The whiskey-vodka pairs trade

January 30, 2016 09:00 AM

Vodka was introduced in the United States around the turn of the 20th century, but America at that time was very much a whiskey country. The “three-martini-lunch” that was popular pre-prohibition generally referred to drinks such as the Manhattan or the gin martini, but not vodka.  

Flipping through pre-turn-of-the-century cocktail books, you’ll be hard pressed to find mention of vodka at all. But once Prohibition hit, the drinking culture in America began to change. After 13 years of being a booze-free country, Americans were less particular and specialty cocktails quickly fell by the wayside.

After World War II, the American economy began to boom and the consumer preference for booze began to shift. Now with industry on the rise and a better overall attitude about the American economy, people could afford more choices. In the 1950s most spirits drinkers still chose whiskey, but vodka started to make an appearance, especially as the Moscow Mule was born. 

A collaboration by John G. Martin, a distributor who bought the rights for Smirnoff in the 1930s, Jack Morgan, owner of the Los Angeles pub Cock ‘n’ Bull and producer of ginger beer and one of his bartenders who likely created the drink, the Moscow Mule became a rising star for its time, and subsequently vodka began to come into focus. Additionally, with vodka being a colorless, flavorless and odorless spirit, Americans looked to it as a way to add oomph to whatever mixer was at hand. 

Following the Moscow Mule was Sean Connery in 1962 when he orders a martini onscreen, “shaken, not stirred” and adds a little vodka to his gin Martini, now known as the Vesper. Along with other creative ad campaigns, notably by Absolut, by the 1970s, vodka became the most ordered spirit in the nation. This continued in the early 1990s with the emergence of ultra premium Grey Goose vodka.

But after a lengthy continued rise in sales since the repeal of prohibition, vodka in the past few years has slowed down in growth. While vodka still accounts for nearly one third of all spirits ordered at a bar, Americans are coming back around to good old American whiskey once again (see “Whiskey Run”). DISCUS reports that American distilled spirits exports broke new records in 2013, crossing the $1.5 billion threshold, driven by premium bourbon and Tennessee whiskey, which have exceeded the $1 billion mark for the first time as reported at its annual briefing for Wall Street analysts. “Eighty years after Prohibition’s repeal, this global whiskey Renaissance is a trend that is benefiting producers, large and small, in the U.S. and around the world,” Council CEO Peter H. Cressy said. “These export records are driven by industry innovation, a very positive perfection of American distilled spirits quality and heritage and market-opening trade agreements.” 

Vodka and whiskey essentially are related. Although vodka technically can be made from any material that will produce sugar, much of it is made from grain like whiskey, and is therefore at its roots an unaged whiskey. The drinking culture today is shifting its focus and becoming more and more interested in history, homeland lineage and production techniques such as aging. From 2009 to 2014, sales of vodka are still growing at 19.7%, yet American and Tennessee whiskey sales since 2009 have increased 28.5%. Vodka projections continue to predict growth, just at a more modest pace than in the past and whiskey volumesare expected to continue to increase at a faster pace. We see a compelling pair trade for the spirited trader: Buy whiskey, sell vodka.

About the Author

Hillary Choo is an award-winning mixologist, brand ambassador and former bartender. Hillary has received multiple recognitions, most recently Top Ten Mixologists in Miami by The Miami New Times in 2013 and Bartender of the Year Miami by Eater. Hillary is Portfolio Ambassador Miami for Bacardi USA. Follow Instagram at HillaryChoo. @ohillaryo