Smirnoff’s leading position under threat

The world’s largest spirits and wine brands arrest their declines and return to growth, according to this year's The Power 100 2011 report published this week by brand valuation and strategy consultancy Intangible Business.

The world’s largest spirits brand and the biggest vodka by over double the size of its nearest competitor, Smirnoff, continued its decline this year, down 5% on top of a 3% decline the previous year. Its 1% volume decline and 4% value decline is symptomatic of its ‘middle of the road’ positioning that is being threatened from above – from the likes of Pernod Ricard’s Absolut up 6% in volume and into The Power 100 top five  – and from below – from the likes of Svedka, up nearly 20%. Its brand reputation is suffering as a result, scoring 2% lower this year.

Also closing in are Bacardi Martini with its flagship Bacardi rum brand whose total score surged 5% to retake the number two spot. Bacardi is helped by being almost synonymous with the rum market in general, which has made it a back bar staple and versatile cocktail ingredient helping build its position in the off-trade too. Bacardi Martini was also able to capitalise on the popular vodka market and Smirnoff’s vulnerability with its more premium Grey Goose brand which climbed one place into the Top 20.

The Top 10 Most Powerful Wine & Spirits Brands 2011

Smirnoff achieved an overall score of 88.9%, giving it a significant margin over the other brands that make up the top ten.

Johnnie Walker remains the world’s leading whisky brand, despite slipping one place to number three in The Power 100, keeping it ahead in the whisky sector from Jack Daniel’s (6 overall), Chivas Regal (8 overall), Ballantine’s (10 overall) and Dewar’s (up two places to 14 overall). American whiskey brand Jim Beam slips four places to number 19 on the back of a 3% fall in its overall score. Martini Vermouth completes the top five in 4th place ahead of Absolut in 5th.

Aside from Svedka, the biggest climbers in The Power 100 are Gallo’s E&J brandy, which climbs 16 places to number 48; Italian liqueur Disaronno, up 14 places to number 84, on the back of its popularity in the buoyant cocktail market, and Bombay Sapphire up 11 places to number 41, which has been helped by consistently bold and eye-catching advertising.

The biggest faller this year is Cointreau which drops 16 places in this year’s The Power 100 despite a slight increase in volume sales. The fall was due largely to the brand score falling 5% and the better performance of other featured brands.  Little momentum in volume and lower brand score contributed to Grand Marnier’s fall of 15 places with the brand not achieving its potential in the hands of a small, independent owner.  Pernod Ricard’s leading wine brand, Jacob’s Creek, also suffered this year – falling ten places - as a consequence of both declining brand score and volume sales which were among the greatest of wine brands featured.

There are only two new brands in this year’s The Power 100, the highest of which, Italian bitters brand Ramazzotti Amaro,  re-enters the top 100 this year having fallen out last year. Twenty-six years after its acquisition by Pernod Ricard it remains an Italian favourite that’s maintained its relevance and popularity with the Italian and cocktail markets. Larios, the best-selling gin in Spain, enters The Power 100 for the first time at No.98 due to careful management by Beam Global following its acquisition in 2005. This has resulted in its brand score being one of the highest movers this year, up 7%.

The USA is the country with the most brands in The Power 100 with 17 brands, led by Jack Daniel’s, Gallo and Jim Beam; Scotland has 16 brands in The Power 100, led by Johnnie Walker, Chivas Regal and Ballantine’s, and France with 14 brands, led by Hennessy, Moet et Chandon and Ricard.

Stuart Whitwell, Joint Managing Director of Intangible Business, comments: “Confidence is clearly returning to the sector with opportunities in emerging markets such as Central and Eastern Europe, China and other Asian markets creating an interesting dynamic. The world has clearly changed following the recession with the balance of power shifting further east. No Chinese or Asian brands have yet made it into the top 100 but with the big groups increasing their presence there it is only a matter of time.”

Whitwell adds: “Consumers have also been exposed to and experimented with more value-orientated brands, developing a wider repertoire of options rather than sticking to the old favourites. Whilst many of the big brands have been able to withstand much of this pressure there are signs that times are changing. There are interesting times ahead.”

The Power 100 2011 report is available for download from www.drinkspowerbrands.com.

Methodology
Nearly 10,000 brands in the spirits and wine sectors were researched to derive a list of the 100 most powerful spirits and wine brands in the world. Power is defined by a brand’s ability to generate value for its owner. Value is classified by a series of measures as identified below. The population for the research is all current and potential users of alcoholic drinks.

Scoring
Hard Measures
Share of market:  volume-based measure of market share
Brand growth:  projected growth based on 10 years’ historical data and future trends
Price Positioning:a measure of a brand’s ability to command a premium
Market Scope: number of markets in which the brand has a significant presence

Soft Measures
Brand Awareness: a combination of prompted and spontaneous awareness
Brand Relevancy: capacity to relate to the brand and a propensity to purchase
Brand Heritage: a brand’s longevity and a measure of how it is embedded in local culture
Brand Perception: loyalty and how close a strong brand image is to a desire for ownership

A panel of leading experts in the drinks industry independently ranked each selected brand out of 10 on the above measures (10 = high, 0 = low). The scores given by the individual panel members were aggregated and averaged to reach a total score for each brand. A total score was achieved by multiplying a brand’s weighted volume by its brand score, within a defined range. The weighting is designed to adjust the volumes to a comparable level. Brand score is a derivate of the 8 measures of brand strength. This results in a ranking of the world’s most powerful alcoholic drinks brands.

About Intangible Business
Intangible Business was established in 2001 to provide an independent approach to brand valuation, brand strategy and brand development. As well as experts in brand valuation, Intangible Business is now an internationally recognised leader in all IP valuation, including copyright valuation, trademark valuation, valuing websites, valuing databases and software.

1 May 2011 - Felicity Murray