Vodka has come a long way since the Moscow Mule. In fact, it could now be worth $6 billion to Sweden.
Before World War II, vodka sales in America were virtually nonexistent. Then in the 1950s, Heublein Brothers -- which is now part of Diageo
Earlier this month, the Swedish Parliament decided to auction off Vin & Spirit, Absolut's parent company. Vin & Spirit also markets Cruzan rum and Plymouth gin, but Absolut brings in more than 50% of the company's gross revenue. The company is the crown jewel of the Swedish government's portfolio and could bring in more than $6 billion in the auction. Interested parties are likely to include Fortune Brands
Among the prospective suitors, Bacardi owns Grey Goose vodka, and Pernod markets Stolichnaya. Adding Absolut would cannibalize their in-house brands. Yet Fortune Brands, which distributes Absolut in the United States, would stand to lose the most, should another bidder prevail.
The super-premium vodka category continues to grow at an astounding 20% annually. In recent years, more than 100 super-premium brands have flooded the U.S. market. As a result, Absolut's U.S. market share has been cut nearly in half since its peak in the late 1990s of more than 60%.
For now, Absolut is still king, even if it has lost market share -- but how long will it continue to wear that crown, in the face of all the competition? Would-be buyers should remember that paying too much for Absolut could leave them with a painful hangover.