Diageo Lightens Up Vodka Brand -- WSJ
02 Mai 2018 - 9:02AM
Dow Jones News
By Saabira Chaudhuri and Cara Lombardo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 2, 2018).
The owner of Ketel One vodka thinks it has an answer to slumping
U.S. sales: less alcohol.
Diageo PLC, the world's largest liquor maker, said it is
launching a botanical version of Ketel One with 30% alcohol by
volume. The new drink doesn't meet the definition of vodka under
U.S. and European regulations, which mandate that neutral distilled
spirits must be bottled at 40% alcohol by volume and flavored ones
at 37.5%. Instead, Diageo will market the new Ketel One as "made
with vodka."
Ketel One and other big vodka brands have been losing market
share to Fifth Generation Inc.-owned Tito's Handmade vodka, which
is made from corn and is advertised as gluten-free. Tito's market
share by volume stood at 8.1% for the four weeks to March 24, up
from 6.1% a year earlier, according to data from Bernstein. Ketel
One's market share was 1.7%, down from 1.8%.
Diageo, which owns Smirnoff and Ciroc vodkas and co-owns Ketel
One with the Nolet family, is hoping the new drink taps into the
demand for healthier drinks. It says a 1.5 oz. shot of Ketel One
Botanical will have 73 calories, 40% less than in a 5 oz. glass of
white wine and 25% less than in a shot of regular Ketel One.
Ketel One Botanical will retail for a suggested price of $24.99
for a 750- milliliter bottle, the same as a bottle of Ketel One
Vodka.
For the six months to Dec. 31, Ketel One's net sales in North
America dropped 13% from a year earlier excluding currency
fluctuations, while Ciroc's net sales fell 11%. Sales of Smirnoff
-- still the market leader -- were down 2%.
In its previous attempts to bolster its vodka brands, Diageo has
sponsored music festivals, marketed to the U.S.'s gay and lesbian
community and experimented with flavors. In 2016 it began selling
Smirnoff infused with real fruit. More recently, the London-based
company has cut prices on Ketel One to try to compete with
Tito's.
The launch of Ketel One Botanical is the first time Diageo has
sold a low-alcohol version of the vodka brand. It comes as many
consumers, and especially millennials, are cutting back on alcohol,
both by having fewer servings at a time and switching to weaker
drinks.
A 2016 survey from research firm GlobalData found 54% of
Americans between 25 and 34 years old were actively trying to cut
back on alcohol, a higher percentage than were trying to consume
less fat, carbohydrates and sugar. While beer sales have been
slumping, some of the bright spots have been sales of
lower-alcohol, lower-calorie brews such as Anheuser-Busch InBev
SA's Michelob Ultra.
Diageo is hoping the new Ketel One will appeal to women and in
particular wine drinkers. It plans to market it as something to be
drunk in a wine glass with soda, ice and fresh herbs or fruit. It
will come in three flavors: cucumber and mint, peach and orange
blossom, and grapefruit and rose.
"There's huge growth in vodka soda in America, particularly with
women," said Diageo Chief Executive Ivan Menezes on an investor
call earlier this year. "A lot of that consumption is moving away
from wine and we've got a targeted campaign against it."
Not everyone is as optimistic. Bernstein analyst Trevor Stirling
said it is unlikely the latest offering will have a meaningful
impact on sales. "Innovation like this rarely pulls a brand
around," he said.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
May 02, 2018 02:47 ET (06:47 GMT)
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