The extraordinary marketing story of Absolut

The phenomenal success of Absolut Vodka is perhaps a lesson for all who toil in the Cognac industry. In a sense, it is even an example, a rare example, of a success of a state-owned industry that not only hadn’t to burn tax-payer money to keep itself alive but became an international leader in an extremely competitive market.

In the third quarter of the 19th century, in 1979, a Swedish businessman, Lars Olsson Smith revolutionized the spirits industry. He launched a new vodka, the "Absolut Rent Bränvin" (pure absolute eau-de-vie). It was distilled using a new industrial method, rectification, which produced a very pure, transparent spirit which became an instant success.

That absolute eau-de-vie would become Absolut vodka  exactly a century later,

Vodka Wars in the 19th century

At the time the city of Stockholm had a a very profitable monopoly on all alcoholic beverages sold within the city limits. Smith was a convinced liberal who abhorred monopolies, particularly when his business was at stake.

He set up his distillery in Reimersholm Island, just beyond city limits and to sell his vodka he offered buyers a free shuttle boat to the island and flatly refused to apply for permission to sell it in Stockholm. And he won.

His off-shore retail shop was an enormous hit and he found himself, much to his delight, in a trade war with the alcohol monopoly Stockholm. To the story belongs that his product was much superior to the ones sold by the distillers working with the monopoly and the quarrel escalated.

The victory of Lars Olsson

Smith expanded his business to the south of Sweden, where the huge wheat fields would afford him plentiful access to high-quality raw materials. In fact, the Skandia region had a traditional reputation for its production of vodka.

At the time, more than half of all spirits in Sweden were produced in Skandia. Lars Olsson Smith went charging there, buying an array of distilleries in the region, while trying to put out of business the existing distribution channels. He managed to convince the trade unions to encourage their members to stay away from competing stores arguing that the poor quality of their products was a threat to the health of the workers.

By the end of the century, Smith went on to export his Renat with great success, becoming extremely wealthy. However, his frantic fashion of doing business made him to lose his fortune, to rebuild it and lose it again before his death in 1913, penniless.

I thought the story of Lars Olsson Smith was interesting and a propos to give a context to the most astonishing case of innovative marketing heritage. Absolut Vodka was born against the stream and so it remained.

The reincarnation of Lars Olsson

Through a number of policy changes, by 1970 the production of spirits in Sweden was in the hands of Vin & Sprit AB (The Swedish Wine and Spirits Corporation), owned by the Swedish state. The monopoly had won, now even more across-the-board. However, the miracle was to came about one hundred years after Lars Olsson’s death.

In the 1970s, Lars Lindmark was named to preside over V & S Vin & Sprit AB. He soon deployed a forceful strategy to modernize and develop the old company. The seminal move came when he decided to celebrate the 100 year anniversary of Absolut Rent Bränvin by launching an ambitious export operation. Using state-of-the-art distillation technology, he revitalized a century old product into a new concept: Absolut Vodka. He had very little experience in advertising, branding and product positioning, but created a high-powered team and began his drive to make the new Absolut vodka an international, global product.

When you have all to win, ie nothing in your hands but a good product and a few seminal ideas, the best is to aim high. Lars Lindmark and his team set their sights on the U.S. market, the most competitive and also the most lucrative. The US consumes more than 60% of all vodka. Consumption patterns showed that, although the global trend was towards decreased consumption, BUT increased premium vodka. The decision was made “to market Absolut vodka as a quality product with a long tradition for a demanding consumer. “It was the first time in more than a century that Sweden had exported any alcoholic beverage.

To be continued