Contents

1 Introduction

2 Etymology

3 History

o 3.1 Russia

4 Today

5 Production

o 5.1 Distilling and filtering

o 5.2 Flavoring

6 European Union regulation

7 Health

8 List of vodkas

9 Its share in international market

1

RUSSIAN VODKA

INTRODUCTION

Vodka (Polish: wódka), (Russian: водка) is a distilled beverage. It

is composed primarily of water and ethanol with traces of impurities

and flavorings. Vodka is made by the distillation of fermented

substances such as grains, potatoes, or sometimes fruits.

2

Traditionally prepared vodkas had an alcoholic content of 38% by

volume. Today, the standard Polish, Russian and Lithuanian vodkas

are 40% abv (80 proof), although many non-export Russian brands

are sold at 38%. The European Union has established a minimum of

37.5% alcohol by volume content for any European vodka to be

named as such. Products sold as vodka in the United States must

have an alcoholic content of 40% or more. Homemade vodka,

referred to as "samogon" or "samohon" in Russia and the Ukraine,

sometimes have an ABV as high as 62%.

Vodka is traditionally drunk neat in the vodka belt countries of

Eastern Europe and around the Baltic Sea. It is also commonly used

in cocktails and mixed drinks, such as the Bloody Mary,

Screwdriver, Sex on the Beach, White Russian, Black Russian,

vodka tonic, and in a

3

Etymology

The "vodka belt" countries of Northern, Central and Eastern Europe are

the historic home of vodka, and also have the highest vodka

consumption in the world

The name "vodka" is a diminutive form of the Slavic word voda

(water), interpreted as little water: root вод- (vod-) [water] + -к- (-

k-) (diminutive suffix, among other functions) + -a (postfix of

feminine gender).

The word "vodka" was recorded for the first time in 1405 in Akta

Grodzkie, the court documents from the Palatinate of Sandomierz in

Poland. At the time, the word vodka (wódka), referred to chemical

4

compounds such as medicines and cosmetics' cleansers, while the

popular beverage was called gorzałka (from the Old Polish gorzeć

meaning to burn), which is also the source of Ukrainian horilka

(горілка). The word vodka written in the Cyrillic alphabet appeared

first in 1533, in relation to a medicinal drink brought from Poland to

Russia by the merchants of Kievan Rus'.

A number of Russian pharmaceutical lists contain the terms "vodka

of grain wine" (водка хлебного вина vodka khlebnogo vina) and

5

"vodka in half of grain wine" (водка полу хлебного вина vodka

polu khlebnogo vina). As alcohol had long been used as a basis for

medicines, this implies that the term vodka could be a noun derived

from the verb vodit’, razvodit’ (водить, разводить), "to dilute with

water". Grain wine was a spirit distilled from alcohol made from

grain (as opposed to grape wine) and hence "vodka of grain wine"

would be a water dilution of a distilled grain spirit.

While the word vodka could be found in manuscripts and in lubok

(лубок, pictures with text explaining the plot, a Russian predecessor

of the comic), it began to appear in Russian dictionaries in the mid-

19th century. It is, however, already attested in Sámuel Gyarmathi's

Russian-German-Hungarian glossary (1799), where it is glossed

with Latin vinum adustum ("burnt [i.e. distilled] wine").

The word vodka was attested in English already in the late 18th

century. A description of Russia by Johann Gottlieb Georgi,

published in English in 1780 (presumably, a translation from

6

German) correctly explained: "Kabak in the Russian language

signifies a public house for the common people to drink vodka (a

sort of brandy) in." William Tooke in 1799 glossed vodka as

"rectified corn-spirits".

Another possible connection of "vodka" with "water" is the name of

the medieval alcoholic beverage aqua vitae (Latin, literally, "water

of life"), which is reflected in Polish "okowita", Ukrainian оковита,

Belarusian акавіта, and Scandinavian akvavit. (Note that whisky

has a similar etymology, from the Irish/Scottish Gaelic uisce

beatha/uisge-beatha.)

People in the area of vodka's probable origin have names for vodka

with roots meaning "to burn": Polish: gorzała, berbelucha, bimber;

Ukrainian: горілка, horílka; Belarusian: гарэлка, harelka;

Lithuanian: degtinė; Samogitian: degtėnė, is also in use, colloquially

7

and in proverbs[12]); Latvian: degvīns; Finnish: paloviina. In Russian

during 17th and 18th century горящѣе вино or горячее вино

(goryashchee vino, "burning wine" or "hot wine") was widely used.

Compare to German "Branntwein", Danish; brændevin; Dutch:

brandewijn; Swedish: brännvin; Norwegian: brennevin (although

the latter terms refer to any strong alcoholic beverage).

Another Slavic archaic term for hard liquors, and its derivatives in

other languages, was "green wine" (Russian: zelyonoye vino,

Lithuanian: žalias vynas).

History

According to the Gin and Vodka Association (GVA), the first

documented production of vodka, stemming from the Russian word

'voda' meaning water, was in Russia in the late 9th century. The first

known vodka distillery was documented almost two hundred years

later at Khylnovsk, Russia, as reported in the Vyatka Chronicle of

8

1174. Poland lays claim to having distilled vodka even earlier in the

8th century but as this was a distillation of wine it would be more

appropriate to consider it a crude brandy. What could be identified

as vodka first appeared in Poland in the 11th century when they

were called gorzalka, originally used as medicines. Encyclopædia

Britannica writes that vodka originated in Russia during the 14th

century, first brewed Sydnayaska Krueger of the Krueger Family,

which later evolved into the company now known as Smirnoff.

For many centuries beverages contained little alcohol. It is estimated

that the maximum amount was about 14% as only this amount is

9

reachable by means of natural fermentation. The still allowing for

distillation – the "burning of wine" – was invented in the 8th

century.

Russia

A type of distilled liquor close to the one that would later become

generally designated by the Russian word vodka came to Russia in

the late 14th century. In 1386 the Genoese ambassadors brought the

first aqua vitae ("the water of life") to Moscow and presented it to

Grand Duke Dmitry Donskoy. The liquid that was obtained by

distillation of grape must was thought to be a concentrate and a

"spirit" of wine (spiritus vini in Latin), from where came the name

of this substance in many European languages (like English spirit, or

Russian spirt).

According to a legend, around 1430 a monk called Isidore from

Chudov Monastery inside the Moscow Kremlin made a recipe of the

first Russian vodka.[18] Having a special knowledge and distillation

10

devices he became an author of the new type of alcoholic beverage

of a new, higher quality. This "bread wine" as it was initially

known, was produced for a long time exclusively in the Grand

Duchy of Moscow and in no other principality of Rus' (this situation

persisted until the era of industrial production). Thus this beverage

was closely associated with Moscow.

Until the mid-18th century, the drink remained relatively low on

alcohol content, not exceeding 40% by volume. Multiple terms for

the drink are recorded, sometimes reflecting different levels of 11

quality, alcohol concentration, filtering, and the number of

distillations; most commonly, it was referred to as "burning wine",

"bread wine", or simply "wine". ("Wine" in the modern meaning of

the word - grape wine - had to be imported and was only affordable

for aristocrats and wealthy merchants.) Burning wine was usually

diluted with water to 24% ABV or less before drinking. It was

mostly sold in taverns and was quite expensive. At the same time,

the word vodka was already in use, but it described herbal tinctures

(similar to absinthe), containing up to 75% by volume alcohol, and

made for medicinal purposes.

The first written usage of the word vodka in an official Russian

document in its modern meaning is dated by the decree of Empress

Elizabeth of June 8, 1751, which regulated the ownership of vodka

distilleries. The taxes on vodka became a key element of

government finances in Tsarist Russia, providing at times up to 40%

of state revenue. By the 1860s, due to the government policy of

12

promoting consumption of state-manufactured vodka, it became the

drink of choice for many Russians. In 1863, the government

monopoly on vodka production was repealed, causing prices to

plummet and making vodka available even to low-income citizens.

By 1911, vodka comprised 89% of all alcohol consumed in Russia.

This level has fluctuated somewhat during the 20th century, but

remained quite high at all times. The most recent estimates put it at

70% (2001). Today, some popular Russian vodka producers or

brands are (amongst others) Stolichnaya and Russian Standard.

Today

13

A large selection of vodkas at an Auchan hypermarket near Nizhny Novgorod

Vodka is now one of the world's most popular spirits. It was rarely

consumed outside Europe before the 1950s. By 1975, vodka sales in

the United States overtook those of bourbon, previously the most

popular hard liquor of the country. In the second half of the 20th

century, vodka owed its popularity in part to its reputation as an

alcoholic beverage that "leaves you breathless", as one ad put it —

claiming no smell of liquor remains detectable on the breath, and its

neutral flavor allows it to be mixed into a wide variety of drinks,

often replacing other liquors (particularly gin) in traditional drinks,

such as the Martini.

According to The Penguin Book of Spirits and Liqueurs, "Its low

level of fusel oils and congeners — impurities that flavour spirits

but that can contribute to the after-effects of heavy consumption —

led to its being considered among the 'safer' spirits, though not in

14

terms of its powers of intoxication, which, depending on strength,

may be considerable."

Russian culinary author William Pokhlebkin compiled a history of

the production of vodka in Russia during the late 1970s as part of

the Soviet case in a trade dispute; this was later published as A

History of Vodka. Pokhlebkin claimed that while there was a wealth

of publications about the history of consumption and distribution of

vodka, virtually nothing had been written about vodka production.

Among his assertions were that the word "vodka" was used in

popular speech in Russia considerably earlier than the middle of the

18th century, but the word did not appear in print until the 1860s.

15

Production

Vodka bottling machine, Shatskaya Vodka (Shatsk, Russia)

Vodka may be distilled from any starch/sugar-rich plant matter;

most vodka today is produced from grains such as sorghum, corn,

rye or wheat. Among grain vodkas, rye and wheat vodkas are

generally considered superior. Some vodkas are made from

potatoes, molasses, soybeans, grapes, rice, sugar beets and

sometimes even byproducts of oil refining or wood pulp processing.

In some Central European countries like Poland some vodka is

produced by just fermenting a solution of crystal sugar and yeast. In

16

the European Union there are talks about the standardization of

vodka, and the Vodka Belt countries insist that only spirits produced

from grains, potato and sugar beet molasses be allowed to be

branded as "vodka", following the traditional methods of

production.

Distilling and filtering

Historic vodka still in Ukraine

A common property of vodkas produced in the United States and

Europe is the extensive use of filtration prior to any additional

processing including the addition of flavourants. Filtering is

17

sometimes done in the still during distillation, as well as afterwards,

where the distilled vodka is filtered through activated charcoal and

other media to absorb trace amounts of substances that alter or

impart off-flavors to the vodka. However, this is not the case in the

traditional vodka producing nations, so many distillers from these

countries prefer to use very accurate distillation but minimal

filtering, thus preserving the unique flavours and characteristics of

their products.

The master distiller is in charge of distilling the vodka and directing

its filtration, which includes the removal of "fore-shots" and "heads"

and the "tails." These components of the distillate contain flavour

compounds such as ethyl acetate and ethyl lactate (heads) as well as

the fusel oils (tails) that impact the usually desired clean taste of

vodka. Through numerous rounds of distillation, or the use of a

fractioning still, the taste is improved and clarity is enhanced. In

contrast, distillery process for liquors such as whiskey, rum, and

18

baijiu allow the "heads" and "tails" to remain, giving them their

unique flavours.

Repeated distillation of vodka will make its ethanol level much

higher than is acceptable to most end users, whether legislation

determines strength limits or not. Depending on the distillation

method and the technique of the stillmaster, the final filtered and

distilled vodka may have as much as 95-96% ethanol. As such, most

vodka is diluted with water prior to bottling. This level of

distillation is what truly separates a rye-based vodka (for example)

from a rye whisky; while the whisky is generally only distilled down

to its final alcohol content, vodka is distilled until it is almost totally

pure alcohol and then cut with water to give it its final alcohol

content and unique flavour, depending on the source of the water.

19

Flavoring

A set of vodka coolers in chocolate and caramel flavors.

Vodka infusion

Apart from the alcoholic content, vodkas may be classified into two

main groups: clear vodkas and flavored vodkas. From the latter

ones, one can separate bitter tinctures, such as Russian Yubileynaya

(anniversary vodka) and Pertsovka (pepper vodka).

While most vodkas are unflavored, many flavored vodkas have been

produced in traditional vodka-drinking areas, often as home-made

recipes to improve vodka's taste or for medicinal purposes.

20

Flavorings include red pepper, ginger, fruit flavors, vanilla,

chocolate (without sweetener), and cinnamon. In Russia and

Ukraine, vodka flavored with honey and pepper (Pertsovka, in

Russian, Z pertsem, in Ukrainian) is also very popular. Ukrainians

produce a commercial vodka that includes St John's Wort. Poles and

Belarusians add the leaves of the local bison grass to produce

Żubrówka (Polish) and Zubrovka (Belarusian) vodka, with slightly

sweet flavor and light amber color. In Poland, a famous vodka

containing honey is called Krupnik. In the United States bacon

vodka has been introduced to critical acclaim.

This tradition of flavoring is also prevalent in the Nordic countries,

where vodka seasoned with herbs, fruits and spices is the

appropriate strong drink for midsummer seasonal festivities. In

Sweden, there are forty-odd common varieties of herb-flavored

vodka (kryddat brännvin). In Poland and Ukraine there is a separate

category (nalyvka in Ukraine and nalewka in Poland), for vodka-

21

based spirits with fruit, root, flower, or herb extracts, which are

often home-made or produced by small commercial distilleries. Its

alcohol content is between 15 to 75%. In Estonia, vodkas are spiced

with barbaris, blackcurrant, cherry, greenapple, lemon, vanilla and

watermelon flavors.

Polish distilleries make a very pure (95%, 190 proof) rectified spirit

(Polish language: spirytus rektyfikowany). Technically a form of

vodka, it is sold in liquor stores rather than pharmacies. Similarly,

the German market often carries German, Hungarian, Polish, and

Ukrainian-made varieties of vodka of 90 to 95% alcohol content. A

Serbian vodka, Balkan 176°, has a 88% alcohol content.

European Union regulation

The recent success of grape-based vodka in the United States has

prompted traditional vodka producers in the Vodka Belt countries of

Poland, Finland, Lithuania, and Sweden to campaign for EU

22

legislation that will categorize only spirits made from grain or

potatoes as "vodka." This proposition has provoked heavy criticism

from south European countries, which often distill used mash from

wine-making into spirits; although higher quality mash is usually

distilled into some variety of pomace brandy, lower-quality mash is

better turned into neutral-flavored spirits instead. Any vodka then

not made from either grain or potatoes would have to display the

products used in its production. This regulation was adopted by the

European Parliament on June 19, 2007.

23

Health

Spirytus Product of Poland.

Excess consumption of vodka or any other alcoholic beverage can

be lethal by inducing respiratory failure or unguarded inhalation of

vomit by a comatose drunk person. In addition, the effects of

alcohol are responsible for many traumatic injuries such as falls and

vehicle accidents. Consumption of alcohol above 0.1 Blood alcohol

content can cause dehydration, digestive irritation, and other

symptoms associated with alcohol intoxication and hangover, and

24

the chronic effects can include liver failure due to cirrhosis, and it is

associated with many GI cancers (particularly oral cavity). In

addition to ethanol, methanol, fusel oils (not present in pure vodka),

and esters can contribute to hangovers.

In some countries black-market vodka or "bathtub" vodka is

widespread because it can be produced easily and avoid taxation.

However, severe poisoning, blindness, or death can occur as a result

of dangerous industrial ethanol substitutes being added by black-

market producers. In March 2007, BBC News UK made a

documentary to find the cause of severe jaundice among imbibers of

a "bathtub" vodka in Russia. The cause was suspected to be an

industrial disinfectant (Extrasept) - 95% ethanol but also containing

a highly toxic chemical - added to the vodka by the illegal traders

because of its high alcohol content and low price. Death toll

estimates list at least 120 dead and more than 1,000 poisoned. The

25

death toll is expected to rise due to the chronic nature of the

cirrhosis that is causing the jaundice.

List of vodkas[[Huzzar Vodka Cork, Ireland Grain

Brand Country Base

42 BELOW New Zealand GE-free Wheat

Absolut Sweden Wheat

AdnamsUnited

KingdomBarley, wheat and oats

Albert Pure Canada Prairie grains

Artic Italy Wheat

Belvedere Poland Rye

Biała Dama Poland Rye

Black Dot Vodka United States Corn

BlavodUnited

KingdomGrain

Bols Netherlands

Bong Spirit Netherlands Wheat

Bowman's United States Grain

26

Brand Country Base

ChaseUnited

KingdomPotato

Chopin Poland Potato

Cirrus United States Potato

Cooranbong Australia Grapes

Crystal Head Canada Grains

Cîroc France Grapes

Danzka Denmark Wheat

DOT AU Australia Australian sugar cane

Double Cross Slovakia Wheat

Dovgan Russia

Downunder AustraliaMolasses of Australian sugar

cane

Dragon Bleu France Wheat, barley, rye

Dubra United States

Eristoff Georgia

Explorer Sweden Wheat

Finlandia Finland Barley

Firefly United States Muscadines

Flyte Canada Corn Grain

27

Brand Country Base

Frïs Denmark Wheat

Gdańska Poland

Glen'sUnited

KingdomSugar Beet

Gold Symphony (Золотая

симфония)Russia

Grey Goose France Wheat

Grey Goose United States Wheat

Han South Korea Barley and Rice

Hangar One United States Wheat

Hooghoudt Netherlands

Hrenovuha (Хреновуха) Russia Horseradish

Iceberg Canada Peaches and corn

IsensuaUnited

KingdomGrain

Jean-Marc XO France Wheat

Karlsson's Sweden Potato

Kauffman Russia Wheat

Keglevich Italy Grain

28

Brand Country Base

Ketel One Netherlands Wheat

Khortytsa (Хортиця) Ukraine Wheat

Kihnu Mark Estonia

Koskenkorva Finland Barley

Kryshtal Etalon Belarus Wheat and Rye

Kubanskaya (Кубанская) Russia

Latvijas Balzams Latvia

Ledo degtinė Lithuania

Level Sweden Wheat

Lokka Turkey Grapes

Lotus United States Wheat

Luksusowa Poland Potato

Magic Spirits Germany Grain

Minskaya Kristall Belarus Grain

Monopolowa Austria Potato

Moskovskaya (Московская) Russia

Murree Pakistan

Narodnaya (Народная) Russia

Nemiroff (Неміроф) Ukraine Wheat

Nikolai United States Corn

29

Brand Country Base

Orloff Brazil

Oso Negro Mexico

Perfect 1864 France Wheat

Pink Netherlands Wheat

Pinky Vodka Sweden

Polar Ice Canada Wheat

Polonaise Poland Grain

Popov United States Grain

Prime-Vodka Ukraine Rye Rusk

Putinka (Путинка) Russia

Pyatizvyozdnaya (Пятизвёздная) Russia

Rachmaninoff Germany

Rain United States White Corn

Renat Sweden Wheat

Reyka Iceland Grain

Rodnik (Родник) Russia

Ruskova (Рускова) Russia

Russian Standard (Русский Russia

30

Brand Country Base

стандарт)

Schramm Canada Organic Potatoes

Serkova Poland Rye

Shustov (Шустов) Russia Wheat

Siwucha Poland Fruits

SKYY United States Grain

SmirnoffUnited

KingdomGrain

Snow Queen Kazakhstan Organic wheat

Sobieski Poland Rye

Soyuz-Viktan (Союз-Віктан, СВ,

SV)Ukraine Wheat

Spendrups Sweden

Square One Organic United States Organic Rye

Starka Poland Rye

Starka (Старка) Russia

Stolichnaya (Столичная) Russia Wheat and Rye

Stolnaya (Стольная) Russia Wheat

Stumbras Lithuania

31

Brand Country Base

SV The Silk Russia

Svedka Sweden Winter wheat

Taaka United States Grain

Three OlivesUnited

KingdomGrain

Tito's Handmade United States Corn

Ultimat Poland Potato, Wheat and Rye

Ursus Netherlands

UV United States Corn

V44 Slovakia Wheat

Van Gogh Netherlands Wheat, Corn and Barley

Vikingfjord Norway Potato

Villa Lobos Mexico

Viru Valge Estonia Grain

VladivarUnited

KingdomGrain

Vodka 14 United States Organic corn and rye

Vodka 7000 United States Oats

Vodkas of Veresk company Russia

Vox Netherlands Wheat

32

Brand Country Base

Wyborowa Poland Rye

Xan Azerbaijan Grain

Xellent Swiss Switzerland Rye

Youri Dolgoruki (Юрий

Долгорукий)Russia Wheat

Zaranoff Germany

Zodiac United States Potato

Łańcut Poland Grain

Żołądkowa gorzka Poland 27 herbs and fruits

Żubrówka Poland Rye

Its share in international marketing

On a lovely spring day in May 1996, Claes G. Fick (marketing director

of the Absolut Company, the international wing of the Swedish state-

owned Vin & Sprit AB) packs his suitcase for the third time this month

for a business trip to the USA. While packing he thinks of how hard the

Absolut Company must fight to keep and increase its market share for

33

Absolut Vodka in the USA and other markets. Until 1994 Absolut

Vodka was distributed by Carillon Importers with the charismatic

Michael Roux in charge.

In 1994 the Absolut Company entered into an agreement with the

somewhat larger Seagram Co. to distribute Absolut Vodka in the USA

and a number of other countries. Seagram is the world's fourth largest

distributor of spirits with world-wide sales of nearly $6 billion. Seagram

distributes (in the USA) such well-known labels as Chivas Regal, oyote

Tequila and Martell Cognac. But it needed a well-known vodka label in

its assortment. Seagram is an international distributor with local

distributors in 1 SO countries.

The shift from Carillon Importers to Seagram Co. has not been without

problems and drama. Michael Roux was very upset when he heard he

had been fired as importer for the American market. As a countermove,

he has taken the Russian competitor Stolichnaya into his assortment,

thus intensifying the 'vodka war'.

34

The world market for vodka

Table 1 shows that eastern European countries amount to 80 per cent of

the world's total vodka sales.

Table 1 Distribution of world vodka sales

Region % of distribution

(IS (the former USSR) 60

East Europe 20

USA 12

Others 8

Total 100

World's total vodka sales 2,250 million liters

Source: Impact International.

The average consumption per capita per year is also very large in eastern

Europe". In Poland the average vodka consumption per capita per year is

about 10 liters, while the average in the CIS is 5 liters. As a comparison,

the average consumption in the USA is 1.3 liters and in the UK 0.6

liters. It should be noted that all these figures are based on registered

sales. In addition to this is home distillery, which takes place in quite a

35

large part of Eastern Europe as well as in Sweden and Finland.

The markets of Eastern Europe are distinguished not only by their high

vodka consumption, but also by how much consumers know about

alcoholic beverages and their feeling for quality. However, political

uncertainty and lack of a well-functioning infrastructure in several

eastern European countries make short-term developments

difficult to predict.' For several years Absolut Vodka has been said to

most eastern European countries, and in 1995 the brand was introduced

in Poland as well. Thus, Absolut Vodka is now represented in all the

major vodka markets of the world.

The US market for vodka ,

In the last fifteen years the consumption of alcohol in the USA has

decreased by 20 per cent. There are several reasons for this decrease.

One of the main reasons is the 'health trend' in the USA, which has

caused a greater consciousness of the harmful effects of alcohol. At the

same time there has been a tendency towards greater consciousness of

drinking 'Iess but better'. Thus many people now drink cleaner and more

36

pure alcohol. This has meant that the sale of 'super-premium' (high-

quality) brands has not fallen and has been stable in the last five years.

Nearly all imported brands are in the super-premium segment and are

the main reason that vodka imports have not fallen. Although the vodka

importers' share of the total market is only 12-15 per cent, the gross

margin on imported vodka represents about 40 per cent of the total gross

margin of all vodka sales in the USA. Historically, vodka has not been a

differentiated product, but more and more flavored brands have

gradually been introduced to the market, including Absolut Lemon,

Absolut Pepper and Absolut Kurant. Today it is not without risk

introducing new brands to the US market, as American consumers' tastes

are so volatile. A producer can risk introducing a flavour one year,

which is unpopular the next.

Product segments

The different product segments are as follows:

• Platinum. The most expensive category with prices around $20 per

bottle. Labels in this category include Stolichnaya Cristall. This segment

has under 1 per cent of total US vodka consumption.

37

• Super-premium. Nearly all labels here are imported. The leading labels

are Swedish Absolut, Russian Stolichnaya and Finnish Finlandia. The

price level is $15-16 per bottle.

This category's share of the total vodka consumption in the USA is about

10 per cent.

• Premium. Here we find the world's most popular vodka, the American

Smirnoff, sold for $9-10 a bottle. This group's share is 22 per cent of the

USA's total vodka consumption.

• Standard priced. Here the two English labels Gilbey's and Gordon's are

said for $7 a bottle. The category's share is 14 per cent of US vodka

consumption.

• Popular priced. This is the largest group. Its share of the total US

vodka consumption is about 54 per cent, and the group consists of a

number of local labels at about $6 a bottle.

Table 2 lists the market shares of the largest producers in the US market.

The three largest imported brands are Absolut (no. 3), Stolichnaya (no.

11) and Finlandia (no. 17).

Absolut's two main competitors can be characterized as follows:

38

• Stolichnaya. The pioneer among imported vodka brands, this was the

first vodka to be introduced in the USA, in 1972. Stolichnaya was at this

time a good alternative to the USA-produced vodka brands as it tasted

milder due to a more refined distilling process.

But Stolichnaya's popularity has been dependent on the political climate

between the USA and the former USSR. Today Stolichnaya is

distributed by Absolut Vodka's former importer, Carillon Importers.

• Finlandia. This brand was introduced to the USA in 1976. Despite

many marketing campaigns, Finlandia has never been able to get hold of

the vodka market. In the trade, it is estimated that Finlandia has the most

exposed position as all new importers go for the esteemed third place,

which seems to be a realistic goal for a new importing vodka brand.

The distribution system for vodka in the USA

Generally the sale of spirits goes through the distribution system shown

in Figure 2. For American producers, producer supplier and

importer/agent coincide. The retail ('off premise') sale of wine, spirits

and beer takes place through two different distribution systems. In the

'open states'(licence states) the market is free, and sale takes place in

39

liquor stores, supermarkets or other grocery stores where the owner has

a licence to sell spirits. In 'control states', spirits can only be sold in

liquor stores owned by the state, similar to the Nordic monopoly system.

The importer/agent usually has only a minor sales force, which

concentrates on selling to and servicing a distributor. An importer/agent

usually cooperates with one distributor in every state (although one

distributor can handle several states), and inlarge states a distributor can

have up to 500 salespeople (geographically divided).

Generally, these salespeople pay for their own car and receive a low

basic wage and commission.

Table 2 Vodka brand shares in the US market, 1990 and 1995

Brand Company % in volume (1990) % in volume (1995)

1. Smirnoff Heublein 16.8 17.9

2. Popov Heublein 9.8 11.1

3. Absolut Seagram 6.9 9.7

4. Gordon's Schenley Ind 5.6 7.0

5. Barton Canadaigua 2.2 3.9

40

6. Kamchatka Jim Beam Brands 5.6 3.8

7. Gilbey's Jim Beam Brands 3.3 3.7

8. Wolfschmidt Jim Beam Brands 2.6 3.7

9. Skol UD Glenmore 2.2 2.7

10. McCormick McCormick Distilling 2.0 3.5

11. Stolichnaya Carillon 3.0 2.8

12. Fleischmann's UD Glenmore 2.2 2.7

13. Aristocrat Heaven Hill 1.3 2.2

14. Nikoiai Sazerac 1.4 2.0

15. Taaka Sazerac 1.5 1.7

16. Relska Heublein 1.6 1.4

17. Finlandia Heublein 0.7 1.4

18. Crystal Palace Canadaigua 1.0 1.3

19. Crown Russe Sazerac/Southland 1.0 1.2

20. Majorska Star Uquor Imports 1.0 0.9

Total top twenty 71.7 84.6

41

Others 28.3 15.4

Total 100 100

Total sales volume (1995): 280 million liters.

Source: Jobson's Handbook Advance/Euromonitor/lmpact Databank,

Figure 2 The

general distribution

system for spirits in

the USA

The salesperson in the area concerned visits both the institutional market

and the retail market, often once a week, taking orders and in xceptional

cases delivering goods and collecting payment.

Having read the above report, Claes G. Fick acknowledges that it is

necessary to get some external input on some essential strategic

questions. When Claes lands in New York he has written down the

following questions which he asks you to answer.

42