For decades, the vodka industry has tried to work extremely hard to make itself a successful portion of the much larger alcohol industry, and they have done just that; in the last few years, vodka sales have been taking up an increasing portion of the alcohol industry. Albeit consumers are changing their preferences, many still prefer vodka when it comes to consuming alcohol. For instance, in the United States, all of the top ten vodka brands saw revenue growth of two percent in 2014. Vodka is definitely growing and an area to consider, but first, you need to know about ‘the craft,’ and millennials.
Part of those consumer preferences that I mentioned and are changing include an inclination towards craft liquor, but what is craft liquor? Well, when someone is farming heirloom grain near their distillery, buying grain neutral spirits from a commodity vendor, and pushing it through a charcoal filter, the product will be called “handcrafted vodka.” Because this is an increasing trend, smaller brands have been profiting by labeling themselves “premium drinks.”
This increase of interest in craft vodka has helped the industry develop; it turns out that these products have been much more trendy among millennials, who have continued to keep the vodka market successful and to increase the attention that craft drinks are seeing. Bloomberg Business reports that American millennials are transferring their attention to smaller craft brands while the larger vodka producers are fighting to maintain control of the market. According to market analyst Rabobank, the spirits market is more focused on craft than ever before, with distillers growing at double-digit rates.
It is not just the brand, though, that is contributing to this trend. Smaller producers are coming out victorious when it comes to being innovative with their designs and marketing. For instance, BiVi, a new brand, has been commended for its unique handcrafted Sicilian vodka, which received a celebrity endorsement from A Bronx Tale’s Chazz Palminteri. The innovation can also be seen through its distinct bottle design with grappa bottle packaging. BiVi is sold under Iconic Brands Inc (OTCMKTS:ICNB) and is in a position to draw considerable attention from millennials and vodka enthusiasts.
All in all, craft spirits have been increasingly successful and of great benefit to smaller brands that produce vodka. Now, the other side contributing to the success of the market is the consumer. The usual buyers for vodka are millennials just turning 21. Millennials consumers are those aged from 21-34, and they are the largest consumer portion of the vodka market. They will also be consumers of the future, companies predict. As previously mentioned, these consumers are buying smaller vodka companies rather than larger companies.
The Spirits Business notes that this month, a large portion of millennials will not “spend their money on mass-market alcoholic beverages.” But the question is, why is there so much of an affinity towards smaller companies rather than the large players in the market? Well here are some reasons that experts have come up with: a desire for exclusivity and a liking for information. Small spirits are naturally exclusive and for millennials who are searching for just that, the newer spirit companies are very attractive. Another quality that millennials hold is that they like to know where their products come from; this is evident through their preference of organic food markets such as Whole Foods. Because craft spirits and premium drinks are becoming more popular, the market as a whole is as well.
So, in closing, why are these trends so specific to millennials? Well, it turns out that they are consistently organizing their beliefs and are driven by legitimacy, discovery, sharing and belonging. To the average millennial, feeling like one’s own person is crucial, and they enjoy having the choice of which spirits brand they are going to have next. What this contributes to most is the confidence of a millennial. Spirits could help them express their preferences and have fun at the same time. In the end, thanks to trending craft developments and the particular preferences of millennials, small vodka companies are developing significantly and may be worth an investment not only from individual investors but the larger “big box” distributors & brands as well.
Constellation Brands, Inc. (NYSE:STZ)
Brown-Forman Corporation (NYSE:BF.B)
Diageo plc (ADR) (NYSE:DEO)
Iconic Brands Inc (OTCMKTS:ICNB)