V&S decided to launch Absolut Cut into the Canadian market because it believes that consumers there are ready for a different kind of RTD product.
"Absolut Cut is less sweet than ready-to-drink beverages currently present on the Canadian market," explained Eva Kempe-Forsberg, the group's vice president of marketing. "Smirnoff Ice is the drink's main rival, as it already has a large presence in the sector, but we hope to take a big part of the Canadian ready-to drink market."
"The market for pre-mixed drinks has developed at a rapid pace in the last few years and, with consumer preferences evolving, there is an opportunity for a more sophisticated product. We see Absolut Cut as the next generation of pre-mixed drinks, ready to change the segment in the same way as Absolut did to the vodka segment in 1979," added Bengt Baron, president at V&S Absolut Spirits, the business area within V&S Group responsible for Absolut.
The7 per cent abv vodka drink will be aimed at the more mature drinker - rather than the younger generation traditionally targeted by RTDs - offering the ease of a pre-mix but with a less sugary taste.
V&S will take a more mature approach in its advertising, moving away from the image-based campaigns of other brands, so frequently criticised for glamourising alcohol consumption and tempting underage drinkers.
"We have no plans to glamourise the drink in advertising," Kempe-Forsberg stated. "It is important that the product is the centre piece of any advertising and not the image."
Absolut Cut will have the same distinctive bottle shape as its parent brand, and has a citrus taste combining lime, orange and mandarin -flavours already used by the company for the core Absolut brand. The brand will be rolled out to both the on- and off-trade nationwide from next month, and will be distributed by Labatt, the Canadian brewing group owned by Belgian giant Interbrew. Labatt will also be responsible for production of the brand.
V&S' research may suggest that Canadian drinkers are increasingly looking for more sophisticated products in the RTD category, but the launch of Absolut Cut is still something of a gamble. Absolut's own figures show that while the Canadian RTD market showed growth of around 9.7 per cent over the past five years, sales in 2003 registered a 3.4 per cent decline.
Smirnoff Ice's dominance is clear - sales of around 222,000 hectolitres account for more than one third of the total market for spirit-based RTDs, estimated at around 650,000 hectolitres. But with few major challengers - Mike's Hard Lemonade is a distant second, with sales of 45,000hl, while Smirnoff Triple Black is third with 36,000hl - the Canadian market is yet to see its true potential, the company claims, and focusing on a strong branded product which differentiates itself from Smirnoff Ice is seen as the best way to rekindle growth.
The success - or failure - of the brand in the Canadian market is likely to dictate whether it is rolled out in other countries, and while V&S has said it hopes to roll out Absolut Cut elsewhere, it has not yet decided which market to target.
Given its positioning as a 'mature' product, Absolut may look at other developed RTD markets for the brand, such as the UK, although competition there is far fiercer than in Canada, writes Chris Jones.
According to Pat Brazzier of PASH Beverage Research, the UK RTD market showed a double digit decline last year, and other attempts to revitalise growth with 'different' products have proven less than successful.
The latest craze has been wine-based RTDs such as Bliss from Scottish Courage, and Slinky from Langguth, the German wine group behind the Blue Nun brand, but with two high profile brands (Archers Eden from Diageo and Coomira Coast from Bacardi Martini) axed after less than a year on the market, the long-term prospects in this market seem slim indeed.
Several companies have decided to launch premixed cocktails - a move into more sophisticated product sectors which could bode well for Absolut Cut if it decides on a UK rollout - but Brazzier said that there was little chance of these products becoming more than niche. "I think these brands will not take off big-time are not 'the next big thing'," he said.
This is clearly not a view shared by the major players. Just this month, Whyte & Mackay announced a range of four vodka-based cocktails based on its Vladivar brand, while Bacardi Martini is also thought to be working on a cocktail range for launch in May.
One real point of innovation in the UK market, according to Brazzier, has come from Cors Brewers, which owns the Reef premix. It has created more than a dozen Reef-based cocktails in which each of the five flavours in the range are mixed with a variety of spirits, liqueurs, juices and soft drinks. Designed for the on-trade, the drinks can be served in either individual glasses or sharing pitchers.
Despite the failure of a number of brands owned by Diageo and Bacardi, spin-offs from well-known brands are still the most likely to succeed in the RTD sector, especially if they offer something different to the raft of existing brands. This was certainly the case for Bailey's Glide, a premixed version of Diageo's market leading cream liqueur, which was rolled out to the UK on-trade in March after a trial period, but whether Absolut Cut would have a sufficient point of difference remains to be seen.
Certainly, the parent brand has a loyal following, and with an extensive range of flavoured vodkas already widely available, it could find the leap into the RTD sector easier than other brands. But Smirnoff Ice is still by far the dominant player in the vodka-based premixed sector, and the Canadian head-to-head between the brands will give a clearer indication of whether Absolut can 'cut' it in this highly competitive sector.