Vodka Craze a Tonic for Olive Company

Like millions nationwide, Craig Makela will be ringing in the new year with the traditional champagne toast.

Before the clock strikes midnight, though, he and his guests will be closing out 2003 with a perennial favorite: martinis.

At Makela’s house in Santa Barbara, the martinis will be dressed up with olives. That make sense, because Makela’s family has grown olives in nearby Gaviota for more than 150 years. And lately, America’s cocktail craze has his tiny Santa Barbara Olive Co. drinking in strong sales of its more than 100 condiments, from green olives stuffed with pickled onions for martini lovers who can’t decide to spicy asparagus spears as celery alternatives in Bloody Marys.

The Makela family can thank the escalating popularity of vodka. The odorless and colorless liquid surpassed whiskey nearly three decades ago as America’s favorite distilled spirit and in recent years has seen potent growth.

Retail spending on vodka jumped 31% to $9.2 billion last year from $7 billion in 1997, according to the Distilled Spirits Council of the United States. Overall, it accounts for about a quarter of distilled spirit consumption nationally, its growth propelled by the success of super-premium and flavored vodkas. A council spokeswoman said more than half of the 30 labels introduced in 2002 were either super-premium -- 750 milliliter bottles priced at $25 or more -- or flavored offerings, a trend that continued this year.

Pretty soon, it even will have its own magazine. Vodka, scheduled to debut in February, will be a bimonthly that its publisher says is based on the premise that vodka “is the spirit of choice of the new urban dweller and embodies their lifestyle and attitude.”

One of the newest vodkas on the block is Shakers Original American Vodka, which was introduced this year by Napa, Calif.-based Infinite Spirits. Selling for $29.99, each bottle resembles a cocktail shaker.

The company was founded by Tim Clarke, who, along with several associates, jumped on the microbrew bandwagon in the 1990s to great success. The group created Pete’s Wicked Ale and turned it into a national brand before selling it to San Antonio-based beer importer Gambrinus Imports for $69 million in 1998.

Clarke and his friends settled next on the expanding vodka sector. With few domestic brands of premium vodka garnering much market share, they saw an opportunity.

“We thought there was plenty of room to grow,” he said, adding that Wednesday night, “people might toast in the new year with champagne, but they will start the evening with vodka.”

Clarke said he saw the Shakers brand one day taking on the great vodkas of the world, including Sweden’s Absolut and Russia’s Stolichnaya, the No. 1 and No. 2 selling imports. In the meantime, Clarke estimated that Shakers sales this year would total about 40,000 cases, a fraction of the 39 million cases of vodka sold annually in the U.S.

Vodka’s growth is expected to continue given that savvy marketing experts are relentless in their promotion of cocktail quaffing as a trendy pastime, especially among urbanites under 40.

Martini bars with detailed drink menus are commonplace in most American cities, and vodka saturates the club scene. At the MGM Grand, the largest hotel in Las Vegas, bar sales of the liquor “are up 30% to 40% over the past four years,” said Mike Milner, the hotel’s executive director of nightclubs and entertainment.

Vodka is such a focus of the club crowd that Milner said MGM Grand’s new Tabu lounge was designed to showcase expensive brands, which sit in niches of solid ice on the wall. One hot trend, Milner said, is so-called bottle service -- customers spend as much as $350 on a bottle of vodka and hire a server to mix drinks table side.

In Santa Barbara, Makela is happy to help vodka buffs accessorize. Every new martini variation, every twist on the Bloody Mary, in fact just about any mixed drink give Makela a chance to make a sale, one olive at a time. And the company’s revenue is growing about 18% annually, he said, to $15 million this year.

Recently, he developed a special olive for a New York nightclub’s version of the black tie martini, which is made with white rum and vermouth and typically garnished with a unstuffed black olive. Makela added red pimento.

Now, he said, bars and clubs in other cities are expressing interest in what he is calling the black tie olive. Martinis are “everywhere you go,” Makela said gratefully. “And we make stuffed and spiced olives that can go in them.”