Examining the Vodka Industry: Smirnoff vs. Absolut

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Examining the Vodka IndustrySmirnoff vs. Absolut

• BIA Presentation
• By Blair Coward and Mollie Jo Holman

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Company and Product

• Owned and produced by Diageo, a British company.
• Brand began with a vodka distillery founded in
  Moscow.
• It is now distributed in 130 countries.
• Smirnoff products include vodka, flavored vodka,
  and malt beverages.

Smirnoff No 21 Vodka The world's leading
vodka. Results 2008 -25.1 million 9-litre
cases -8 volume growth -12 net sales
growth Top five markets 1.US 2.Great
Britain 3.Canada 4.Brazil 5.South Africa
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Situational Analysis

• In 2006, vodka was the largest growth category of
  any major international spirits sector.
• Total global consumption in 2006 increased 1.6,
  or over 8m cases, to top 513.5m cases, according
  to the International Wine and Spirit Record
  estimates.
• Recession-weary U.S. vodka drinkers are switching
  to lower-priced rivals such as Smirnoff, Skyy and
  Svedka, this has hurt Absolut.

• Smirnoff is the largest vodka in the U.S. by
  volume Absolut is the second-largest, according
  to research firm Beverage Information Group.

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Competition Analysis
Brand Producer Ad Campaign Summary
Smirnoff Diageo Used to emphasize purity and its premium-status, now markets interactive Be There campaign focusing on sharing special moments in life.
Absolut Pernod Ricard Long running ad campaign based on the distinctive bottle shape and the phrase Absolut_____. Currently In an Absolut World.
Grey Goose Bacardi Marketed as a premium brand vodka and has luxurious lifestyle brand to correspond, for those who value refined subtleties in all aspects of life.
Svedka Constellation Brands History of overt sexual ads, newest campaign set in 2033 introduces futuristic, party-going fembot Svedka_Grl, Voted 1 vodka of 2033.
Skyy SKYY Spirits LLC Focused on Skyy Infusions with bold ads highlighting the blue bottle and the colors of the infusion and sexualized art.
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Competition Analysis

• Diageo's Smirnoff -also lower-priced than
  Absolut- has been outperforming its rival.
• (David Kesmodel. (2009, September 4). Corporate
  News Absolut's U.S. Sales Fall, Pressuring Its
  New Parent --- Pernod Ricard Bet Big on Brand
  Last Year, but Recess.ion Has Led Some Americans
  to Turn to Less Expensive Vodkas. Wall Street
  Journal)
• Smirnoff's volume in North America rose 1 in
  Diageo's fiscal year ended June 30. The company
  has been offering mail-in rebates for Smirnoff
  and other brands this year in U.S. newspaper ads.
  
• It also for the first time rolled out new flavors
  of Popov, one of its discount vodkas, whose sales
  have risen in the economic slump.

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Smirnoff Campaign Objectives

• To provide a platform for brand and consumer
  content around Be There, while using an
  engaging interface to communicate the brands
  tone.

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Be There Positioning

• The campaign marks a shift away from a
  traditional marketing approach and aims to
  inspire consumers to experience and create
  exceptional, unexpected and inexplicable there
  moments for themselves, said Anita Robinson,
  marketing director for Smirnoff.

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Be There Messaging Strategies

• Focus on being there in the moment
• Emphasizes having fun and sharing it with friends
• Focus on being social , friendly, and lifestyle
  based, as opposed to previous positioning
  emphasizing purity and its premium-status

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Target Audience Segmentation

• Smirnoff Be There
• New campaign focuses on men and women 18-35.
• Looking for a cheaper option but still high
  quality.
• Found mostly on the web.
• Enjoy having a good time, good sense of humor.

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In an Absolut World Messaging Strategies

• New take on and continuation of In an Absolut
  World
• Recovery from Spring campaign.
• Emphasis on tradition, creativity, being genuine,
  classic yet modern and ready for the future.

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Target Audience Segmentation

• In An Absolut World
• Men and women 2150.
• Looking for a high-quality, reasonable vodka
• Wish to savor and enjoy beverage
• Enjoy perception of class

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Smirnoffs Tactics

• Be There Campaign (7/13/09)
• Commercials and online videos
• Promotional Parties
• Contest suggest moment
• Interactive Website
• Media Tie-in
• Facebook
• Print and interactive ads (which have not been
  released yet)

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Absoluts Tactics

• First TV spot
• Making of TV spot
• Print Ads
• Interactive Website
• Online Ads
• Utilization of Facebook and Youtube
• Share your inspiration feature
• iphone application

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Results of Smirnoffs Be There Campaign

• Smirnoff sales are increasing due to the economy
• Too early to tell direct impact from campaign
• Mixed reviews from Critics
• Success to be based on level of interaction and
  response from possible consumers

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Suggested Ways to Improve Smirnoffs IBP

• Clean up the website and make it more navigable,
  since so much is website-based.
• Tie back in the purity factor.

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Suggested Ways to Improve Absoluts IBP

• Stick to the classic Absolut values
• Emphasize clarity and purity - classic yet
  modern nature of the brand
• Tie commercial to print endeavors as part of more
  cohesive campaign
• Reincorporate the bottle

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Smirnoff Weaknesses that Suggest Opportunity for
Absolut

• Website hard to navigate
• Approach is very different from previous
  efforts-will it resonate? Isolate part of
  market?
• Difference between being in the moment and
  sharing the moment.
• Very reliant on online media/events
• Emphasis on social media, yet no visuals of
  phones, cameras, etc.
• Campaign grows out of smaller marketing project
  in 07-08-will consumers find it hackneyed?

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Suggestions for Absolut

• The U.S. accounts for more than half of the
  brand's retail revenue and the majority of its
  profits, according to the industry journal Impact
  and analysts.
• Restoring volume growth in the U.S. will be
  "key," even though Absolut enjoys healthy growth
  in countries like Brazil and Mexico, said
  Laetitia Delaye, an analyst with Kepler Capital
  Markets in Paris.

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Conclusions

• Absolut should stay the course
• Smirnoff campaign great concept but flawed in its
  deviation from its core values and a poor
  execution

• Absolut can take advantage of Smirnoffs
  deviation to present itself as the pure, classic,
  and innovative choice for consumers