotts, etc), Absolut benefitted from the Stoli boycott and the door was open to other imports. In the mid 90s, brands like Ketel One and Grey Goose taught the consumer that super and ultra premium vodka brands were worth paying for. At the same time, flavored vodkas began to make their presence known and further changed the category.

The Flavor explosion

At first, the flavors had some meaning and a strategic role to play. Want to enhance the flavor of a drink, choose citrus vodka; make that Bloody Mary zing, choose spicy vodka; and so on. Gradually the ‘simplistic’ flavors gave way to the exotic – mango, strawberry, apple, peach, vanilla and so on.

By the 2000s, the flavors took hold and gradually moved from exotic to the ridiculous – marshmallow, whipped cream, sorbet, cake, candy, bacon, salmon and other flavors that, as the saying goes, I wouldn’t drink with your mouth.

While this senselessness was going on, another factor entered the market – the low priced imported segment. Brands like Svedka, Sobieski, Wodka and others basically said to the consumer, “Hey, you’ve been overpaying; here’s imported quality at a low price.”

The net result of the “tutti frutti” flavors and inexpensive brands has been to churn the market and create confusion. Both among the trade, stuck with dozens of fad flavors and brands, and consumers, who face a dizzying array of choices.

Where is it all heading?

The storm clouds on the horizon are coming from two main directions – craft products and whiskey and even a combination of the two.

Ironically, whiskey (particularly American) originally defeated by vodka, has come back and with a vengeance. From 2012 to 2013, the rate of whiskey’s growth was two and a half times faster than all vodka including flavored. Leading the whiskey charge were flavored whiskeys (the sweetness factor again); interest in unique cocktails (traditional and new) and mixologist skills; and the craft, small batch explosion.

Whiskies of all types have begun to capture the drinking imagination of consumers regardless of age or gender. They’re fun to talk about, to drink and to identify with – whether bourbon corn, rye, or malt – they represent serious products and an understanding that, unlike vodka, they require skill that is more than turning on a tap.

Tito's Vodka
Tito’s Vodka

Enter the craft or small batch phenomenon. Not only is it fueling the whiskey growth, it’s also impacting the vodka category. Take a brand like Tito’s for example; it’s grown by over 40% compounded in the last five years, based largely on its “Hand Crafted” claim. Although, I wish someone could explain to me how you are hand crafted at nearly 1.5 million 9-liter cases.

Nevertheless, the craft concept, claim or whatever, is also becoming a factor in vodka with micro distilleries and the anti-filtration movement that’s just beginning. (By the way, the “unfiltered” vodka approach makes me chuckle… we’ve gone from filtered over charcoal, lava rocks, precious minerals and vestal virgins during a full moon to what, straight from the still?)

Our vodka
Our/Vodka Detroit

I think the Big Boys are starting to take notice of the vodka evolution. What choice do they have other than watch their sales go down and miss their bonuses. Take Absolut’s Elyx for example. It’s billed as “the single estate handcrafted vodka.” Other than marketing hype, I have no idea what they are trying to say about the brand. I think it has something to do with copper stills and an offbeat “global creative director.”

Also, Pernod Ricard’s Absolut is going into the micro distillery business and opening local distilleries around the world including Seattle, Detroit, London, Melbourne and others. It’s called Our/Vodka and supposedly the uniqueness of the concept will return the brand to its glory days. Good luck with that.

Grey Goose VX
Grey Goose VX

Finally, Bacardi’s Grey Goose is introducing Grey Goose VX, which “contains Cognac created from grapes from the Grande Champagne cru.” It’s currently only available at Travel Retail outlets, probably as a market test of the viability. According to The Spirits Business, “Bacardi has claimed Grey Goose VX (which stands for vodka exceptionelle) is a “significant step change for the vodka/white spirits category”.

So look for more churn in the vodka market in the years ahead. The growth will decelerate as the crazy flavors are put out to pasture (or wherever errant products go) and the competition from outside the category heats up.

The response from the vodka companies will be interesting to track. I can’t help but think of the expression, “Desperate times call for desperate measures.”

 

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Solbeso: A New Spirit from the Tropics

Introducing a new brand and new category of distilled spirit

UnknownSolbeso (derived from the Spanish for Sun and Kiss; “Kiss of the Sun”) is the first premium, distilled spirit made from cacao fruit. At 80 proof, this product has created a new category that is currently considered by the TTB as a Distilled Spirits Specialty. But it’s way more than that.

Imagine this: You’re in Peru visiting farms growing cacao on behalf of a chocolate venture. You discover that after the cacao pods are harvested, the beans are collected but the pulpy, tasty cacao fruit is thrown away. They tell you that the fruit oxidizes very quickly and soon starts to ferment so nothing is done with it. For most of us, that’s the end of the conversation.

Not for Thomas Higbee and Thomas Aabo, the founders of Solbeso. If Whiskey comes from grain, vodka from grain or potatoes, tequila from agave and cachaça from cane – why not create a new category from cacao fruit. Which is exactly what they did.

The aromatic fruit comes from family farms and co-ops throughout Latin America where cacao production has been going on for centuries. In fact, up until the arrival of Europeans, the people of Mesoamerica fermented the fruit into a low proof mead-like beverage. (In case you don’t know, tequila’s origin is pulque, which comes from an agave plant with a similar history among Mesoamericans.)

The Thomas’s decided to ferment and distill the “delicate, citrusy sweet pulp” into a spirit. By the way, the fruit bears no resemblance to the dark and bitter cacao bean, which is used to produce chocolate. Solbeso has no chocolate taste whatsoever.

So, what does it taste like?

I like it a lot. It’s a very unique taste that I enjoyed on the rocks with a lemon twist. To me, it has a slight citrus taste with an ever so slight aroma of chocolate. Definitely more complex, with a soft finish as compared to vodka consumed the same way. Unlike vodka, which is masked by the flavors you mix it with, Solbeso “plays well with others” and enhances the cocktail ingredients. You know it’s there but it doesn’t overpower the drink like tequila, cachaça or pisco .

A new spirit and a new brand
A new spirit and a new brand

Where does it come from?

Here’s the part I love. Similar to grapes, cacao fruit is influenced by terroir and as a result, it can come from a variety or areas in the tropics (between the Tropics of Cancer and Capricorn) but currently from farms in Peru and Ecuador. Like grapes, it can come from other areas that meet the terroir requirements. In addition, they use a specialized strain of yeast that ensures consistency from region to region.

What about cocktails?

Thomas Higbee talks about the versatility of the taste and I’ve mentioned its enhancement to cocktails. Believe it or not, it makes a great Manhattan – they call it El Conquistador – made with sweet vermouth and bitters. (A Manhattan from a white spirit? What is this world coming to?)

The most interesting drink is the Picante No. 2 made with muddled jalapeño and fresh lemon juice. (See Recipe)

 Where to find it?

Picante No. 2: 2 parts Solbeso, 1 part lemon juice, ¾ part simple syrup, 2-3 jalapeño slices. Muddle jalapeño with fresh lemon juice.
Picante No. 2: 2 parts Solbeso, 1 part lemon juice, ¾ part simple syrup, 2-3 jalapeño slices. Muddle jalapeño with fresh lemon juice.

Solbeso sells for $40 for a 750ml bottle. It’s available at select retailers, restaurants and bars throughout NYC and Miami. You can find locations on their website. While distribution is limited, I think it will grow over time. The brand — as the saying goes — has legs (longevity).

What’s the outlook?

From what I can see, the Thomas’s have the knowledge, horsepower and entrepreneurial drive to make Solbeso a huge success. After all, those consumers who love to discover new products don’t often get to see a new category being created.

At the same time, their biggest challenge might be what category is it in – Distilled Spirits Specialty (TTB), New World Spirits (the name of their company) or something else — DrinkUpNY referred to it as Cacao Spirit.

I don’t think it matters. Consumers drink brands not categories.

 

 

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Do different types of liquor have different effects on you?

liquor bottles 2Fact or fiction? Physiological or psychological?

What do you think?

I’ve been researching this topic lately and have been thinking about it ever since I got into the booze business.

When you talk to consumers, many have clear cut answers such as, “tequila makes me crazy,” “whiskey makes me angry,” “gin makes me sad, must be the junipers.” My favorite, that I found online, is… “I’m allergic to tequila. Last time I drank it, I broke out in handcuffs.”

Whether in focus groups or with friends, these beliefs are strongly held and generally tied back to a memorable occasion. Usually, it’s based on a particular episode of, ahem, being over-served or the maiden drinking voyage. But, misconceptions play a big role – there is nothing in juniper to lead to sadness and even if there were, the distillation process would eliminate it. Similarly, the agave plant from which mescal is distilled (tequila is a type of mescal) has nothing to do with mescaline.Alcohol is alcohol

Sorry folks, alcohol is alcohol. The differences one experiences from different types of liquor (and alcohol in general) have, in my opinion, little or nothing to do with the liquor itself. There are many other factors at work.

What about the congeners (the substance produced during fermentation of alcoholic beverages)? While red wine and dark spirits have the greatest amount, they are present to different degrees in white spirits. They also are more related to the morning after than getting you to slur, “I love you man” during an evening’s indulgence.

How about the mixers used as a possible explanation for the difference? Tequila is consumed as a shot half the time and with sugar laden margarita mixers the other half – do these play a role? Rum mixed with juices, sugar or cola can affect the impact. Maybe it’s the tonic in your G&T.

I think the culprit is the mood, occasion and situation you are in while drinking. If you’re planning to get hammered, or the situation calls for it, you will. If it’s been a tough day and you’re looking to unwind and mellow, what you choose to drink will have that result.

mixedSo, in effect, it’s in your mind rather than in your glass or bottle.

Here’s something that sums it up. I found it online at io9, a blog by Gawker media:

…The question of whether mixers or congeners affect our experiences with different alcohols seems almost inconsequential; if you wholeheartedly believe that a tequila is your one way ticket to Bedlam, there’s probably not a whole lot that can be said to convince you – or your body – otherwise.

What do you think?

 

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