New Amsterdam Vodka has only been around since 2011 but has proven that a brand’s youth has little to do with its path to success. Since its debut, the “five-times distilled” spirit founded by E. & J. Gallo Winery has set records in sales, selling 1 million cases within its first year of existence, according to New Amsterdam Spirits, and starting a steady march toward the 5 million mark for annual case sales, reached in 2016. These were the fastest-set records for a spirit’s sales in U.S. history.
Backed by a strong distribution network and an even stronger marketing strategy, New Amsterdam Vodka, and its ability to connect with young drinkers, provides an ideal case study for today’s industry. “We are a relatively new vodka in the space, so unlike our major competition, we have not had years and years to build up goodwill and awareness with the consumer,” says Michael Sachs, the director of E. & J. Gallo’s spirits marketing, which includes overseeing New Amsterdam. “We are fighting to overtake them.” He adds that in addition to delivering a high-quality product, New Amsterdam Vodka is gaining ground with consumers through marketing efforts that seek to develop an emotional connection between the consumer and the brand.
New Amsterdam Spirits’ lineup of vodka brands broke $100 million in sales in IRI-tracked MULC (multi-outlet and convenience retail channel) stores in 2016, reaching about $115 million in 2017. Volume sales have been equally strong, growing nearly 200 percent in those same stores over the last five years.
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Sachs says that a key reason for the success has been E. & J. Gallo’s close relationships with distributors and retailers, built over more than 80 years in business, as well as the way the company has leveraged the connections created through the success of New Amsterdam Gin, which debuted in 2007. He says the company “copied the playbook” from the launch of its gin, which sold 100,000 cases in its first year. That brand got a boost from strong marketing, which included a sponsorship deal with the Oakland Raiders NFL franchise. “Once we got to a certain threshold of growth,” says Sachs, “we began investing more heavily in connecting emotionally with the consumer.”
For its vodka brand, that investment came in the form of a roughly $10 million campaign called Pour Your Soul Out, one of the costliest marketing efforts ever for E. & J. Gallo. Targeting millennial consumers, with a particular eye for drinkers 21 to 29, was crucial. TV ads played a part, including a spot during the NBA Finals, with a main focus on social media. Instagram, YouTube, and Snapchat received particular attention, including a masthead on YouTube for logged-in users over 21 and a nationwide photo filter for Snapchat.
In the Denver metro area, sales of the vodka were supported by billboard advertisements, says Callie O’Bryan, the manager at JK Liquors, located in the suburb of Lakewood. She says the store began stocking New Amsterdam Vodka in May 2017 because younger customers were requesting it by name, something that happens occasionally but isn’t typical. O’Bryan estimates that most buyers have been in their 20s, and they’ve pushed sales of the regular vodka brand as well as the berry- and peach-flavored variants. “It’s certainly not unheard of for a brand to have a blast of popularity,” she says. “But not everyone finds a way to sustain it for years.”
Part of the attraction of New Amsterdam, she notes, is likely its price point. Advertising draws attention, as does the clean, modern packaging, and JK’s retail price of $13.99 for a 750-milliliter bottle is an ideal complement. O’Bryan adds that the price has the potential to be even more attractive when shoppers compare New Amsterdam with other well-known brands. Cîroc, with its own strong brand recognition, she points out, costs $20 more. “Young customers aren’t reliable,” she says. “They’re trying to find new products they’ll enjoy, so they aren’t going to be consistent customers unless something really catches their eye or is pushed at bars. If I had to guess, I really do think marketing efforts are the most effective.”
Marketing and price are what Susan Mooney, CEO at Spirits Consulting Group, a marketing research and brand development agency in New York City, calls the “secret sauce” in an ever-shifting market. She explains that for years Grey Goose pushed the vodka category toward ideas of premiumization and production practices, but things have swung back a bit and consumers are showing greater affinity for brands that feel more grounded in presentation and a price point that reflects efficient spending. Brands retailing from $15 to $23, she says, have a real opportunity to expand.
“I think within categories, you see holes where brands can do very well,” says Mooney. “We had premiumization starting with Grey Goose, then some real value plays, like Skyy, and New Amsterdam seems to be successful because it’s at a reasonable price point but also has a strong brand associating itself with history and cocktails.”
On its website, New Amsterdam provides several cocktail recipes, including a Bloody Mary, a classic screwdriver, and the Amsterdam Mule—all meant to conjure up ideas for new experiences with the brand. Mooney says vodkas can benefit from strong associations with cocktails, and New Amsterdam’s promotional materials featuring the mixed drinks, as well as its flavored vodka variants, help embed the brand into more occasions at reasonable price points.
In essence, the New Amsterdam label has used all its available tools to maximize opportunities for its vodka, from leveraging previous distribution relationships to paying attention to the kinds of experiences—and retail price—its most critical consumer demographic demands. By creating a record-setting pace in sales, New Amsterdam has shown how the pairing of history and ambitious marketing can pay off.
“The strength of our distribution network was a great foot in the door for New Amsterdam Vodka,” says Sachs, “but at the end of the day, you need a quality spirit that will keep consumers coming back. We’ve succeeded year after year by knowing our consumers extremely well—and putting our passions into making an excellent vodka.”
Bryan Roth is an award-winning journalist and the director of the North American Guild of Beer Writers. He’s written for All About Beer, Beer Advocate, Good Beer Hunting, and other beer industry publications. Find him tweeting about beer at @bryandroth.