Vodka makes inroads in world's biggest Scotch market

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PARIS, Oct 17 (Reuters) The music is pumping and the lights are low, but something strange is happening in the bar of R, a trendy rooftop club in Paris: in the world's biggest Scotch whisky market the young drinkers are turning to vodka.

While national statistics show Scotch is still France's favourite tipple after wine and beer, vodka consumption is booming, and the industry's giants are muscling in.

''Overall it's 50/50 (whisky/vodka) but with young people it's much more vodka,'' said Guillaume, 23, the barman at R Female drinkers, especially, prefer white spirits, he said.

Whisky sales still dwarf those of vodka by 10 to 1 in France.

Nearly 140 million litres of Scotch was sold in 2006, according to France's drinks industry federation. But in terms of value, vodka sales grew 16 per cent, three times faster than Scotch and the fastest rate of growth of any spirits category.

According to market research group ACNielsen, the French vodka market is now worth more than 121 million euros.

''It's certain that we sell more vodka than whisky,'' said Guillaume Le Blan, a barman at Alcazar, a restaurant and bar in the heart of Paris's bustling St Germain district. ''I would say its 30/70 (whisky/vodka).'' WHISKY MAKERS NOT WORRIED The Scotch Whisky Association is not worried, yet. Spokesman David Williamson said the French market continued to be strong, growing nearly 10 per cent in 2006 to 170 million bottles, meaning it remained the biggest market by volume in the world.

''Scotch sells more in one month (in France) than cognac does in a year,'' he noted.

Big Scotch producers -- like France's Pernod Ricard, which makes Chivas Regal and Ballantines, and LVMH Moet Hennessy Louis Vuitton, which makes Glenmorangie, are continuing to invest in their Scottish highland distilleries. But at the same time they are expanding in vodka.

LVMH through its Moet Hennessy joint venture with Britain's Diageo this year took full control of the Belvedere vodka brand, acquiring full rights in the United States.

Pernod Ricard has made no secret of its desire to buy Absolut vodka, a top-5 brand in France and the jewel in the crown of Swedish state-owned drinks company, Vin&Sprit.

The French group is also in talks with Russia's government to acquire full rights to Stolichnaya vodka, which it currently sells outside Russia under a deal due to expire in 2010.

Stolichnaya sales in France grew sixfold in the year to June, Ricard said in a statement. ''This spectacular growth is due mainly to sales generated outside the home (92 per cent of volume, of which 75 per cent in bars and night clubs),'' it said.

NEW ENTRANTS While the French market is currently dominated by western groups the leading brand is ''Eristoff,'' a vodka made in France by Bacardi it is beginning to attract Russian interest.

Russian Standard, a leading Russian brand, launched this month in a blaze of publicity with the aim of becoming number one ''as quickly as possible,'' said founder Roustam Tariko.

''Vodka is the hottest brand worldwide now,'' he said. ''So it's very easy to outsell Scotch. In some markets (Scotch) is a declining category, in some markets it's just not growing.'' A recently created professional organisation, ''Le Monde des Vodkas Russe,'' backed by Russian manufacturer Kin, has just opened an office in Paris with the aim of encouraging demand for ''Authentic Russian Vodka,'' a quality label it is promoting.

Olivier Balva, a director with French wines and spirits group Belvedere, which said its Polish-made vodka Sobieski has captured more than 5 per cent of the French market in less than a year, agreed the trend was clear.

''Vodka in France, like everywhere else in the world, is the most dynamic part of the market ... The trend is towards white spirits and away from brown ones,'' Balva said.

But Pernod Ricard Chairman Patrick Ricard predicted Scotch would remain king for a long time.

''Certainly vodka's growth is remarkable, but from a low base.

If it happens, it won't be tomorrow,'' he said. ''In France, a lot of the vodka sold is also not of premium quality, so in terms of value it's not tomorrow that Scotch will be dethroned.'' Reuters RN RS1012

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