Spirits makers raise the bar on lux brands

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Stoli Elit is the priciest mass-marketed vodka on shelves. At $60 a bottle, the brand, targeted at male "vodka connoisseurs" aged 30 to 44, is more than double the price of red-hot Grey Goose.

Allied Domecq introduced Stoli Elit to select bars, restaurants and retailers in Los Angeles and San Francisco earlier this year with an eye to a broader geographic rollout. "It's creating an ultra-luxury category in vodka," said a spokesman.

Trading up

It's not alone. Elit is an example, albeit an extreme one, of how liquor marketers are trying to capitalize on the popularity of both luxury brands and high-priced spirits-the latter nurtured nearly a decade of aggressive marketing from promotions to cable TV advertising from liquor companies. Overall, luxury is a $400 billion market expected to hit $1 trillion by the end of the decade, according to the Boston Consulting Group (AA, Sept. 13).

Trading up has been a reality in spirits for years, but it's accelerated lately. The consumer price index for spirits rose by only 1% in 2003, but unit revenue per case shot up by 8.2%, according to figures from the consultant Beverage Marketing. The gap demonstrates how people are going for more expensive pours.

"People are moving up in terms of price," said Brian Sudano, Beverage Marketing senior VP.

The popularity of higher-priced brands cuts across spirits products from tequila to Scotch whisky to vodka. The high price points of tequilas and Scotches are justified by their scarcity; for vodka it's largely a matter of imagery and exotic bottle designs.

extreme tequila

The super-premium-tequila category is dominated by such brands as Patron, marketed by St. Maarten Spirits. The tequilas can cost upward of $28 and top sellers move a range of 200,000 cases to about 300,000 cases, according to Adams Beverage Group. Rocker Sammy Hagar has moved into the market recently with his Cabo Wabo tequila (AA, Sept. 27).

Diageo, the world's biggest spirits marketer, is active in high-end scotches with its Johnnie Walker Blue Label, making Stoli Elit a relative piker: Blue is priced at $185.99. Diageo is expanding the Johnnie Walker Scotch Whisky line with Green Label, which retails at $53.99 at Binny's Beverage Depot, a major beer and spirits chain in Chicago. That puts it well above Johnnie Walker Red and Black, which sell for $19.99 and $25.99, respectively. The marketer's Green Label is just below the $59.99 price tag of Gold Label.

Much of the upward movement in spirits prices has taken place in the vodka category, thanks to the rollout of Grey Goose in the late 1990s by Sidney Frank Importing.

Grey Goose soared-it sold 1.4 million cases in 2003, more than five times its volume in 2000, according to Impact-and was snapped up by Bacardi. Other high-priced vodkas also grew dramatically. Ketel One, handled by Nolet Spirits, sales hit 1.2 million cases in 2003, up 57% from 2000. Belvedere, marketed by Millennium Import, more than doubled to 400,000 cases in that period.

If Stoli Elit takes off, it could cast a halo over the rest of the portfolio, observers said. But it won't hit the volume of its less expensive-but still dear-rivals, probably maxing out in the 200,000 to 300,000 case range.

"At $60 it gets pretty rarefied," said Tom Pirko, president of BevMark.

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