Features April 24, 2008, 6:02PM EST

Ketel One Finally Hits the Bottle

The Dutch vodka brand known for mysterious ads unveils a campaign that shows the bottle for the first time as it seeks to break out globally

by David Kiley

In the pages of the April issues of Esquire and Food & Wine magazines, a Ketel One vodka ad sports the headline "Dear Ketel One Drinker—One Thousand Words." If it weren't for the unexpected image of the Dutch vodka's bottle, the first time in the five-year-old campaign that the bottle has been shown in ads, the ad copy would be as puzzling as so many other Ketel One ads that have beguiled and confounded readers.

It's a long way from one of those bottleless ads, which drew catcalls and howls in the advertising blogosphere: "Dear Ketel One Drinker—Can we just say, you looked great the other night." Eighty-five percent of that ad was white space, yet it cost, by some estimates, about $140,000 to place in Sports Illustrated.

Ketel One's first bottle sighting in its ads this month comes an astonishing 15 years after it launched in the U.S. The cryptic creative strategy from ad agency M&C Saatchi (SAA.L), while an affront to some business-school ad professors for all the "wasted" white space, has nevertheless helped propel a 47% sales increase since 2003 to 1.9 million cases sold last year. But Ketel One, owned by the Dutch Nolet family since the 1600s, is now embarking on a worldwide expansion with a new distribution partner, British drinks giant Diageo (DEO), which appears likely to make the brand a bit less mysterious in the next few years. The challenge confronting the Nolets is finding a way to retain the mystique that comes from not being understood by everyone while striving to double sales in the next five years with Diageo's help.

Diageo is rolling the dice that Ketel One's growth will return more and faster profit than it could have generated by paying up for Absolut's 10 million-plus cases a year. Diageo, which also owns the lower-priced Smirnoff vodka, ceded the recent auction of Absolut to Pernod Ricard (PERP.PA) for $8.9 billion. Instead of waiting to snap up rights to the premium Russian vodka Stolichnaya, which competes head to head with Absolut (Pernod is forced to divest its distribution rights to Stoli after buying Absolut), Diageo paid $900 million for half the global distribution rights to Ketel One. Ketel One is generally priced between $25 and $30, about 20% above Absolut, and is considered a superpremium vodka. "The business has gotten to the point where it's awfully hard for independent companies to play globally," says Bill Eldien, CEO of Nolet Spirits USA, about the reason for the hookup with Diageo.

Discovering the Brand

The Nolets' deal leaves control over Ketel One advertising with them. Despite being in 24 countries, Ketel One still only advertises in the U.S. In overseas cities such as London and Paris, the brand is in limited bar and liquor store distribution by design, just as it was in the U.S. for a decade before launching its first ad campaign. When Carl Nolet Jr. built up the business in the U.S., he would get 25 of the top bars in cities such as New York and Miami to carry it, enlist bartenders to push it to customers, and then move on to another city. He calls it "discovery marketing."

Now, advertising is going to play a bigger role overseas, as it has in the U.S. where the Nolets have been spending around $10 million to $15 million a year on print ads. Is the U.S. campaign, lambasted once by blogger www.copyranter.com as "cultural puke," exportable? M&C Saatchi's North American CEO Huw Griffith says it's still an unresolved issue. "The campaign has been polarizing, and when you are in a small niche, as we are, that has been an effective strategy," he says. But, he says, the issue of how to advertise overseas has not yet been decided.

Some experienced ad executives believe the campaign will work well adapted to other cultures.

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