Case Study Analysis of Smirnoff

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Joe Salvatori
Suzy Marigold
Intro to Sales Promotion
October 23, 2008
Case Study Analysis of Smirnoff
The drinks market is constantly evolving, with product innovation, as well as brand strength, at the heart of its growth. Smirnoff Vodka has continued to remain successful in this market because of the consistently high standard of Vodka that has been produced over the years. As the market constantly changes, so does the Smirnoff brand. With a wide variety of flavors and pre-mixed drinks, Smirnoff is successfully supplying the demand for new products that will target the ever-growing younger, style conscious adult drinker.

The Smirnov family is believed to have made their start in Moscow's wine and vodka business during the early 1800s. But it was in 1864, following the abolition of serfdom after the Napoleonic wars, that Piotr Arsenyevitch Smirnov founded his own vodka distillery near the Chugunny Bridge, achieving rapid success on a national and international scale. By the time Smirnov died in 1898, his company employed over 1,500 people, produced over 4,000,000 cases of wines, spirits and liqueurs and was generating the equivalent of $20 million a year in revenues, making the Smirnov family one of the richest in Russia.

Disaster then struck the Smirnov family after the 1917 October Revolution, which led to the Bolsheviks confiscating all the private industry in Moscow, and ultimately shutting down the Smirnov distillery in 1919. One of Piotr's sons, Vladimir, was determined to carry on the family business and fled Russia for Paris where he was cut off from his roots and fortune. Adopting the French version of his family name - 'Smirnoff', Vladimir then began his struggle to make a success of the business in Europe. The new product was an instant success and by the end of 1930 it was exported to most European countries. Smirnoff vodka was brought to America after a meeting between Vladimir and Rudolph Kunett, a native Russian who worked in the United States, and together they decided to find out if Smirnoff would appeal to the U.S market. Vladimir granted Kunett the exclusive rights and license to all Smirnoff alcoholic beverages in the US, Canada and Mexico, and on September 21st 1933, Ste Pierre Smirnoff Fils of New York was incorporated, transplanting the exiled vodka brand to the New World.

Once Smirnoff made it to the US, it was only a matter of time before Rudolph Kunett would find out that business would not be as good as anticipated. The good news was that America drinks; the bad news being that America only drinks whiskey. First year sales reached 1,200 cases and by 1937 that figure had reached only a little over 4,000 cases. By 1938, when business was so bad that he could not afford the $1500 mandatory sales license, he contacted John Martin, president of Heublein, asking him to act as an agent for Smirnoff vodka. Martin ended up buying the ailing Smirnoff, and sales still began to suffer. By 1941, Martins sales of Smirnoff had reached 22,115 cases a year. Although this was a dramatic improvement over previous figures, the real turning point came when the product began to be marketed as 'white whisky', with 'no taste, no odor’. This concept seemed to really appeal to consumers who did not care for the traditional characteristics of whiskey. They soon realized that vodka could be mixed with pretty much anything, thus leading to Smirnoff inspiring the American cocktail revolution. Through heavy national promotion of cocktails such as the Bloody Mary, Screw Driver, and Vodka Martini, Smirnoff sales would triple from 1947 to 1950, and then doubling again in 1951. The mixability of vodka would change America’s drinking culture forever.

Since the 1950s, Smirnoff has been renowned for its ingenious and highly evocative advertising campaigns. In 1952, the “leaves you breathless” advertising campaign was launched. Smirnoff became the drink of Hollywood, and thanks to a great marketing ploy by Heublein...
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