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Not Russian Vodka
July 16, 2008 16:08

Last week Russia lost its biggest producer of vodka: Central European Distribution Corporation (CEDC) based in Poland and British Lion Capital LLP closed a transaction on acquisition of 90% of shares in Russkiy Alkogol (Russian Alcohol). The management of the Russian company will hold the rest 10% of the stock.

Lion Capital LLP now controls the major shareholding, while Polish company owns 42% of shares.

The key assets of Russkiy Alkogol are liquor plant Topaz located in the Moscow Region, the First Wine Blending Factory in Tula, Ushba Distillery in Tbilisi, Georgia and Bravo Premium plant making low-alcohol beverages in St. Petersburg. Lion Capital already owns 75% plus one share in Russian company Nidan focusing of Juice production. Central European Distribution Corp. is one of the leaders at the alcohol beverages market of Poland and has got such brands as Zubrowka, Bols and Soplica. Besides, the company is a distributor of over 700 brands including Remy Martin, Jagermaster, Metaxa, Corona, Foster' s, Jim Beam, Guinness.

 In 2007 Russkiy Alkogol produced 11.2 million deciliters of vodka compared to 8 million in 2006. This year the company plans to extend production volume by 25%. Russkiy Alkogol accounts for 8.77% of the Russian market of high alcohol beverages. Such brands as Marusya, Yamskaya, Kalinov Lug, Zhuravli and Zelenaya Marka (Green Mark) belong to the company. In 2007 Green Mark put competitive pressure on world alcohol leaders and won a place among top 3 best selling vodka brands along with Smirnoff and Absolute, the ranking by the Spirits Business Magazine says.

Experts presume Green Mark’s successful ride to the international market caught attention of foreign companies and induced them to buy a promising rival. Interestingly, the Russian vodka market has been almost totally controlled by the domestic manufacturers until quite recently. Today there are 265 vodka and spirits manufacturers in the country.

 The estimated annual turnover of the Russian high alcohol market is $17 billion. The world vodka consumption grows by 2-3% annually, allowing the largest corporations expand business.

Acquisition of the leader of the Russian high alcohol beverage market is considered to be the beginning of foreign campaign to buy up the Russian spirits industry. Russkiy Alkogol is the third large transaction performed by CEDC in Russia: last year the Polish Corporation took over Parliament Company and negotiated acquisition of 49.9% of voting stock in Whitehall alcohol distributor.

Experts believe the foreign companies will improve attitude of the Russian authorities to the high alcohol beverages – today it is emphatically negative.

Most Russians treat vodka as a national drink and may take changes too close to heart. However, such transactions have their merits: most foreign investors run business legally and care a lot for the employees.


Olga Pletneva

Tags: Russian vodka Moscow region Moscow Russian vodka producers  

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