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Vodka Nation

How the flavorless, colorless, odorless spirit became a billion-dollar business

Aug 15, 2011, Vol. 16, No. 45 • By VICTORINO MATUS
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Nevertheless, the drink caught on, and by 1967, vodka had overtaken gin as the most popular white spirit in America. Keep in mind that, through the 1970s, 99 percent of all vodka consumed in America was also distilled here. The only imports were Stolichnaya from the Soviet Union and Finlandia. Stolichnaya dominated as an import thanks to an agreement struck between Pepsi-Cola and the Soviet Union in 1972 in which, in lieu of payment, the Soviets gave Pepsi import rights for Stoli in return for Pepsi. But outside of Stolichnaya, Finlandia, and Smirnoff, the vodka scene was bleak.

Michael Roper, owner of Chicago’s Hopleaf bar and restaurant, recalls what bartending was like in the early seventies. While Smirnoff was considered top shelf, he remembers lesser varieties such as Nikolai, Arrow, Wolfschmidt, and another brand that was then ubiquitous called Mohawk. “Mohawk was cheap, cheap, cheap,” Roper remembers. “Mohawk had a factory just outside Detroit along the expressway and .  .  . all their products were made there. It’s almost like they turned a switch—whiskey, vodka, gin. And it was all junk.” Still, by 1976, vodka had surpassed bourbon and whiskey as the most popular spirit in America. Roper attributes vodka’s rise partially to women, who started drinking more spirits and ordering them on their own: “Women were not going to like Scotch—that was for cigar-smoking burly men,” he speculates. “And .  .  . it was unladylike to drink Kentucky whiskey. But it was considered somewhat ladylike to have a fancy cocktail with an olive in it.” He also remembers when a salesman first brought Miller Lite into his bar, explaining “it’s for women.” In a similar vein, Roper considers vodka a low-calorie option with “a less challenging flavor.”

Others look to countercultural factors. “You don’t drink an Old-Fashioned if your dad drank an Old-Fashioned, because you’re a hippie,” one bartender has observed. “You can’t see a hippie going, ‘I’ll take an Old-Fashioned.’ It just doesn’t even make sense.” The industry received another jolt in 1979 when a small New York company, Carillon Importers, introduced a new vodka to the market. Initially, it received a cold reception: Prior to Carillon, the distillers had been rejected by all the major distributors, such as Hiram Walker, Seagram, and Brown-Forman. Bartenders complained that the bottles were difficult to handle because their necks were too small. Worst of all, the vodka was not Russian but Swedish—and what do Swedes know about vodka? Even the name seemed misspelled: Absolut without the “e.”

Of course, the Swedes know a lot about vodka. Absolut had been distilled since 1879; and in fact, its inventor Lars Olsson Smith, whose image graces each bottle, came up with the process of rectification, which removed many of vodka’s impurities. But as pure as Absolut was, it needed to be exported in order to survive. Not only did it have the good fortune of landing Carillon as its importer but, eventually, TBWA as its ad agency. In Absolut Book: The Absolut Vodka Advertising Story (Journey Editions, 288 pp., $34.95), TBWA’s Richard Lewis, who handled advertising for the Swedish vodka, remembers the challenge of designing an ad for his client: “Somehow they had to establish that Absolut was the best vodka on the market, without actually saying that in an ad,” he writes. “That kind of advertising claim—‘This is the best [whatever] that money can buy’—is both boring and unpersuasive.”

Lewis explains how it finally came about:

One November evening in 1980, [TBWA art director Geoff Hayes] was doodling huge Absolut bottles on a pad as he watched The Honeymooners. Atop one bottle, he drew a halo much like an angel’s. Then he jotted down a headline: “Absolut. It’s the perfect vodka.” Hayes liked it, especially the little joke. He knew the halo would reduce some of the pompousness of the headline.

The following morning, Hayes showed the sketch to his partner. [Writer Graham Turner] liked it, but he looked at the long headline and asked, “Why not just say ‘Absolut Perfection’?” Together they turned out a few more ads, and soon a format emerged: In just two words (the first one always being Absolut), the ad would say something complimentary or flattering about either the product itself or the person drinking it, and, importantly, add a dollop of humor so the “We’re the best” claim wouldn’t be quite so boring or pretentious. 

It took a few years, but the advertisements caught on. One of the tricks was photographing the bottle not with a typical black background but with a matte Plexiglas, giving the bottle a luminous glow. Still, by the end of 1984, Hayes and Turner worried that they were running out of superlatives and came up with an alternative image: a series of light bulbs in the shape of the bottle and the words ABSOLUT STARDOM. The concept allowed them to branch out—they no longer relied on an actual glass bottle but crafted images in the shape of their product, such as ABSOLUT PEAK (a ski trail) and ABSOLUT 19TH (a hole on a golf course). Each image, however, had to be carefully chosen: “They had to possess or reflect either a high value, such as gold, or an upscale activity, such as skiing or golf,” says Lewis. “It may not have been obvious to the reader, but we perennially strove to build upon Absolut’s premium image.” The agency’s other stroke of genius (aside from commissioning Andy Warhol to create ABSOLUT WARHOL) was to incorporate cities into the ads, beginning with Los Angeles in 1988 (a swimming pool in the shape of the bottle).

There have been more than 2,000 Absolut ads using, in Lewis’s words, the “bottle plus two-word headline” format, each one costing as much as $100,000 and involving elaborate scale models (ABSOLUT MIAMI—a miniature art deco hotel on South Beach—may be the most impressive), but it was well worth the cost, as Absolut eventually overtook Stolichnaya in U.S. sales. By the 1990s it also became the most expensive vodka on the market, priced around $15. That would change, however, in 1997 when the late importer and marketing genius Sidney Frank unveiled a new vodka distilled in France and costing twice as much as Absolut. Frank told New York magazine that he called his associate early one Sunday morning in the summer of 1996, telling him, “I figured out the name! It’s Grey Goose!” New York’s Seth Stevenson picks up the story:

Here were all these vodkas, in the $15-$17 range, vying to be the premium brand (with Absolut mostly winning). Frank just sidestepped the fray altogether and charged an unheard-of $30 a bottle. The markup amount was pure profit. “He was the first person to see,” says an executive at rival Bacardi, “that there was a super-premium category above Absolut, if you had a good product story.”

And it was quite a story. As Frank explained to Inc. magazine, “I said, France has the best of everything. I asked the distiller there whether they could make a vodka. They said sure.” Then in 1998 the Beverage Testing Institute awarded Grey Goose the title “World’s Best Tasting Vodka,” a moniker that would find its way (along with “Distilled and Bottled in France”) onto each bottle.

“It was a case of almost perfect aspirational marketing,” says John Frank, Sidney’s nephew and current vice chairman of the Sidney Frank Importing Company. “We wanted to provide consumers with affordable luxury and knew that the product had to be of the highest quality with exquisite packaging but also that the timing had to be right.” In short, “Grey Goose was the right product for the right time, but it was also the culmination of 25 years of building brands and a strong sales and distribution organization.”

By 2004 Grey Goose was churning out 1.5 million cases annually (ahead of Absolut but behind Smirnoff). The product also received a boost when the characters on Sex and the City began ordering not just Cosmopolitans but Grey Goose Cosmos (Grey Goose L’ Orange, Cointreau, cranberry juice, lime, orange twist). In 2004 Bacardi acquired the vodka for $2.3 billion and, at 85, Sidney Frank finally achieved his goal of becoming a self-made billionaire. 

Vodka was no longer viewed as a mere mixer; it had become a status symbol. As Noah Rothbaum, author of The Business of Spirits: How Savvy Marketers, Innovative Distillers, and Entrepreneurs Changed How We Drink (Kaplan, 189 pp., $24.95) says, such successful branding is “not an easy thing to do, considering there is nothing romantic about how vodka is made. But consumers were convinced by slick marketing and high prices that vodka was particularly exotic and valuable. The vodka companies then bolstered their appeal by using flavorings, which made the spirit more palatable and attracted new drinkers.”

Not that every distiller is on the make. When Robert and Sonat Birnecker left their comfortable jobs in Washington three years ago to open Koval, Chicago’s first boutique distillery, vodka was not exactly on their minds: “We had a very good idea in terms of fruit distillation, what we wanted to produce, but unfortunately we had missed fruit season,” says Robert, a native of Austria. “So we said we can’t wait a year and sit around and do nothing. We have to start with grains. And then we said, okay, we’ll do white whiskeys, vodka, and liqueurs”—all of which proved popular.

“We got lucky,” he adds. Koval now sells roughly 5,000 cases a year, and only about 400 of those are vodka. Robert stresses that, as artisans, he and his staff of seven do not envision producing a million-plus cases a year like Grey Goose, but something closer to 15,000-20,000. “You can go up to a certain amount of people working for you, and a certain amount of production, to still make sure everything stays at the same quality,” says Robert. “But once everything turns into a more industrial process, you lose that quality aspect, unfortunately.” Good thing the Birneckers have no intention of challenging the giants, for such a task would be nearly impossible. “Here’s the problem with the vodka market,” explains Robert.

We may have a very good vodka. But there are a lot of other forces out there on levels where we can’t compete, in terms of what distributors are able to give bars for using a certain vodka. A lot of it is “pay-to-play.” I know companies [where] you buy five cases of this flavored vodka, you get two cases or one case of the unflavored vodka for free. .  .  . It’s a market where, because a lot of bars think it’s flavorless and odorless, it’s all the same anyway. Why would you buy a product that’s twice as expensive as Svedka if you’re just using another margarita mix or something, you know?

(Koval Vodka costs $39; Svedka runs about $16.)

There’s an earnestness to the operation, which I recently toured. Their 3,000-square-foot facility in the Ravenswood-Andersonville neighborhood north of downtown Chicago will soon encompass a second building. In the same room as the vats of mash and the enormous still imported from Germany you will find a long wooden table cluttered with papers and laptops that serves as Koval’s office. A little plastic table and chair belonging to the Birneckers’ toddler son Lion are propped next to it. “It’s his office,” jokes Robert, who also points out that the space currently housing the gift shop was once Lion’s playroom: “People thought we had day care at the distillery.” One of Koval’s most popular products is an organic whiskey called Lion’s Pride, and the Birneckers’ second son is Rye—the grain they use to distill a variety of whiskey and all of their vodka.

Michael Roper, the owner of Hopleaf, says there’s a homespun quality to Koval. He remembers when, several years ago, Sonat Birnecker entered his establishment, pushing Lion in a stroller. “She went up and down Clark Street with the baby carriage, and there were bottles underneath, where most people put their diapers and stuff,” he recalls. “It’s like someone coming in saying, ‘You want to try some of our applesauce?’ but instead, ‘You want to try our vodka?’ We’re only a couple of blocks away, so they sold it to us as a kind of neighborhood thing and it was fun.”

There is a certain intimacy within the craft distilling community. During my visit, a distiller from another state had mailed Robert a mason jar of white whiskey hoping he could figure out what was wrong with his batch: Much like the early California wine growers, the craft distillers often share tips and secrets with each other. Three times a year the Birneckers hold seminars on distilling, each consisting of about 35 attendees from across the country. According to the American Distilling Institute, the number of craft outfits has grown from 50 in 2002 to 240 today.

But for those strictly focused on the vodka business—what Dan Aykroyd calls “only the most challenging arena in the legal recreational consumables industry”—it takes more than just a good story to move your product. “One of the lessons the industry learned from Grey Goose,” writes Noah Rothbaum, “was that consumers are impressed by reverse labels, frosted glass, and distinctive bottle shapes.” But how far does one go? A vodka contained in a glass skull or dispensed from a replica tommy gun? Wyborowa commissioned Frank Gehry to design a new bottle for its single-rye vodka.

And then there are the endorsements. Whereas Smirnoff once touted people like Groucho Marx and Woody Allen, Stolichnaya runs commercials now featuring Hugh Hefner and Julia Stiles. Americana Vodka, an upstart from Scobey-ville, New Jersey (produced at Laird’s, the oldest family distillery in the nation), has quarterback Dan Marino on its side. Even value brands can garner endorsements: Sobieski, found in the well at Hopleaf, has Bruce Willis as its spokesman. But knowing just how lucrative the vodka business can be, some celebrities won’t simply endorse; they want to be partners. Ciroc, a French vodka distilled from grapes and owned by liquor giant Diageo, negotiated a partnership deal worth more than $100 million with Sean “P. Diddy” Combs, who explained at the time, “I’m not just a celebrity endorser. I’m a brand builder.”

Laugh all you want, but he really is: According to a 2010 report in the Financial Times, “In the first six months of 2007, before Mr. Combs signed on, Diageo sold 60,000 cases of Ciroc. The following year, sales grew to approximately 169,000. In the full year ended June 2009, volume spiked to 400,000 cases. Sales rose another 48 percent in fiscal 2010, according to Diageo’s earnings statements.” (None of this is new, of course. Pyotr Smirnov spent years trying to earn the czar’s blessing, finally gaining Alexander III’s endorsement in 1886. “The very next day,” writes Linda Himelstein, “Smirnov ordered that all his labels be changed to carry the new distinction.”)

As might be expected, America’s obsession with vodka has led to a certain pushback within the drinking community. The return of classic cocktails and the rise of craft bartending has meant a rejection of vodka and rediscovery of whiskey, gin, tequila, even absinthe. At the speakeasy lounge PX in Alexandria, Virginia, patrons are encouraged to try exotic concoctions such as Smoker’s Delight (tobacco-infused tea, honey, bourbon, lemon juice, water) and other libations involving house-made bitters. Tucked inside The Passenger bar in Washington is another, more exclusive, watering hole called the Columbia Room, considered by GQ to be one of the best cocktail bars in the country. It is run by “master mixologist” Derek Brown who, also according to GQ, makes one of the best martinis in America. A few months ago, on a Saturday afternoon, I sat with Derek in the Columbia Room and asked his thoughts on vodka.

“To us,” he replied, “the important thing is that we make a great drink. And vodka is capable of that. But it is the chicken breast of cocktails. It is the most boring, least thoughtful, sort of one that you can mix with. For a craft bartender—someone who believes in humanity—this stuff is just a joke and will fade away.” Derek is respectful of customers who order vodka drinks—his bar carries only one brand, which he refused to reveal—but will find ways to steer them toward alternatives such as gin which, he says, “is just flavored vodka. It just happens to be a very good flavor of vodka.”

And while Derek Brown considers many of the new vodkas to be scams—“Essentially charlatans are making some of the crappiest vodkas that exist, and they’re putting them in different shaped bottles with really nice looking labels”—he is hopeful about the impact of craft distillers: “They’re changing the way people look at vodka. You have High West Whiskey or Oat Whiskey, which is in some ways a vodka. I mean, they call it a whiskey, it’s barrel-aged, but it’s a neutral spirit. .  .  . You see people who are producing flavorful vodkas. That doesn’t meet the Tax & Trade Bureau’s assessment of what a vodka should be, but it certainly is what a vodka can be.”

“So you want to do a vodka tasting?” he asked me. A few minutes later he returned from the next-door Passenger bar with two sets of four tall shot glasses, each filled with room-temperature vodka. “You do best to expectorate,” he  suggested, meaning that I should swish it around but not ingest. And he would know: Derek regularly serves as a judge on spirit tastings and estimates that, over the last three months, he’s sampled at least 60 different vodkas.

One shot at a time, we compared notes about a vodka’s purity, clean mouthfeel, hints of oat, banana, or citrus. There were differences between the shots, and once I arranged them in order of preference, he revealed their identities. My favorite (which I found to be sweet, citrusy, and with only a slight burn) was Skyy, a vodka I actually do enjoy. Second was Stolichnaya (almost minty). Third was an artisanal vodka called Smooth Ambler (which has those hints of aforementioned banana but felt a little rough around the edges). Much to my surprise, my least favorite turned out to be Ketel One, a vodka I would normally choose over Stolichnaya. But perhaps this shouldn’t have come as a surprise. In 2005 the New York Times conducted its own tasting of 21 super premium and craft vodkas. The coordinator, Bernard Kirsch, however, had secretly inserted Smirnoff into the mix.

Take a guess which vodka was judged the favorite.

At the turn of the last century, the Russian government commissioned the Central Chemical Laboratory, under the direction of the Ministry of Finance, to investigate the vodka industry. The report, noted in The King of Vodka, revealed that “the product’s reputation doesn’t always depend on the quality. .  .  . Very often, the product’s reputation depends on its harmonious name, bottle’s shape, colorful label, or just a more expensive price of the product.” The Russians were on to the vodka game, but there wasn’t much they could do about it.

A century later we’re still playing the same game—and there still isn’t much we can do about it. At the Columbia Room I joked with Derek Brown about the one vodka his bar carries. “I take it that it isn’t Crystal Head Vodka,” I said. “No,” he chuckled, “although I did get the Crystal Head the other day. And what’s funny is that I was on the panel at the San Francisco World Spirits Competition, and I think it got a gold medal.” 

Actually, it won Double Gold.

Victorino Matus is a senior editor at The Weekly Standard.

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