Absolut buoyed by US market growth
third-largest international spirit brand with a 5 per cent increase
in shipments in 2004 - buoyed in particular by an excellent
performance in its most important market, the US. Chris Jones
reports.
The vodka, owned by the V&S group, shipped 8.5 million nine-litre cases to 126 markets in 2004, its ninth successive year of growth.
The steady improvement came on the back of a particularly good performance in the US, the biggest market for the brand with sales of 4.6 million cases in 2004. Part of this 3.4 per cent increase came from the launch of a new super-premium vodka brand, Level, which the company claimed "reached the highest volume ever of a super-premium vodka in its first year on the American market".
In its first 10 months on the US market, Level recorded sales to retailers of 97,000 cases. The brand is also available in Sweden.
"We are pleased that the US market reached the aggressive goals we set for it. Our subsidiary, The Absolut Spirits Company, and our American partner, FutureBrands, are making the most of the momentum Absolut has on the US market," said Bengt Baron, CEO of V&S Group.
Shipments to the rest of the world grew by 14 per cent in 2004, with Germany and the UK - the brand's fourth and eighth-largest markets with sales of 211,000 and 157,000 cases respectively - leading the growth. In eastern and central Europe, Poland and Russia are the key markets, with the former posting sales of 161,000 cases in 2004.
Growth in the Asia-Pacific region increased by 56 per cent, mainly due to China, the company said. No Asian market features in Absolut's top ten, as yet, but the rapid development of China's economy, and the increasing demand for western products as status symbols there, means that it is only a matter of time.
In contrast, Sweden dropped three places down the list to seventh place with 157,000 cases, a factor which V&S attributed to the high alcohol taxes in Sweden which has prompted increasing numbers of Swedes to buy their liquor in neighbouring countries such as Denmark.
As well as Level, Absolut benefited from additional volumes due to the launch of two other new products in 2004.
Absolut Raspberri, the sixth flavour variant of the vodka which also includes lemon, mandarin, blackcurrant, vanilla and pepper, was launched in the US, Sweden and other markets in May. Absolut Cut, a premixed version of the vodka produced in association with brewing giant InBev, was launched in Canada and the UK in April, offering one of the few major branded vodka alternatives to runaway market leader, Smirnoff Ice.
Although many analysts are predicting that the glory days of flavoured alcoholic beverages (FABs) are now over, with the limited number of markets in which they are sold already at saturation point, Absolut remains confident that it will be able to steal market share from longer established brands.
"The market for pre-mixed drinks has developed at a rapid pace in the last few years and, with consumer preferences evolving, there is an opportunity for a more sophisticated product," said Baron at the time of the brand's launch in April 2004. "We see Absolut Cut as the next generation of pre-mixed drinks, ready to change the segment in the same way as Absolut Vodka did to the vodka segment in 1979."
The drink is certainly pitched as a more upmarket product than many of its main rivals - it is much less sweet than many FABs, blending the vodka with spring water as well as flavours (hence the 'Cut') - and its premium price should reinforce this position, but Absolut has undoubtedly taken a gamble in launching a premixed brand at such a relatively late stage in the development of the market.
A report by market analysts Datamonitor released last year suggested that FABs were perhaps on the way out, after sales growth dropped to 6.3 per cent in 2003 compared to 19.3 per cent just two years earlier. British FAB sales are expected to drop from £14 billion to £1.1 billion by 2008, a 23 per cent decline, according to the report.
But the Datamonitor research also suggested that the 'girly' image of many FABs would be the main cause of their downfall - something which Absolut will hope to avoid with its brand which is a lot less sweet than many rivals, giving it a broader appeal.
The strength of the Absolut brand also counts for a lot, with Datamonitor predicting that only the strongest and most recognisable products likely to survive the inevitable cull as consumption levels stabilise or even drop.
