The whole spirits industry, and sales of vodka have

The
United States has a beverage market worth $354.2 billion with alcoholic
beverages totaling over 60 percent of the revenues with more than $211.6
billion in sales. The alcoholic beverage market is split between wine and
spirts and also malt beverages. In the alcoholic market, vodka owns about 34
percent of the market. Whiskey and rum combine for about percent market share,
followed by wine which makes up about 15 percent of the market (Parkstreet).
During the last ten years, this market has seen a lot of growth, and from the
period of 2016-2020 analysts expect a growth of at least 3.5 percent
(PRNewswire). American made vodka has been growing at a rate so fast that it
surpasses imports. Brands like Tito’s, Smirnoff, and Grey Goose have taken off
and created a huge vodka boom in 2016 (Beverage Dynamics). Tito’s alone sold
almost 4 million cases of vodka in 2016 and continues to grow at an astonishing
rate. Shipments of vodka have increased at a greater rate than the whole
spirits industry, and sales of vodka have increased by over 5 percent each year
from 2012 (Beverage Dynamics). The figure below shows the U.S. spirits market
in 2015. As you can see, sales and growth of vodka drinkers and buyers are constantly
increasing. More and more brands are coming into the market and will provide
consumers with different types of vodka in order to keep their purchasing behaviors
the same.

Market Segments/Demographics:

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The total market for vodka drinkers in the United
States could easily consist of anyone over the age of 21 or over the legal
drinking age, but vodka makers need to market to different segments in order
for their products to be sold efficiently. Education is one market segment that
vodka drinkers can be segmented by. Surprisingly, those who have achieved some
kind of college education make up about 47 percent of vodka consumers
(Anastarian). About 30 percent of vodka drinkers are high school graduates who
did not attend or receive a university education (Anastarian).

The second way to segment vodka drinkers is by age.
The highest market composition is from people who are aged from about 45-65 or
some older than 65 (Anastarian). Young consumers who are about 34 and younger
make up another smaller segment but are generally the second highest consumers
in terms of age. With that being said, consumers from the age of 21-34 are the
second highest consumers in terms of age. Most likely these numbers are a
little off because a large population of vodka drinkers are high school and
college students who aren’t even legal, but obviously that can’t be taken into
account statistically speaking.

The most intriguing market segment for vodka consumers
is the average income level. For vodka in general, most consumers are people
who make less than $20,000, and the second highest consumer level is for people
who make between $50,000 and $75,000. However, most people who are at the
highest consuming level are often buying the cheapest brand of vodka.
Similarly, people who have higher income levels and make up the second level of
consumers are often purchasing premium brands of vodka like Tito’s.

The last and least important demographic segment in my
opinion is geographic location. Geographic locations of vodka purchases are
split up into five different regions. The regions are Northeast, South,
Midwest, Southwest, and West. In each region, there is a fairly similar purchase
pattern and one region does not over power another in sales. The least likely vodka
consumers of these five regions were the South and the Northeast. The next
highest consumer was the South which includes areas like Florida and the Carolina’s.
The most likely regions to consume vodka and make more purchases than the other
regions were the West and the Midwest. Brands marketing vodka clearly don’t really
have an exact region or two to market to, there are consumers all over the
United States. This will help brand makers but also could hurt them while
marketing. During marketing, they obviously want to have specific target
markets, but in this case, it is hard because the consumers are all over (Infoscout).

Tito’s Vodka Stats:

In a study done for consumers of Tito’s vodka, the
consumer behavior results were quite interesting considering they are one of
the most well-known brands. Out of 231 consumers surveyed 135 were male and 96
were female. For the age section 672 consumers were surveyed, more than 534
were aged between 34 and 65 or higher and 138 consumers were aged between 21
and 34 (InfoScout). When it comes to education, over 80 percent of those
surveyed either had a college degree or some kind of advanced degree. As for
the income levels, there is no surprise that more than 66 percent were those
who earned more than $80,000 (InfoScout). The highest level of consumer income
for Tito’s vodka is actually those who earn more than $125,000. This shows that
drinking premium vodka or any upper level alcohol is more common in upper-income
Americans and those who have a true and more formal education, especially after
high school (Jones).

Consumer Behavior:

Vodka consumers are very outgoing and always willing
to try different products, whether it be low calorie or new innovated flavors
that could possibly be appealing to them. If new packaging or flavor
innovations are not created, purchasers may get bored of the same old vodka
product they have been drinking for so long (Euromonitor). Producers of vodka
have been spending more and more money on investments, innovations, and
marketing into their products in order to keep consumers happy and loyal to
their brand (Euromonitor).

Vodka consumers are very brand loyal. In a study done
of all brands with customer loyalty, a vodka brands were within the top twenty.
Ketel One vodka ranked at number 17 for most loyal customers and was also ranked
the number two in terms of vodka brands (BusinessInsider). A more premium brand
of vodka called Grey Goose ranked in at number 15. Compared to the previous
year where it ranked fourth, it dropped more than ten spots which goes to show
other brands have been higher competition than normal (BusinessInsider).

            Consumers are also becoming way more
conscious about their health and living a healthy lifestyle. There has been
demand for low calorie and light vodkas that has now entered the market and has
had success in sales recently (Barton). As customers become more and more vocal
about their wants in these types of products, vodka brands can start their
innovation process. If they make a high-quality product and consumers are
satisfied, this could help certain brands make a name for themselves in a new part
of the market.

If vodka makers are aware of these consumer wants and
needs, they need to be innovative and realize they have a huge possible market
for new products. If certain brands are able to please and satisfy their customers,
then this will help them continue to have a very strong and loyal customer base.
 By innovating and changing consumers
minds will make them keep paying attention to the brand and thus will let the
brands continue to be successful. If brand makers are not able to keep the
attention of consumers then they will most likely switch to another brand and
lose customers to their competition (Anastarian).

            Recently, vodka purchasers have been
changing their purchasing behaviors. Instead of buying out at restaurants and
going out for drinks, most purchases have been made for in-home consumption (Anastarian).
Obviously, the consumer is trying to save money because they know buying drinks
out would be way more expensive than just buying a bottle of vodka for their
house and drinking there. This is showing brand makers that they will most likely
have to change their marketing strategies and focus more of their trends on in-house
consumption in order to attract more attention. Marketing to both in-house and
out of house consumption is smart because both strategies will help sales. However,
because so many more sales are occurring for in-house is would be a better idea
for companies to focus their marketing for in-house uses.

 

Product Trends:

Vodka is by far the favorite spirit among American
drinkers even with consumers wanting different flavors and new brands, the
product continues to grow. Vodka makers are now making flavored vodkas that
appeal to consumers and appeal to new trends in the market (Barton). In the
last few years, flavored vodka sales have grown more than 30 percent and
continue to grow even more which shows this new trend is very appealing to
consumers (Anastarian). In 2011, out of all vodka sales in the United States,
flavored vodka accounted for more than 25 percent (Anastarian). There have been
hundreds of different flavor combinations that have been created in order to
appeal to different consumers (Barton). Even though flavored vodka appeals to
customers online and in stores, most of the time consumers tend to buy the
non-flavored vodka. Flavored vodka sales do tend to rise at all different
locations, but it has not affected the sale of regular tasting vodka brands at
all.

            Another vodka trend lately has been
light vodka, or low-calorie vodka which has been made from brands like Smirnoff.
Because more and more people are being more conscious about their weight and
living an active and healthy lifestyle, low calorie vodka has been becoming
very popular (Barton). Traditional vodka sales have not been affected at all
from this trend but the sales of this new trendy vodka have increased and is
making a healthy alternative to normal brands of vodka (Cocktail Hunter).

            The latest trend for vodka products
has been innovating packaging. Most vodka brands are hard to tell apart and
they only reason to tell the difference is by reading the label. Vodka makers
have been producing bold and unique packaging in order to differentiate their
products from competitors. Companies like Svedka are actually gaining a good
portion of market share ever since they created new bottles and packaging (FoodManufacturing).
Because old brands are now being outnumbered by the newer, more unique looking
brands it is forcing them to redesign and innovate their packaging in order to
regain their market share (FoodManufacturing). It will be interesting to see in
the next year or so what brands will change their packaging or overall product
in order to have a competitive advantage over their competitors. Consumers are
always looking for different products, not just the name but they also look at
the aesthetics of the product. Consumers are more likely to buy a vodka product
that is aesthetically pleasing than just a standard white bottle of vodka
(FoodManufacturing).

Customer Appeal/Buying Preferences:

            When it comes to purchasing vodka, a
study has been done that proves the bottle shape and label design really do
make a difference when it comes to appealing to the customer and them falling
in love with that specific product (Gabriele). A liquor store conducted a study
by setting up aisles of vodka brands with brand names written on cards in one
aisle and actual bottles on the shelves in the other aisle (Gabriele). Their
results were that the package is more important than the taste of the actual
product. In fact, a blind taste test was performed and more than half of the
consumers were not able to tell the difference between a low-quality brand and
a premium vodka brand (Gabriele). Consumer stated that they were more attached
to a vodka brand based on the marketing and advertising or promotion they have
seen on the items, and not just the taste.

Pricing/Economic Conditions:

Vodka is one of the more expensive types of alcohol,
mainly due to the fact that it is the most consumed spirit in the United
States. Most vodka prices are fairly high especially for the premium brands. In
fact, vodka prices have risen faster than the rate of inflation during the year
of 2015. The average price of vodka in like three years has gone up more than 5
percent (Anastarian). The most recent recession had a huge impact on vodka
sales, so this goes to show that companies must be aware of possible economic
downturns and conditions. This will ensure that their funds are taken care of
and to make sure they’re distributed correctly (Anastarian). During a
recession, companies should spend more money and time on marketing in home
consumption or in restaurants and bars. This will keep consumers intrigued and
make them want to still purchase the product, even during a recession. Recessions
also cause increase in prices which could cause less premium brand vodkas to
decrease in sales. This means that most low tier vodka would most likely be
purchased more and would hurt those premium tier companies. For the consumer,
it all depends on the price and what they are willing to pay to have their vodka
of choice (Anastarian). During the economic downturn in 2011, sales of liquor actually
increased by 4 percent. Consumers actually started to purchase super premium
brands of vodka like Belvedere and Grey Goose because the prices had gone down
(Anastarian). In the consumers mindset, they are purchasing a premium brand at
a lower price and have that feeling of luxury and feel good about a drink they
normally would just purchase at a bar. Companies that make vodka need to keep
in mind that there could be possible economic downturns or recessions that
could affect the sales of their products. They also should keep in mind that
this will most likely change the consumers purchasing behaviors.

Projected Sales/Future:

            As stated previously, vodka is by far the favorite and
most purchase spirit in all of North America and is expected to keep growing at
a rate of 3-5 percent per year. From 2015 to 2017 vodka was expected to make an
increase in the spirits market share from 33.7 percent to 37 (Anastarian).