Wodka & A New Business Model: Cheap, Premium Vodka

on 20/06/11 at 2:49 pm

Spirits

While no one can deny that consumption is a form of social distinction, it sounds even more absurd to think that people will pay more for an equal product.  Calling the market bluff on the whole premium liquor industry, Wodka Vodka is trying to revolutionize the market with a new business model: cheap, premium vodka.

Grey Goose, along with Ciroc and other premium vodkas, have managed to implant the idea that a higher price tag indicates greater quality, the “Grey Goose effect,” as James Dale, president of Panache Imports and one of the founding members of Wodka calls it.

Dale tells the story of Sidney Frank, dubbed “booze baron” by Fox Business.  Frank’s genius came in recognizing that while the premium vodka market seemed stuck in a price fight at about $15 to $17 per bottle (with Absolut inching ahead of the pack), consumers could be convinced that a bottle worth more than $30 was indeed better, when the mark-up was nothing more than pure profit.

Another perfect example is Ciroc Vodka.  An ailing brand, Ciroc was revitalized by Sean “Diddy” Combs, who helped the brand grow its sales 552% in three years, according to Dale.  Diddy, though, takes 50% of the $6.8 million in annual revenues.  Today, Grey Goose and Ciroc cost about $50 at most Manhattan liquor stores.

Wodka Vodka is Dale’s attempt to break that dynamic.  Produced in Bialystok, Poland, Wodka scored 90 out of 100 in a review by the Beverage Tasting Institute, which gave Ciroc.  A bottle of Wodka costs between $9 and $11 at any New York liquor store.

{Full story via Forbes}

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