The good news is the alcohol market in the United States continues to grow.
People have standards and expectations when it comes to, well, everything. But particularly their alcoholic beverages. Call it “sociability,” or “ritual,” or just plain “thirst.” We call it “engagement,” in this instance, an elucidation of how a consumer looks at an alcoholic beverage category and how – and in what way – they compare alcoholic brands to standards they hold for their Ideal in the category. It’s not always articulated as artfully as this, but here’s the very best example of I’ve ever heard:
“My dear girl, there are some things that just aren’t done, such as drinking Dom Perignon ’53 above the temperature of 38 degrees Fahrenheit.”
James Bond, played by Sean Connery in the 1964 film “Goldfinger,” delivered that line. Mr. Bond, also the progenitor of the martini, “shaken not stirred,” might just be a little shaken himself to find out what’s currently happening in the white goods sector – meaning vodka, gin, and rum (but mainly vodka). So pull up a barstool, brace yourself, and let me bend your ear, because there’s good news, better news, but also bad news.
The good news is the alcohol market in the United States continues to grow. The better news is vodka has been the top-selling spirit since the 1970’s, driven by the spirits of Mr. Bond, Don Draper, and Carrie Bradshaw. The bad news is vodka growth has slowed significantly in recent years, with vodka’s popularity on the wane. A lot of that has to do with the introduction of crafted whiskeys and the growth of new, whiskey-based cocktails. Boredom and the search for new experiences plays into the trend as well.
Since Russia invaded the Ukraine, vodka is also facing a challenge to its traditional ties to Russia, with consumers, retailers, bar owners, legislators all calling for a boycott of anything linked – even just historically – to Russia. Although I’d venture to say, not so much the ”boycott” of Russian vodka itself. That only accounts for 1%of total vodka volume in the United States, so it ends up being pretty much symbolic. Still, it all adds up and symbols are sanctions, too. It’s not the first time vodka’s connection to Russia has affected the sector. In the 1980’s when Stolichnaya was still under Russian control (it’s now Latvian, so feel free to continue to buy it) its consumption diminished significantly during the Cold War.
So now the growth in the alcohol market overall is being driven by what the industry calls, “brown goods,” which includes bourbon and scotch, and mostly whiskey. Loyalty – for virtually every alcoholic beverage category – is driven primarily by things like appearance of versatility (the critical word being “appearance”) with that appearance having to do with how the brand fits into a consumer’s lifestyle, rather than just the brand’s bottle or country of origin. Sure, vodka brands talk about “filtration,” but brown goods talk about being “crafted” and “handmade,” and stored in “aged barrels,” in ways that harken to a bygone era when a silver dollar flipped onto a bar top got you a shot of whiskey.
Mark Twain noted, “Too much of anything is bad, but too much good whiskey is barely enough,” and from an increasing-brown-goods-consumption-perspective, that would seem to be true. I have a preference for single malts, but there’s a famous Churchill quote that goes, “The water was not fit to drink. To make it palatable, we had to add whisky. By diligent effort, I learned to like it.: And from recent trends, Americans are apparently following our British cousin’s example.
It could also be those Millennials and their cocktail culture. Or that tastes have changed so much, vodka is no longer in vogue. So, consumers have been migrating to other “brown goods” like bourbon, Irish whiskey, and spiced rum. In the same period American and Tennessee whiskey have both climbed nearly 25 percent and 11 percent in the U.S. alone.
It was mob boss and purveyor of various alcoholic beverages, Al Capone, who claimed, “All I ever did was supply a demand that was pretty popular.” And that’s still true. Alcohol is still popular. When it comes to purveying alcoholic beverages today, however, the lesson to be learned is to always keep track of what’s engaging the customer most, and then serve them that.
Because an increase in sales is something that every marketer will drink to!
Robert Passikoff is founder and CEO of Brand Keys. He has received several awards for market research innovation including the prestigious Gold Ogilvy Award and is the author of 3 marketing and branding books including the best-seller, Predicting Market Success. Robert is also a frequent contributor to TheCustomer.
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