Grey goose case study

SVEDKA Vodka SVEDKA Vodka As he waited for his wife to meet him, Guillaume Cuvelier sat in a downtown Manhattan restaurant sipping vodka straight up. As founder and managing director of Spirits Marque One, a liquor importer, Cuvelier wondered if patrons of such an upscale bar would soon be ordering his new vodka by its name: SVEDKA. It was mid-1998, and the product was set to launch in just a few months. Scanning the bar for the competition’s vodka bottles, Cuvelier ran through the marketing campaign in his head.1 The U.S. government defined vodka as a neutral spirit “without distinctive character, aroma, taste, or color.” As one food and beverage writer explained, “Good vodka is considered to be one without the harsh, rubbing-alcohol fumes of ethanol.”2 The nowpopular liquor originated in the fourteenth century in either Russia or Poland (depending on which history you believe) as a spirit distilled from rye or wheat. In the early 1800s, the introduction of filtration and dilution techniques allowed vodka to evolve into something more refined but no less potent. As Cuvelier enjoyed his drink, the image of James Bond came to mind—described years earlier by an industry observer as “the first upscale vodka drinker.”3 Consumers were increasingly imitating Bond’s discerning taste for high-priced vodka. In this climate, Cuvelier reviewed his own pricing, distribution, and positioning one last time. He hoped he was right that the vodka market was ready for a mid-priced option: Was there really an opportunity below the Bond tier and above the very low-priced products? With a small marketing budget, Cuvelier had to be correct in his efforts to position his brand as he created a new segment. On Trend Trends in the marketplace inspired Cuvelier to take a closer look at opportunities in the spirits business (whiskey, gin, and vodka were among those classified as spirits). In 1991, he had received his MBA from the Darden School of Business at the conclusion of a two-year hiatus from his position with LVMH’s Möet Hennessy-Louis Vuitton. As an industry insider during the 1980s and early 1990s, Cuvelier had been inspired by Absolut vodka’s success as a product, brand, and category leader. “Pre-Absolut, you could say that vodka was vodka was vodka,” he said. Cuvelier believed there was room to compete in the category by offering his own twist on the concept of name-brand vodka. With that purpose in mind, in 1998, Cuvelier founded a small entrepreneurial team of industry experts in New York City. That same year, vodka was the top-selling distilled spirit, representing 24% of total spirits consumption in the United States, up 3.6% in volume sales from 1997. The growth in premium vodka was in stark contrast to the negative long-term trend for most other spirits. The Market Branded vodka dated back to the late 1860s, when Smirnoff cultivated the endorsement of the czar, engaged in comparative advertising with competitors, and paid patrons of Moscow bars to demand Smirnoff and accept no substitutes. Russia’s connection with the category became prominent in the minds of many consumers. A leading imported vodka from Russia, Stolichnaya, had been introduced to the United States as recently as 1965. The brand leveraged its Russian image, evoking a strong connection to its origin and heritage. But “Stoli stumbled after the Soviet downing of Flight 007 in 1982, [which] hurt sales of many Russian products.”4 Once a Russian import, Smirnoff was eventually produced in the United States and came to dominate the domestic vodka segment, capturing almost 20% of the market share by 1998. Until the launch of Absolut, Smirnoff dominated the premium-price vodka segment with a brand name that derived authenticity from the family’s Russian heritage. The launch of Absolut in 1979 and its now-famous ad campaign helped the brand attain its pop-culture status. In 1998, Absolut spent $18 million on advertising.5 Years later, USA Today reported: “Absolut had pioneered selling distilled spirits on image, persuading consumers to buy prestige in a bottle for $20. But the new prestige vodkas, at $25 to $200, have become what Absolut was 20 years ago.”6 It took more than a decade for the Dutch Ketel One and American Skyy (then the only domestic vodka priced above $10) to enter the market.