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Russian invasion provides leverage for Ukraine vodka brands Khor and Nemiroff across US and Europe. - Actual Market Research
Jun, 15
2023

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Russian invasion provides leverage for Ukraine vodka brands Khor and Nemiroff across US and Europe. - Actual Market Research

 

In 2022, supermarket giants like Sainsbury's, Aldi, Asda and Waitrose all announced to axe Russian vodka.

The start of the conflict resulted in Western consumers, retailers, and governments boycotting and banning Russian vodka. At the same time, Western vodka brands that have Russian-sounding names, such as global bestseller Smirnoff, were quick to point out that they aren't actually from Russia. Smirnoff is instead owned by UK drinks giant Diageo. Ukrainian vodka producers toast a rise in global sales with Ukrainian vodka. Nemiroff continues to see sales soar around the world. Vodka suddenly found itself in the international media spotlight following Russia's invasion of Ukraine. A handful of US governors have ordered state-owned liquor stores to stop selling Russian-made and branded vodkas. The symbolic move was meant to show support for Ukraine after Russia invaded. The governors of Ohio, New Hampshire, Pennsylvania, and Utah ordered boycotts of Russian-style vodkas, products that account for a tiny fraction of the US vodka market. In Canada, the Ontario liquor control board made a similar decision on Friday, removing all Russian-made products from its 679 stores. With Russian vodkas still mostly absent from international shelves, previously little-known Ukrainian brands are continuing to take their place, and their exports have increased by twofold.

The national origin of vodka is both hotly contested and difficult to define due to changing borders and countries over the centuries. But most drinks historians would agree that today's Poland, Russia, and Ukraine are the historic heartland of vodka production. The Russian president has vodka named after him, Putinka, that was introduced by Kristall distillery back in 2003. Capitalizing on Putin’s early popularity, Putinka was even dubbed Russia’s Superbrand of 2004. With Kristall churning out more than eight million bottles monthly, Putinka quickly became Russia’s second-most popular vodka brand, grossing some $500 million annually. The downside to such skyrocketing sales was that Russian alcohol consumption and the alcohol-related mortality, crime, and poverty figures that accompanied it remained alarmingly high. In May of 2022, three months after the beginning of Putin’s disastrous and bloody invasion of Ukraine, the bottles of Putinka that rolled off the Kristall assembly line were emblazoned with new, patriotic, pro-war labels featuring Russian tri-color flags and the Latin letters Z and V, like those adorning the Russian tanks and APVs trundling across the border into Ukraine. Other Russian brands include Husky Vodka, Jewel of Russia, Moskovskaya, Polugar, Ustianochka, and Zyr Russian Vodka.

According to the research report, "Global Vodka Market Research Report, 2028," published by Actual Market Research, the market was valued at USD 44 billion in 2022 and projected to grow at a forecast CAGR of 5.8% to be valued at USD 61.64 billion by 2028. While Europe and North America have traditionally been strong players in the vodka market, the Asia-Pacific region has indeed been experiencing significant growth and is considered one of the fastest-growing markets for vodka. North America's strong market presence showcases the region's importance in terms of consumption, production, and innovation. The North American vodka market continues to evolve, driven by changing consumer preferences, mixology trends, and a dynamic spirits industry. Consumption patterns and preferences vary across different regions within the Middle East and Africa. In some areas, spirits like whiskey, rum, or local traditional alcoholic beverages may be more popular compared to vodka. Local preferences, social norms, and cultural practices play a significant role in shaping consumer behavior and choices.

Vodka brands have been actively expanding their distribution networks in the Asia-Pacific region to tap into the growing market. Vodka producers are introducing innovative flavors and premium offerings to cater to the evolving tastes and preferences of consumers in the Asia-Pacific region. Rising disposable income, changing consumer preferences, urbanization and western influence, the tourism and hospitality industries, expanding distribution networks, innovation and premiumization, and a growing cocktail culture contribute to the rapid growth of the vodka market in the Asia-Pacific region.

Russia has a long-standing tradition and history of vodka production. Russian vodkas are renowned worldwide, and some famous Russian vodka brands include Stolichnaya, Russian Standard, and Beluga. Poland is another country with a strong vodka tradition. Polish vodkas are known for their high quality and craftsmanship. Brands such as Belvedere and Chopin have gained international recognition. Sweden is known for producing vodka with a focus on purity and smoothness. Absolut Vodka, one of the most recognized vodka brands globally, originates from Sweden. The United States has a significant vodka production industry, with many domestic brands catering to the market. Brands such as Tito's Handmade Vodka, Smirnoff, and Grey Goose (which is produced in France but owned by an American company) are prominent examples. France is renowned for its wine production, but it also produces high-quality vodka. Brands like Ciroc, which is made from grapes, and Grey Goose, which is made from wheat, are produced in France. Belarus has a strong vodka culture, and Belarusian vodkas are known for their smoothness and quality. Brands like Belaya Rus and Minskaya Kristall are popular examples. Ukraine has a rich history of vodka production, and Ukrainian vodkas are highly regarded. Nemiroff and Khortytsa are well-known Ukrainian vodka brands. Finland is known for producing vodka made from barley and pure glacier water. Finlandia Vodka, one of the prominent Finnish vodka brands, is recognized globally.

Consumers' willingness to pay a premium price for vodka has created opportunities for small and independent distilleries to enter the market and cater to niche consumer segments. Effective marketing and branding campaigns play a significant role in driving the popularity of vodka brands. The vodka market is limited by legal drinking age restrictions in various countries. Vodka manufacturers have opportunities to tap into emerging markets with growing consumer populations and increasing disposable incomes. Catering to health-conscious consumers can help capture a niche market segment. Online platforms allow for convenient purchasing, personalized marketing, and consumer engagement.

The vodka market is highly competitive, with numerous global and local players vying for market share. Adapting to changing consumer demands and preferences requires continuous innovation and market research. Fluctuating raw material costs, distribution expenses, taxes, and pricing competition can impact profitability. Reducing water consumption, implementing eco-friendly packaging, and supporting responsible sourcing can be both a challenge and an opportunity for vodka players.

Premium and luxury vodka segments continue to grow, driven by consumers' willingness to spend on high-end products and unique experiences. Online sales, subscription services, and personalized marketing strategies have become important channels for engaging with consumers and offering unique experiences. Absolut (Sweden), Beluga Noble (Russia), Belvedere (Poland), C?roc (France), Grey Goose (France), Ketel One (The Netherlands), New Amsterdam (United States), Russian Standard (Russia), Smirnoff (United States), Skyy (United States), Stoli (Latvia), Svedka (Sweden), and Tito’s Handmade Vodka (United States) are some of the renown vodka brands around the globe.