Source: New York Times
March 8th
By ANDREW MARTIN
I CAN'T say for sure whether I've ever tried Popov vodka, but I seem to recall pouring it into a punch bowl in college. Or maybe it was Gordon's.
Tom Smith, the spirits director at Union Square Wines in Manhattan, says he doesn't carry Popov in his store because he associates it with his days of waiting tables, when he used it to polish silverware.
Even Diageo, the liquor conglomerate that owns the Popov brand, seems reluctant to own up to it. Popov, which can sell for less than $9 a 750-milliliter bottle, isn't mentioned on its Web site, and when asked about the brand, a company spokeswoman kept trying to steer the conversation toward pricier spirits.
But the economic malaise has prompted consumers to trade down for all kinds of products, whether cereal, cars, sweaters or lunch fare. The same is true for booze. All of a sudden, Popov doesn't taste so bad.
It might seem logical that people would drink more in a recession. In fact, liquor sales in the United States are up slightly, about 1 percent in the year ended Jan. 25, compared with the year earlier, according to Information Resources, a market research firm.
The more pronounced trend is that some consumers are switching to the cheap stuff. Over the same period, consumers bought $36 million worth of Popov, up 8 percent.
Sales over all in the "popular" vodka category, costing $6 to $9 a bottle, increased 14 percent.
And it's not just vodka that has been "popularized." The trade-down effect is even more pronounced in wine, merchants say.
"The lower-end stuff is definitely flying out the door," said Claire Defoe, a manager at the Sherry-Lehmann wine store in Manhattan.
"People don't want to hear about that $700 bottle of wine," she said. For wine, "$15 to $30 is the sweet spot right now."
The resurgence of low-priced wine and spirits shows quite a turnabout for an industry that has been the happy beneficiary of America's long and reckless infatuation with luxury goods. During the last decade, alcohol marketers came up with an astounding array of high-priced products.
Information Resources now tracks six categories of vodka: value (under $6); popular ($6 to $9); premium ($9 to $15); super premium ($15 to $22); ultra premium ($22 to $40); and luxury (more than $40).
Ivan Menezes, president of Diageo North America, says sales of his premium brands, like Smirnoff and Captain Morgan, remain strong. But he says sales of more expensive spirits, which grew by double digits in years past, have slowed markedly in recent months to single-digit growth. During that same period, budget brands, long in decline, have started growing again.
"The pace of premiumization has slowed," he said. "Strong, trusted, high-value brands are what people are migrating to."
Of course, some boutique vineyards and craft distilleries create exceptional beverages, even if the price is sometimes hard to justify. But much of the high-end liquor bubble was fueled by sleek advertising and bottle design, and by the realization that many Americans assume that the priciest beverage must be the best.
Nowhere was this more evident than in the vodka category. By government definition, vodka is supposed to be a neutral alcohol without distinctive character, aroma, taste or color, and some believe that the differences among vodkas are so subtle that only connoisseurs can distinguish them.
But a marketing genius and liquor baron named Sidney Frank decided in 1996 that with the right story line and marketing panache, Americans would buy steeply priced vodka. He came up with a refined name, Grey Goose, and a sleek bottle.
Most important, Mr. Frank, now deceased, decided to charge $30 for a bottle of Grey Goose, nearly twice as much as the most popular imported vodka, Absolut. It was a phenomenal success, so much so that in 2004 Mr. Frank sold Grey Goose for $2 billion to Bacardi.
And yet several impartial taste tests have found that the cost of a bottle of vodka doesn't necessarily translate into better taste.
In 2004, Slate magazine crowned a Polish vodka, Chopin, as the best; it cost the same as Grey Goose, which it described as unremarkable. The next year, a panel at The New York Times determined that Smirnoff, at $13 a bottle, was better than its pricier rivals.
Those taste tests did little to curb sales of ultra-premium vodkas. But the current recession is taking its toll. Sales of Grey Goose declined 3 percent in the last year, according to Information Resources, while a rival, Ketel One, was down nearly 7 percent. Sales of ultra-premium vodka were down 2 percent for the year.
At the Grove Liquor Store in Montclair, N.J., the manager Anthony Singh said bottles of Grey Goose, which sell for $36.99, were gathering dust. The big sellers, he said, are Majorska and Laird's, which cost even less than Popov. They sell for $9.49 and $7.99 a bottle, compared with $10.99 for Popov.
"We ran out of Majorska last week," Mr. Singh said. "It's selling like crazy."
Vodka snobs will sniff at the idea of switching to budget brands like Popov or Majorska. Maybe they are right. But given the state of economy, I would suggest at least trying a blind taste test.
After all, if Popov wins, you'll save a bundle, even if you decide to hide the bottle in a brown-paper bag. And if you don't like it? I hear it's good for cleaning silverware.
