Vodka: Quality without the cost?

March 18, 2011

A Wodka advertisement is featured in this undated handout photo. REUTERS/HandoutLet’s talk alcohol: After all, it’s 5 p.m. somewhere, right? Over the past decade, the popularity of super-premium spirits has exploded, catering to a new breed of high-end cocktails in many watering holes.

“There has been a significant increase in consumers buying better quality products, almost across the board in all the various categories of spirits,” says Frank Coleman senior vice president of Distilled Spirits Council of the United States (DISCUS).

As the sting of the recession dulls, demand for top-of-the-line goods is increasing to pre-crisis levels. For spirits, super premium categories have experienced double-digit growth in 2010  — Irish whiskey sales rose 30 percent from the previous year, while scotch single malt was up 17.8 percent and vodka rose 13.8 percent, according to DISCUS data.

“There’s an overall trend in consumer consumption patterns for all types of products, whether you’re talking about coffee, spirits or women’s purses. In general, in the mature markets around the world, the consumer demand is for luxury goods,” says Coleman.

But is that $22 martini featuring your favorite luxe-grade vodka worth the price? Can consumers get quality vodka without the cost?

“There’s no question the more you spend on some of these products, you are getting a significantly better product,” says Coleman. “These companies produce, at the high end, phenomenally good products from an artisanal sense. They are hand-crafted products, aged 20 to 30 years. There is a cost factor and a status factor.”

The “status factor” is exactly what value rivals are rallying against, contending you can get a high-quality vodka without a high price tag. Wodka vodka, produced in the Polmos Bialystock distillery in Eastern Poland, retails for an average price of $9.99 for a 750 ml bottle, which is substantially less than the $30 to $40 you’ll pay for the average 750 ml bottle of Grey Goose.James Dale is pictured in this undated handout photo. REUTERS/Handout

“We’ve taken an egalitarian approach to the brand. We could charge $25 a bottle for it, but we don’t and as a consequence, we make a lot less money. We hope people pick up on that — buy into the honestly and integrity of the product,” says James Dale, President of Panache, which owns and distributes Wodka.

The low-cost alternative  was rated a Best Buy from the Beverage Testing Institute in Chicago, receiving a taste rating of 90 along with an International Review of Spirits Gold Award.

Wodka isn’t the only value brand making waves. A 2005 blind taste test conducted by the New York Times ranked Smirnoff vodka, which retails for around $14 for a 750 ml bottle, well above higher-priced brands like Ketel One and Grey Goose.

So why are consumers paying more for super-premium brands when value vodka can satisfy even the most sophisticated palette? Dale chalks it up to “the Grey Goose effect” — a movement in ultra-premium vodka started by booze baron Sidney Frank. In a New York magazine profile, the genius of Frank’s audacity is summed up as: “Grey Goose costs way more than other vodkas. Waaaaaaay more. So it must be the best.”

Frank could see that there was a product missing from the shelves. Here were all these vodkas, in the $15-to-$17 range, vying to be the premium brand (with Absolut mostly winning). Frank just sidestepped the fray altogether and charged an unheard-of $30 a bottle. The markup amount was pure profit. “He was the first person to see,” says an executive at rival Bacardi, “that there was a superpremium category above Absolut, if you had a good product story.”

The Grey Goose effect is paying off, as brand loyalty abounds — especially in the mid-to-late 20s, young-professional crowd. “There is a specific demographic who comes into the store and look for Grey Goose and Grey Goose only. It’s basically the name recognition and if I try to steer them towards another kind of vodka, they won’t go for it,” says Amy Sulawan of Red Carpet Wine and Spirits in Los Angeles.

Grey Goose contends consumers buy into the superior ingredients of a quality product for both cooking and cocktail crafting, rather than splashy marketing campaigns.

“I think everything we do is focused on creating the finest vodka and an exceptional spirit. Consumers cast their vote over the quality of our product every time they make a purchase of our bottles,” says Emil Jattne, senior brand manager of Grey Goose vodka.

What makes Grey Goose a superior brand? Jattne says it starts with using superior bread-making wheat, sourced from local farmers in France’s Cognac region. The recipe was created by Maitre de chai (cellar master) Francois Thibault, who also oversees the distillation process.

“The care that it takes in creating our vodka speaks for itself. We have over 550 quality control checks in place that the maitre de chai has put in place throughout the process. No batch is bottled before the maitre de chai or a member of his hand-selected tasting team has tasted and approved it. Five people on the tasting team have to taste every single batch before they approve it,” Jattne says.

Whether in a lazy-man’s screwdriver or a high-brow martini, your palette will ultimately decide if the price you’re paying is actually for prestige or a premium product.

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I walked into a friend’s kitchen a year ago to ask if my Grey Goose vodka martini was ready, and caught her pouring Smirnoff into a Grey Goose bottle!

“Caught red handed” she exclaimed matter of factly.

“Why?” I asked in shock, almost in the same tone I would have used if I caught her doing something really bad.

“Why not,” she said flatly, “when I can get this stuff at Costco for a fraction and nobody knows the difference?”

I didn’t admit it but I admired her shameless audacity not to mention her thrift. Come on, folks, it’s a recession. Desperate times call for desperate measures. Buy Grey Goose and refill the bottle with Smirnoff!

Posted by DisgustedReader | Report as abusive

Grey Goose is good, but now I am hooked with Skorppio vodka, very smooth with a special flavor that I can’t find in any other vodka, the price is affordable and with the scorpion in the bottle, always my parties are more fun because everybody participate at who is eating the scorpion.

Posted by mosca | Report as abusive

[…] types of alcohol, not just wine. In TIME’s It’s Your Money blog, Brad Tuttle quoted a Reuters blog that noticed the same thing about vodka: while Grey Goose has glossy ads and brand recognition, […]

Posted by My $10 bottle of wine is better than your $100 bottle. | Yes, YOU can afford it! | Report as abusive

[…] There are always ways to get the attention of the general public, most go the high-end route because they want to be all fancy and ish! These guys are real deal I mean look at that ad, and being from Jersey we love it more! Check the article dropping some knowledge on you Grey Goose drinking fools: WODKA […]

Posted by Holy WODKA Batman!!! | Report as abusive