Miguel’s point about vodka was a professional rather than personal observation. It’s one of the best-selling spirits in the world. Unknown outside of Eastern Europe before 1950, a consistent compound annual growth rate of 5 per cent has seen it overtake the once dominant Scotch.
And yet, despite its popularity, vodka remains a marketing enigma. Most punters could not tell you what their favourite brand is made from. They remain ignorant of the fact that vodka can be distilled from alcohol derived from potatoes, grain, grapes, or even quinoa, the South American super-food.
What’s more, most people struggle to identify their brand from the rest in blind taste tests. That’s not surprising given that vodka, which means ‘little water’ in Slavic languages, is meant to be odourless, tasteless and clear in colour.
As a result, the incredibly competitive vodka market is quite probably the most brand-centric battle on the planet. Devoid of product differentiation and any artisanal distinction in production, there is nothing other than image and price to sway consumers one way or another as they select from the 300-plus brands currently vying for their attention.
Traditionally the market has been dominated by Smirnoff and Absolut in the premium tier of the category and by Grey Goose in the high margin, ultra-premium category. But things are changing and at a speed even the vodka category has never seen the like of before. Miguel, never an easy man to impress, was using words like “amazing”, “unprecedented” and “incredible” to describe the rise of Ciroc.
To understand his amazement we must wind the clock back to 2007. Diageo, the British-based drinks giant, was experiencing a very painful vodka headache. Its Smirnoff and lower tier Kettle One brands were going like gangbusters, but in the all-important, super premium category it was getting hammered by Grey Goose. Its French luxury vodka Ciroc was struggling to make an impact in the US at a paltry 120,000 cases – barely 3 per cent of Grey Goose’s figure.
Something had to change and in a risky move that many in the industry deemed to be desperation, Diageo called Diddy. The rapper formerly known as Puff Daddy was invited to become spokesman for the brand. But Diddy was not interested in the traditional fixed fee, celebrity endorsement deal. “I’ve gotten to the point where I don’t want to do just endorsements. I want ownership,” he said.
And so a different deal was done. Diddy became the brand manager and chief marketing officer of the brand on a full-time basis. He even had the business cards made. In return he would take a 50 per cent share of Ciroc’s profits each year.
With deal signed, Diddy, working with his own marketing company the Blue Flame Agency, set about fixing Ciroc. While many in the industry sneered at the idea of celebrity endorser turned brand strategist, Diddy turned his sights on the branding basics.
Out went ‘The wine lover’s vodka’ positioning and in came one built around the art of celebration. Diddy also questioned Diageo’s strategy of targeting existing drinkers of ultra-premium vodka who already had strong established loyalty to existing brands. Instead, he went after new, younger drinkers who were just starting to trade up their drinking repertoire.
And then there was the communications. A perfect 360-degree campaign in which events, PR, advertising, product placement, digital and outdoor were seamlessly used to build Ciroc’s reputation for celebration and celebrity. Some of the tactics were highly unusual by traditional marketing standards. For example, Diddy adopted the moniker of ‘Ciroc Obama’ during the 2008 Presidential campaign.
But it worked. Sales are now up 600 per cent since Diddy took charge and while other top vodka brands managed growth of 2-3 per cent last year, Ciroc grew by an astonishing 65 per cent. The brand sold more than 2 million cases last year in the US. That’s still only half that of Grey Goose but the trajectory of the two brands has now been reversed: Goose is flat, and Ciroc is catching up, fast.
For Diageo, the success is a remarkable coup and part of what most analysts agree is a purple patch for the company. For Diddy, the move is likely to net him hundreds of millions of dollars.
When Diddy took the helm in 2007, he was openly derisive of traditional brand building agencies and their convoluted approach: “Everybody has their marketing lingo, but I’m about results”. Many snorted at his arrogance and waited for his inevitable comeuppance. But there has been no hangover. Ciroc is the hottest brand in wine and spirits right now. And that makes Diddy the daddy of branding.