October 15, 2010 / 12:04 PM / 9 years ago

Exclusive: Diageo throwing two more names in vodka ring

NEW YORK (Reuters) - Diageo PLC (DGE.L) is introducing two new brands of vodka in the United States to tap more corners of the world’s most profitable spirits market.

A worker walks past the headquarters of Diageo in London, August 27, 2009. REUTERS/Toby Melville

The world’s biggest spirits company already controls about 34 percent of the U.S. vodka market with brands like Ketel One, Ciroc and Smirnoff, the top-selling global spirits brand.

In the coming weeks, Diageo will launch Godiva chocolate infused vodkas and Moon Mountain vodka, which it says is artisanal, organic and made in the United States.

Earlier this year, the London-based company launched Rokk vodka, a less expensive vodka made in Sweden, and Ursus vodka, which comes in bright colors and flavors like blue raspberry and fruit punch. Its label changes color when the bottle is chilled in a freezer.

Adam Rosen, Diageo’s brand director of vodka, said the company’s major brands are still growing, but that the new products serve consumer needs that Diageo was not meeting or fill gaps in the marketplace.

“The desire is to win in vodka and that means winning vodka share,” Rosen told Reuters in an interview.

The Godiva vodka, which will come in chocolate and chocolate raspberry infusions, is aimed at women drinkers with a taste for premium chocolate. It will be priced around $30 per bottle, in line with top-shelf brands like Ciroc or Bacardi’s Grey Goose.

Moon Mountain should appeal to people who prefer natural ingredients, Rosen said, describing the product as “farm to glass.” Moon Mountain will cost about $20 per bottle, making it comparable in price to brands like Ketel One and Pernod Ricard’s (PERP.PA) Absolut.

“We’re understanding the consumer’s desire to know where things come from,” Rosen said.

Rosen declined to give specific sales targets for the new brands but said “we are on track to hit all of our agreed-upon expectations for these brands and we hope to continue that.”

Diageo, which also makes Captain Morgan rum and Johnnie Walker whisky, said on Thursday that underlying net sales in its July-September quarter rose 5 percent as growth in emerging markets offset weakness in Greece and Spain.

HIGHLY DIFFERENTIATED

Vodka’s lack of color and odor makes it a versatile and popular spirit, and the fact that it does not need aging, like some whiskies, makes it easy to create new variations. Rosen said some 300 new vodkas have been introduced in the past few years alone.

Including an array of flavors from blueberry to vanilla, there are thousands of vodkas on sale in the United States and more coming all the time, said Ted Wright, founder of Fizz, a word-of-mouth marketing firm.

Still, Wright does not see Diageo’s new vodkas stealing sales from each other, or its other brands, since the new products seem aimed at highly segmented targets.

It is fine to launch several products in the same category at the same time, Wright said, “as long as the company has the management bandwidth and each product has highly differentiated stories that are interesting, relevant and authentic to influential U.S. consumers.”

Vodka made up 30 percent of the distilled spirits sold in the United States last year, according to the U.S. Distilled Spirits Council. Vodka volume rose about 5 percent, outpacing the total spirits category, which grew about 1.4 percent. Only Irish whiskey and tequila grew more than vodka in the United States last year.

But the value of the vodka market rose only 1.7 percent last year, demonstrating that much of the growth was in the lower price range, in contrast to years earlier in the decade, said Frank Coleman, spokesman for the Distilled Spirits Council.

Reporting by Martinne Geller; Editing by Steve Orlofsky, Dave Zimmerman

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