Case study: The steps Smirnoff took to revive its flavored-vodka business

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As a trend bottomed out, the Diageo brand decided to stop innovating in flavor variants and mix things up online

Can a brand become too dependent on product innovation? Smirnoff, the biggest vodka brand in the US, faced that question in 2013, when consumers began losing their taste for flavored vodka, a category in which the brand had invested heavily.

Not that Smirnoff was alone. For years, much of the US spirits industry had ridden the boom in flavored vodka to double-digit growth. As the biggest player in the game, Smirnoff was a key beneficiary of that success, churning out a constant stream of variants to an eager and receptive audience. But as the boom waned, the Diageo-owned brand also stood to lose more than its smaller competitors. If Smirnoff wanted to maintain growth in the category, it had to break its dependence on wild new flavors and find fresh ways to ignite customer interest.

In 2014, Smirnoff partnered with the New York office of 72andSunny, part of the MDC Partners network, to reintroduce the brand and rethink its approach to flavored vodkas.

The challenge

Six years ago, flavored vodkas were rapidly becoming a significant and reliable driver of growth in the US vodka market. According to Smirnoff, from 2010 to 2011, these variants fueled 20% year-on-year growth for the brand. Eager to capitalize on the trend, spirits companies as a whole introduced more than 500 flavored vodkas in the US over the next five years. 

With so many variants being added, brands quickly exhausted the obvious options, and started reaching beyond mass-appeal flavors such as watermelon, citrus, cherry and raspberry to those with more limited appeal. Coffee, marshmallow, root beer, chilli pepper and bacon versions found niche audiences, but failed to deliver the returns of earlier flavor innovations. The category began to feel saturated.

By 2013, growth had begun to stall. Smirnoff, as mentioned, had more to lose than most, but abandoning the market wasn’t an option.

Despite only a 2% increase in volume sales of all vodka brands in the US in 2013, flavored vodkas still accounted for more than $2 billion worth of all vodka sales in the country, according to industry research. 

Rather than continuing to try to expand the market with additional flavors, Smirnoff needed to fight for a bigger slice of existing sales. Hence the company shifted its focus to driving growth in its current flavors. 

The audience

The typical flavored-vodka consumer is young (21-34) and female. She isn’t drinking her Blueberry Smirnoff on the rocks—research shows (and good taste dictates) that colorful, flavored vodkas are most often used as ingredients in mixed drinks, particularly for parties, holidays and other festive occasions.

However, flavored-vodka fans do not tend to consider themselves mixologists. They want to make fun concoctions, but aren’t likely to have, say, a bottle of Angostura bitters in the liquor cabinet. So they need recipes that can be made with easily attainable ingredients and minimum effort. They will most likely search for those recipes online, seeking suggestions from friends on social networks.

Another challenge is that flavored-vodka drinkers tend to be more loyal to their preferred flavor than a brand. A Raspberry Smirnoff drinker will sooner buy another brand of raspberry vodka than a different flavor of Smirnoff, for example, and price heavily influences their decision. So Smirnoff had to be top of mind before consumers entered the store.

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The Smirnoff Drinks Engine offered US consumers easy-to-follow drinks recipes

The strategy

It became clear that engaging with conversations about mixing cocktails represented Smirnoff’s best hope to win back share. If the brand could get customers to share recipes based on its products with their friends online, it could reinvigorate interest in some of its core flavors—Green Apple, Watermelon, Strawberry, Raspberry and Cherry.

Unfortunately, it soon became clear that consumers—particularly casual spirits fans like the ones Smirnoff was targeting—don’t talk about vodka online much. To achieve the kind of scale it had in mind, Smirnoff would have to go beyond the specialist discussion forums and attach its recipes to something more mainstream. 

Luckily, trending topics make it easy to tell what counts as "mainstream" on social networks on any given day. The team discovered that when casual fans do share drinks recipes, it’s usually driven by a holiday, change of season or other cultural moment—the very stuff of trending topics. Data on buying patterns revealed that certain flavors sold better during certain seasons, and purchases for key drinking occasions began two weeks in advance. 

Clearly, if Smirnoff wanted to make recipes based on what people were talking about, it was going to have to live in the moment. A one-off campaign featuring generic cocktails wouldn’t work. Instead, Smirnoff and 72andSunny needed to monitor those trending topics and produce a steady stream of cocktail ideas that would always feel "of the moment."

The solution

The big idea was the Smirnoff Drinks Engine, an always-on video platform where consumers could find easy-to-make recipes tied to culturally relevant events. In short, edgy videos, no more than 15 seconds in duration, customers could learn to make a variety of drinks—all based on the handful of Smirnoff flavored vodkas that accounted for the majority of the brand’s existing sales volume. 

Every week, the team monitored social conversations to plan drink recipes around scheduled occasions, such as holidays and sporting events, and spontaneous ones, like storms and—believe it or not—Supreme Court decisions. 

When winter storm Jonas dumped more than two feet of snow on the northeastern US in January, for example, the Smirnoff Drinks Engine produced a recipe called the "Jonas Jalapeño" (Smirnoff Watermelon, pink lemonade, lime juice, jalapeño). And when the US Supreme Court legalized gay marriage in all 50 states, it introduced the "Equalitea" (Smirnoff Peach, iced tea, peaches, mint).

The team would spend the early part of the week following social chatter with the goal of publishing a recipe by Thursday or Friday. They also began issuing briefs a month in advance to prepare for predictable events, such as Movember ("The Stacherac") and the series finale of "Mad Men" ("The Madison Avenue"). At weekly editorial meetings, they would review the previous week’s performance and make adjustments. 

Over time, they found that engagement for "natural drinking occasions" was considerably higher than for generic cultural events (a 22% increase), so they adjusted in that direction. In addition, although the initial strategy called for a heavy emphasis on video, the team soon found that the clips they produced were not performing as well on Twitter and Instagram as they were on Facebook. So they decided to embrace photos for those platforms, which ultimately led to a 46% increase in engagement. 

  • The Jonas Jalapeño (during winter storm Jonas)
  • The Stacherac (for Movember)
  • The Madison Avenue (to mark the Mad Men finale)

Results

The Smirnoff Drinks Engine fueled new growth for Smirnoff’s flavored vodkas. While the rest of the category dipped 1.6% in the first eight months of 2015, Smirnoff’s flavored business reversed its performance, outpacing the category by 9.5%. That increase provided enough of a lift to return Smirnoff’s entire US business to sales growth. 

The recipe videos and images resulted in industry-leading social metrics. Engagement (see graph, right), and media efficiency (Facebook cost per impression: $3.12 vs. $4.68; Twitter cost per engagement: $0.25 vs. $0.30) exceeded all spirits-industry norms, indicating that the social activity was responsible for driving sales.

In addition, Smirnoff’s audience base increased significantly across all social channels year on year (Facebook up by 5%; Instagram by 594%; Twitter by 29%; YouTube subscribers by 44.1%; and Pinterest by 2.4%).

By the end of Diageo’s fiscal year 2016, Smirnoff’s net sales were up 2% in the US, against a 4% decline for 2015. With vodka representing 13% of Diageo’s net sales, it’s safe to say the team behind Smirnoff Drinks Engine deserved to toast themselves for that success.

Q&A

(Left) James Thompson, chief marketing officer, Diageo North America / (Right) Matt Jarvis, partner and chief strategy officer, 72andSunny

James Thompson, Diageo North America chief marketing officer, and Matt Jarvis, partner and chief strategy officer at 72andSunny, explain the success and the appeal of the Smirnoff Drinks Engine

Why did Smirnoff decide to try reviving its flavored-vodka business, rather than just pull back from it?

James Thompson: While the overall flavored-vodka category has shown signs of slowing in recent years, vodka remains a highly competitive category. We saw this decline not as a hurdle, but as an opportunity to use modern digital techniques to make a tangible impact on Smirnoff’s vodka-specialities business, and our US vodka business as a whole.

You did a lot of research into the flavored-vodka audience. What was the key insight that gave birth to The Drinks Engine?

Matt Jarvis: A lot of the people we were talking to were curious about cocktail culture, but needed a guide. Our audience wants to be creative and invent and make cocktails. That’s how people are already using the product, so part of our role was to facilitate what we already saw was a burgeoning behavior and make it more useful to our audience—and, in doing so, make purchasing Smirnoff something that was exciting to them.

Who came up with the recipes?

Jarvis: All these assets are created by Hecho en 72, which is an in-house production facility [at 72andSunny], so we have a consistent team who engage with experts in making them. 

We want to make a drink that’s fun to drink, fun to serve and has a taste profile that’s appealing, but we also want to place it in a cultural context to make it more engaging and more relevant. It has to be a good cocktail, but then it also has to make sense for the Blood Moon, or Movember, or the "Mad Men" finale.

What were your most successful recipes, and what do you think made them such a hit? 

Thompson: The most successful recipes feature trending flavors, are simple to prepare and are published to align with cultural trends. For example, The Drinks Engine quickly acted upon noticing, via social monitoring, that watermelon was becoming a popular ingredient in food and drink recipes. To contribute to the conversation, Smirnoff created and posted a watermelon-based cocktail recipe to our social channels that outperformed our engagement benchmarks.

Jarvis: There’s a key to these types of things in making it as close to the speed of culture as you can. As things are unfolding, reacting to them and placing the brand within that context.

The Smirnoff brand platform is about inclusivity. We are "exclusively for everybody," a counterpoint to the "velvet ropes" of the category. Whenever we’re able to tap into that idea of inclusivity on a higher level, as we did with same-sex marriage, that gets a lot of interest in the market. A lot of respect and magnetism is generated from it, because we’re talking about what people are talking about, and doing it in a way that’s authentic to us.

Conversely, what sort of recipes simply did not catch on?

Thompson: Recipes that are simple to make and vibrantly colored—on the warmer side of the color spectrum—elicit the strongest engagement on social media. Cocktail recipes featuring colors on the cooler side of the spectrum have not performed as well.

Jarvis: Not everybody wants a sweet hint of caramel in their vodka or in their cocktail; there are some folks for whom that flavor profile doesn’t really connect. But I can honestly say we haven’t made a drink that doesn’t meet the standard of a good cocktail.

To what extent did The Drinks Engine simply revive interest among flavored-vodka fans versus creating new ones? 

Thompson: When evaluating the steady engagement rates of a growing audience, the results seem to point to The Drinks Engine’s success both in reviving existing and [driving] new consumer interest in Smirnoff vodka specialties.

Jarvis: Our engagement levels are twice the industry average. Our social-media growth is more than 600%, so we know that we’re really connecting with people. Because it’s a social product, the power of that type of virality is higher than in other categories, which are less frequently shared. This has been, first and foremost, a way of making our product more well-known and interesting. From that, we’ve been able to grow into bringing new people into the family.

Thompson: Additionally, our flavors strategy allows us to serve a more diverse population, which ties into our brand purpose [of] being the most inclusive brand in the world. We have a flavor for everyone and a recipe for every occasion.

What did The Drinks Engine teach you about the ways consumers engage on different social platforms?

Jarvis: The big lesson for any marketer is using your marketing to create value, not just to create transactions. If you create value, the transactions will come. If you just try to create transactions, you may find that nobody shows up.

Thompson: With this approach, we continue to effectively highlight trending flavors and existing products through new recipes that align with culturally relevant topics. For example, when consumers were buzzing about "Blizzard Jonas" on social media, Smirnoff created the "Jonas Jalapeño."

Jarvis: We got people to interact with the product. We got people to try the product. The drinks were easy to make. They were culturally relevant. These are flavors that already existed, but we gave them context and we were able to make them more fun, useful and meaningful to our audience.

What’s the future of flavored vodkas? Do you see them remaining a robust part of Smirnoff’s lineup? 

Jarvis: Flavored vodka is an important part of the Smirnoff proposition, for sure.

Thompson: During the past fiscal year, the combination of Smirnoff’s innovations and The Drinks Engine resulted in overall US sales growth of the Smirnoff vodka specialty portfolio, despite declines in the category.

Continuing innovation and maintaining cultural relevance by keeping consumer trends top of mind will be key to the success of Smirnoff’s specialities, and the flavored-vodka category as a whole.

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