The story of how a Absolut-quality vodka became the super-brand known as Grey Goose. If you’re going to spend that much on vodka, go for the Belvedere and/or Chopin.
…though to be fair, Le Poire does shoot oh so smoothly.
To the business at hand. The year is now 1996, and, flush with Jager’s success, you’re ready to invent a new vodka from scratch. Why? Because the microbrewed-beer craze is giving way to a new age of sophisticated cocktails. Dot-com dollars are begging to be spent ostentatiously, at expensive nightclubs. Herein lies opportunity.
As you lean back in your golf cart, watching another perfect chip shot bounce up onto the green, you ponder the fact that the premium vodka right now (in 1996) is a brand called Absolut. When it was first introduced, Absolut’s high price was considered outrageous. But it’s had great success (with its iconic, artsy ad campaign), and it now sells for the steep, steep price of about $17 a bottle.
So, to steal away Absolut’s market share, your unborn new vodka should undercut this price, correct? No, you think, chomping your cigar as you watch a 30-foot putt roll straight into the cup. Why don’t I price my vodka extravagantly higher than Absolut, at wildly more profitable margins … and steal Absolut’s market share that way? This was the great insight of Sidney Frank (and not only him: The makers of Ketel One vodka had the same basic idea). Frank could see that there was a product missing from the shelves. Here were all these vodkas, in the $15-to-$17 range, vying to be the premium brand (with Absolut mostly winning). Frank just sidestepped the fray altogether and charged an unheard-of $30 a bottle. The markup amount was pure profit. “He was the first person to see,” says an executive at rival Bacardi, “that there was a superpremium category above Absolut, if you had a good product story.”
