Absolut: SWOT analysis

Strengths

Supreme quality product image

Absolut Vodka is a high quality spirit, and it is positioned as one of the leading luxury brands in the world. With it’s witty, chic advertising and it’s unique production methodology, it has reached the top of mind of spirit consumers around the world. The brand image is closely connected to art and chicness.

Good price-quality ratio

Since Absolut positions itself as a luxury brand, it uses premium pricing strategy to support its claim for leadership in chic market. It’s high quality image and positioning allows the brand charge a high price for its product.

Globally acknowledged brand with strong recall and recognition

Through time, Absolut has had highly recognizable and consistent marketing campaigns. They maintain Innovative ads that appeal to emotional connection and customer loyalty. Absolut has the most exclusive and powerful advertising campaign of all spirits brands (increased the sale of Absolut Vodka by 14,900% over 15 years)

Distinct product packaging

Absolut’s packaging is recognizable everywhere. The style and package of the product differentiates it from all the other vodka producers around the world (the bottle shape was taken from classical Swedish medicine bottle, which was weird at the time since it differed from the standard vodka bottle shape.

Weaknesses

Environmentally harmful production

An up to date modern equipment supports Absolut’s unique distillation process. The product is distilled at least one hundred times.

Design of the product makes it hard to distinguish on-shelf

The transparent bottle without any paper labels makes it difficult to stand out on-shelf, with the variety of colors and designs portrayed by the competitors of the category.

Weak company’s position after reform of distribution channels

Seagram, one of the three importers of Absolut in the United States, went out of business. This has challenged Absolut’s former distribution strategy, and made them reorganize their distribution channels. This caused the formation of Absolut Spirits, distributor of Absolut and Jim Beam worldwide.).

Complete reliance of Absolut brand on its image.

Liquor industry agents have nothing distinctive concerning quality or taste of the product to offer except the image. On the long term this can hurt the company’s revenues, as the advertising and marketing goals can change not only internally, but also due to external factors.

Opportunities

Flavored-vodka growing market trend

Supporting the healthy lifestyle trend, flavored vodka is becoming an option to other more caloric drinks. As they don’t necessarily need to be mixed with sodas or juices, flavored spirits are growing as a choice for
health-conscious consumers.

Fast development of pre-mixed drinks, making room for innovative products

As consumers’ lives go faster, there is a growing preference for fast and easy, and drinks aren’t the exception. Portability is another important factor on this rising trend, as consumers feel comfortable with convenient and effortless drinks at their hands.

Threats

US policy on alcohol and it’s negative connotation

Drinks companies are faced with increasing regulation from national governments, as they want to negate the harmful effects of alcohol, such as alcoholism, liver damage, binge drinking, harmful societal effects and drink driving. Governments are considering curtailing promotional options available to drinks companies, and considering heavier excise duties. In a pre-emptive strategy, drinks companies are launching “drink sensibly” and “sip sensibly” campaigns to placate regulators.

Active usage of TV, radio and other advertising means by competitors in the industry

Absolut has mainly focused on magazine ads and internet-based advertising. It is a fact that social media is the fastest growing communication channel, however it is important to maintain presence where consumers and competitors are.

Counterfeiting trend

Nowadays counterfeiting of legitimate spirits is taking place, with counterfeiters, copying the packaging of premium labels. Also retailers have launched their own brand equivalents in a bid to capture the value end of the business (e.g. Lidl & Tesco), leaving branded spirits on strategic
avenue left.

Growing health-conscious trend among consumers

As consumers are becoming more and more health conscious, they can possibly turn away from strong alcoholic drinks such as spirits. In some markets, consumers are continually migrating to less alcoholic drinks such as beer or wine.

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