VODKA (smirnoff)

Nandan Shahane

Deepa Shahane

Product introduction Most vodka today is produced from grains such as sorghum, rye, corn or wheat.

Among grain vodka, rye and wheat vodka is considered superior.

If vodka is made from sugarcane, it’s called a neutral cane spirit; if made from a fermentable grain, it’s called a neutral grain spirit.

Most of today’s commercial vodkas are made using a continuous still, which neutralizes much of an alcohol’s flavor.

The fact that most commercial vodkas have little or no smell or taste is what makes them so versatile and popular and as a mixer.

Due to carbon filtering, Vodka is a purer form of alcohol than the rest.

The alcohol content in vodka usually ranges from 35 to 60 percent by volume. Vodka may be classified into two main groups: clear vodka and flavored vodka.

Flavorings often include red pepper, ginger, various fruit flavors, vanilla, chocolate (unsweetened), and cinnamon.

Brands Available

Brand Introduction

Type - Vodka

Manufacturer - Diageo

Country of Origin - Russia

Introduced - 1860s

Smirnoff ProductsEach Smirnoff product has a unique identifying number that is displayed on its label. Some of these

numbers are: 21 - Smirnoff North (previously Smirnoff Norsk). The classic Smirnoff Red Label vodka flavored with

Nordic Berries. In some markets, including the United Kingdom, it is called Smirnoff Nordic Berries. 27 - Smirnoff Silver Label Vodka, 45.2% ABV 55 - Smirnoff Black, 40% ABV. A small-batch vodka that is produced in copper stills. Smirnoff Black No. 55.57 - Smirnoff Blue Label Vodka, 50% ABV 63 - Smirnoff Twisted V Green Apple 64 - Smirnoff Ice Pomegranate malt beverage, 5.5% ABV 66 - Smirnoff Ice Raspberry Burst malt beverage, 5% ABV 66 - Smirnoff Twisted V Raspberry malt beverage 67 - Smirnoff Twisted V Mandarin Orange malt beverage 68 - Smirnoff Twisted V Black Cherry malt beverage 75 - Smirnoff Ice Double Black. Sold in Australia and New Zealand. 76 - Smirnoff Ice. Sold in Canada. 7% ABV 83 - Smirnoff Ice Wild Grape malt beverage, 5% ABV 85 - Smirnoff Twisted Raspberry. Sold in Canada. 97 - Smirnoff Ice Triple Filtered. Sold in Germany. 3% ABV 103 - Smirnoff Twisted V Arctic Berry 110 - Smirnoff Ice Double Black & Cola 111 - Smirnoff Ice Double Black. Sold in Australia.

SWOT Analysis

SWOT Analysis

Strengths High brand recall and recognition Ads reinforce brand name and identity Distinct bottle shape Variety of flavors and pre-mixed drinks Building international brands which enhances

the sale potential

SWOT Analysis

Weaknesses Not present in all price points Arch-rival Absolut may have the edge as far

as trend-setting is concerned Inability to launch variety of flavors in the

Indian Market No ownership in many global brands.

SWOT Analysis

Opportunities The market for pre-mixed drinks have

developed a rapid pace in last few years. Change in social pattern, lifestyle and

population profile.

SWOT Analysis

Threats Continued fears about the social impact of

alcohol abuse Volatility in raw material prices Change in regulatory environment Falling sales of spirits brand could lead to an

international price war Insufficient marketing instruments in India

Marketing Environments

The Internal Environment

The Micro Environment

The Macro Environment

Macro Environment

The factors that influence an

organization indirectly

They are out of their direct control.

PEST Analysis

Macro Environment(PEST Analysis)…

Political Factors State and national government’s

regulation hours and days of sale of

alcoholic beverages.

Restriction on availability of narcotic

drugs other than alcohol.

Anti drink and drive policies of

government

Economic Factors

Increase in price leads to decrease in

consumption and vice versa

Majority of Indian population

comprises of lower to lower middle

class which may/may not afford the

higher priced beverages .

Price hike

Macro Environment(PEST Analysis)…

Socio-Culture Factors Social interaction- major reason for

drinking in bars.

Younger individual are more likely to

drink in group.

Change in lifestyle and population

profile.

Religious barriers.

Entertainment and games in drinking

setting.

Technological Factors Faster Transportation

High quality manufacturing facilities.

Vodka production has been increasing

over the last few years

Michael Portar’s Five Forces Model

Meaning : The model of five Competitive Forces was developed by Michael .E. Porter in 1980. These forces determines the intensity of competition and hence the profitability and attractiveness of an industry. Its five forces are: Bargaining power of Suppliers Bargaining power of Customers Threat of new Entrants Threat of Substitutes Competitive Rivalry between existing players

Based on the information derived from the five forces analysis,

we will see the characteristics of a Liquor Industry.

Bargaining Power of Suppliers

In Indian Liquor Industry some of the Suppliers are- United Breweries Holdings LTD , Eshix Impex , Amber Distilleries , Cipla ,

Govindraj Exports. Bargaining Power of suppliers is high when :-

Market is dominated by few large suppliers rather than a fragmented source of supply. The Indian Liquor Market is dominated by United B.Holdings Ltd and the foreign market is dominated by brands like Smirnoff , Absolute.

There are no substitute for a particular product. Example is Grey Groose. Switching cost from one supplier to another is high If the product is unique. For example :-

Absolute , manufactured in Sweden has the largest market share. Romanov and White Mischief in India.

Bargaining Power of supplier is low When supplier’s customers are fragmented

Bargaining Power Of A Customer

A customer bargaining power is high when:- Large volumes of products are being bought.

The product is undifferentiated and can be replaced by substitutes.

Presence of few numbers of customer.

Customer knows about the production cost of the product.

Presence of alternate suppliers.

Threat Of New Entrants…

There are some barriers which prevent any new company to

enter into a new industry. These entry barriers are:- Government Rules and Regulations

All liquor manufacturers has to abide by The National Liquor Act 59 of 2003.It

says its an offence if

Manufacture or distribute liquor if not permitted to do so.

Manufacture or distribute methylated spirits.

Manufacture ,sell or supply any impotable substances mixed in the liquor.

Advertise liquor in a misleading way and should not include a minor at all.

And many more strict rules are there in this law.

Threat Of New Entrants…

Higher capital requirement Liquor production goes through stages fragmentation, Distillation and

Rectification, Filtration and Purification, Dilution and Bottling.

Brand Loyalty About 70% of Indian liquor industry is captured by U B Holdings Ltd. Its

products are Vodka ( Romanov and White Mischief), Whisky, Gin, Rum,

Brandy etc.

Product Differentiation U B Holdings Ltd produces a large range of products leaving a little room

for any new company to enter. Its a strategy.

Threat Of Substitutes

Some factors determining Threat of Substitute are:-

Brand Loyalty.

Switching cost for the customers.

If switching cost from one product to another is high a customer will stick to

the former and vice versa.

Following current trend

Adding new value to the product

Adjustments in price from time to time

Market survey

Competition Rivalry Between Existing Players

A healthy competition is the need for any industry to grow.

Competition between players is likely to be high due to

Competitive Structure

Fragmented structure

Consolidated structure

Demand structure

High demand less competition, low demand stiff competition

Exit barriers

Economic factors

Strategic and emotional factors

And Remember…