United Distillers and Vintners of North America

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United Distillers and Vintners of North America

750 E. Main Street
Stamford, Connecticut 06902-3845
USA
Telephone: (203) 602-5000
Web site: www.stoli.com

RUSSIAN ART CAMPAIGN

OVERVIEW

Non-Russian drinkers of vodka might not have been familiar with the names of artists such as Kamalova, Shakirov, or Volcov, but most people would recognize the name Gorbachev. Besides belonging to the former president of the Soviet Union, the name also belonged to a Russian artist, Mikhail's nephew Yuri, who was nicknamed the "Russian Rousseau." Hoping to translate name recognition into sales, the Russian distiller Stolichnaya commissioned the artist to produce a work combining references to its vodka (nicknamed Stoli) with a Christmas theme for the holiday installment of its "Russian Art" advertising campaign.

Yuri Gorbachev responded with a painting titled "The Russian Country," which featured a Stolichnaya bottle riding in a sleigh. The "Russian Art" campaign, introduced in 1997, was created by Stolichnaya's advertising agency, Margeotes/Fertitta & Partners of New York. It played off an ongoing ad campaign launched in 1980 by rival vodka Absolut, a Swedish product, that featured the instantly recognizable shape of an Absolut bottle as rendered by famous artists like Andy Warhol and Keith Haring. But the objective of the Stolichnaya campaign differed significantly from Absolut's goal. Whereas Absolut sought to extend its reputation for sophistication by depicting its bottle as a work of art, Stolichnaya sought to ground its own brand in its Russian roots through the work of contemporary Russian artists. Further accentuating its Russian heritage, Stolichnaya sponsored the maintenance of four Russian-made Mikoyan-Gurevich (MiG) fighter jets in 1999. Adorned with Stolichnaya's logo, the Cold War jets appeared in air shows across America. The campaign ended in early 2001.

"Russian Art" helped Stolichnaya stop a sales decline that had begun in the early 1990s. In 1999 sales of Stolichnaya increased to 1.3 million cases, which was significantly greater than the 1.1 million posted in 1996. At the campaign's conclusion Stolichnaya reigned as the number one vodka brand worldwide and second in America only to Absolut.

HISTORICAL CONTEXT

According to Russians, vodka, whose name was a Russian diminutive that might be translated as "little water" or "water of life," originated in the twelfth century. Distilled from grain, beets, or potatoes, vodka was described by the U.S. Code of Federal Regulations as "neutral spirits so distilled … as to be without distinctive character, aroma, taste or color." Rival brand Smirnoff took advantage of this designation in its first advertising campaign in 1946 with the tagline "It leaves you breathless," highlighting the "no taste, no smell" advantage of vodka over other spirits that left their mark on the breath of the drinker. There were a number of quality gradations in the vodka market, and Stolichnaya, produced in five distilleries in Russia for export, asserted its superior quality by stressing its Russian status.

Stolichnaya's ad agency, Margeotes/Fertitta & Partners, introduced the "Freedom of Vodka" campaign, which featured contemporary Russian art, in September 1994. In 1997 this campaign evolved seamlessly into the "Russian Art" campaign, with the style of artwork remaining the same and only the "Freedom of Vodka" tagline eliminated. In 1995 Stolichnaya became the first distilled-spirits marketer to establish its presence on the World Wide Web when Margeotes, in conjunction with CyberSight, developed the website "Stoli Central." The initiative broke the voluntary ban on advertising in the electronic media by spirits distillers in the United States. Stolichnaya thus took advantage of the graphic sophistication of the Web to extend its "Freedom of Vodka"/"Russian Art" campaigns beyond the confines of print advertising. The Stoli website gathered more than a dozen of the artistic images from the "Freedom of Vodka"/"Russian Art" campaigns for display. Patricia Barroll, vice president of marketing communications for Carillon Importers, which marketed Stoli in the United States at the time, was unrepentant about the decision to establish a presence on the Web. In keeping with its existing print advertising and its tradition for responsible marketing, the company maintained strict quality standards with respect to the content of the website. Barroll stated in a 1998 Brandweek article, "It was not a problem for us because we've always taken the high road … We always strived to make [the website] sophisticated, not sophomoric. Just like our print campaign."

TARGET MARKET

"Stoli Central" allowed the brand to reach a broader audience while maintaining its reputation for sophistication. In its Web advertising Stolichnaya targeted the 21-to 45-year-old demographic group by hiring MXNT's entertainment division, MaxPlanet Media, to produce a separate site, the "Virtual www.Stoli2000.com Millennium Tour," in late 1998. The site broadcast so-called Virtual Parties, with MTV-style concert footage geared specifically to Stoli's target audience. According to Keith Benjamin, an analyst with BancBoston Robertson Stephens, one strength of the medium over television, radio, magazines, and newspapers was its accountability, since all activity on the MaxPlanet Media website could be digitally monitored. "We believe [the Web] is the first widespread consumer medium that has the capability to deliver measurable [return-on-investment] data to advertisers," Benjamin stated in a PR Newswire press release. Another strength was the inherently global reach of the Web, allowing Stolichnaya to tap into its international brand awareness.

It was Russia, however, that had the largest vodka market in the world. According to beverage-industry journal Impact International, 80 percent of Russians drank vodka on a regular basis. This translated into astronomical sales: in 1996, for example, an estimated 250 million cases of vodka were sold on the Russian market, compared to 33.4 million cases sold in the United States. The maturation and opening up of the Russian market sent international vodka distillers scurrying to the motherland. Expatriate brand Smirnoff highlighted the double f in its name, reminding Russians of its connection to the imperial Romanoff family, which had appointed the Pierre Smirnoff Company as its sole purveyor of vodka from 1886 until the Russian Revolution of 1917, when Vladimir Smirnoff fled across Europe to the United States to reestablish his family's brand. Such intense interest in the vast Russian market reinforced Stoli's authenticity and boosted its status as an export.

LEMON RUSKI WINE COOLER?

United Distillers Australia (UDA) introduced Stolichnaya Lemon Ruski alcoholic soda in late 1997, and when the demand created by television advertising outpaced the supply in January 1998, UDA had to suspend the ads. UDA ascribed the success of the launch to the combination of wine, vodka, and lemon flavoring as well as to the brand recognition of Stolichnaya. In March 1998, however, Independent Liquor filed a lawsuit against UDA for misleading advertising. Independent Liquor's managing director, Michael Erceg, explained that the advertising portrayed Lemon Ruski as a vodka drink, while in reality its vodka content was quite low, with wine contributing the majority of the alcoholic punch to the drink. In that sense the drink was more of a wine cooler than a vodka soda. The Australian Federal Court heard the case on March 27, 1998.

COMPETITION

Poland backed up its claim to be vodka's country of origin with an onslaught of products in the "ultrapre-mium" category, also known as "Polish luxury vodka," which chipped away at Stoli's market share. Belvedere and Chopin spearheaded this development. Both were imported exclusively by Millennium Import Co. of Minnesota, a subsidiary of Phillips Beverage Co., which spent $15 million on advertising for the two brands from their 1996 launch until 1998. Belvedere was bottled in satin glass with an etched "window" engraved with the likeness of the Belvedere Palace in Warsaw. Millennium pushed both brands by sending gift boxes to celebrities such as Robert DeNiro, Robert Redford, and Michael Jordan and his Chicago Bulls teammates, as well as to the managers of General Motors, a strategy that earned Belvedere a 1998 Gold EFFIE from the American Marketing Association. Belvedere alone had exports totaling $1.6 million in 1996, $3.7 million in 1997, and an estimated $7 million in 1998.

The brand ran into trouble, however, when the French producer of the distinctive bottle, which held the rights to the Belvedere trademark, stopped shipment because of lack of payment from the Polish distiller, the state-run Polmos Uyrard-w. This produced a backlog in exports to the United States, hampering the growth of the brand. But Belvedere and Chopin were not the only brands in the Polish luxury vodka category. The Original brand underlined its heritage with its name. Wall Street Journal reporters Ernest Beck and Daniel Michaels interviewed 52-year-old New York City property developer Bob Shapiro, who had switched from Stoli after taste-testing Original, which he described as "viscous, and well-refined … a cut above." Descriptions such as this, as well as fancy bottles, led Smirnoff to run a campaign that parodied the Original advertising. The Smirnoff ads featured cartoon characters boasting that their vodka of choice "comes in a bottle designed by albino monks from Tibet," and Smirnoff's tagline read, "All vodka. No pretense."

Finlandia, the number three imported vodka behind Absolut and Stoli in the U.S. market, added fuel to Smirnoff's mockery with its own bottle redesign. Louisville-based Brown-Forman Corp., which also marketed Jack Daniel's and Southern Comfort, ordered the new design from Philadelphia-based Hanson Associates, which created a bottle in smooth, carved glass, as if it were the melting ice of a Finnish glacier, the source of the water for the vodka. The label was printed in organic inks directly onto the bottle. A new advertising campaign, the first in 18 months, was unveiled in 1997 in anticipation of the introduction of the new bottle in May 1998. The campaign created sales spikes, with sales in December 1997 increasing 22 percent over the same period the previous year.

Even with such increases, however, Finlandia would be hard-pressed to catch the leaders of the $1.2 billion premium-vodka market in the United States, for it maintained a mere 4 percent share, compared to Absolut's 55 percent and Stoli's 16 percent. What was more, Absolut was on an upward sales trend. Global sales of Absolut in 1997 amounted to 3.5 million cases, an increase of 5.9 percent over 1996, according to Impact Databank. Some of Absolut's success resulted from its line extensions into flavored vodkas such as lemon and pepper. The appeal of flavored vodkas resided in their mixability. Citrus-based drinks such as the screwdriver could be given an increased bite with lemon-flavored vodka, and spicy drinks such as the Bloody Mary got more fire with use of the pepper-flavored vodka. In January 1998 Stolichnaya followed in its rivals' footsteps by introducing six flavored vodkas: Razberi (raspberry), Strazberi (strawberry), Persik (peach), Vanil (vanilla), Zinamon (cinnamon), and Kafya (coffee). Stolichnaya later added four more flavors: Ohranj (orange), Limonnaya (lemon), Pertsovka (pepper), and Okhotnichya (herb and spice).

MARKETING STRATEGY

In order to underline the authentic Russian heritage of Stoli, the talents of contemporary Russian artists were enlisted to incorporate the Stolichnaya bottle or logo into works to be used as print advertisements. The ad titles from the "Freedom of Vodka" and "Russian Art" campaigns were broad and included "Accordion," "Ballet," and "Business," with artwork by Serguei Volcov; "Boat" and "Planes" by Eugeni Mitta; "Dance" and "Dining" by Fathulla Shakirov; "Epicurean" by Guram Abramischvili; "Fashion" by Irina Raevskaja; "Film" by Aidan Salakhova; "Kosolopov" by Alexander Kosolopov; "Orange" and "Shout" by Khurshida Kamalova; and "Tower" by Konstantine Jouravlev. The ads included text in Russian, translated on the "Stoli Central" Web page. Volcov's "Business," for example, was accompanied by the text "After work, Stolichnaya Vodka," and his "Accordion" had text that read, "In Russia, in America, in Europe, in restaurant, in cafe, in bar, at home, with beloved, with good people, with a friend, in nice company or just in a crowd of friends."

The "Stoli Central" website also featured an encyclopedic list of recipes for vodka cocktails, including lesser-known drinks such as one called To Russia with Love, which was made with vodka, cherry liqueur, half-and-half, coconut rum, and egg whites; and the Muscovy Martini, concocted from two different kinds of vodka along with triple sec, orange juice, and cinnamon. Some cocktails were exclusive to the list, such as the Pertsovka Angelic Ruble, the Preferred Chekhov Libation, Aunt Olga's Slick Cosmonaut, and Das Chartreuse Bolshoi. Besides drinks, the site featured two games, Stoli Cipher and Stoli Says. The former challenged its players to reconfigure a picture from jumbled mosaic squares, and the latter tested its players' memory. In early 1998 Stolichnaya upgraded its website to version 2.1 to include Quicktime video. MaxPlanet Media integrated Real Audio and Real Video into www.Stoli2000.com, its website dedicated to Stolichnaya.

In 1999 the American pilots Randy Howell and Jerry Gallud were looking for sponsors to fund U.S. air-show appearances for their four MiG-17s, fighter jets used by the former Soviet Union. The open-nosed jets consumed about 1,000 gallons of jet fuel an hour, an exorbitant expense compared to the 12 to 15 gallons used by small stunt planes. Peter Heyworth, an executive for United Distillers, jumped at the opportunity for the sponsorship. "The MiG is an icon of Russia, and Stolichnaya is an authentic Russian product with a lot of heritage," Heyworth was quoted in the San Francisco Chronicle. "It's not often in marketing that you get such a close fit." Stolichnaya covered the pilots' fuel costs. In return the jets were painted bright red and renamed "Stoli MiGs." The jets made their first air-show appearance at the Paso Robles Air Show in California. An executive from Stolichnaya stated that, even though they were using MiGs for an art-themed campaign, the jets themselves also celebrated Russia's heritage. Both were "as authentic as the soul of Russia herself," according to the San Francisco Chronicle.

OUTCOME

David Proffitt of the Arizona Republic applauded the "Stoli Central" website for its diversity of cocktail recipes. Otherwise he panned the site: "Its entertainment value is about as low as the temperature during a Moscow winter." The goal of advertising campaigns was to increase sales, however, not to please reviewers. When Margeotes launched the "Freedom of Vodka" campaign in 1994, sales of Stolichnaya vodka had fallen to 900,000 cases from 1.1 million cases in 1991, a decline of 18 percent. By 1996 sales had gone back to 1.1 million cases. Turnarounds were rare in the highly competitive distilled-spirits market, and this represented one of the few instances when a major brand of spirits had reversed a downward trend in sales.

Yuri Gorbachev's business manager, Beatrice Booth, was quoted in Art Business News as saying that executives from Stolichnaya liked Gorbachev's painting for "Russian Art" so much that they asked him to contribute a new piece every holiday season for the campaign. "Yuri's Stoli ads made the product very successful," said Booth, "and the ads gave Yuri's career a tremendous boost. Collectors tell us all the time that they cut them out of magazines and frame them."

"When fine art is used in advertising," Gorbachev explained to Art Business News, "the quality, strength and feeling of the art transfers to the product, enhances it. And when an artist is unique, he gives a uniqueness to the product as well. Art connects emotionally with people. It is less artificial and has a stronger impact." The campaign helped Stolichnaya increase its U.S. sales from 1.1 million cases in 1996 to 1.3 million cases in 1999. Stolichnaya was the second-largest vodka brand in America and the largest vodka brand worldwide. In 1998 one in every three Russians drank it. Stolichnaya executives eventually awarded the brand's advertising account to BBDO Chicago, which in 2001 released a new campaign with the tagline "See what unfolds."