History of Origin of Vodka - Research Paper Example

Vodka The popular alcoholic drink Vodka is a distilled spirit containing high alchahol content. This can be produced from a number of sources ly grain, potatoes etc. Even though the exact history of vodka is unknown, it is believed that it originated in between 14th and 16th AD at areas bordering Russia and Poland. The word itself is derived from the Russian word meaning little water. Traditionally vodkas are made from wheat, but it can also be made from grapes, soy, beets, potatoes, corn and even leftover materials from oil refining process. In many east European countries, vodka is heavily filtered. This pattern is also followed in the US also. Vodka normally contains 40% alchahol, which is the normal standard. Such vodka is widely used in Russia as well as the US. Even 50% alcoholic vodka is popular in the US. In some vodka, mainly polish descent, the alcoholic content is around 95%.In many east European countries as well as in the west, vodka is a supportive drink which is blended with other drinks. Examples are bloody marys, vodka martinis, etc (What is Vodka?). Vodka is a colourless and flavourless alchahol. The Russians normally brew it from grain whereas the poles make it from potatoes, beets, corn etc. the sugar is transformed into alchahol and distilled six times forgetting a wonderful mixture of vodka. Six times is the magical number. It is then filtered through charcoal. Vodka is an ideal blender. This property is used to the maximum in many countries. For example a bottle of istok or moskovskaya has milder quantities of vodka blended into it. There are more than 400 brands of vodka in Russia. It is flavoured and the most popular is the pepper flavoured vodka. Sometimes lemon is also used for flavouring. In US vodka is closely associated with martinis and cocktails. The average American drinker does not drink vodka straight. The American drinker does not mix vodka with beer as the Russian drinkers do (Gougeon). In today’s spirit industry, vodka is the most dynamic spirits in the global arena. Its growth trajectory is nothing but truly phenomenal. Over the past 20 years there has been an increase of a staggering 246.7m cases world wide. The growth of vodka is mainly associated in countries like Russia and Poland. In Russia there has been an increase by 21m cases over the 20 year period. This growth is truly commendable because it was achieved against tight governmental control as well as rising affluence. In US also there was tremendous growth for vodka. There was growth by 21.2m cases over the last 20years. The growth in sales there is favourable due to the demographic profile existing in US. The other major contributors were UK, Germany, and Canada (Global Market Review of Vodka). In Russia, vodka is the national drink as well as an inseparable part of Russian social culture. Russians drink more vodka than any other people in the world. It also has the largest market for vodka in the world also. It is a great contributor to Russian treasury also. Since the times of Ivan the terrible, the state has used funds from the sale of vodka to fund its domestic and foreign agendas. The Russian public have consumed at least six billion bottles last year. The concept of social lubricant is a clear factor for the success of vodka in Russia. The manufactures of vodka have promoted the drink acknowledging the fact that vodka acts as a great leveller in the Russian society. The production of vodka is an important component in the Russian economy. Earlier the government itself controlled directly distilleries producing vodka. Later after the revolution, the industry was controlled by the communist party; however after the now the industry is in the hands of the private sector. The growth of the vodka industry in Russia was facilitated by the reformist approach of the new democratic government. Even during the times of economic slowdown, the vodka industry contributed much to the revenue of the state. After the privatisation of the vodka industry, the first thing they did was to reintroduce high quality brands of vodka into the market. Previously the common man was deprived in procuring superior brands. Moreover industry also took steps to increase production in order to export vodka to other countries. A separate brand was created for Russian vodka in foreign markets. This not only increased the sales for vodka in foreign markets but also created goodwill for the product. Speaking about brands, now the Russian government owned vodka distilleries are very keen in producing their own brand equity in Russian market as well as overseas market. The Russian government has also taken steps to promote the vodka industry by reducing the excise duty for vodka (Kunzinger & Baur). After Russia, Poland is also another important market for vodka. Polish vodka is one of the most sought after vodka in the world market today. Poland has its own vodka brands. For example the bison grass vodka which is revered by vodka drinkers is manufactured in Poland only. The vodka industry in Poland was on the decline after the second world of vodka industry in Poland war, but smarter marketing techniques allowed the growth of vodka industry after 1990,s. reforms undertaken in the polish economy in the 1990,s especially introducing the whole sale sector has helped in the growth of vodka industry in Poland (Kubilius). Apart from east European countries like Russia and Poland, American is now one of the largest markets for vodka. This started after the Bolshevik revolution in Russia when an immigrant replanted his Smirnoff family business from Russia to Connecticut. Later it was taken over by another American company. The Americans soon discovered that vodka is one of the best blenders in the alcohol family. Later all the blends including martini were done with vodka. This resulted in the popularity increase in vodka as result vodka outsold other alchahol products like gin and even whiskey. The popularity of vodka in America is mainly attributed to the promotion of the brand there in a scientific way. It was first introduced in Hollywood. Characters in Hollywood films were seen enjoying vodka in screen and off screen this was used as a good promotion tool to boost the sales of vodka. Now vodka accounts for nearly 25% of the alcoholic products that is sold in America (History of Vodka). .The growth of the vodka industry in America is also attributed to intelligent mergers as well as joint ventures. A clear example to this phenomenon is the case of Diageo which is the largest vodka manufacturer in America. Diageo undertook a joint venture with Nolet. This enabled them to enter the super premium brand market of vodka. This area is super dynamic so that the company can extend its market operations and share not only in America but also in china, Australia and western European markets along with some Latin American markets like Mexico. This strategy has helped to increase the share of the company tremendously and also the expected sales level in future because it is estimated that markets in china and India are expected to grow tremendously after 2012. Super premium vodka which the company concentrates has had a tremendous growth. It has grown nearly 80% since2003. Its growth in UK is around 160%. In emerging markets like Brazil and china, it has increased four fold. This trend is likely to continue in the near future. The joint venture undertaken by the company has made it a leading producer of super premium vodka in the world today. The company is now in position of facing least competition. It has also built up its cash base and is ready for takeovers also (Cunnington). China is another market that has lot of potential for vodka. The market in china is growing rapidly as a result of reformist activities of the government. The national policy of china is so favourable for the development of vodka industry. The growth of vodka industry in china has benefited from the emergence of foreign brands in the market. However rapid growth is attributed because of the participation of domestic companies which entered into the Chinese vodka market after 2008. The domestic companies have improved their production capacity and quality. Moreover the production technology also has improved. Due to this factor more and more investors are now interested in investing in the industry. Moreover development of a number of national construction projects has also helped the vodka industry to grow. Construction industry has a role in driving the demand for vodka. The vodka industry in china has become so successful because it has blindly followed the reformist economic policies of the government and reaped its benefits. The vodka industry in India is growing rapidly. The pace of growth is just outstanding. There was a 42% increase in sales of vodka. This is much higher than markets in Korea, Nigeria etc. the growing demand for vodka in India is well exploited by leading brands including Diageo. Diageo with its super premium vodka, the Smirnoff has stormed the Indian vodka market. The company achieved an astonishing18% growth in volumes. The strategy used by the company to capture majority market share was to promote flavoured variants of vodka. It sold estimated 7lakh cases of Smirnoff last year and is expected to sell more in the future. The concept of premium branding seems to be the correct technique that is used to capture majority market share. The Diageo Company has almost 90% market share in vodka market. The growth of the vodka market in India is well ahead of other markets including North America, western Europe etc. this growth was achieved using many strategies. Main among them is premium branding and promoting the concept of lifestyle liquor image in the minds of Indian customers (India tops Diageo’s growth markets in H2). In Western Europe and Latin America the market for vodka is growing fast. Vodka is out placing other popular liquor brands like whiskey, gin rum etc. The constant growth of vodka over the last couple of years have made the product one among the most vibrant and exiting products of the beverages industry. The growth of vodka in these markets was achieved due to variety of factors. Of course one among them is the development and promotion of super premium brand of vodka. But recently experts have pointed that growth of the vodka industry is not alone attributed to super premium brands but also because of the introduction of ultra premium brands or high end brands. As a result of such a strategy, the market of vodka is expected to grow in the future. As a result of the introduction of the ultra premium brands the vodka industry is now poised for the next revolutionary step. The growth of vodka in western European and Latin American markets was related to strategies like consumer profiling. Such type of strategies helped the industry to establish itself firmly in these markets. Moreover there is still potential left for development in Latin American markets because the market itself is in the development stage. Premium and super premium brands can be used to capture the market (RESEARCH). The demand for vodka in Australian markets is also on the rise. It is estimated that vodka will outshine other popular brands of alcohol in the near future. This growth was achieved through the introduction of super quality brands of vodka into the market. Vodka was also promoted as a high society drink in Australia. For these reasons, the growth of vodka in Australian market is positive. The Australian vodka market is dominated by Russian giant standard spirits, which have more than 60 % share in the market. This growth was achieved because of super quality supply of vodka to the Australian consumers. Recently many vodka manufacturing companies have used different methods to increase the growth rate of vodka and thereby capture maximum market share. Efforts were also undertaken for sustaining the growth for a longer period also. This included introduction of super premium brands, creating a brand value and using different types of innovative sales strategies like offering discounts, aggressive advertising campaigns etc. Efforts were also made to collect consumer opinions regarding brands which were popular and also for unknown brands. Pricing of the product also was made competitive. Strategic decisions like joint ventures were also undertaken for entering and establishing the products in unknown markets. Such a decision was very beneficial as in the case of V&S spirits, a Swedish company which has had a joint venture called Future brands LLC. This was to increase its market share in the American market dominated by Smirnoff. Such ventures could decrease profit margin to intermediaries, maximise sales, and help to have more control over value chain and obtaining more feedback from customers. Moreover The strategy of luxurious product differentiation also can be effectively used. The strategy that was used by some companies in Europe was the flanking attack strategy combined with intensive advertising. This strategy helped to break customer loyalty of other products. In the Australian market, Africa and the Middle East, a focused strategy was followed. In Asia, a differentiation and focused strategy was used to increase growth. Dynamic branding strategies were used keeping in mind globalisation as well as heritage. Importance was given to brand optimisation and building and communicating brand value. Aspects like historical landmarks, culture etc were effectively used for growth purposes. It was also found effective to formulate different brand strategies for different regions. The bargaining powers of the customers were given preference; therefore different brands having different price ranges were introduced. The cost of production of the product vodka was reduced using innovative methods. Notable among them is the manufacture of vodka from potatoes. Effectual know-how in operating a cost efficient supply chain and high potential to explore new generation products into markets, high and influential expertise in creating advertising which is distinctive, adaptation towards different cultures in different countries for the purpose of communication with different customers, collaboration with fashion designers and artists etc are the other strategies that can increase and sustain growth for vodka. Although vodka is regarded as one of the hottest products in the drinks category today, there is still room for product improvement, development, new promotion methods, innovation and last but not the least creating brand awareness. The vodka market is now having players engaged in stiff and healthy competition. Entry into the market may not be difficult as it is thought if. Some healthy strategies and models are discovered and used effectively in the market. Some of the aspects include manufacturing the purest forms of vodka irrespective of its price factor. Even though the price could be high, it is worth to manufacture vodka having the purest quality. Such vodka should contain fewer impurities than any other vodka that is available in the market. The vodka that is manufactured should attract young professionals and bartenders. It must have the choice of the ultimate mix and taste. Emphasis should be given to present the product that is totally different from its competitors rather than capturing of predominant share in the market. The smooth, stylish and sophisticated features of the product should be highlighted among its customers effectively. It should be made a spirit of choice among young drinkers. The packing should be attractive and distinctive. The product should have different flavours so that it can please different categories of drinkers. The goal of the vodka manufacturer should always be to change the perception of customers towards the brand. Ultimately the sales as well as market share of the product can be gradually increased (Vodka Industry). Works Cited: Cunnington, Jeremy. Diageo solves its premium vodka problem. 2008. April, 27 2010. < http://www.euromonitor.com/Diageo_solves_its_premium_vodka_problem> Global Market Review of Vodka – Forecasts to 2014 . 2009. April, 27 2010 Gougeon,Luc. A Lesson In Drinking Vodka. 2010. April, 27 2010 History of Vodka. 2010. April, 27 2010 Kubilius, Kerry. Poland, Vodka, and the EU. 2007. April, 27 2010 Kunzinger, Bob& Baur, Duane. Vodka and Russia. India tops Diageo’s growth markets in H2. 2009. April, 27 2010 RESEARCH - Vodka market set for ultra-premium boost. 2008. April, 27 2010 Vodka Industry. 2010. April, 27 2010 What is Vodka?. 2010. April, 27 2010 < http://www.wisegeek.com/what-is-vodka.htm> Read More