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Russia's Vodka Wars

The vodka is an essential component of Russian life. And in Russian death. alcohol-related accidents and have heart stops decimated Russian life expectancy by more than a decade during the last decade.

The vodka is big business. The brand "Stolichnaya" sells $ 2 billion per year worldwide. Hence the endless and overly bitter battle between the Russian Ministry of Agriculture and SPI Spirits. The latter still partly owned by the State, is the owner and was haloed brand "Stolichnaya", James Bond's favorite.

SPI public relations firm, Burson-Marsteller, this is passed by a labor dispute classic case of the violation of property rights of foreign shareholders unhappy with the greedy and unscrupulous officials of an unreformed evil empire. They question the willingness of Russia to join the WTO and its respect for the law.

Latest News Press releases SPI is a detailed history of this painful history. The brand, Stolichnaya, and 42, were privatized in 1992. The firm cites a document with the official seal of the maligned ministry, which says no unambiguously: "VAO Sojuzplodoimport has the right to export Russian vodka to the United States under the following trademarks: Stolichnaya, Stolichnaya Cristall, Pertsovka, Limonnnaya, privet, Orange privet (Apelsinovaya), Russia and Okhotnichya. "

Privatization was completed in 1997, when the old SPI was sold to the new SPI Spirits. The new SPI claims to have made $ 40,000,000 in debt and invested $ 20 million dollars to rebuild the company into "one of the major producers the world's leading vodka. However, the Russian government, the tough as ever, is clearly unhappy with SPI.

He said the privatization deal was dubious and SPI paid only $ 300,000 (or perhaps as little as $ 61,000 claim from other sources) for the brands of several billion dollars, including "Stolichnaya" "Moskovskaya", and "Russkaya". The Government believes that the marks of a much more reasonable $ 400 million. other critics have suggested a figure of 1.4 million.

The government, in a battle of New found moral rectitude, also insists that the seller of the brands, the defunct (state), SPI, not the legal owner. It also questions the mysterious shareholders of the SPI – including a holding company taxes lenient Delaware. SPI's trademarks portfolio represented by an Australian lawyer, Malleson Stephen Jaques.

Putin was erected a committee for the repatriation of these brands and other consumer goods for the state. He wants the alcohol industry profits tax revenues could have on the federal budget – and their powers of patronage. A holding company owned the center mark and the distribution is established within two years. Since then, the alcohol sector has been the subject of state intervention without rest. SPI is the case is evident.

The Observer said SPI currently operates most of its business inscrutable Cyprus, a favorite of Russian money launderers, tax evaders Tycoon tax, and the mafia. German distributor SPI, Plodimex, is less active – three new entities offshore distribution (Cyprus, the Netherlands Antilles, and Gibraltar) are growing.

The FSB ordered Kaliningrad customs to prohibit bulk exports of Stolichnaya. The cases of the drink are routinely confiscated. were made criminal charges against the directors and managers of the company. The Deputy Minister of Agriculture is discrediting SPI in meetings with its distributors and business partners abroad. Also is accused by the firm of obstructing the court registry mandated by their trademarks.

Courts recently have been good for SPI, with a series of decisions against government behavior in this complicated case. However, on 1 February, the company suffered a setback when a Moscow court ruled against him and his request 43 brands, including Stolichnaya valuable returns to the government (ie, re-nationalization).

SPI is doing everything possible to appease the authorities. It is rumored to have offered last month to use their funds to complete the federal budget. He said last September that is looking for new acquisitions in Russia – a strange statement to a company that claims they have suffered. "The Moscow Times said it plans to sign a sponsorship agreement with the Committee $ 500,000 Russian Olympic.

Summit Communications, a specialist in the country's image, has put this on their website in November 2001:

"A example of a company has warned Russia to do the same in the West to find the right partner is the Soyuzplodimport company (see also p. 14). Soyuzplodimport or SPI has exclusive rights to export Stolichnaya, which vodka lovers in the United States is affectionately called "Stoli. About 50% of export sales Company of the United States, thanks mainly to its strategic alliance with Allied-Domecq distribution in the United States.

"I'm not sure that all Americans know that Russia is on the card, but most of them know what is Stolichnaya, "muses Andrey Skurikhin, SPI CEO." I that the quality of Stolichnaya in America to create an image of Russia that is pure, strong and honest, like vodka. At SPI, we feel we are like ambassadors and we will try to everything possible to create a more objective and more positive view of Russia to the U.S. "
SPI disorders may be contagious. Allied Domecq, its British distributor America and Mexico, facing competition from Kryshtal International, a subsidiary of the troubled Kristal distillery, 51% owned by Rosspirtprom, a government agency. Kryshtal signed distribution contracts for "Stolichnaya" with distilleries backed by the Russian Agriculture Ministry.

Allies and development Miller beer, have announced an investment of 50 million dollars in product launches and marketing campaigns just five years ago. "Stolichnaya" (Nicknamed "Stoli" in the States) sells 1 million cases of 12 bottles per year in the U.S. (Compared to 3 million cases Absolut).

The problems began almost immediately with the first foreign investments in SPI. In 1991, a foreign trade agency Vneshposyltorg government tried to export Stolichnaya in Greece. This led to a demand by the Greeks. Vodka wars also erupted between the newly registered company in Russia, "Smirnov" and Grand Metropolitan over the brand "Smirnoff".
The vodka wars are sad reminders of the future course of Russia. Its legal system is rickety – different courts upheld the decisions government and SPI's position almost simultaneously. Russian bureaucrats – even when right – are abusive, venal, and obstructive. Russian "businessmen" are much more darkness, more loving off-shore tax havens than with proper management. The rule of law and private property rights even fantasies. WTO – And gives respectability – are as far away as ever.

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