If you'd bellied up to the bar in the 1970s to order an upscale libation, chances are it would have been whiskey, the liquor that hogged most of the prestigious top-shelf real estate. Back then vodka was primarily a well drink, poured from anonymous bottles hidden below the bar. Because customers rarely requested a specific brand, bars mixed most vodka drinks with such standbys as Smirnoff, Popov, or Gordon's.
Fast-forward to today, and pricey vodkas are the drink of choice. At the Palm in Boston, veteran bartender Phil Richardson sounds mildly annoyed by how much space he's devoting to the profusion of upscale brands like Vox, Belvedere, Rain, and Chopin. "My bottom shelf is all vodka, and it's exploding over to this side, too," he says, gesturing broadly at the 21 different labels. Ask him which one sells the most, though, and he'll name a brand that has existed for only five years: Grey Goose.
Liquor isn't the only industry in which success spawns imitators. Today's executives-whether in autos or fast food, consumer products or financial services-spend much of their time not just dreaming up their own innovations but also figuring out how quickly they can copy someone else's. And if the demise of the dot-coms proved anything, it's that the vaunted "first-mover advantage" is often mythical.
In this era of copycat product launches, Grey Goose offers some lessons. Like the fashion and movie industries, the beer, wine, and spirits business moves in cycles, from wine spritzers to Merlot, hard lemonade to clear malt beverages, single-malt Scotch to small-batch bourbon. Vodka entered that maelstrom in the mid-'90s, as a new generation discovered the vodka martini and Sex and the City fueled a nation's thirst for cosmopolitans. Grey Goose wasn't the first upscale vodka; several competitors, including Ketel One and Belvedere, beat it to market. But the strengths of its corporate parent, savvy marketing, and critical acclaim have enabled it to box out most of the newcomers. Grey Goose's beginnings lie in the 1970s, as vodka migrated out from under the bar to become a prestige drink. The move began when Lars Lindmark, president of a Swedish distiller, saw an opportunity to export vodka to the U.S. His marketing team toyed with different ideas for names and images, including a brand called Swedish Blonde, whose label depicted pillaging Vikings. In the end, the new drink was packaged in a clear Swedish medicine bottle with crisp blue lettering: Absolut. The drink hit the U.S. in June 1979 and became something of a sensation. Ad agency TBWA created a print campaign that paired images of the bottle with short brand-centric captions-absolut perfection was the first. By 1985, the Swedish elixir had become the leading imported vodka in the U.S. and had pretty much single-handedly turned vodka into a hip drink.
Other brands were quick to follow. One reason so many distillers have jumped on the bandwagon is that vodka has fewer barriers to entry than other types of alcohol. For one thing, it is far easier to produce than darker liquors. "You don't have to put it away for 12 years like Chivas Regal," says Frank C. Walters, director of research for M. Shanken Communications, publisher of the spirits industry trade magazines Impact and Market Watch. The aging process eats up capital and entails huge financing costs. And although the upscale vodkas use more complex distillation processes, production costs aren't much higher than those of cheaper brands. That means big profits. Walters figures a case of Absolut delivers $47 in profits, compared with $24 for a midpriced brand like Smirnoff and as little as $2 for the cheapest domestic brands. It's no wonder, then, that by the early '90s, a host of Absolut-inspired brands were starting to hit the scene.
Sidney Frank, the entrepreneur behind Grey Goose, missed that first wave, but he was able to use valuable industry experience to make up lost ground quickly. Frank got into the liquor business after he married the daughter of a prominent distiller, and for three decades he helped Schenley Distillers sell Scotch around the world. When he was fired after a family dispute in the early '70s, he launched the Sidney Frank Importing Co., buying the U.S. rights to Jacques Cardin brandy and a then little-known German liqueur called Jägermeister. Sales of that beverage, which was typically served warm as an after-dinner drink, trickled along until the mid-'80s. That's when Frank discovered a bar in New Orleans that served shots of chilled Jägermeister. His sales team started promoting that usage-especially at college bars-and sales began to spike. In 1985, Frank hired teams of models, dubbed the Jägerettes, to work barrooms, dispensing shots and merchandise. Later came the Jägermeister-On-Tap system, a chilling machine that took the brand's bottle out of the bar's cooler and placed it front and center. Those innovations cemented Frank's reputation as a liquor marketing master; Jägermeister, which is undeniably an acquired taste (some critics have likened it to cough syrup), sold 700,000 cases in 2001, making it one of the nation's most popular liqueurs.
Since Jägermeister had no direct competition, its sales reps readily established solid relationships with every major liquor distributor in the country. That gave Frank a big advantage when he decided to launch his own superpremium vodka. The first step was to find the right recipe. Capitalizing on his relationship with the producers of Cardin brandy, Frank decided to create a French vodka that would use water from the Cognac region and be distilled by the makers of Cardin. The second step was crucial in the superpremium vodka segment: creating the perfect bottle. "You can have a wonderful vodka, but if people don't see it as a beautiful bottle, you're losing your market right there," says Jean-Marie Heins, Frank's executive vice president for marketing and advertising. The company tinkered relentlessly, finally settling on a tall bottle that was a mélange of clear glass, frosted glass, a cutaway of geese in flight, and the French flag. When Grey Goose debuted in 1997, it literally stood out from the crowd, since its bottle was taller than most of the competition.
The brand's big boost, however, came from an outside endorsement. Soon after they'd launched Grey Goose, Frank's team sent a bottle to the Beverage Testing Institute, a company that produces Consumer Reports-style rankings of beers, wines, and liquors. A few months later, Frank received word that Grey Goose ranked number one. Though vodka's taste profile is less distinctive than other liquors (it was originally marketed in the U.S. as tasteless and odorless, endearing it to generations of promgoers), different brands do offer subtle variations. Jerald O'Kennard, the institute's tasting director, describes Grey Goose this way: "It's almost on the plane of an eau-de-vie. It has a definite note of anise that's very prominent, and a citrus palate and a characteristically mineral-y profile. . . . The palate has a plush, almost oily texture to it." Grey Goose quickly incorporated the top ranking into its advertising. "We took it and ran," says Heins.
That kind of objective endorsement has helped many nascent brands build their businesses. In the auto industry, Toyota and Honda became more popular in the U.S. in the 1980s by doing well in the J.D. Power and other automobile rankings-results that the Japanese manufacturers promoted endlessly in their ads.
One of the hallmarks of the liquor industry, though, is that there's an expert behind every bar. Pros say many people hem and haw when ordering a drink, giving bartenders a chance to suggest brands. It's no secret that companies that take care of bartenders can see their sales improve. Richardson, at the Palm in Boston, says that when customers look for a vodka, he suggests Absolut because its reps host an annual golf tournament and maintain a good relationship with his restaurant. But special promotions can sway his loyalty. A few years ago Richardson took part in a contest, held at more than a dozen Palm locations nationwide, with a $2,000 prize for the bartending team that poured the most Grey Goose in a month. During that contest, he says, every fifth drink he poured contained Grey Goose.
Grey Goose has also benefitted from vodka's surging popularity. In 1990 imports constituted just 12 percent of the vodka market; by 2000 that share had grown to 22 percent, according to Impact's 2002 distilled spirits study. And vodka, once a small portion of overall liquor sales, now accounts for 26 percent of sales, second only to cordials and liqueurs as the leading profit category. But even in this rising tide, Grey Goose was powering ahead of competitors. It's now the fourth-leading import vodka, behind Absolut, Stolichnaya, and Ketel One. "When you look at industry publications, it seems like someone's announcing a new vodka every month," says Heins. But Grey Goose seems to have staying power. And though tastes change, experts suspect the public's thirst for vodka will remain strong. "Vodka has some legs," says O'Kennard. "It's been on a growth path for the last decade. It's still the dominant player, and it doesn't show signs of deteriorating." At Sidney Frank, they'll drink to that.
