Vodka is a versatile and resilient spirit. Though not currently experiencing the same highs as it did during the pandemic, the category has retained its power in the global spirits market as producers evolve their offering to respond to emerging trends.
Shaped by changing consumer preferences and industry innovation, data shows that premiumisation is driving the success of the distilled spirit in the global market. In a market flooded with global giants and local producers alike, competition is strong, and consumers are showing an interest in flavour innovation, quality and integrity.
“Vodka is the second biggest growing category and growing ahead of spirits,” says Carla Galasso, Grey Goose Brand Manager.
“Vodka is the biggest light spirit category and second largest spirit category after whiskey and Bourbon, with 18 per cent share.
“We have seen vodka performance slowing this year, but in line with total spirits. This is different than previous years, with the whole category being in accelerated growth since 2020. There has been a rebasing with cost of living pressures being the main reason for the slow down.
“We expect that the vodka segment will rebound in the next 18 months. Prior to this year, it grew 18 out of the past 20 years,” added Galasso.
While growth of the total vodka category has mellowed this year, the IWSR has reported positive growth for the global premium-and-above segment, which is expected to grow at a rate of three per cent volume CAGR between now and 2027.
Having observed notable growth in premium and craft vodka and increasing consumer preference for unique expressions, Ewen Pettit, Co-Founder of Idle Hour, explains how the category is evolving.
“Vodka is slowly changing in the mind of the consumer. They are increasingly seeking premium and nascent offerings, prioritising quality and flavour. We are seeing plenty of experimentation with flavoured vodkas.
“Contemporary vodka strategy will be built on diversifying and emphasising flavour in raw materials, incorporating external elements like natural botanicals and extracts.”
In data released by the IWSR earlier this year, the drinks market analyst reported a noticeable shift towards flavoured expressions in the global vodka market. As Pettit suggested, the IWSR also reported an overlap with other spirits categories through the use of botanicals and native ingredients, a trend that is resonating with gin drinkers.
In the same report, data revealed that in the US, vodka-based RTDs command the largest share and growth rate within the spirit-based RTD market. Perhaps thanks to the neutrality in flavour offered by vodka, the spirit is well placed to capitalise on the growth of RTDs and this trend is predicted to expand globally.
“RTD has played an incredibly significant role in reopening avenues to vodka and the ability to explore within the category,” added Pettit.
While premiumisation dominates the vodka category, Peter Sinclair, D’Yavol Brand Lead, says that this provides a growth opportunity for storytelling brands.
“Consumers are gravitating towards smaller craft brands with a story to tell rather than large commercial vodka brands from the global spirits companies.
“The vodka category needs to continue to provide consumers with better choices that satisfy their evolving consumer trends. Brands need to have interesting back stories and they need to be super premium. The risk if they don’t is that other white spirit alternatives such as tequila will increasingly take their share of consumer occasions.”
According to data from the IWSR, sustainability has been a growing trend across the broader spirits category with consumers driven by transparency and local origin.
Itinerant Spirits Co-Founder Brad Wilson explains that the desire for authenticity allows Australian producers to establish a point of difference in the category, supported in-store by retailers haloing Australian-made vodka and its origin as a selling proposition.
“Local producers in Australia, including ourselves at Itinerant Spirits, are making significant strides in the vodka landscape and competing favourably with international brands. The emphasis on provinence has become a key differentiator, and this is something we proudly embody.
“When it comes to capitalising on the sale of vodka in-store, my advice is to champion the excellence of quality premium Australian vodka. Emphasise the premium nature and rich provenance of Australian-born vodkas, showcasing how they stand shoulder-to-shoulder with the best in the world.
“Ultimately, by positioning premium Australian vodka as a top-tier option, retailers can tap into a growing market of consumers who value quality, authenticity and a unique tasting experience.”
Speaking about innovation in the vodka landscape and premiumisation of the category, Alex Doughty, Managing Founder of SoHi Sprits, explains how this has affected pricing and consumer spending.
“We expect the vodka category will continue to barbell, meaning consumers will gravitate to either value and mainstream or premium and ultra-premium ends of the spectrum, there won’t be a middle ground.”