Raising the Russian standard

The arrival of new brand Russian Standard looks likely to shake up the battle for supremacy in the vodka market. Nigel Huddleston reports

The Russians are coming. No need to stock up the nuclear shelter just yet though, because the battle is going to be fought not with bombs and missiles but with cocktail shakers and point-of-sale material.

The market is facing a shake-up with the arrival of Russian Standard in the UK and ramped-up marketing for Stolichnaya.

At the heart of it lies a fight not just for listings and sales but for the soul of Russian vodka: in the red corner, Stolly, the classic Soviet-era brand; in the blue corner, Russian Standard, a brand built on new Russian entrepreneurialism and Cossack imagery.

They are both waiting for a chance to take on the reigning champion, Smirnoff with a heritage story built on Russian émigrés to the USA.

On the face of it, Russian Standard looks the rank outsider against the marketing resources available to Stolly through Pernod Ricard and Diageo-owned Smirnoff.

But Russian Standard has got a lot going for it. Potentially deep pockets, for one. It was created by Roustam Tariko, the owner of the bank from which the vodka takes its name and the biggest supplier of consumer credit in Russia.

This year, Forbes magazine placed Tariko at number 150 in its global rich-list with a personal fortune estimated at $5.4bn.

Unlike a host of vodka brands trying to break the UK market with the barest of sales resources, Tariko has managed to secure distribution through an experienced and well-resourced company in the form of William Grant-owned First Drinks Brands, a deal

brokered after Tariko's company, Roust, became the Russian distributor of William Grant brands last year.

An eye on the top slot

It means Russian Standard will be going to the negotiating table with buyers alongside established brands such as Glenfiddich and Disaronno. And, importantly, First Drinks also has first-hand knowledge of the Russian vodka market because it was the UK agent for Stolichnaya until 2005.

Tariko is on record as saying he wants to be "number one in all markets", though managing director of First Drinks Brands Chris

Mason is more circumspect.

"It's a huge call to be number one," says Mason, "Smirnoff is 45% of the UK market and a 26 million-case brand globally, but to be in the top three in the total UK market we would need to sell 300,000 cases a year and I'd like to think we could reach that in five years' time.

"To even be number one in 10 years' time would be over ambitious, but with the right level of investment and focus we could certainly be number two."

Mason adds that Tariko won't be chucking Chelsea-style silly money at the brand, though the £5m quoted budget for the first year, including pre-Christmas TV, trumps the £1m spend behind Stolichnaya over the next 12 months. "He won't just say 'Here's a blank cheque'. We've got all the right measures in place to make sure we stay on the right track," Mason says.

For all three brands, it won't just be about money, but also about which version of Russian authenticity consumers are willing to buy into.

Ian Jamieson, president of Pernod Ricard's Stolichnaya Brand Organisation subsidiary, says: "[Russian Standard] is quite big in Russia but it doesn't have a lot of competition because Stolichnaya is managed by the Russian government in that market. I wish Tariko well, but, if you were looking for an authentic Russian iconic vodka, would you look for one that's been around since the start of the last century and lived through the entire history of Russia since that time, or a new brand that's been created by a marketing team?"

The heritage angle

While Russian Standard will trade on a mix of modern energy and Tsarist imagery, Stolly will seek to champion its Soviet-era might as the brand managed for the people by the people, with constructivist graphics and a Red Army-style choir in its cinema advertising, plus anecdotes linking it to the post-war

space programme in its PR work.

Vice president of the Stolichnaya Brand Organisation Howard Southern says: "The heritage has never been told before. We're already the third-largest premium vodka brand globally and this is all before we've really got started. There's a lot of untapped potential and a long way it can go. It seems live and

exciting at the moment. If we had been flogging it for years and found a few new facts

It wouldn't have been quite the same thing."

Keeping the name alive

Stolly's global brand director Vincent Gillet adds: "There was no communication through the Russians, no depth for local retailers to

focus on. It was just there's the bottle and that was it really."

Stolly's existing on-trade presence could give it a head start on Russian Standard. As Jamieson says: "The on-trade has been the champion of keeping the Stolly name alive."

He adds: "Brands that get themselves listed in the off-trade before they've established some form of credibility in the on-trade often find it difficult to maintain their position."

However the other brands approach the challenge, it's going to take a lot to knock Smirnoff off the top of the heap.

"It's not how much you've got, it's what you do with it," says Chris Lock, Smirnoff marketing manager at Diageo, safe in the knowledge that he's got £15m to play with and a new TV campaign breaking.

He adds: "Absolut has a relatively small spend but punches above its weight."

Though he claims Smirnoff is proud of its pre-revolutionary Russian heritage, "it's not worth going on about how Russian we are".

He adds: "Russian-ness is an element of our marketing, but it's not the be all and end all. We're really more interested in communicating the quality of the liquid and the importance of having a great night out."

Marketing strategy for the future

Russian Standard's on-trade success could rest on how well it can segment it's offering.

Both Smirnoff, with Black and Penka, and Stolly, with its flavours and Elit, have experience at the top end of the market where much of the seeding of new vodka brands takes place.

First Drinks Brands will be seeking a premium of around £1 a bottle over Smirnoff Red for its Original mark, which is likely to be the mainstay in take-home.

The premium Platinum style will be more for the on-trade says First Drinks boss Chris Mason, while the ultra-premium Imperia will be more in the "beluga caviar" arena.

"Original will be more at Optic level and we would hope to generate a halo effect with the others," says Mason.