Grown-Up Drinks for Tender Taste Buds

Smirnoff's parent places a big bet on its fruity beer alternative

When Smirnoff Ice first showed up in nightclubs in Austin, Tex., last year, it looked like just another entry in the ever-changing group of fruity, low-alcohol drinks aimed at young adults with a sweet tooth. But backed by a local TV-ad blitz and heavy bar promotions, the clear, citrusy beverage blew off the shelves during the field test, selling at volumes approaching those of import-beer kings Corona and Heineken. "It's been so huge you could write a book on it," exults Howard Wilson, field sales manager at Austin wholesaler Capitol Beverage Corp.

That's welcome news for Smirnoff's marketer, London-based Diageo PLC. A succession of turnaround efforts have barely moved the needle on sales of venerable Smirnoff Vodka. In 1999, shipments in the U.S. edged up a scant 1%, according to Impact Databank. Meanwhile, rival upstarts like Skyy, Absolut, and Finlandia have scored with younger consumers, achieving consistent double-digit sales gains.

Smirnoff Ice could be a potent weapon to change all that: Its sweet taste and boisterous, beer-style ads may be just the thing to attract consumers who grew up on fruit drinks and soda pops and are now reaching legal drinking age. These young adults "want the panache of drinking alcohol but are not ready to go out and have an Absolut or Chivas Regal on the rocks," says Stephen Fisher, president of Seagram Beverage Co.

PERCEPTIONS. To reach them, beverage makers have been tossing out an array of new brands with quirky monikers like Mike's Hard Lemonade, Rick's Spiked Lemonade, and Hard E (for "energy"), along with packaging covered with graffiti-style lettering and colorful characters. Most, including Ice, employ the same malt base as beer, but go out of their way to foster a perception that they are different.

So far, none has found a durable place in the mass market, but then, none has enjoyed a megabudget launch since Coors Brewing Co.'s big-ticket Zima kickoff failed to meet expectations nearly a decade ago. Like Coors, Diageo is thinking big: It's bankrolling Ice's rollout with $50 million in marketing support just in the first six months of this year. TV ads from agency J. Walter Thompson show a guy spraying his fishing buddy with honey to distract a bear that's ambled into their campsite. That way, he gets to keep a cooler full of Ice for himself and the two young women the guys have met in the woods. "Smooth move," the tag line approves.

The ad's tone may be a far cry from the urbane sophistication often used in booze marketing, but these aren't urbane consumers being targeted. Indeed, Diageo chose to market the new brand through its beer unit, Guinness Bass Import, not its spirits unit. Still, Ice-- which contains no vodka--is counting on the recognition and heritage of the 150-year-old Smirnoff trademark to set it apart from rivals. And there's already buzz about ready-to-drink, low-alcohol versions of other Diageo brands such as Malibu rum and Jose Cuervo tequila. "We've made no secret that we intend to have further ready-to-drink beverages," says Guinness Bass president Tim Kelly.

In some ways it's a risky game. Take the TV ads. Having a low-alcohol version of Smirnoff may circumvent restrictions on liquor commercials, though Kelly denies that's the strategy. Still, plans for an introductory blowout on the Super Bowl ran aground when broadcaster CBS turned down Diageo's bid for a national buy. The marketer was able to do an end run via local buys in 24 markets, but obtaining national airtime remains tough. And while Diageo insists it's being careful to target its ads to adult viewers--and it's airing a healthy dollop of responsible-drinking messages to boot--some critics feel so-called alcopops inherently are appealing to underage drinkers.

Retailers, though, have warmed to Ice, and some say it's already giving a lift to the vodka brand. In the Texas test, "Ice has increased Smirnoff Vodka sales," reports Chris Cage, assistant vice-president of bar operations at Dallas-based restaurant chain Dave & Buster's Inc. If the pattern continues, Ice could become a win-win deal for Diageo.

By Gerry Khermouch in New York

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