Superbrands case studies: Smirnoff
Originally published in 'Consumer Superbrands Volume IV', May 2001. The book reviews the UK's strongest consumer brands as judged by the independent Superbrands Council.
Case study provided by the Superbrands organisation.
The drinks market is constantly evolving, with product innovation, as well as brand strength, at the heart of its growth. Doubtless, the root of success of Smirnoff vodka is the consistently high standard of classic vodka that its owner has produced over the years. However, as the market has evolved, so has the Smirnoff brand. With a growing range of flavoured vodkas and pre-mixed cocktails that perfectly tap into the lucrative ready to drink sector, Smirnoff is successfully supplying the constant demand for new products that will target the younger, style-conscious adult drinker.
White spirits are better suited as summer refreshers rather than winter warmers. However, unlike many other alcoholic beverages, the white spirits market is not adversely affected by seasonality. Sales within the white spirits market are not limited to the summer season alone, but are equally included in the general upsurge in alcohol consumption over the festive season which sees around 22% of annual volume sales being made in the Christmas period (Source: Mintel 2000).
Vodka is a drink that appeals to young adult drinkers, partly because of its versatile character. It has benefited from its lack of association with, or limitation to, any one particular mixer, meaning that the different possibilities of consumption are multiplied.
In 1877, the Smirnov vodka company in Moscow was awarded the right to use three Russian State coats of arms and in 1886 became Purveyor to the Imperial Russian Court. Between 1874 and 1897 it won numerous awards for quality and variety at international exhibitions.
By the end of the nineteenth century, the Smirnoff vodka brand was generating the equivalent of nearly $20 million a year in revenues.
Since 1975, vodka -- led by Smirnoff -- has outranked bourbon as the US's most popular spirit. In 1978, Smirnoff became the number one spirit brand in the US, its largest market (Source: Smirnoff Impact Newsletter). Although overtaken by Bacardi it has remained a strong second ever since and is growing more rapidly than Bacardi on a worldwide basis.
Smirnoff is now the largest premium international vodka brand in the world, selling more than three times than its nearest competitor, Absolut (Source: ACNielsen).
The Smirnov family is believed to have made their start in Moscow's wine and vodka business during the early 1800s. But it was in 1864, following the abolition of serfdom after the Napoleonic wars, that Piotr Arsenyevitch Smirnov founded his own vodka distillery near the Chugunny Bridge, achieving rapid success on a national and international scale. By the time Smirnov died in 1898, his company employed over 1,500 people, produced over 4,000,000 cases of wines, spirits and liqueurs and was generating the equivalent of $20 million a year in revenues, making the Smirnov family one of the richest in Russia.
Disaster struck with the Russian Revolution which saw the confiscation by the Bolsheviks of all private industries in Moscow including the Smirnov distillery. One of Piotr's sons, Vladimir, was determined to carry on the family business and fled Russia for Paris where he was cut off from his roots and fortune. Adopting the French version of his family name - 'Smirnoff', Vladimir then began his struggle to make a success of the business in Europe.
Smirnoff vodka was brought to America after a meeting between Vladimir and Rudolph Kunett, a representative from the Helena Rubenstein cosmetics company who was on business in Paris. Vladimir granted Kunett the exclusive rights and licence to all Smirnoff alcoholic beverages in the US, Canada and Mexico, and on September 21st 1933, Ste Pierre Smirnoff Fils of New York was incorporated, transplanting the exiled vodka brand to the New World.
But when US production of Smirnoff vodka began in March 1934, business was not as good as Kunett had anticipated. First year sales reached 1,200 cases and by 1937 that figure had reached only a little over 4,000 cases. By 1938, when business was so bad that he could not afford the $1500 mandatory sales licence, he contacted John Martin, president of Heublein, asking them to act as an agent for Smirnoff vodka.
By 1941, Heublein's sales of Smirnoff had reached 22,115 cases a year. Although this was a dramatic improvement on previous figures, the real turning point came when the product began to be marketed as 'white whisky', with 'no taste, no smell'.
This concept seemed to appeal to consumers who did not care for the traditional characteristics of whisky and discovered that vodka could be mixed with pretty much anything. This, combined with heavy national promotion by Smirnoff of cocktails like the Moscow Mule, resulted in a rapid escalation of Smirnoff sales.
In the 1950s Heublein purchased the remaining worldwide rights to the Polish Smirnoff company from Tatiana Smirnoff, Vladimir's widow and heir. W&A Gilbey Ltd of England was then commissioned to manufacture and sell, on a royalty basis, Smirnoff vodka in the UK, Canada, Australia, New Zealand, and South Africa. Heublein bought the French Smirnoff company, the last independent Smirnoff producer, on May 12th 1954, therefore securing the world rights to the brand and making Smirnoff into the truly global company that it is today.
The Smirnoff brand owner uses only the highest quality raw materials in its production process. The process includes a triple distillation, a filtration process that lasts a minimum of eight hours and 47 individual quality control checks. It is this process that has set Smirnoff apart from other vodkas, securing and sustaining customer confidence in the consistent premium quality of Smirnoff vodka.
Smirnoff 'Red' is the world's leading international premium vodka and second best selling spirits brand. However, Smirnoff has developed many variations on the vodka theme, thus ensuring that it is leading, rather than merely keeping up with, the competitive pace of the drinks market.
Smirnoff 'Black Label' is distilled using the traditional methods of Tsarist Russia. Made in a copper pot at a very slow pace, it is then passed through Siberian silver birch charcoal to a strength no lower than 40% ABV, thus preserving the natural flavour of the original grain spirit.
Smirnoff flavours were launched in March 1998 into the off trade, and currently have a growing distribution in the on trade. Flavours include Twisted (citrus), Bloody (hot spice and pepper), Creamed (vanilla and burnt spice) and Black'n'Blue (natural berry flavours) a selection of flavours that are daring, innovative and new, yet packaged in a way that is reassuringly 'Smirnoff'.
Flavoured vodkas have been available for a long time but until recently were confined to specialist outlets and aimed at very small niche markets. The introduction of a varied range of flavoured vodkas by the Smirnoff brand owner has brought it into the mainstream, putting Smirnoff on to supermarket shelves, and exposing all vodka drinkers to the concept in a way that entices them to experiment.
This innovation has created another facet of the premium sector and has stimulated interest in the market since shot drinking, driven by the 'big night out' occasion, has increasingly become an integral part of drinkers' repertoire. 61% of young adult consumers drink shots monthly and 41% weekly (Source: Cardinal Research 1999). Since shots supplement regular drinks they therefore drive incremental sales and tapping into this market has enabled Smirnoff to stay ahead of the game.
Smirnoff Ice - a blend of pure Smirnoff 'Red' vodka with the classic taste of lemon - was launched in July 1999 in the UK as part of an ongoing strategy to broaden the Smirnoff footprint and to lead the brand into more drinking occasions.
Since the 1950s, Smirnoff has been renowned for its ingenious and highly evocative advertising campaigns. In 1952, the 'it leaves you breathless' slogan was coined and made a splash when it appeared in an advertisement in Life magazine. The 'driest of the dry' campaign, launched in 1953, was a series of distinctive surrealistic executions that ran for over twelve years that established and encapsulated -- rather unleashed -- the spirited atmosphere surrounding the Smirnoff brand. The surrealistic adverts were mingled with high profile 'celebrity ads' which saw characters like Woody Allen, Zsa Zsa Gabor, Marcel Marceau, Groucho Marx and Buster Keaton endorsing Smirnoff -- albeit in the guise of a seemingly endless variety of drink concoctions -- as their spirit du choix.
The 'effect is shattering' campaign which followed used lines like 'Accountancy was my life until I discovered Smirnoff.' It was this campaign that firmly established the personality of the Smirnoff drinker as individual, relaxed, rebellious and mysterious. Smirnoff advertising ever since has talked the distinctly unconventional and imaginative language of its target consumer.
The 'Pure Thrill' campaign was the first truly global spirits advertising campaign. The campaign, which was a huge success, consisted of a series of conventional images that were distorted -- transformed into something slightly different -- as a result of being viewed through the lens of a Smirnoff bottle. The campaign was developed across a global network of agencies and its various executions have since won over 50 advertising awards including the coveted Cannes Golden Lion award. The recent 'No Imperfections' campaign continues Smirnoff's tradition of innovative and creative advertising.
The Smirnoff brand's huge international success is in part due to values that can be successfully described and translated into any language. Whether warming up a frosty Moscow night or cooling down a steamy Tennessee evening, the brand essence of Smirnoff is that of stimulating sociability.
The core brand values of Smirnoff are freedom, originality and versatility. This has been conveyed and endured through a series of hugely successful advertising campaigns and built on the foundation of consistency and quality that was implemented by Piotr Smirnov when he first devised what has evolved to become known internationally as Smirnoff vodka.
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© 2002 Superbrands Ltd
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