I had no idea, until I started learning more about distilled spirits. Most of the vodka produced in the USA is distilled by three mega producers, then sold wholesale to companies who bottle, brand, market, and sell to retail outlets. The three mega producers are Midwest Grain Products of Indiana (MGP), Archer Daniels Midland, and Grain Processing Corporation. These mega producers distill and sell Neutral Grain Spirit, NGS in shorthand, at 190 proof, to which the bottlers add water to reduce the proof to the level they want to sell.
The NGS is sold, depending on the quantity, for as low as 40 cents for 80 proof 750ml bottle to 70 cents for the same bottle. The bottler then spends more money to add the water, for bottles, labels, boxes, shipping, and, of course, a hefty tax to Uncle Sam. Nevertheless, their investment is fairly low. Think of that the next time you reach for a high priced bottle of US produced vodka. Mostly it’s the same NGS, so you’re mostly paying for marketing and the bottler’s profit.
Also important to know, in the USA, no legal definition exists for the terms “handmade” or “small batch”. I could, if I wanted, buy a tanker car load of NGS, cut it with water, bottle it and sell it as a handmade, small batch, craft distillery product. Many of the so called craft distilleries in the USA are doing exactly that. Buyer beware.
Finally, the process in Europe isn’t much different, except for the mega distillers. Nevertheless, the cost of producing NGS, which is then cut to drinking proof for vodka, is similar to US costs. They just have to pay to ship it here, and pay US tax on top of European tax. Fundamentally, there is little difference between the NGS produced in Europe and the NGS produced in the US. We tend to produce more NGS with corn, with is slightly sweeter, and they tend to produce more with wheat which is slightly smoother. The water used the cut the proof also slightly affects the taste.
If you are mixing your vodka with a strong flavoring agent such as a fruit juice, paying for a premium vodka makes little sense. If you drink yours straight or with a subtle flavor, paying a bit more may make sense, but in no case can I envision ever buying a premium now that I understand the process. NGS, whether produced from corn, wheat, potatoes, or whatever, is almost tasteless, so why pay more?
The Booze Cruzer