Diageo to launch lower-priced vodkas

Diageo to launch lower-priced vodkas

Diageo is planning several vodka launches on the US market this year, including two new brands targeted at consumers who are looking to spend less money per bottle.

Diageo will expand its US portfolio in 2010 by launching a Swedish vodka named Rokk, as well as the Ursus vodka brand, which already sells widely in Greece, the company confirmed to just-drinks today (24 March).

Both brands will target the US$9 to $15 price bracket, considered the mid to lower end of the premium spirits price segment.

A number of other Diageo launches will also target the popular/premium segment of the US vodka market.

The move to introduce vodkas below the price level of Smirnoff is further evidence that Diageo does not see strong consumer thirst for premium pricing in 2010.     

Ivan Menezes, head of Diageo's North America business, said last week that the firm remains “cautious around the face of recovery".

Total spirits market volume sales will rise by a maximum 1% in 2010 in the region, he said. Within this context, Diageo is targeting market share gains, although Menezes said that the firm will raise marketing spend in North America.

A spokesperson for the group said that there will be eight new products and extensions in vodka this year.

She said that, despite trading down by consumers, Diageo continues to innovate in the so-called ultra-premium category. A new Ciroc flavour and an orange-flavoured version of Ketel One, as well as a Godiva vodka, will join this category in 2010.

"Ultra-premium fell into decline last year, but it is coming back," said the spokesperson.

Ultra-premium spirits sales in the US fell by around 0.5% in value in 2009, according to research group Information Resources Inc (IRI). However, sales were flat against 2008 in the final 12 weeks of the year.

According to IRI, Diageo produced four out of the top five spirits launches in terms of value sales in the US in 2009.

Captain Morgan Long Island Iced Tea was named by IRI as the most successful spirits launch of the year, followed by Smirnoff Tuscan Lemonade. Both launches highlight an ongoing consumer trend in the US for drinking at home, accentuated by the economic downturn in the country.