The vodka market - France (2023)

1.2 Positive momentum on the global market

Global vodka market World, **** - ****, in billions of US$ Source: thespiritsbusiness In ****, the global vodka market was worth $** billion. By ****, this market is forecast to reach $** billion, with an average annual growth rate of around *.*%. The vitality of this sector is fuelled by a number of key factors. The trend towards premiumization, booming demand among young adults and increasingly hard-hitting advertising campaigns targeting a wide audience are among the main factors. In addition, vodka is often perceived as the alcohol of choice for a healthier lifestyle, making it popular for use in a variety of cocktails. This favorable perception should also encourage market expansion, in line with consumers' growing interest in health.

Leading vodka-consuming countries, annual average per capita World, ****, in vodka "handles" (***) Source: ****

Russia stands out as the country with the highest per capita consumption, where an average of nearly ** *-centiliter shots are consumed per month. It is closely followed by Poland and Ukraine, with average monthly per capita consumption of **.* and ** shots respectively.

1.3 The French market: growth interrupted by the Covid-19 epidemic but now recovering

Market size for distilled alcoholic beverages (***) France, **** - *****, in billions of euros Source: ****

The chart above illustrates the size of the French market for distilled alcoholic beverages. Distilled alcoholic beverages are defined as beverages obtained by distillation from wine or other fermented fruit or plant juices, or from a starchy material (***) previously brewed, with between **% and **% alcohol. Examples include whisky, rum and vodka. In other words, this category extends beyond vodka alone.

Vodka market size France , ****-**** , in millions of euros Source: ****

Vodka, just behind rum among white spirits, has seen a historic revival, with ** million liters sold in ****, a success that will continue in ****, buoyed by the reopening of CHR establishments. Poliakov leads the market with a **.*% share, while Zubrowka and Sobieski show significant growth, benefiting from their strategies and brand image. Absolut, with a *.*% increase in volume, benefits from its many flavors, and Cîroc dominates the superpremium segment thanks to its flavored vodkas. Despite this growth, Smirnoff suffered a decline, falling below ***,*** liters sold.

1.4 International trade

Vodka trade France, ****-****, in millions of euros

France's foreign vodka market is marked by a significant growth dynamic, driven by innovation and the craze for luxury products. France, with its premium brands such as Grey Goose and Cîroc, has succeeded in positioning itself as a leader in vodka exports, even surpassing traditional cognac exports in volume. This success is due in part to vodka's association with the prestige of "made in France", a quality label that attracts a wealthy, cosmopolitan international clientele. The strategy of product differentiation, moving away from vodka's Slavic origins to explore local ingredients such as cerealsales from Picardy or French grape varieties, has helped to broaden the market and reach a varied clientele, particularly in the United States. What's more, the adaptability of French brands, offering special flavors and editions, attracts a younger, more feminine clientele, eager for novelty and sophisticated drinking experiences. This includes the launch of flavored vodkas and the creation of innovative cocktails. These trends, combined with a strong presence at prestigious venues and social events, have helped solidify the reputation of French vodka on the international stage, making France a key player in the luxury spirits sector.

Main destination for French ...

1.5 The Covid-19 effect

The Covid-** epidemic has led to a shift in consumption away from home towards the home, due to restrictive measures. Sales of vodka in supermarkets rose by **% between January * and May *, ****. [***]

Sales trends for alcohol categories in supermarkets France, from January *th to May *nd ****, in % Source: ****

However, the growth seen in supermarkets is not enough to compensate for the losses incurred in out-of-home sales over the first * months of ****. The revitalization of supermarket sales has been at the expense of out-of-home distribution channels. Vodka sales in cafés, hotels and restaurants fell by **.*% in ****. [***]

However, **** looks set to herald a return to growth in the vodka market, with June sales up **% on June ****.

Monthly sales index for the spirits market (***) France, ****-****, base *** in **** Source: ****

2.1 Profile analysis: French vodka consumers

Consumption :

Number of people using vodka France, **** - ****, in millions of users Source: ****

The chart above illustrates the evolution of vodka consumers in France. As with spirits, overall consumption in France is falling, with some *.** million consumers in **** (***). This equates to a drop of around **%.

Large consumers are the **% of households that bought the most vodka, followed by the **% of medium consumers, and finally small consumers are the **% of households that bought the least vodka. We can see that small consumers were the dominant category in **** and ****, followed by medium consumers and finally large consumers.

Brand preferences

On the graph, vodka accounts for **% of spirits purchases in France in ****, ranking third after rum (***). This high rate indicates that vodka is a popular drink in France, probably due to its versatility in cocktails and its marked presence at social events.

Spirits purchase rate over the last ** months France, ****, in Source: ****

Vodka and tequila account for **% of the market share in terms of value in the sale of spirits in supermarkets.

Value of spirits sold in supermarkets in France France, ****, in Source: ****

2.2 Demand cyclicality

Vodka" research interest France, ****-****, in index value Source: ****

The graph above represents the proportion of searches for a given keyword in a specific region and for a specific period, compared to when the rate of use of that keyword was highest (***). Thus, a value of ** means that the keyword was used less frequently in the region concerned, and a value of * means that there is insufficient data for this keyword.

This shows that interest in vodka is highly cyclical in France. Peak interest occurs around the end-of-year holiday season, in December. Although vodka is not the first drink on the minds of French households for Christmas, with alternatives such as sparkling wine and champagne traditionally more widespread, it still generates more interest during this period than the rest of the year.

2.3 New consumer trends

Growing interest in cocktails: Cocktail consumption is indeed a catalyst for vodka demand and has been growing in recent years. According to a **** survey, **% of French people consumed spirits, including **% neat and **% in cocktails. Young people in particular are prime targets, as **% of **-** year-olds consumed them in cocktails in ****, while **% of **-** year-olds consumed them neat. Furthermore, in ****, **% of those questioned said they were interested in mixology, * points more than in ****. What's more, among the **-** age group, **% expressed interest, ** points more than in ****. [***] Top * spirits cocktail drinkers prefer to drink France, ****, in Source : Sowine Cocktail consumption in France is mainly rum-based, as are drinks like the Mojito. The latter accounted for nearly **% of cocktails sold in bars in France in ****. But cocktails appear to be a potential growth niche for players in the vodka industry. [***] The Covid-** epidemic has also boosted French interest in cocktails, with **% of major cocktail spirit consumers having increased their consumption since the last containment[***]. The no-low trend The trend towards no-alcohol or low-alcohol wines and spirits has grown considerably in recent years, as exemplified by the "Dry January" movement. However, this trend does not seem to signify a shift away from spirits consumption, but ...

3.1 Production process

The vodka production process comprises six stages:

Must preparation Sterilization and inoculation Fermentation Distallation and modification Addition of water Bottling

[***]

Each stage is explained in more detail below.

Harvesting and processing raw materials

Today, most vodkas are made from fermented grains such as sorghum, corn, rice, rye or wheat, although potatoes, fruit or even just sugar can also be used. The germ is first extracted from the grains or cereals used, then the potatoes are cooked. The purpose of this operation is to convert the starch they contain into sugar. Once the starch in the raw materials has been transformed, they are ground and mixed with water to extract the target fermented sugars and produce a must. This product is then fermented in stainless steel tanks to reduce the risk of contamination by bacteria that could disrupt the vodka's aromatic range. Finally, at the end of fermentation, the alcohol is transported to the still for distillation.

Distillation and filtration

Most vodka produced in France comes from continuous distillation in a column still (***). However, some distillers use traditional iron stills to obtain vodkas rich in aroma. To cleanse the alcohol of its aromas, activated charcoal filtration can be used.

A crucial ...

3.2 Market organization

The vodka market in France is interesting to study; although only one region of the country (***) in **** in terms of exports [***]

On the domestic market, vodka is mainly distributed through physical channels, as is the case for foreign demand, but for the latter, e-commerce is gaining ground as global shipping becomes smoother and easier. Three types of distributor can be distinguished in this market: supermarkets, out-of-home consumption such as cafés, nightclubs, hotels and restaurants, and specialist retailers and duty-free outlets.

Many players are involved throughout the supply chain before vodka reaches the end consumer:

The first players involved in this sector are first and foremost farmers or agricultural cooperatives. They produce, transform and supply the raw materials needed for the production process (***), Brandy and spirits manufacturers then carry out additional production steps such as distillation, ageing and packaging. Intermediaries (***) provide the link between manufacturers and distributors.

Source: ****

Number of companies and employees in distilled alcoholic beverage production France, ****-**** Source: ****

The chart above is based on the following NAF code: **.**Z: "Production of distilled alcoholic beverages", which is a subclass of code **.** "Production of beverages".

It is clear that the payroll of spirits production companies has grown between **** and ****. In ...

3.3 Main players and market shares

Market share in supermarkets, drives and convenience stores France, ****, in Source: ****

The chart illustrates the breakdown of the vodka market by volume in supermarkets, drive-through services and convenience stores in France for the year **** .

Poliakov (***) account for a significant share of the market, with **.*%, indicating a marked preference for private label vodkas among French consumers.

3.4 Interview with Frédéric Beigbeder and Guillaume Rappeneau, co-founders of Le Philtre

Aymar: Hello and welcome to vue d'ensemble, the podcast that allows you to decipher market issues in ** minutes. My name is Aymar Monnoyeur and I'm the founder of Businessscoot, a startup specialized in market research. Today, with Cantiane, we're talking to Frédéric and Guillaume about the vodka market and how they've positioned their Le Philtre brand in this market. Before we get to the market analysis. I'd like to know a little more about how you came to enter this market.

Frédéric: I think it's a story of friendship that goes back some thirty years, since I've known Guillaume for a long time. And with my brother, it goes back even further. We said to ourselves that we wanted to make a product that was like us, that respected the environment, that had values, but that was also festive. So vodka seemed like the perfect choice. it carries a whole literary and poetic history, a whole culture. And at the same time, we could try to come up with something new that would appeal to us. And if it appealed to us, it might appeal to others. And then there was also a sincere battle behind it, ...

4.1 Product analysis: vodka in France

Source: ****

4.2 Price and cost analysis

Brand Price range Absolut Vodka **.** to **.** €/**** ml Poliakov **.** € - **.** €/**** ml Sobieski **.** € - **.** €/**** ml Eristoff Original **.** - **.** €/**** ml Zubrowka Bisson Grass Vodka Poland **.**-**.** €/**** ml *The price comparison for the same brand sold by different distributors is presented by wine-searcher, and is correlated with proximity; this helps explain the wide price range. For example, a bottle of Absolut Vodka is more expensive in the Alps than in central France, for logistical reasons.

Taxes levied on spirits France, ****, in Source: ****

The chart above illustrates the breakdown of taxes on spirits. The total tax on a spirit sold for €**.* is €**.**.

alcoholic beverages are subject to special tax regulations. Not only do they have to pay VAT, but since ****, consumption taxes and a social security contribution have been required. These change every year:The duty rates for spirits and alcoholic beverages shown in the tables below are increased by *.*% (***) for the year ****, they will amount to €****.**/HAP for consumption taxes and €***/HAP for social security contributions. [***]

In ****, a bottle of spirits (***) to social security. The remaining €*.* corresponds to the selling price excluding duties, taxes and VAT [***]

4.3 Offer trends: Premiumization and Aromatization

In France, overall spirits consumption continues to decline. At the same time, there has been an increase in the share of products belonging to the luxury drinks segment. According to larvf, these trends can be explained by consumption in bars and restaurants, as it takes four to five years for luxury brands to reach supermarket shelves. In other words, the premiumization and subsequent distribution of products that fall into this category tend to occur less in traditional distribution channels.

What's more, according to IWSR, premium spirits ranges are set to grow at an estimated annual rate of *.*% between now and ****. Super-premium ranges, meanwhile, are expected to grow at an even faster pace, with an annual growth rate of *% over the next five years

For vodka in particular, France is, for example, the main export country for premium Polish vodka. A total of **% of the value of premium vodka exports was sent to France in ****.[***]

Domestic premiumization is also fueled by craft spirits, which emphasize the local aspect of production, the origin and traceability of their ingredients, product quality and artisanal practices.[***]

Finally, France has a (***) tradition of exporting premium vodka, with famous brands such as Grey Goose and Ciroc.

Flavoring:

In ...

5.1 Strict regulations governing spirits

France is concerned by regulations at European level, the main ones being those listed below:

Regulation (***) ***/**** of the European Parliament and of the Council of January **, **** on the definition, description, presentation, labeling and the protection of geographical indications of spirit drinks related to this regulation are ****/*** and ***/**** , which repeal the aforementioned framework.

In addition, there is a comprehensive national legislative framework. given that spirits are alcohols of at least **º and that the majority of products have an alcohol content well above the average, spirit drinks are highly regulated. Below is a non-exhaustive list of laws and regulations relating to alcohol (***) in France:

Production

Bottles of spirits must be strictly labeled with the following information: ingredients, alcohol content, volume, and, for example, a crossed-out logo of a pregnant woman. Certain products are regulated to obtain the AOC (***) label, as is the case with cognac, armagnac and Martinique rum. In all, there are ** products bearing the AOC acronym in France. [***]

Distribution

Retailers need a Licence IV in order to sell spirits in a CHR (***). However, these licenses are no longer being created, and a transfer of ownership is required in order to benefit from them. Anyone operating a drinks establishment must undergo training ...

5.2 Vodka regulations in particular

The legislation presented below is the predominant framework for analyzing vodka regulations in France. It derives from Regulation (***) No ****/**.

Point **

a) Vodka is a spirit drink made from ethyl alcohol of agricultural origin, obtained by yeast fermentation:

i) either from potatoes and/or cereals,

ii) or from other agricultural raw materials, distilled and/or rectified in such a way that the organoleptic characteristics inherent to the raw materials used and to the spirits are preserved.organoleptic characteristics of the raw materials used and the fermentation by-products are selectively attenuated.

This process may be followed by further distillation and/or treatment with appropriate processing aids, including activated carbon treatment, to impart particular organoleptic characteristics to the product.

In the case of ethyl alcohol of agricultural origin, the maximum values for residual components must comply with those laid down in Annex I, with the exception of the methanol content, which must not exceed ** grams per hectoliter of ***% vol. alcohol.

b) The minimum alcoholic strength by volume of vodka is **.*%.

c) The only flavorings that may be added are the natural aromatic components present in the distillate obtained from the fermented raw materials. In addition, flavoring may impart particular organoleptic characteristics to the product, ...

6.1 Segmentation

• La Martiniquaise Bardinet
• Diageo
• Bastille Day (Guillotine)
• Maison Villevert Cîroc
• Absolut Vodka (Pernod Ricard)
• Poliakov (La Martiniquaise)
• Pernod Ricard Groupe
• Sobieski Vodka (Marie Brizard groupe)
• Vodka Lab AG Spirits
• Grey Goose (Bacardi)
• Eristoff (Bacardi Group)
• Cobalte Vodka Paris