Focusing on premium brands may have been a priority for spirits producers in recent years but it is economy or standard products which still drive volume growth in many markets. Jeremy Cunnington of Euromonitor International takes a look at various blended Scotch and vodka markets around the world, identifying how important standard and economy products remain and the impact they are likely to have on future growth.

In recent years, spirits groups may have focused largely on boosting sales of premium and super-premium brands, but the vast majority of spirits sold in the world, even in established markets for international spirits, are either economy or standard brands, and in many markets it is these products that are driving volume growth. Margins may be lower, but with the large volumes involved, these products still offer producers huge potential.

While it is true that premium products are seeing the fastest growth rates in many developed and mature markets such as Spanish blended Scotch or Russian vodka, this is not universally the case. In the world's largest blended Scotch market, France, standard and economy variants grew by 17% and 14% respectively between 2003 and 2007. This was in a market that grew by around 12% over the same period.

Even if standard and economy variants do not see the most dynamic growth rates these products are still the key volume growth drivers in many Western markets. In the US vodka market, where consumer trading up is strongest, nearly 60% of the 21m case growth between 2003 and 2007 came from standard and economy brands. Meanwhile, in the UK, another large and dynamic vodka market, 94% of the 1.9m nine-litre case growth between 2003 and 2007 came from standard and economy variants.

The share of growth from standard and economy brands may fall slightly over the period from 2007 to 2012 in the US and the UK as trading up continues, but with the US vodka market expected to grow by over 10m cases over those five years, there is plenty of room for growth in standard and economy variants, especially if there is a recession.

In the UK it is highly likely that, with the country's discount culture and slowing economy, the vast majority of the 2.1m case growth expected over the forecast period will still come from standard and economy brands. And the UK is not alone, with other countries such as France and Germany having seen, and likely to continue to see, similar trends in vodka.

Furthermore, in most emerging markets, due to lower disposable incomes, economy and standard products dominate vodka and blended Scotch sales. In Brazil in 2007, 87% and 98% of blended Scotch and vodka respectively were either economy or standard products. Between 2003 and 2007, standard and economy products accounted for 78% of the 1.1m case growth in blended Scotch and 95% of the 2.1m case growth in vodka.

Meanwhile, in Thailand in 2007, over 86% of the 3.8m case blended Scotch market was accounted for by either economy or standard Scotch, with economy blended Scotch commanding two thirds of total volume sales and responsible for 75% of the 0.4m case growth between 2005 and 2007. Over 2007-2012, the market is expected to grow by 0.8m cases.

The combination of the prestigious image of blended Scotch and low disposable income means that brands such as Johnnie Walker Red or Grant's, positioned as standard brands in many mature markets, are perceived as either super-premium (India) or premium (South Africa) in other markets. Consequently, all growth in the 350,000 case Indian market has come from standard or economy variants. With the Indian market expected to nearly double between 2007 and 2012, most, if not all, of that growth will come from standard or economy variants.

In South Africa in 2007, over 70% of the 1.6m case blended Scotch market was made up of what would be perceived in more mature markets as standard or economy products, and they in turn accounted for 70% of the market's growth between 2005 and 2007. With the market expected to grow by a further 600,000 cases between 2007 and 2012, at least half of this growth should come from standard and economy variants.

Vodka, because of its foreign or Western image, is also in a similar position in some markets, such as the 3.8m case Indian vodka market. The 350,000 case super-premium vodka category is made up of brands such as the normally standard positioned Smirnoff. Super-premium products only accounted for 8% of the 1.7m case growth between 2005 and 2007. With growing consumer prosperity, the market is likely to witness growth of 2.1m cases between 2007 and 2012. Standard and economy vodka have good prospects in India.

Even in the largest premium blended Scotch market, China, consumption has started to move away from premium products, purely purchased and consumed by businessmen. Economy brands (such as Johnnie Walker Red) saw growth of over 72% between 2005 and 2007 to account for 9% of the Chinese market, as prosperity and the desire for Scotch reaches lower-income consumers.

Trading up is likely to continue for the foreseeable future in both established and emerging markets. In established markets, this will be due to a certain increase in prosperity, but also increased desire for premium products. Yet even so, standard and economy variants will dominate volume sales and are likely to drive whatever growth there is.

In emerging markets, trading up will come primarily from continued economic growth and increased prosperity. Due to the low economic base of most consumers the majority of trading up is going to be either to economy variants as consumers move away from other local spirits, or from economy to standard variants.

This means huge potential, in both large established markets and relatively small but rapidly growing markets, for manufacturers to increase substantially volume sales and generate healthy profits. To achieve this, they will need to produce products in large enough quantities and have good routes to market.

In the largest premium and super-premium market - the US - only 31% of the 55m (nine litre) cases of vodka sold in 2007 were premium or super-premium, while in the more premium-positioned blended Scotch, 52% of the 8.2m cases sold were premium or super-premium. The one exception is China where 91% of the nearly 3m case blended Scotch market were premium variants (ie Chivas Regal 12) or higher in 2007.