With interest surrounding the likely sale of Swedish spirits producer V&S Group growing by the day, there could be no better time to look at the company's flagship vodka brand Absolut and the opportunities on offer in the premium vodka sector. This month's Just the Answer is a two-part series, featuring an interview this week with Anna Laestadius, global brand director, Absolut Vodka, to be followed next week by Ian Jamieson of Stolichnaya.

J-D: How would you describe the market for Absolut at the moment?

Laestadius: Absolut grew by 7% worldwide in 2006, from what we viewed as an already strong position, to a total volume of 89m litres (2005, 83m litres). Almost all our 14 focus markets grew by double digits, so we feel justified in saying that the Absolut brand is enjoying great momentum around the globe.

J-D: What are the main challenges that Absolut faces in the medium term, for example, competition from cheaper brands?

Laestadius: The competition is strong in markets where vodka is a preferred spirit and is always strong in mature markets. We see consumers trading up in quality - and consumers are more quality-aware today when it comes to vodka. We believe there is a 'premiumisation' taking place. We have also developed a super-premium vodka called Level Vodka, which is now the third largest super-premium vodka on the US market.

J-D: With regard to the expected privatisation, what changes do you envisage this would involve? Would customers see any difference, and what are the potential advantages and disadvantages?

Laestadius: V&S is one of six state-owned companies named as an object for privatisation (the others are SBAB, OMX, TeliaSonera, Nordea and Vasakronan). It is important to note that the formal decision on whether or not to privatise V&S not yet has been made. When parliament has taken this decision, the government will work on how to privatise, and whether to fully or partly privatise.

J-D: V&S has always been closely linked to the Swedish Government's approach to controlling the sale of alcohol. Would the emphasis change under new ownership?

Laestadius: V&S has not had a monopoly for importing and producing alcohol since 1995 so does not have a political assignment to control the consumption of alcohol as Systembolaget (the Swedish state-controlled retail monopoly) has. However, promoting responsible drinking is a part of our heritage. We have a code of business ethics and conduct and a responsibility programme. This focuses on promoting responsible drinking and responsible marketing.

We are also active in the European Forum for Responsible Drinking (EFRD) and in the Distilled Spirits Council (DISCUS) to drive important issues in this area on a global basis. We are sincere in our commitment to the responsible use and marketing of our products. However, we do not wish to speculate on the effect any potential new ownership may have on this commitment.

J-D: How important is innovation in a category where the product is reasonably 'bland'?

Anna Laestadius, acting global brand director for Absolut Vodka

Laestadius: We know that consumers in markets where vodka is a preferred spirit want to try new products and this of course also has an impact on their preferences. Therefore, it is important to work with innovation and to bring new exciting products for the consumers to buy and try.

J-D: How does Absolut see the vodka category exploiting the premiumisation trend?

Laestadius: We do see more new products in the premium vodka segment. However, this is at the present time a saturated market, and it is also expensive to establish a new brand. Therefore some brands and products will not stay for a long time on the shelves.

It is a natural development that consumers demand high quality where you have a lot of vodka to choose from. The quality seal for Absolut Vodka is that it is only produced in one place - Åhus, southern Sweden. We can promote the 'One Source Concept', using wheat from southern Sweden and water from our own deep well. Thereby we can guarantee that Absolut Vodka tastes the same wherever in the world you drink it. We also believe that consumers would not continue to consume a product that did not keep to its product promise.

J-D: Looking at the wider picture, what are the main opportunities for Absolut, and the vodka industry in general? Are there any emerging markets or countries that are particularly promising?

Laestadius: Opportunities for Absolut Vodka are in new markets for us. As the interest for vodka grows in markets which used to be brown-spirits markets, we see new opportunities in Asia, particularly China, and Latin/South America - countries such as Brazil.

Both China and Brazil are emerging markets which we work closely with and which have a good development opportunity. We are also present in India, but the opportunity there, is on a longer-term basis.

J-D: How would you describe the current state of the vodka sector in Europe and globally?

Laestadius: Europe in general is showing very good development for us, especially Western Europe. However, looking at the vodka industry as a whole, the market is mature, with the exception of Asia and Latin/South America.

J-D: How central is the issue of responsible drinking to the overall marketing strategy of a major international vodka brand?

Laestadius: This is an important question. We do believe that the industry as a whole is taking these issues seriously. We also think that the vision that V&S as a company has to become a global leader in the wine and spirits industry, will not be possible unless we have the courage to act responsibly. We are therefore working with a responsibility programme throughout the company in order to promote responsible drinking and educate all our marketers and our business associates in responsible marketing.