Diageos Smirnoff vodka was classed as a "loser" in the US

Diageo's Smirnoff vodka was classed as a "loser" in the US

Mainstream vodka brands including Diageo's Smirnoff and Pernod Ricard's Absolut have strong growth potential in emerging markets, a new report has said.

The rise of female drinkers and a burgeoning cocktail culture will help international brands succeed in the the developing world's currently-crowded vodka market, according to Bernstein's annual vodka report, released today. An expected consumer move from cheap vodka to standard to eventually premium will also aid growth, the report added.

Vodka's prospects in the US, however, were less bright, with Bernstein describing Smirnoff as a "loser" in the country. The analyst said: "Smirnoff is likely to continue to face intense competition in the mainstream segment in the US, but in emerging markets, Smirnoff has strong potential to grow in Latin America and Africa." 

Bernstein also highlighted ongoing problems for Absolut in the US, where the brand took a write-down last year. However, though it is "still early days" for super-premium variant Absolut Elyx, the Absolut brand looks to have stabilised recently in the US, Bernstein added.

Overall, Bernstein said vodka remains an attractive spirits category, with a positive long-term outlook.

Diageo's struggles with Smirnoff were highlighted last week when the vodka dropped from 94th to 96th on a list of the top 100 global brands. According to the Interbrand rankings, Smirnoff lost 4% of its brand value in 2015.

Expert analysis

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