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Vodka Rebellion: Behind the Rise of New Amsterdam and Tito's

By Published on .

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When it comes to vodka, age is no longer a virtue.

The two fastest-growing brands, New Amsterdam and Tito's, are relative newcomers, while stalwarts like Smirnoff and Absolut have been losing ground. Starting today one of upstarts is making a major marketing investment as it looks to keep its momentum going.

New Amsterdam is putting an estimated $10 million behind a new campaign by David & Goliath called "Pour Your Soul Out." It seeks to boost the emotional appeal of a brand that has accelerated thanks to a smart distribution and pricing strategy by owner E. & J. Gallo Winery.

The vodka grew case volume by 36% last year to become the second-largest brand in the category behind Diageo's Smirnoff, according to Impact Databank, a sales tracking service published by liquor trade pub Shanken News Daily. Only fifth-ranked Tito's came close to matching that growth, at 35%, while Smirnoff eked out a 1.3% increase and fourth-ranked Absolut fell 3.4%.

It is an astounding accomplishment for two relatively young brands that would not even be old enough to drink if they were people: Tito's arrived in 1997 and New Amsterdam has only been around since 2011. The growth indicates how much has changed in the vodka category over the past couple decades. Austin, Texas-based Tito's -- officially Tito's Handmade Vodka -- carved out a unique identity as a "handmade vodka" produced in "old-fashioned pot stills."

Tito's, named after founder Tito Beveridge, has taken a folksy approach. The brand's website features "Tito-isms" like "I make a filet mignon at a pot roast price." Tito's didn't spend a dime on TV advertising last year, but still shelled out $13.9 million on measured media, including $9.2 million on magazine advertising, according to Kantar Media. Tito's rise, and the tumult it has caused in the vodka market, became clear when Smirnoff launched a campaign earlier this year taking a shot at its "fake crafty" competitors with spots starring Chrissy Teigen.

"The brand has cultivated a craft-like identity, while at the same time selling significantly below the $30 tier of imported vodkas," said Dan Marsteller, managing editor of Shanken News Daily, in an email. "That seems to be drawing in consumers for whom the glamour of traditional upscale vodka marketing is less appealing -- craft beer drinkers for example." New Amsterdam, he said, "seems more of a straight price-value play, and it benefits from Gallo's scale and distribution network."

The average price of a bottle of Tito's is $16.06, while New Amsterdam sells for $10.42, according to IRI data for the 52 weeks ending April 16.

E. & J. Gallo has made the most of its strength as a long-time wine marketer to get prime retail placement for New Amsterdam. "We are able to garner great displays and really make sure that when consumers walk into any retail store that our product is front and center," said Michael Sachs, Gallo's director of marketing for New Amsterdam Spirits. The vodka brand has also tapped into Gallo's consumer research as it formulates flavored vodkas. Offerings include red berry, coconut and pineapple. "With wine you have to have such a sophisticated palette," Sachs said. "We are taking that expertise and that learning into our spirits-making process."

The New Amsterdam ads will be backed with one of the largest campaign budgets in the history of 84-year-old Gallo, whose iconic Bartles & Jaymes ads got significant play back in the 1980s, including a Super Bowl spot. Sachs declined to disclose exact figures but said the effort would be backed by "close to $10 million."

A TV ad that will debut on ABC during tonight's broadcast of the NBA Finals features a drummer named Omari Williams. (An extended version is above.) Digital ad plans include a national Snapchat filter, a masthead takeover on YouTube and a homepage takeover on Spotify. (New Amsterdam also markets a gin, but this campaign is for the vodka only.)

The tagline "Pour Your Soul Out" is meant to celebrate the "hustlers, the dreamers and the doers," according to David Angelo, founder and chairman of David & Goliath, which won the account last year. The ad mostly shows Williams practicing his craft, interspersed with a bar scene that shows the vodka. It is a departure from the brand's previous campaign by Muhtayzik/Hoffer called "It's Your Town" that included this 2014 spot showing dancing millennials. The new theme "celebrates grit and work ethic," Angelo said.

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CORRECTION: An earlier version of this article said the NBA Finals will air on ESPN. They will appear on ABC.