Trend Setting Innovation

18.  That's the number of different flavor vodkas ABSOLUT has produced.  Furthermore, they were one of the first brands to consider adding flavor to their original flavor, back in 1986.  As part of an incremental innovation process, ABSOLUT discovers unique combinations that go beyond the current trends in the market.  Most recently, this January, they released ABSOLUT HIBISKUS, a
combination of hibiscus flower and pomegranate, definitely not a flavor any other brand has thought of. The senior brand manager of ABSOLUT Eric Horowitz is quoted as saying 

   "In recent years, a sophisticated trend has emerged, as more and more    bartenders are adding floral ingredients to the mix ,... The distinctive combination of Hibiskus will appeal to consumers who have tired of the confectionary flavored vodka category and are looking for something for a more refined palate with no added sugar or preservatives."

Other unique flavors include Cilantro, Wild Tea, Kurant, Peppar, CherryKran, and Grapevine.  Part of the huge success of these flavors is the fact that ABSOLUT doesn't change the original ingredients, and maintains only all natural flavors, and no sugar added.  To market the flavor within, each bottle has it's own design reflecting their characteristics.  These bottles stand out against competing brands because they mostly stick to popular flavors such as Lemon, Raspberry, and Orange. ABSOLUT's sustaining innovation tactics keep their consumers eager for more, and therefore help them hold their high market position. 

Pernod Ricard-- #16 on Forbe's top 100 most innovative companies!

Leading a Brand to Success

A leader could arguably be the most important person within a company.  The example they set is going to be the basis for behavior, and ultimately, a key factor in success.  I'm going to focus on three interdependent activities of leadership that are important to every company.  For the purpose of leading ABSOLUT I'm actually going to discuss their parent organization, Pernod Ricard. 

Setting a Direction
    This element focuses on the strategics that involve stakeholders and employees to give the company a clear direction and mission. As a conglomerate that owns a variety of bands, Pernod refers to theirs as "House of Brands".  They hold 18 premium brands including ABSOLUT, which is considered their "global icon"  They want to be the company that sells premium wines and liquors. 

Designing the Organization
     Pernod Ricard takes pride in the fact that their employees are all part of the bigger picture, and they show this appreciation by applauding creativity and sharing experience throughout all levels.  By putting effort into the teams and processes that implement the overall strategy, they are setting themselves up for greater success.  Although the company is broken up into specialty areas such as Marketing, Finance, Sales, and of course wine and spirit professionals, they all strive on a mutual trust they are working towards the same goals. 

Nurturing a Culture Dedicated to Excellence and Ethical Behavior
      "Since its creation, the Group has advocated universal values of responsibility, transparency and respect for people and cultures."  This is Pernod Ricard's open statement on the importance of ethics within their organization.  By supporting a culture dedicated to excellence, the leaders can be sure that their brands are in responsible hands.


Concluding these thoughts is a general idea that leaders can make or break any company.  Pernod Ricard does a good job at explaining their values, and by being a holding company for so many impressive brands, it is important they set a good example.  It is in my opinion that ABSOLUT follows suit with these strategies and it is a leading cause to their success today. 

The Structure Behind ABSOLUT

Following the Swedish way and being highly efficient, ABSOLUT runs 24/7 with five shifts of 45 employees... and everything else automated.  Their key element of being all from "One Source" leaves most of their facilities and practices in house.  All ingredients are, for all logical purposes, in their back yard, and all the employees are on site.  Although they import a few ingredients for their flavored specialties, nothing else is outsourced.

This type of structure leads the outsider to view the company a functional design.  As a large company producing 600,000 liters of vodka a day, they go beyond the simple organizational structure.  Each department can work on its own specialty while all working towards the same goal of their final pure product.

Looking further, what is interesting about ABSOLUT is their foreign market presence, with their tops being the United States, Canada, Germany, Brazil, Spain, United Kingdom, and France, their home country Sweden isn't even on the list! With a large portion of their sales dependent on foreign markets, ABSOLUT needs to make sure and not focus too much on their homeland base in Ahus, Sweden and pay enough attention to the rest of the world. 

The Absolut Factory- Ahus, Sweden

 (www.theabsolutcompany.com)

Organizational Culture

As a company whose sole business purpose is to sell alcohol, ABSOLUT needs to take extra caution in their culture.  When visiting their website "The Aboslut Company" you see their slogan "Doing the Right Thing is Better for Business".  After taking this stand they go further into their leadership practices and the core of their "One Source" location.


ABSOLUT's expectations of their employees in relation to the use of alcohol can be summed up in their published work "The Book of Small Sensible Choices".


Within are questions such as "Is it okay to drink at a work lunch?  What should I do if a colleague is intoxicated at work? When is the right time to schedule a tasting?"  By addressing
these types of questions openly, employees understand where ABSOLUT stands.  These boundaries set the standard.  After reading the short book, you realize that over-drinking is highly frowned upon and each employee can easily find the lines of appropriateness.


This type of culture is a strong factor in ABSOLUT's success.  Their product demands excellence and the people who are apart of that process are proud of that fact.  Proof of employee dedication can be seen in quality control: each person spends half an hour of their shift inspecting bottles for impurities.  This all takes place in-house as ABSOLUT proudly produces every bottle out of their hometown, Ahus.  By having "One Source" the employees know that they are a crucial part of delivering a high quality product.

Overall, ABSOLUT portrays a positive, comfortable corporate culture.  Being an innovative company, they need workers who feel energy.  Furthermore, as an organization that needs special focus on their responsible actions, they take care to make sure everything is up to their standards.

International Strategy

In a world that is becoming more global every year, it is crucial for a company that wishes to perform on an international level to develop specific strategies.  The key components of international strategy include diffusion and adaptation.  ABSOLUT can utilize this type because there is very low pressure for them to adapt to local taste.  Their product does not change design for specific countries, therefore they can focus energy on product quality.  Furthermore, as a superior quality product comparatively within the market, low-costs are not their primary concern. ABSOLUT's process of producing their product exclusively in Ahus, Sweden puts them on a slightly different level than other spirit brands.  People who purchase ABSOLUT are looking for the flavor it offers.  By using an international strategy, ABSOLUT has focused on designing new exotic flavors and combinations.  If it ever arises that local markets require a distinctive taste, ABSOLUT may have to consider changing courses, but as of their current position they are doing great. 

Trademarking ABSOLUT

It may be thought that ABSOLUT spelled without the final "e" is a mistake, when it actually stems from their patent.  As "absolute" is a common English adjective, it cannot be trademarked.  When ABSOLUT applied, they changed their company name from "Absolut Pure Vodka" to " ABSOLUT VODKA" with the slogan "Country of Sweden".  This can be seen on every bottle produced, along with a brief history to express their originality to consumers.

 "This superb vodka was distilled from grain grown

 in the rich fields of southern Sweden.  It has been produced at the famous old distilleries near Ahus in accordance with more than 400 years of Swedish tradition. Vodka has been sold under the name Absolut since 1879."

The trademark on this name, and the designed bottle based off traditional Scandinavian medicine bottles, is a huge combined intellectual asset to ABSOLUT's company. 

It is no wonder that ABSOLUT is considered a higher end vodka.  They focus their strategies on people who are out to appreciate a solid spirit brand.  By investing in not only different flavors, but also in marketing different mixers including ABSOLUT, they are able to give their buyer a complete experience. 

To further understand where ABSOLUT is standing in the market, we can look at the overall business life-cycle... and where they currently stand.  I stand to argue that ABSOLUT is at the high end of the growth stage, almost to maturity.  Although they have a solid brand and multiple varieties, they still are developing more.  Rivalries are all there, brands such as Smirnoff, Skyy, and Ciroc... but none seem to be trying to find cost leadership.  Their differentiation is their focus, which seems to be working just fine as their stock (Pernod Ricard's stock) maintains constant shares and standing. 

Intellectual Assets

In today's economy it is important to not only analyze how a company uses their tangible resources, but to look at how they manage their intellectual resources.  These intangible assets refer to human capital, social capital and networks, technology, and a variety of other loyalties and skills.  Often a company's market value can be much higher than their book value by a measure of these types of assets.  Since ABSOLUT is a member of the larger French organization Pernod Ricard, I will be examining how they manage different areas from employees to technology.

Attracting, Developing, and Retaining Human Capital
     With a wide variety of spirit brands and consumers, Pernod Ricard looks for a diverse range of employees.  Their underlying important qualities are laid out on the website as entrepreneurial spirit, mutual trust, and a sense of ethics.  They feel as advertising for this type of worker, they can find the perfect fit to their team.  There is a strong emphasis on creativity. 

     Pernod Ricard has a specialized focus on improving managerial leadership.  They have developed their own model that includes programs such as Pernod Ricard University, and iMove (an international collaboration).  It is through these processes that they train their employees to be the best they can be.  Their third initiative is iLead, which hopes to discover future leaders and helps them along the proper career path to attain their goals. 

     The final step comes in retaining good employees.  Pernod Ricard has a combination of stats available about rewarding individual behavior, and offering stock options.  With a high investment in training, 84.7% of employees receive a performance review annually.  This strategy helps Pernod Ricard keep a running tab on where their intellectual capital is, and how well they're working.

Intangible Intellect- Technology

     I have previously mentioned ABSOLUT's intangible assets including their brand and reputation, but there are even more.  With the world changing to one of mobile apps, ABSOLUT has jumped on the bandwagon with their app "Drinkspiration".  This program allows users to browse different drink recipes that use ABSOLUT products, all in the palm of their hand... for free.  By offering this service, consumers, the product is actually self-advertising itself.  Say someone is looking for a fruity mixer; they will be told which flavor of ABSOLUT would go well with their favorite juice.  This is a new innovative way to connect with customers and keep them coming back for more ideas. 

Overall ABSOLUT's strengths lay in their loyalty of buyers, the people who recognize the brand and know its true quality.  By staying true to this reputation and offering pure vodka, the newest tastes, and the consistency of 100 years, ABSOLUT has a steady competitive advantage.  It is important to watch their company for any discrepancies that may bring a negative opinion to their name, and at the same time continue to innovate their brand's product.