Andy Morton

GLOBAL: Diageo leads Pernod Ricard in top-end vodka fight - analyst

By | 16 January 2013

Pernod and Diageo are the two biggest vodka players

Pernod and Diageo are the two biggest vodka players

Pernod Ricard's super-premium vodkas lack the depth to compete with Diageo's as vodka continues its value boom, an analyst has said.

The French company boasts a stronger premium vodka stable, but lacks a contender to its rival's high-value Ketel One and Cîroc brands, Sanford Bernstein said in a note yesterday (15 January). The super-premium segment will benefit most from strong premiumisation trends in vodka that have seen value grow ahead of volume for the past ten years, the note said.

Diageo and Pernod are the world's leading vodka makers by value, with 15% and 8% of the global market respectively.

Bernstein also warned that Diageo's lower-value Smirnoff will face intense competition in the mainstream segment as new products flood the low-barrier market. However, Smirnoff is poised for further growth in Latin America, the analyst added.

“From a category growth standpoint, we believe the outlook for vodka remains positive,” it said. “In particular, we see a mid-long term opportunity in emerging markets as women become more important as purchasers and consumers of alcohol.”

Vodka remains the largest category within spirits, the note said, both in volume and value terms, and accounted for 19% of global spirits volume and 17% of global spirits value in 2011. Central and Eastern Europe accounts for 73% of consumption, and despite relatively flat growth, premium offerings Russian Standard and Brown-Forman's Finlandia should emerge as long-term winners, Bernstein said. Producers of cheaper brands in C&E Europe will continue to lose out as the vodka market moves forward, it said.

In November, an analyst warned that lower-value vodka players in Russia, such as Central European Distribution Corporation, will face pressure from premium brands and the illegal, non-taxed market.

Expert analysis

Russia Food and Drink Report Q1 2013

Business Monitor International's Russia Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Russia's food and drink industry.

Sectors: Emerging markets – BRIC, Spirits

Companies: Diageo, Pernod, Ricard, Smirnoff, Brown-Forman, Finlandia, Central European Distribution Corporation

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