Positioning: vodka brands Razvozzhaeva Elena/Barysevich Olga

Master AINI

2009 – 2010

Par

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CONTENT

Introduction 2

I. New trends in vodka positioning today 3

II. Contemporary European vodka drinking culture trends 6

III. Smirnoff’s recent brand evolution 9

IV. Absolut positioning 11

V. Belvedere vodka 13

VI. Grey goose

Conclusion 14

Sources 15

Annex 16

Introduction

There is no product that does not have a well definite position on the market, as it is essential

to be recognized by a certain category of customers due a definite set of values and

characteristics. In order to be competitive, this positioning has to be successful due to

understanding consumer perceptions, placing a product in the mind of a consumer and

designing the appropriate approach.

On the example of such vodka brands as Absolut, Smirnoff and Belvédère we will see how

vodka brands position themselves on the present-day market and how they differentiate

themselves from their competitors, what strategy they use and what explains their success.

It should be noted, that it is difficult to communicate on such a product as alcohol drink which

demands a high degree of expertise. Besides, the recent changes on global market influence

customers’ behavior and deeply transform it. As a result, vodka brands have to rethink their

positioning strategies in order to keep their privileged place on this highly competitive

market.

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Vodka is an alcoholic beverage which doesn’t have any special taste or particular country

origin which would condition its basic ingredients. Indeed, vodka can be based on potatoes as

well as on cereals; it can be produced in Russia or Poland or in any other country. Can this

shortage in distinctive features and convenience in consumption explain the success of vodka?

How is it perceived in different countries of Europe and how do the most popular vodka

brands adapt their image to be complied with new trends in vodka positioning today?

I. New trends in vodka positioning today

If we look at the most important trends in vodka positioning during last five years, we

will see 3 main trends: high quality, convenience, and indulgence associated with

premiumization and innovative product lines and collection of vodka.

1. According to the statistics, highquality is the most popular product tags in the

vodka category. Vodka of high quality includes several ideas: vodka should be

upscale, natural, pure and real product, without any artificial additives. Due to this

trend vodka now gains its share market, because pure white alcohol is more easily

associated with health in consumers’ minds than brandy, liquor or any other

colored spirit. Natural means that vodka has to be based only on natural

ingredients: where every ingredient is of the best quality or has its own particular

origin that adds to differentiate one vodka from another. “Real” also means “based

on national tradition of making vodka”.

For example, “Russian standard vodka” brand tries to gain new market shares in

positioning itself as “real Russian vodka”, based on the standard formulation of vodka,

created in 1894 by Dmitri Mendeleev, the famous Russian author of periodic table of

chemical elements. The author is the Russian scientist whose competences as chemist are

worldwide recognized. Water which is used to make this vodka is “the water from Saint-

Petersburg region”, known as one of “the softest in Russia”. According to the owners of the

brand, most of vodkas have a particular rough taste that’s why consumers prefer to drink it

cold or in cocktails, while “Russian standard vodka” can be drunk directly even if it hasn’t

been cooled before and still will be “soft”. The vodka is also based on “noble” type of cereals,

the wheat, and it’s distilled seven times which makes it “the purest”.

Special form of the bottle was designed to make reference to the past of Russia: it is

inspired by the form of the church bell. “Russian Standard” was the first vodka brand to use

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and to promote this form. It underlines once again the particular Russian origin of vodka

which adds to its image of a “real” one.

All these elements permits to “Russian standard” to be correspond to the high quality

trend in new trends of positioning of vodka.

2. Convenience is also a very important trend now. It means that vodka to be

competitive has to be quick in consumption and should be able to be serve like an

independent drink as well as a base for cocktails.

“Russian standard” positions itself as the independent drink, as it was shown above. At

the same time, its manufacturers have developed a wide range of cocktails on the basis of this

vodka. Receipts can be downloaded by Internet; special books of receipts are supplied to

bartenders who are able to follow particular “courses of bartenders” to study the receipts of

vodka cocktails and the way to serve them.

3. Vodka in Europe is experiencing a huge surge in Premiumization. On the graph we

can see than even if the volume of vodka sales hasn’t change during last five years,

its value increases by 10 %. It means that people pay more for vodka, because they

buy more premium vodka.

Spirits market volume versus value growth, Europe, 2006-2010

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The increasing demand on super-premium brands can be explained by the new trend in

vodka positioning: demand for a fashion product of high quality. Vodka is a strong spirit that

can affect the human organism in a very dangerous way. Thus, consumers are looking for the

visual proofs of its high quality, especially in the most developed of European countries

where people have begun to be strongly concerned about their health. The quality represented

by new packaging concepts and “improved” formulations of vodka play the role of “health

insurance”. Vodka tends to become a fashion, trendy and sometimes even luxurious beverage.

The spirit moves from mainstream drinks into a higher-class market are also driven by

- Mixologist’s interest in the on-trade,

- The rise in ultra-premium products,

- Consumer interest in more innovative or unusual varieties of vodka.

Vodka is one of the most accepted spirits among young adults of 18 – 24 y.o. The

Premiumization is often associated for them with fashion and exclusivity, the values which

are more important for younger generations.

To satisfy the demand on the innovative product, almost 60 % of all vodka

manufacturers change the formulation of vodka: either they add an ingredient to the main

formulation; either they change the production process in adding a new distillation cycle. The

innovation passes often through new package as well.

Just after launching of the “Russian Standard vodka”, the brand launched “Premium

Russian Standard vodka” based on “the silver water” and packed in a special transparent

bottle. In 2007, to emphasize the accent on the Russian origin of vodka and to play on the

well-known facts of Russian history by Europeans, the company launched the super-premium

“Russian standard vodka”: “Imperia”. The campaign was accompanied by commercials

making references to the Russian noble imperial past and vodka consumption.

The company has developed as well its own business model of distribution of vodka: it

invests a lot of money in education of “vodka consultants” who know everything about

Russian standard vodka and are always able to advice it to clients. It permits to increase vodka

sales and to position it on the same level as traditionally more expensive alcohol beverages as

whiskey or cognac. Besides, packaging of the premium vodka reminds boxes for whiskey

bottles.

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“Russian standard” organizes also “vodka presentations” with degustation. Usually

these presentations are made by model-looking girls in costumes which should be associated

with Russian winter clothes including fur-caps.

“Russian standard” has become one of the popular vodka brands in Western Europe,

but it is always considered to be weaker than the leaders in this category: the brand hasn’t

created for the moment a strongly recognizable particular story, the imaginary world or

community of consumers around its product as it has been done by the biggest vodka brands

that will be presented below.

First, we will give an overview of the European vodka drinking culture trends.

II. Contemporary European vodka drinking culture trends

1. Europeans drink less

Europeans put away over nine liters of alcohol a year per person, twice the global

average. The European Commission has declared that alcohol is a “key public health and

social concern”. Yet in most big EU countries drinking is in decline.

In France and Italy the average adult drinks over a third less than he or she did 30

years ago.

Germans and Spaniards are drinking out quickly.

Alcohol consumption has likewise fallen in most of Eastern Europe in recent decades.

The decline in drinking is most marked in southern Europe, where there has been a

notable dropping-off in wine-drinking, especially during the working day. In 1980 France,

Italy and Spain were the booziest nations in Europe. Among the main reasons are rising

numbers of urban workers and the spread of Anglo-Saxon fast-food habits which works

against the old traditions of a long lunch fuelled by a bottle.

2. Europeans are drinking differently

The habits of Europeans are converging now. The old geography of drinking on the

continent, with its well-defined wine, beer and vodka “belts”, slowly gives way to a

patchwork quilt. Young people, unshackled by tradition, are leading the charge away from old

stereotypes.

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Poles, for example, are these days almost as likely to be found drinking bottles of beer

as shots of vodka.

Alcohol consumption in Britain rose more or less continuously after 1956 and has

leveled off only in the past few years. Poland is the only other country among the ten largest

EU members to have seen a rise in alcohol consumption since 1980.

Britain has become a land of wine: last year, for the first time, Britain spent more on

wine that on beer. This tendency has its reverse side: the shift from beer to wine in Britain

may have boosted overall drinking, suggests Rachel Seabrook, research manager at the

Institute of Alcohol Studies, a London-based think-tank. Britons may have adopted the

alcohol beverages of Southern Europe, but they also retain a fondness for “heavy episodic

drinking” (binge drinking). The difference now is that Britons drink 12%-strength wine rather

than 4%-strength beer.

3. Place of vodka among other alcohol drinks and drinking cultures in Europe

The possibilities of positioning of vodka among other alcohol in Europe depend a lot

on national drinking culture.

A. European North

Traditionally in the European North people prefer spirits with higher degree of alcohol

than in the European South.

The UK is the biggest spirits market in Europe by value sales but lags behind France,

Germany and even Spain by volume. Consumers are simultaneously demanding super-

premium brands by name on one hand, and seeking ever cheaper products in supermarkets on

the other.

After the crisis of 2008, Britons spend more time at home drinking cheap supermarket-

bought booze than in the pub buying expensive pints. Bars, pubs and nightclubs with

bars are extremely popular in the UK and binge drinking is very common.

Vodka is the second spirit by popularity in this country after whiskey. Bars, pubs and

nightclubs are the very developed distribution means and the places where young people are

more disposed to bingeing quickly to “make fun” than in restaurants and cafes. There is no

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surprise that the most known vodka brands promote their products by organizing “vodka

parties” or “vodka sponsored concerts/DJ parties” in bars or nightclubs.

In Norway, as well as in Sweden, there is a State Monopoly on the spirits sales and

there are a lot of limits for its advertising. One can buy a bottle of vodka only in special State

Winemonopoly shops, but these shops are open on weekdays only until 6 pm. So very often,

people buy a lot of vodka for the weekend and level of binge drinking on weekends is very

high. It is the special feature of vodka consumption in Scandinavian countries.

Germany is a country of beer culture, and vodka is popular but its rate is behind

liquor, cognac, brandy and rum. In Germany the nightclub culture is very developed, and the

vodka distributors use that a lot for vodka promotion parties or for launching new trademarks

of vodka. Alcohol consumption in volume here is the highest in Europe, but its role is less

important for young adults than in the UK or in France. It means that Germans prefer to save

money on vodka and buy more mass-oriented, cheap vodkas than premium ones.

B. European South

France is the country of cafe and restaurant culture. The role of alcohol is very high

here but binge drinking is uncommon. Nightclub culture is far less important than in other

European countries. There are some restrictions on spirits advertising here, but nevertheless

today this is the most dynamically growing market of vodka.

Italy is a country of café and restaurant culture even more than France, a country

where people prefer to drink wine more than any other alcohol. The role of alcohol is low (in

bars Italians order very often soft drinks). In this context, Italians spend money more on

premium alcohol drinks including vodka than on cheap spirit beverages.

In Spain young people drink in bars and in homes and now binge drinking and

drinking in large groups is very common.

Whiskey takes a half of spirits market. Vodka is popular but only as a base for

cocktails and alcoholic drinks like Vodka Ices are more popular here than vodka itself.

C. Eastern and Central Europe

The market of spirits in Eastern and Central Europe is the biggest in the EU. It is

characterized by presence of strong domestic spirits companies and distribution by

supermarkets because people prefer to drink vodka in families or with friends at home. While

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vodka is regularly consumed with a mixer in Western Europe, in Eastern Europe it has a more

traditional image and is often consumed straight. There are some countries where the beer

consumption prevails over vodka or spirits one, like in Czech Republic. Vodka has to

compete here with herb liquors like Absinthe. And there are some countries like Poland where

vodka amounts for 90 % of all spirits and the competition in this category is very high.

III. Smirnoff’s recent brand evolution

“Smirnoff”is the first vodka brand in the world and for a long time it positioned itself

as the purest vodka and the vodka that changes the perception of the world. But if it was

enough to be a leader before, to maintain its position, “Smirnoff” has recently decided to

change its image integrating the new expectations of its consumers.

Target customers of Smirnoff are 18 – 24 y. o. young adults. So, very often Smirnoff

sponsors parties and events which are considered to be cool and fashionable among this group

of consumers. Among the events Smirnoff often chooses fashion shows of young designers or

concerts of underground techno music. Smirnoff supports as well the “Extravaganza parties”

of Oxford students.

Moreover, it decides to become the creator of “special Smirnoff events” launching

new advertisement “BE THERE”.

In 2007 it made a new commercial “SEA” that permitted to this vodka brand to be

associated with environmental concerns of young adults. Although this commercial cost a

fortune to “Smirnoff” and gained several prices for its concept, it didn’t create a strong

association between the image of “Smirnoff” and the story described in the commercial.

The brand had to rethink its positioning and now it tends to make a community of

young, dynamic AND creative young people who like to work and know how to have a rest in

a very particular way. The accent is made on the unbelievable, unexpected and inexplicable

moments that you have if you organize a party or other cultural/fashionable event and drink

Smirnoff. As these parties/events/moments are so particular, they are inexplicable and the

only way to understand them is to live them, “BE THERE”.

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“Smirnoff” launches several commercial films about strange but cool, trash and

fashionable parties arranged by “us, people who like a lot Smirnoff”. It is an attempt to create

a community of young creative “fans of Smirnoff”. On the web site of “Smirnoff” its “fans”

can write their ideas of “Smirnoff parties”, create “Smirnoff events” or at least “be there”,

participating in these events and living “Smirnoff experience”. In two sentences the credo of

“Smirnoff” fans is: “Celebrating life, every day, everywhere, responsibly” with “Smirnoff”

which invites them “to be restless, to be inventive, to be extraordinary, to be able to say "I

was There."

After that, it’s possible to share your emotions with other fans of Smirnoff on its

official web site, in Facebook and Twitter.

Smirnoff positions itself also as the brand which has the right to offer these

“unbelievable, unexpected and inexplicable” moments because its own life (or history) was

full of them. The commercial “Be there”, where the main characters are target consumers, is

completed by the commercial “Signature”. It represents the “unbelievable and unexpected”

turnarounds in vodka history and strengthens its image of “real Russian vodka” with its

“toughness and a strong character”. This commercial adds the ideas of an adventure and a

dare to the image of “Smirnoff vodka”.

The other direction of the development of the brand is the creation of new trademarks,

for instance, “Black Smirnoff”. In the period of crisis when people have to be stronger and

tougher to get on in life, Smirnoff launches this new vodka for “real men”. The vodka has its

strong, dry and sharp taste. Its packaging and commercial is oriented strictly for men.

At the same time, vodka positioning in Western Europe is connected with the trend of

convenience: Smirnoff vodka is “the most convenient base for cocktails” and distributers have

written already several recipe books of vodka cocktails to play on this feature of vodka as

beverage which doesn’t have some particular taste and is easy to mix with other beverages.

The idea of mixing the vodka creating cocktails is linked by marketing specialists of Smirnoff

with DJ concerts: DJs are popular among young people and they MIX and REMIX music as

bartenders MIX vodka “Smirnoff”…

The variety of vodka flavors is urged to satisfy customers’ demand for the innovation

and indulgence. Thus, manufactures launch a line of new flavors of Smirnoff. The most

popular flavors in Europe are orange, apple and lime.

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Origin :Seden

Distributor :PernodRicard

100 mlns liters sold in 2008 IV. ABSOLUT vodka’s positioning

Today Absolut vodka is the third most popular brand in the world famous for its very strong

positioning. To make the flavorless and indistinguishable product stand out from the crowd,

the company has put a lot of efforts into the right communication of the image of the brand.

First of all, the company adopted an unusual ironic “pharmaceutical” bottle to stand out from

the crowd and linked it to a special story.

Besides, through an original idea of a transparent etiquette the brand managed

to convey better its main qualities of purity, transparency and simplicity.

Moreover, Absolut started the brilliant advertising campaign, which has

become the longest running in history, which helped to shape a distinctive

product’s positioning.

The Absolut power of advertising is stunning, as it seems to erase borders between

communication and art. It managed to inject relevance into each message of its advertisement.

It helped to convince the customers to pay more for a product that is not necessarily different

from competitors’ products.

In the beginning, the brand’s advertising rules were very strict: the bottle had to be always in

the center of a campaign, the product not to be associated with any particular lifestyle, use of

classic and at the same time modern approach. These campaigns were based on a play of 2

words with a touch of humour.1

The brand also wants to be associated with creativity and modernity, that’s why it

has been working with different artists and participating in special events. In 1987

Andy Warhol creates the famous Absolut collection.

Absolut also commissioned Lenny Kravitz to compose a piece of

music in Absolut style. The result is a track called Breath which can

be downloaded for free from Absolut’s website. Absolut also

worked together with Keith Haring, Damian Hirst, Versace, Tomm

Ford, GallianoAll these collaborations are targeted at positioning as

a creative brand.

1 See Annex.

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As for the events, that the brand has been sponsoring, among them we can cite:

The Dublin Fringe Festival

The Absolut Gay Theatre Festival

Galway Arts Festival

The aim of such an investment is to show that Absolut is a portal through which its audience

is ushered into a more vibrant, creative and inspiring world.2

Change in positioning strategy

But recently Absolut had to change its positioning strategy and readapt its advertising

campaign in order to reassert its place among numerous upstarts and give a fresh touch to its

image.

First of all, the brandlaunched a radically new “In an Absolut world” communication

campaign in 2007. The spirit tries to move away from its focus on a distinctive bottle shape

and premiumness of the product, and begins to convey a new imaginative story. It creates a

new concept of an Absolut world where the brand invites its customers and promises a

distinctive way of life where reigns a daring and optimistic vision of life. Like that, it is

targeting a broader audience and tries to match any personality or lifestyle.“Doing things

differently leads to something exceptional” manifesto is in the center of its In an Absolute

world campaign.3The main idea is to make customers imagine their proper vision of an

Absolut world. The Ads run in magazines and on selected TV channels. One ad depicts police

fending off pillow-rioters, another shows Times Square filled with pregnant men and priceless

artwork. In Germany, the campaign runs with Porsche taxis.

One of the most remarkable is a short film Absolut Hugs, which imagines a world where

transactions are paid by an act of kindness instead of currency. In such a way, it offers a new

platform for communication where each market can

have each proper vision of an ideal world.

2 Absolut sponsors Fringe festival, October 2010. 3 See Annexe.

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Adoption of a large choice of flavors

To be in the center of cosmopolite and night life, the brand introduce16 new flavours, like

ruby red, berry acai, raspberry, citron, kurant, mandarin, pears, pepper, mango, peach and

others. In that way, the brand managed to attract women and younger drinkers.

Moreover, it creates a sort of drinks encyclopedia with a large choice of receipts in order to

position itself as a cocktail drink to be served in any place.

Absolut launched a free iPhone application called Drinkspiration by Absolut. It is

a sort of interactive encyclopedia of drinks. It includes 400 drinks. You can

choose a drink according to your location, popularity, colour, taste, the sound

volume of the place, time of day and much more. You have even the recipe to

show to a barman if he does not know the drink you have chosen to order. This

drink can even be shared with friends on Facebook or other social networks.What is more,

you can even find out what drinks are popular in different places of the world.

As a result, the brand have managed to give a fresh touch to its brand and to position itself as

an innovative and flexible. Still, it is not ready to give up its image of exclusivity and luxury,

and that’s why it creates from time to time special exclusive collections.

V. BELVEDERE vodka

When Belvedere vodka was launched in 1996, it started an

industry revolution. It positioned itself as the first “luxurious

vodka” 30 % over Absolut, the highest priced vodka at the

time, and it started a remarkable, multi-faceted marketing

campaign to shape the top place for the brand. It first of all

aimed at creating the so-called “super-premium” brand to

distinguish itself from “premium” brands. Due to its

possibility to position itself as an innovator and to create new

categories within a defined market, it managed to gain a huge success and today it isa

regarded as Rolls-Royce of vodkas.

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How has it managed to achieve its successful positioning? The main reason is a well-thought

and consistent message it managed to send its audience, which consisted in stating that

Belvedere as the hottest new thing. The key of its marketing campaign is luxury and

differentiation. It concentrated a lot of efforts on trying to convey the right idea on what

Belvedere vodka is and what distinguishes it from main competitors.

If we look at the recent advertisement campaign, we see that it wants to position itself as

different from other conventional vodkas. Its communication is aimed at conveying a

provocative image. It wants its consumers to associate themselves with stars that are present

in its advertisement. It offers a vision of life far from old clichés. To do this it uses in its ads

such personalities as Vincent Gallo, Terry Richardson who are known for their downtown

attitude.

VI. GREY GOOSE

Grey goose is one more example of vodka that managed

to become rapidly a real phenomenon through a very

intelligent marketing.

It is another premium vodka brand that understood very

quickly that in order to be successful today, a vodka

brand has to convey a special lifestyle. That’s why Grey

Goose has out an accent on being associated with movie

stars, fashion icons and other famous people. The brand

positions itself as super-premium vodka, aligned with

the best tradition of France. It made a very clever use of

“world’s best tasting vodka” tagline.In order to attract new drinkers, it set up in-store

spectacular shows, presenting the product as a hero. The brand states that its product can be

drunk pure or in many different cocktails, which proves once again the desire to correspond to

the needs of present day consumers.

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Conclusion

On the vodka market it is difficult to differentiate itself from main competitors just attracting

attention to the product’s quality. Vodka is the ultimate commodity and it is incredible how

most successful vodka brands today manage to create an particular atmosphere through a

definite lifestyle around their product.They are a success today because they understood that

positioning comes mostly through communication of a certain universe.

Thus, the most popular vodka brands try not only to promote the product, but to create a

“world”, a “history” of this product, create a community around the image of vodka. They

sponsor events popular among young adults, target customers of spirits. The most known

brands have a very strong image positioning and try to modify it according to the new demand

of their clients. They take into account all recent trends in vodka positioning like

premiumization, convenience, high quality and indulgence. Every vodka brand tries to adapt

these concepts and it’s only its image that differs: Smirnoff – dynamic, tough and real;

Absolute – premium, ironic, mature; Belvedere – chic, trash and luxurious, etc.

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Sources

LEWIS Richard W., “Absolut Book”, Journeyeditions, Singapore, 1996.

Capell Kerry,“Absolut Makeover”,BusinessWeek Online, 1/17/2006.

Darling John R., “Successful competitive positioning: the key for entry into the European

consumer market”, in European Business Reviw, Vol. 13, N° 4, pp. 209-220.

EVALUSERVE, “The Alcoholic Drinks Market Outlook. New opportunities in beer, cider, wine, spirits

and FABs”, 2003.

Gavin Humphries, “Fighting the Market Slowdown in Alcoholic Drinks. Growth hotspots, innovation

and changing consumer preferences”. 2009.

Gavin Humphries, “Future Trends in Beer and Wine. Emerging markets, private label and

innovation”, 2008.

Kiley David, “An Absolut Marketing Dream”, BusinessWeek Online, 4/1/2008.

Lewis, Helen, “The Future of Spirits. The Innovative response to private label threats and market

slowdown”, 2008.

Mullman, Jeremy, “BREAKING WITH BOTTLE FIRES UP ABSOLUT SALES”,

Advertising Age, 2/18/2008, Vol. 79.

Pitilla Mary J., Grey Goose soars into super-premium fight, Brand Showcase, oct/nov 2006

WANG Jennifer, “10 brilliant marketing ideas”, Entrepreneur, February 2010.

Absolut sponsors Fringe festival, October 2010.

“Smirnoff drops „purity‟ strategy for social push”, Marketingmagazine.co.uk, 1 July 2009.

“The Top 10 Spirits Companies. Industry trends and growth strategies of leading players”, 2009.

“Vodka, superstar des bars”, in BARMAG, Jul/août 2008.

Internet:

www.absolut.com

www.belvederevodka.com

www.smirnoff.com

www.greygoose.com

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ANNEXE I.

ANNEXE II.

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ANNEXE III.

Absolut advertising campaign (80s)

ANNEXE IV.

Absolut vodka’s new advertisement campaign

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ANNEXE V.

Communication campaign of Belvedere

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ANNEXE VI:

”Smirnoff Black”: vodka for men + Russian “real” origin

BE THERE: Beach party in the city

”BE THERE” party and Smirnoff flavors