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How did Diageo’s Ciroc go from relative obscurity to an established foothold in the Ultra-Premium vodka category? What was the strategy? How did Diageo innovate in the crowded Vodka category? What challenges did they face?All Trademarks Registered Property of Diageo.
Notes:World’s leading premium drinks company with market leading brands across categoriesGlobal reach, with products sold in 180 countries on five continents with effective routes to marketFocused on delivering sustainable top and bottom line performance through organic growth and value accretive acquisitionsCommitted to the responsible sale and marketing of iconic brands based on deep consumer understandingBuilding a solid foundation for future performance underpinned by financial strength
Creating premium brandsServe the emerging middle class consumersDrive growth in developed marketsSustain what’s already launched
The word «vodka» has been known since the 17th century and is most likely a derivative of «voda» (water). It is thought that the drink itself, or rather its ancestor, a strong drink called aqua vitae (Latin for «water of life»), was first brought to Russia by Genoese merchants on their way to Lithuania. They travelled via Moscow, where the foreign guests had an audience with Prince Dmitry Ivanovich, called Donskoy for his victory over the Mongol-Tartar army on the Kulikovo Field by the River Don. Flattered by the hospitality of the Moscow governor, they presented him with vessels with the above mentioned spirit.In 1429foreign visitors brought aqua vitae to Moscow once again, this time it was served as the universal cure. As the drink was too strong, it was normally diluted with water. It is likely that the idea of diluting alcoholwith water was the starting point for manufacturing Russian vodka that was produced from grain, which was abundant in Russia. In the 15th century the monasteries of Russia began producing grain vodka.As early as the beginning of the 16th century «burning wine» was exported from Russia. It was the first experience of the Russian export of vodka that later would take over the whole world. It is worth mentioning that in the end of the 15th century the grand prince of Moscow and the Tsar of all Russia, Ivan the Third (who had an astute and strategic mind) introduced a state monopoly on the production and selling of vodka, as well as on all other alcoholic drinks.In 1533, the first «Tsar's kabak» was opened, a place where various alcoholic drinks, including vodka, could be bought and consumed. In the times of Ivan the Terrible kabaks were rather widely spread. These places were mostly frequented by the Tsar's guards, who had no qualms at parting with their money earned with no significant effort. Moscow kabaks were mentioned in the diaries and travel journals of foreigners who visited the Moscow lands during the second half of the 16th century, calling them «Russian taverns». The kabak business was very profitable for the state.In the middle of the 18th century, vodka was produced not only by state-owned distilleries, but also by land-owning aristocracy. It is not surprising then that the largest part of vodka was produced in the estate of the nobility and the quality of the drink was unsurpassable.In the 19th century, beginning with the Patriotic War of 1812, the Russian treasury got less, the ruble underwent inflation, and the government introduced a state monopoly on vodka in the largest part of the Russian empire, except for Siberia, where it was useless to control the leaseholders, anyway. It is quite characteristic that after the war with Napoleon was over, Russian vodka was highly appreciated in France and it was not considered to be just one more exotic drink, but something noble and pure, brought to the French by those who defeated Bonaparte.The invention of this vodka is connected with the name of the famous chemist D. I. Mendeleev. The scientist had been searching for the ideal volume and weight ratio of alcohol and water for a year and a half and after having solved the problem published his findings in his doctorate dissertation «On Combining Alcohol and Water». Mendeleev's conclusions were appreciated and successfully applied in alcoholometry and vodka production. In 1894-1896 the national standard for vodka was established and the state monopoly on vodka that gradually spread all over the country was introduced.
Background:CÎROC® Ultra-Premium celebrates the uncommon on every level, from the uniqueness of its grape composition, to the innovative cold fermentation and maceration techniques.The name “CÎROC®” comes from the combination of two French words: Cime, meaning peak or summit-top and Roche, meaning rock. Its name references the high-altitude vineyards where the Mauzac Blanc grapes are grown.CÎROC® Ultra-Premium Vodka releases the true flavors of every cocktail. The complexity of the distilled grapes draws out and complements the flavors of whatever CÎROC® is mixed with. The Grapes of Ciroc:CÎROC® Ultra-Premium is one of the world’s only vodkas made entirely from grapes. CÎROC® is made from top quality "snap frost" grapes; Mauzac Blanc grapes grown in Gaillac, one of the oldest and highest vineyard areas in France. Why Grapes? Historically, vodka has been made from natural and local source of fermentable sugars and starches. But CÎROC® is an innovation in French craftsmanship, and creates an unexpected vodka experience in a category where being different is rare. Unlike grain, grapes don’t need heat to release their sugars, so CÎROC® uses cold maceration, cold fermentation, and cold storage processes. Until now, only top fine wine producers practiced this process. This technique further preserves its distinctive freshness and extracts a more flavorful combination of the fruit character. The Distillation process:The CÎROC® fermentation process lasts for two weeks to ensure the best possible flavor. While all vodka is distilled, CÎROC® Ultra-Premium is distilled five times. The Mauzac Blanc ‘heart’ is distilled four times before being blended with the Ugni Blanc grape spirit from Cognac, which is also then distilled four times. The fifth and final distillation takes place in a beautiful, family owned distillery deep in the Cognac countryside. It is here that CÎROC® is truly created - in a traditional, custom-made, Armagnac style copper pot, just like they’ve done from the beginning. The pot distillation lends CÎROC® Ultra-Premium Vodka its amazingly smooth texture.
Building brands for the long term Faster execution in market Increased resources in wealth creating markets Target female and older consumers with new focus Building a pre-eminent luxury capability New initiatives to use entertainmentSegmenting supply chain to deliver the strategy Efficient: Maximize scale advantages Agile: Anticipate changes in customer trends Responsive: Manage demand volatilityScale & Agility:Brand Portfolio – Importance to Customers, Options in a changing environmentApproach – Absolute spend levels, Preferred partnerCustomer Execution – National programsInnovation – Invest in new technology, Develop a full pipeline of productsRoute to Market – Complete dedication, Financial investmentServing across all price tiers – See the pyramid
Sean Combs, the CEO and founder of Bad Boy Worldwide Entertainment Group is a multifaceted entertainment powerhouse. Combs oversees one of the world's preeminent urban entertainment companies, encompassing a broad range of businesses including recording, music publishing, artist management, television and film production, recording facility, apparel and restaurants. Sean’s success in music has translated into a collection of businesses leaving an indelible mark on the worlds of entertainment, fashion and fragrance – a true testament to his marketing prowess. In 2007, Sean partnered with Diageo for a groundbreaking strategic alliance to oversee and manage all branding and marketing initiatives for Ciroc Vodka. Combs said he wanted to work with Diageo because the company understood that "I'm not just a celebrity endorser, I'm a brand builder. I'm a luxury brand builder." Since collaborating with CÎROC, Combs has heavily contributed to make this brand a household name. "They're looking for something that tastes like their lifestyle," he said. "It's that trendsetter, that hipster, someone who's looking for luxury and looking for something better."
Segmenting supply chain to deliver the strategy Efficient: Maximize scale advantages Agile: Anticipate changes in customer trends Responsive: Manage demand volatility
The greatest obstacle to Ciroc’s success were two fold: 1)acknowledging the brand’s unique characteristics while 2)simultaneously establishing itself as a competitor in the crowded super-premium vodka space. Sean “Puffy” Combs should be credited with increasing the profile of the Ciroc brand from it’s relative anonymity in North America. The strong following of Combs fans was sufficient to increase Ciroc sales in a broad range of consumer segments and gross product sales. Utilizing an established celebrity in North America, Ciroc overcame the most challenging obstacle to consumer acceptance, sustained use by consumers in upscale, celebratory settings.
Diageo's Ciroc Vodka
GROWTH STRATEGY FOR ULTRA-PREMIUM VODKA Brandon Bachik Chris Hamilton