Vodka sales rose 14% in FY14 driven by demand from flavoured ones

NEW DELHI: For a twentysomething, ginger-lemongrass, espresso or butterscotch with a hint of dark chocolate may have nothing to do with the flavours one usually associates with tea or coffee.

Rather, these are flavours that are adding a dash of magic to vodka. These, along with an ever-expanding palette of exotic flavours such as green bell, chilli and jalapeño pepper, are now driving bulk of vodka sales — a category that has notched up 14% growth, selling roughly 7.6 million cases in April-February last financial year.

Vodka sales had actually dipped 2%-5% during the last two fiscals due to price hikes and regulatory taxation changes in key states, that also impacted the overall spirits market which posted its worst performance in a decade.


“Vodka flavours come across as gender-neutral and are getting extremely popular, especially when there’s a strong culture among people to drink without getting high,” says Rahul Gagerna, president, sales and marketing, at Radico Khaitan, that controls a third of the vodka market through the Magic Moments brand. “The idea to drink dark spirits is to get high, which might not appeal to the younger generation that just wants to enjoy the concept of drinking,” Gagerna explained.

Flavours, however, aren’t a novel concept; companies had tried out green apple, orange and lemon vodka more than five years ago. What has changed though is the aggressive stance adopted by Radico Khaitan, Allied Blenders and Diageo among others, to step up new launches. No wonder flavours accounted for nearly 29% of vodka sales in 2013, compared to 5% four years ago, according to a 2014 report by Euromonitor.

For instance, Diageo launched Smirnoff Ice in India last year, positioned as a bold alternative to beer and ready-to-drink beverages. It had also launched mango and chilli flavour in 2013. Ditto for Radico that has, over the past three years, launched chocolate, ginger and lemongrass vodka. In November 2012, Bacardi-Martini launched the country’s first naturally coloured vodka — Eristoff Green and Eristoff Red.

“While majority of consumers are men, women are increasingly taking to flavoured beer, vodka and non-alcoholic beer as social drinkers. Newage jobs... in the knowledge process outsourcing/business process outsourcing have put more time pressures and money in the hands of younger people, resulting in experimentation and consumption at a younger age,” the Euromonitor report stated.

Yet, India is still far from becoming a hardcore vodka drinking nation. The whiskey market too has improved slightly, growing 6% since last year against 3% in 2013-14, driven by premium products.

“Vodka as a category is still less than 5% of Indian made foreign liquor market which is heavily skewed towards whisky. There will always be more people either entering the spirits market through whisky or graduating from vodka ,” said Ahmed Rahimtoola, marketing head at Allied Blenders that sells Wodka Gorbatschow.