Case Study: Smirnoff Vodka

Topics: Smirnoff, Smirnov, Vodka war Pages: 5 (1639 words) Published: November 12, 2008
Case Study: Smirnoff Vodka


The drinks market is constantly evolving, with product innovation, as well as brand strength, at the heart of its growth. Doubtless, the root of success of Smirnoff vodka is the consistently high standard of classic vodka that its owner has produced over the years. However, as the market has evolved, so has the Smirnoff brand. With a growing range of flavoured vodkas and pre-mixed cocktails that perfectly tap into the lucrative ready to drink sector, Smirnoff is successfully supplying the constant demand for new products that will target the younger, style-conscious adult drinker. White spirits are better suited as summer refreshers rather than winter warmers. However, unlike many other alcoholic beverages, the white spirits market is not adversely affected by seasonality. Sales within the white spirits market are not limited to the summer season alone, but are equally included in the general upsurge in alcohol consumption over the festive season which sees around 22% of annual volume sales being made in the Christmas period (Source: Mintel 2000). Vodka is a drink that appeals to young adult drinkers, partly because of its versatile character. It has benefited from its lack of association with, or limitation to, any one particular mixer, meaning that the different possibilities of consumption are multiplied.


In 1877, the Smirnov vodka company in Moscow was awarded the right to use three Russian State coats of arms and in 1886 became Purveyor to the Imperial Russian Court. Between 1874 and 1897 it won numerous awards for quality and variety at international exhibitions. By the end of the nineteenth century, the Smirnoff vodka brand was generating the equivalent of nearly $20 million a year in revenues. Since 1975, vodka -- led by Smirnoff -- has outranked bourbon as the US's most popular spirit. In 1978, Smirnoff became the number one spirit brand in the US, its largest market (Source: Smirnoff Impact Newsletter). Although overtaken by Bacardi it has remained a strong second ever since and is growing more rapidly than Bacardi on a worldwide basis. Smirnoff is now the largest premium international vodka brand in the world, selling more than three times than its nearest competitor, Absolut (Source: ACNielsen).


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 struck with the Russian Revolution which saw the confiscation by the Bolsheviks of all private industries in Moscow including the Smirnov distillery. 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. Smirnoff vodka was brought to America after a meeting between Vladimir and Rudolph Kunett, a representative from the Helena Rubenstein cosmetics company who was on business in Paris. Vladimir granted Kunett the exclusive rights and licence 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. But when US production of Smirnoff vodka began in March 1934, business was not as good as Kunett had anticipated. First year sales reached 1,200 cases...
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