"Affordable Luxary"

"Diageo said Wednesday it will pay $900 million (610 million euros) in a deal with the Nolet family for "perpetual exclusive global rights to sell, market and distribute" Ketel One vodka." -CNBC

In the video the CEO of Diageo was confronted with a question about the impact lower consumer sentiment will have on sales of Kettle One. He replied that people will buy liquor no matter how the economy is doing. Don't people subsitute to cheaper goods when times are rough. Apparently Kettle One is an "affordable luxary" and consumers are still demanding the product. This is a creative description of his pocket, but I think it is usually true for the most part. College kids account for a lot of alcohol consumption, but their drinking habits are significantly different from "normal" people. I think this is a good acquistion for Diageo because it fills a product hole (middle vodka brand) plus they will do a better job increasing the sales of the liquor. Right now 97% of sales are in the U.S. but with Diageo's distribution and marketing advantages they should be able to introduce it in other countries.