Cigar Aficionado

The nation's thirst for premium liquor in cool cocktails is making vodka the clear leader in the spirits market

Define vodka.

It's a tasteless, odorless spirit? That would be true except that now it comes in an array of flavors. It's the spirit that leaves you breathless after a three-Martini lunch or a breakfast with Bloody Marys and Screwdrivers? Not quite. Today, vodka is poured into a myriad of cocktails that are served any time of day.

The drink of the Russians? Yes, but vodka also comes from Finland, Sweden, France, Germany, the Netherlands, England, Ireland and even New Zealand, and most of what the United States drinks is made here.

A distillate made from potatoes—no, make that grains? Again, not quite; some of today's hottest brands are made from grapes.

So what is vodka? It's the leading category in the spirits market, the drink that's driving the cocktail culture and redefining levels of luxury and fashion at the bar.

No matter how you describe it, vodka easily outperforms any other hard liquor. At an estimated 48 million cases, its U.S. sales were more than double the closest contender—rum—in 2005. Moreover, growth has been constant since 1995 and Impact International (a beverage alcohol trade publication owned by Cigar Aficionado's parent company, M. Shanken Communications, Inc.) estimates that sales will reach 60 million cases by 2010. Much of that growth is coming at superpremium levels and higher, in packaging meant to rival the liquid in the bottle.

Perhaps the most telling figure is the $2 billion that Bacardi forked over to Sidney Franks Importing to buy the ultra-premium Grey Goose brand in 2004. It is among hottest brands in the spirits world, but still the pricey purchase was a high compliment to pay a French vodka that had been on the U.S. market for only seven years. Vice president group director Monsell Darville considers the price entirely justified. "It is one of the greatest investments a spirits company has made in the history of acquisitions," he insists. "Few brands if any react like this. Grey Goose has no psychological, geographic or demographic limits."

The industry's confidence in top of the market as category leader is borne out by Russian Standard's decision last September to barge into the U.S. market with its ultra-premium Imperia, instead of testing the waters with one of two lesser-quality brands. Jose Aragon, head of U.S. operations for Russian Standard says, "You have to establish a value proposition at the high end first."

It wasn't always like that. Obscure are the origins of vodka, amorphous are its guidelines and inauspicious was its introduction to America.

It is thought that around the twelfth century, people from the region that encompassed what is now western Russia, Poland, Latvia, Estonia and Lithuania used crude distillation to turn their excess grains into spirit. While different countries may lay claim to its origin, it is its Russian name—vodka, or "dear little water"—that stuck.

Without a clear country of origin, it is hard to put regulations on its production. The U.S. government defines vodkas simply as "neutral spirits, so distilled, or so treated after distillation with charcoal or other materials, as to be without distinctive character, aroma, taste or color." In other words, you can expect it to taste like alcohol.

In the early twentieth century, the U.S. market centered on cheap vodka sold to the burgeoning Eastern European immigrant population. Then Smirnoff, once the vodka of the imperial court of czarist Russia, arrived. Vladimir Smirnov, a son of the founder, had fled the 1917 revolution and settled in France, where he changed the spelling of the family name and created Ste. Pierre Smirnoff Fils. In 1933, he sold the rights to the name and his father's ground-breaking charcoal-filtration method to Rudolph Kunett, a Russian emigrant doing business here. Kunett sold to Heublein (now folded into spirits giant Diageo) in 1938.

It would be more than three decades before vodka made in the Soviet Union came to America. In 1972, Pepsico brokered a landmark deal with the U.S.S.R. to trade cola syrup for Stolichnaya, thus creating the first superpremium vodka in America. By 1979, Absolut had joined that price league and soon introduced a captivating advertising campaign that implied its distinctive bottle shape on a number of landmarks. High-priced vodka was here to stay.

Today, new terms must be coined to keep up with vodka's progress. Originally the market consisted of well brands and a few premium vodkas, like Smirnoff, that cost a few dollars more (about $15 a bottle on today's market). When Stolichnaya and Absolut raised the bar with products priced today at around $20 a bottle, they were accordingly called superpremiums. But $30 bottles soon arrived and needed a name, hence ultra-premium. Stoli and Absolut, suddenly passed by on the vodka tree, decided to elevate again with Elit and Level. Elit sells for more than $50 a bottle, so what would you call that? Mega-premium? Hyper-premium? The market may be running out of superlatives, but it apparently doesn't lack customers willing to pay more for vodka. Lately comes word of a really-truly-highest-premium-we-sincerely-mean-it-this-time-top-of-the-heap vodka, which sells for $1,500 a bottle.

"The recent developments have completely changed the landscape," says Matt Aeppli, the vice president of marketing for Absolut. "We created a category and then had a category created above us. Absolut isn't the most expensive, but it is the standard of vodka."

What makes the luxury vodka race more unusual is that it's a spirit that is not aged. High quality and high price are usually associated with maturity. Even if the older-is-better maxim isn't strictly true, at least the consumer can understand why age is reflected by price: barrels and years of aging contribute to cost. But since the goal with vodka is to eliminate flavor, aging it would be counterproductive.

How, then, do vodkas distinguish themselves and justify higher prices? Approaches are many and some more substantive than others.

If the goal is to eliminate flavor, distillation is an effective place to start. Most vodka essentially starts as beer fermented from grains. Distillation concentrates the alcohol, but removes grain flavors. The higher the proof, the less prominent the residual beer taste. Repeated distillation strips away more flavor. Whiskies are typically distilled twice at low proof. Most premium vodkas get at least three high-proof distillations, and four, five and six runs are not unusual.

Hyper-premium Jean-Marc XO is distilled nine times in a pot still that was inspired by the alembics of the Cognac region. Ketel One vodka, of the Netherlands, also employs pot stills in a process that been handed down over 10 generations of the Nolet family of distillers. But the use of pot stills is unusual. With typical vodkas, all or most distillations are done in a modern column still even though pot stills are thought by some to be more artisanal. That's because along with the column still's industrial efficiency comes a facility for eliminating impurities in alcohol that are associated with using a pot still. Those impurities, called congeners, can confer unpleasant flavors and are blamed for hangovers. In the production of single-malt Scotch, the congeners associated with pot stills can become sublime, but only after years of mellowing. While vodka can be made from most any organic material, luxury vodka makers tend to specifically use boutique ingredients. Many are made from a single grain instead of a mixture. Grey Goose touts its French wheat from the Beauce region. Absolut uses winter wheat from Sweden. Imperia goes with Russian winter wheat, with an emphasis on proper storage. Belvedere is made of Dankowskie gold rye from Poland, which brand manager Jill Quady says has a hint of vanilla. Finlandia uses six-row barley, harvested after a short but intense growing season. Skyy vodka, made in San Francisco, champions the grains of the Midwest.

Years ago, a large part of the public believed that all vodka came from potatoes. Ironically, most Americans had probably never had potato vodka. Only recently has it been imported here and, once again, misconceptions abound. Anyone who thinks of potato vodka as down-market should taste Poland's Chopin. Sarah Gorvitz, the brand manager, says, "This is like talking about a single-vineyard wine. The potatoes are grown steps away from the distillery. We wear the potato with an appropriate pride." She points out that it is an expensive base ingredient, because, among other things, it's highly perishable.

A new development in raw material is the grape, originally explored by France's Ciroc, which made vodka from two varieties of snap frost grapes (picked late in the season), using cold fermentation. Others, such as California's Roth, have joined the fray, even as purists grouse that these grape-based drinks are not vodka, but eau-de-vie. The consumer clearly isn't bothered much by such distinctions.

Many vodka makers apparently aren't either. Todd Martin, the CEO of Daucort Martin, which imports Jean-Marc XO, readily compares his vodka's taste to that of an eau-de-vie even though it's made from wheat, not grapes. "Is it vodka or is it grappa? I think that it doesn't really matter." Indigenous water is another point of distinction. After all, more than half of the liquid is the H2O added after distillation to bring the proof down. As vodka is particularly associated with northern regions, the praises of pure glacial waters are often sung. Finlandia feels its glacial water is so pure, filtering it would actually be counterproductive. Iceberg vodka, from Canada, is said to be made from, well, icebergs that have been "harvested" for the impacted ice of pristine snow that fell thousands of years ago. Sweden's Absolut, however, doesn't trade on its frozen clime and instead uses well water. New Zealand's 42 Below doesn't have the glacial option and so touts its spring water. Grey Goose is made in France's Cognac region, where, the company points out, the water from the mountain filters through the area's very chalky champagne limestone deposits. Skyy's approach, on the other hand, advances science above nature with a proprietary reverse osmosis system used to purify water.

As Smirnoff founder Poitr Smirnov discovered, filtration is an important key to eliminating congeners from vodka. Smirnoff still credits its obsessive charcoal filtering (through 12 tons of silver birch charcoal from Poland) as well as its 100 quality checks for its purity. While charcoal is the most favored filtration medium, wood types vary (Jean-Marc XO insists on French limousine oak). Other filters include quartz crystal (Imperia) and cellulose (Skyy).

One interesting wrinkle on the filtration front is Stoli Elit's patented cold filtration process, which is similar to an ancient method of distillation (the spirit is chilled below the freezing point of water but above that of alcohol, causing impurities to separate in the resulting ice). Flavored vodka contributes double-digit annual growth, and new choices are constantly available. Absolut reached eight flavors with the recent addition of its Ruby Red. Stolichnaya has eight. Smirnoff has 10. Abolut's Aeppli says, "You have to be able to deliver on flavors. The first one out there with the best flavor will win the race."

Flavor is nothing new. Adam Rosen, senior brand manager of Stolichnaya, notes that for centuries Eastern Europeans have infused vodka with flavor by leaving fruit in it in large jars and that some flavors were added for medicinal purposes. It also might be argued that gin, with its mixtures of several aromatics in neutral spirits, is essentially a very complex flavored vodka. Belverdere, owned by the maker of Hennessy Cognac, trumpets its Gallic craft-flavoring method. Rather than simply adding concentrate, artisans in the south of France soak vodka in macerated fruit peels.

Grey Goose has its own three flavors, but Darville says the number that a brand should carry is limited. "When you rely on a flavor of the day, you run into a wall. Retailers [won't] carry 17 brands."

Unless you've been in a dry county for the last decade, you're aware that packaging is of paramount importance to luxury vodka marketing. Visit any upscale bar and a phalanx of tall slender bottles all but jumps out at you. Vodka makers are unabashed about the notion that great packaging makes great vodka, especially since many luxury products are in bars, where backlighting make them more enticing. Hence great effort is expended on packaging. Noted designers Milton Glaser and Frank Gehry have created bottles. The vessel that contains the Pravda vodka is adorned with a tanzanite jewel.

"The package is one of the significant factors," says Darville. "It's an inviting window into the world of Grey Goose." Quite literally. The frosted bottle has a window of clear glass that allows a view of the Massif Central mountains painted on the opposite side. Frosted glass and height are two popular motifs in vodka packaging.

The Jean-Marc XO bottle bucks the trend for tall bottles with a squat container that Todd Martin says is based on the look of a Cognac bottle. "We hardly talk about it because we don't want people to think it's about the bottle and not the vodka." Stolichnaya's Adam Rosen says, "It's not about the package. The proof is in the bottle. We are very comfortable with having a paper label in a world of frosted bottles." It should be noted, however, that the hyper-premium Stoly Elit is packaged in one of the category's most magnificent bottles.

Because the bottles stand out so much from other spirits, they become shorthand for anyone wanting to judge a drinking establishment. "If you walked into a bar and you didn't see the Grey Goose portfolio, you would begin to question it," Darville argues.

The age-old gambit of marketing by celebrity has not been ignored in the vodka world. Not only have marketers worked to make sure trendsetters are seen with their product, but certain rich and/or famous personalities have created their own vodkas. The real estate baron—cum—reality television host Donald Trump lends his name to an ultra-premium vodka that will soon sell in the above-mentioned Glaser bottle. Kalashnikov vodka is named for Gen. Mikhail Kalashnikov, the Russian war hero and creator of the AK-47 assault rifle. It is available in a bottle shaped like the infamous weapon. (We'd have a pun here about shots or rounds or getting loaded, but they've been used up already.) And vodka icons needn't be living: the guitarist Jimi Hendrix is being remembered by Hendrix Electric Vodka.

One marketing method that vodka hasn't employed much is the distillery tour so popular with the wine and whiskey crowds. That may owe to the fact that vodka making isn't as picturesque. While Scotch makers can show you quaint copper stills in ancient buildings, vodka plants are often industrial affairs. Nevertheless, Russian Standard recently built a state-of-the-art distillery near St. Petersburg to which it welcomes visitors. The complex includes a vodka museum, which especially honors Dmitri Mendelev, who, as well as authoring the periodic table, determined that 80 proof (not coincidently the alcohol content of Imperia) was the perfect level for vodka. Vodka has not been without its controversies, some of which have sprung from Russia's shifting political landscape. A company associated with descendants of the founder of Smirnoff sued Diageo, claiming that the brand name had been sold to it illegally and that Smirnoff packaging fostered the impression that the spirit was made in Russia. U.S. courts were unimpressed by the argument. Stolichnaya has been challenged on brand ownership and essential Russianness. Two Russian companies, with the backing of the Russian government, sued SPI, the maker of Stolichnaya, claiming that it had "stolen" the trademark by purchasing it during the round of privatization that followed the fall of the Soviet Union. The suit might have meant a Stoli drought here, but a U.S. court dismissed the suit, ruling that the existing domestic trademark agreement superseded any foreign dispute.

But Russian Standard, the maker of Imperia, has verbally tainted the Russianness of Stolichnaya as it is now bottled in Latvia. President Roustam Tariko is especially adamant about the issue as he made it his patriotic mission to introduce luxury vodka to the Russian people.

Rosen counters that it's all a PR ploy and that SPI owns its own wheat fields in Russia and contracts the vodka from Russian distilleries, simply bottling it in Latvia.

To Polish vodka makers, Russianness may be a moot point. Claiming origin for their own country, some have petitioned the European Union to set guidelines defining vodka, as Poland traditionally has, so that it must be made from grains, not grapes.

A development that might have more far-reaching effect on spiraling levels of vodka was a blind taste test conducted by The New York Times in January of 2005. A panel, which included industry experts, chose Smirnoff best in a tasting of 21 vodkas, among which were several ultra-premium brands. Participants praised Smirnoff for its neutrality, smoothness, soft texture and aroma. While Smirnoff is certainly a respected brand, the results caused some to question the cost structure of the category, and the company made much hay of it. U.S. vice president of marketing Martin Breen says, "We've been telling consumers all about that and running taste tests with consumers as well as professionals, trying to bring the taste quality message to life." The result has been 10.5 percent year-on-year growth in sales.

Grey Goose's Darville is unmoved. "The consumer is the ultimate arbiter," he says, pointing to his brand's continuing gains, which include a 26 percent sales increase in 2005. "We don't have to shout to the world that we are the best vodka."

But will consumers one day decide there's no relation between price and quality? Will the trend end? Will bars fill up with drinkers who ask for well brands in cocktails since the mixers will mask the flavor anyway? Or worse, will drinkers buy cheap vodka and purify with Brita filters as some Internet chat rooms suggest is possible?

Don't count on it. Exclusivity and brand perception has always been a big part of spirits purchasing, and vodka just keeps proving it. Think of it this way: you could always tell your wife you're not going to buy her diamond jewelry, since cubic zirconium looks just as good and is so much cheaper. You could, that is, if you don't mind sleeping on the couch.

With vodka powering the current cocktail craze, we thought we'd share some favorite recipes with our choice of vodkas.

Grey Goose: Orange Blossom
The orange vodka revels in this drink.
2 lemon wedges
1 1/2 parts Grey Goose L'Orange
1/2 part cherry brandy
1/2 part Triple Sec
1/2 part orange juice
1 tsp. lavender flowers
Pinch of star anise powder
Pinch of lavender flower
In cocktail shaker filled with ice, squeeze the lemons and drop in. Add the remaining ingredients, except garnish. Shake vigorously and strain into Martini glass. Garnish with lavender flower.

Absolut: Bloody Mary
The perfect match for pepper vodka.
1 part Absolut Peppar
2 dashes of Worcestershire
2 dashes of Tobasco
1 dash lemon
Pinch of salt and pepper
Tomato juice
Build over ice in a highball glass. Garnish with celery and limes.

Level: Citrus Lavender Martini
A garden of delight.
1 wedge of fresh orange
2 fresh lavender leaves
1 1/2 oz. Level vodka
1/2 oz. Cointreau
1/2 oz. sweet and sour mix
1 tbsp. honey
1 packet sugar in the raw
Muddle the orange and lavender in the bottom of a cocktail shaker. Add the Level, Cointreau and sweet and sour mix over ice and shake. Rim glass with honey and sugar.

CIroc: Trois Vines
Wine meets grape vodka in this mother-child reunion courtesy of WD-50's Eben Freeman.
1/2 oz. Cîroc
3/4 oz. BV Muscat de Beaulieu
Dash of fresh lemon juice
Dash of orange bitters
Shake and strain into chilled flute. Top with Moet White Star. Garnish with 3 frozen champagne grapes. Flame orange twist.

Smirnoff: Moscow Mule
The original premium vodka cocktail.
1.5 oz. Smirnoff
3 oz. ginger beer
1 tsp. simple syrup
.25 oz. lime juice
In a glass with ice, add vodka, simple syrup and lime juice. Top with ginger beer and stir. Garnish with mint sprig and lime slice

Stolichnaya: White Russian
Honoring the Caucasian heritage.
2 oz. Stolichnaya
1 oz. Kahlua
Light cream
Pour vodka and liqueur over ice in a highball glass. Top with cream.

Finlandia: Vesper
The classic James Bond Martini.
3 oz. Findlandia
1 oz. gin
1/2 oz. Lillet aperitif
Shake vigorously over ice. Strain
in Martini glass. Garnish with orange twist.

Chopin: Chopin Polonaise
Welcome the local hero.
2 oz. Chopin
1 oz. Midori Liqueur
1/2 oz. Rose's Lime Juice
Place in cocktail shaker top with sour mix. Pour a crescent moon of raspberry puree in Martini glass. Shake ingredients and pour over puree. Garnish with 2 fresh raspberries.

Belvedere: The Belvedere
A symphony in citrus.
1 1/2 oz. Belvedere
1/2 oz. Limoncello
1/4 oz. Amaretto
1 oz. Fresh Sweet n' Sour
Juice of half a lime
Strain into an 8 oz. cocktail glass with cinnamon sugar on the rim. Garnish with orange twist.

Ketel One: Citroen Cosmopolitan
Pot-still charms meet lemon wisps.
2 oz. Ketel One Citroen
2 oz. Cranberry juice
Splash of Cointreau
Shake with ice in a cocktail shaker. Serve in Martini glass with lemon garnish.

Imperia: Empire Strikes Back
Our own inspiration.
2 oz. Imperia
1 oz. Chambord
1 oz. Southern Comfort
Pour over ice in a highball glass. Top with soda water. Garnish with orange, lemon and lime.

WHITE GOLD: Cherry White Gold
Amateur alchemy with cherries.
4 pints of cherries
1 750 ml bottle White Gold
Remove stems and pit cherries. Put cherries and vodka in an infusion. Let sit for a few days, drain vodka and save cherries for pie.