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Pernod Ricard is starting a national roll out of Absolut Lime, the vodka brand's first new flavor since 2013. Courtesy of Pernod Ricard

Absolut Releases Its First New Flavored Vodka in Four Years

Jan 16, 2017

Absolut vodka thinks there is room for another flavored vodka on liquor shelves and local bars.

Pernod Ricard this year will debut Absolut Lime, the first new flavor for the brand since the French beverage giant debuted Absolut Cilantro back in 2013. A roll out begins this month, with full distribution expected at the end of February. The move indicates that the alcohol maker thinks that the flavored vodka industry has some opportunities for growth, even though flavored vodka sales have declined in recent years in the United States.

Vodka—dismissively called "odorless, colorless, flavorless" by whiskey and tequila producers—found a formula for success when it began to popularize flavors. The flavor innovation fueled sales, giving consumers new reasons to return to the category whenever a new flavor would hit shelves. At first, big vodka brands focused on simple flavor additions like lemon and vanilla, making alcoholic spirits that could still be easily mixable.

But then things got crazy. Confectionery inspired flavors like birthday cake, cotton candy and Cinnabon started hitting retail shelves. There was even a bacon-flavored vodka (for a Bloody Mary of course).

Consumers were turned off by the wackiness. Flavored vodka—which had fueled demand for the spirit—dropped by 1.1 million cases in 2015, according to industry advocate Distilled Spirits Council. Brands that had previously led the movement—Constellation Brands' (stz.b) Svedka and Beam Suntory's Pinnacle vodka—became more prudent about flavor innovation. But alcohol drinkers didn't just ditch flavored vodka—they moved away from the entire category in favor of brown spirits like bourbon. A fundamental shift in drinking behavior took hold.

But vodka sales in the U.S. are still growing. And Pernod Ricard thinks that consumers are still interested in some of the more traditional flavors, especially citrus-based drinks.

"We launched Absolut Citron almost 30 years ago," Nick Guastaferro, who runs Absolut's U.S. business. "As we looked at the category, we realized that citrus was a top position for Absolut." That classic flavor, Guastaferro says, is something that's easier for bartenders and drinkers at home to understand.

After all, the second most popular cocktail in the U.S. is a vodka soda—and that's often accompanied with a lime. "You can add lime juice to make more complex cocktails, but the idea is that the [Absolut Lime] liquid can stand on its own and you don't need the lime. That step can be replaced," Guastaferro says.

Absolut is one of the core brands sold by Pernod Ricard, which also sells Jameson whiskey, Malibu rum and Chivas Regal whisky. But when Fortune asked Pernod Ricard CEO Alexandre Ricard in a recent interview about which brand could be performing better in the U.S., he pointed to Absolut—which posted a volume drop of 2% to 10.9 million cases in the most recent year—as a laggard. Though Absolut is the second-most popular vodka in the U.S. after rival Diageo's Smirnoff, it has ceded vodka market share, most notably to U.S. craft brand Tito's, according to data by research firm Euromonitor.

"Absolut is a big ship," Ricard said. "To turn a big ship around requires time, money and creativity. Those are the three ingredients we are playing with to get there." Ricard thinks Absolut can do a better job communicating the values of the brand—including the fact that every ingredient used to make the vodka is truly local. All ingredients are sourced from a 50-mile radius of the distillery in Åhus, Sweden.

Another goal: streamlining the focus on Absolut. The company currently has 17 flavors on shelves but this year, it will refocus on just 10 flavors. Those are: Citron, Mandrin, Ruby Red, Apeach, Vanilia, Raspberri, Pears, Mango, Peppar and now Lime.

"We wanted to think about the flavors in our portfolio and build from a point of strength—classic flavors," said Guastaferro. "This is a simple flavor that a bartender can play with—that's really the thinking that led to the launch of Absolut Lime."

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