Absolut Vodka

19 Pages Posted: 21 Oct 2008

See all articles by Paul Farris

Paul Farris

University of Virginia - Darden School of Business

elizabeth joan collins

affiliation not provided to SSRN

Abstract

This case depicts the history of an unusual brand in the "super premium" segment of the vodka market. The top-of-line positioning is supported with creative advertising, narrow distribution, point-of-purchase advertising, and expensive advertising production. Absolut has used very expensive inserts as advertisements in print vehicles during the Christmas season. The last inserts described in the case cost approximately $1 each to manufacture and distribute via the media vehicle (The New Yorker). The case asks students to decide whether such expensive advertising should be continued and, if so, how. The societal effects of advertising alcoholic beverages and the implications of pursuing such exclusive positioning strategies may also be explored.

Excerpt

UVA-M-0366

ABSOLUT VODKA

You found it inserted in the December 1988 issues of LA Style and New York magazines: two sheets of plastic, one clear and attached at the edges; inside, a viscous liquid containing floating snow droplets. You could shake it and, like an old-fashioned paperweight of a Christmas scene, snow swirled around a bottle of Absolut vodka—“Absolut Wonderland.” The industry, advertisers, publishers, and news media took note. Was this (the second in Absolut's blockbuster Christmas ads) the establishment of a tradition? What next?

Background of the Alcoholic Beverage Industry

The 21st amendment, which marked the end of Prohibition in the United States, allowed each state to regulate the sale of alcoholic beverages. More than 50 years later, their sale was still highly regulated and taxed. Some states had licensed private package stores, some had state-controlled stores, and the regulation of on-premise drinking laws varied considerably. A three-tiered system of distribution was strictly followed, however: producers/importers, wholesalers, and retailer/on-premise licensees. Wholesalers were allowed to operate only within one state. All retail and on-premise licensed vendors (bars, restaurants, and clubs) were required to buy from wholesalers. Eighteen states were “control” states, that is, the state owned and operated the majority of retail outlets. In these states, bar and restaurant owners received a discount on buys but had to make all of their purchases through state stores. “Noncontrol” states required licensing but allowed competitive pricing.

Alcoholic beverages (distilled spirits, wine, and beer) were a $ 170 billion global market in the mid-1980s; global advertising expenditures, excluding other promotional devices such as sports sponsorships, were estimated at about $ 2 billion. One-half of this spending was estimated to occur in the United States.

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Keywords: advertising, advertising media, advertising strategy, ethical issues, marketing strategy, product positioning

Suggested Citation

Farris, Paul and collins, elizabeth joan, Absolut Vodka. Darden Case No. UVA-M-0366. Available at SSRN: https://ssrn.com/abstract=909948

Paul Farris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-0524 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/farris.htm

Elizabeth joan Collins

affiliation not provided to SSRN

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