Interview: Stoli Not For Sale
Dear Client:
WSD had the chance to chat with Andrey Skurikhin, a minority shareholder for SPI (owner of Stolichnaya vodka), earlier this week. Despite media reports, Andrey insisted Stoli is not for sale and the company is instead focused on making improvements to the brand before seriously exploring any options. SPI also wants to put an end to litigation with the Russian government. Take a look below as you, dear reader, are a fly on the wall.
Wine & Spirits Daily: There are a lot of rumors in the press right now about Stolichnaya, and I understand that SPI would like to clear the air.
Andrey Skurikhin: Yes.
WSD: What will Stoli do after its distribution agreement with Pernod ends?
Andrey: We didn’t want to make any announcement now, but because of not fully correct information from the media we [felt compelled to say something]. It’s not our intention at the moment to sell the brand. We have had lengthy negotiations with Pernod Ricard about a possible deal...now, we are not looking for another partner to buy Stoli.
We believe that for the nearest future, we need to do some job on the brand side. I mean, right now we are restructuring the distribution, not only in the US but worldwide. You may have known that before 2004, we used to distribute the brand ourselves in the rest of the world outside the United States.
We are going to implement the same system now, as we do have relevant distribution experience and we are quite sure that by doing that, we will be able to better control the brand’s performance. In the United States, we are at the moment moving into the direction of establishing a new importer and hiring of a marketing team which will be in the United States representing our interest.
Then, we can explore different routes to market and ways of building up the sales team. We can do it ourselves and work directly with the local wholesalers in the States or we can create a joint venture with somebody, either a single brand, a great single brand company, or a larger company that has a significant portfolio at the premium level. Here, we still have not made the decision, some negotiations are ongoing, but the main decision has been taken that we’re not selling the brand and we want to do a better job on the marketing and distribution side in order to improve the brand’s positions and increase the volumes with time. Then we can come back later to the discussion on the possible sale.
Moreover, what I will call “Russian litigation” is still ongoing in some of the countries. We believe it must be finished in order not to distract from possible buyers of Stoli and not to be a factor when talking about the value of the brand.
Our chances are extremely high in the litigation. For instance, you may have heard in 2006 we won the proceeding in New York in the Southern District Court of New York in the United States,
WSD: Yes.
Andrey: Chances to win in the Russian litigation are very, very high according to the opinion of our lawyers and I am sure the lawyers of Pernod Ricard share this view. As you know, they are co-defendants in the court case.
WSD: The Court case has been stayed for a year, right?
Andrey: Correct, in order to agree on some amicable solution. When we won the court case in the United States, the economical ground behind the attack on Stoli disappeared because the United States in general is the major spirits market in the world. And for Stoli, it is by far the most important, both in volume and revenue.
The economical basis for the litigation, for the Russian government does not exist anymore and we believe having this in mind an amicable solution must be found anyway. Otherwise it’s absolutely a useless exercise on their side without any goal to be achieved.
We want these issues to vanish, to disappear before we move to the stage of the discussion of possible sale to whomever.
WSD: Okay. So I’m guessing there’s not much truth to the rumor that SPI hired the Lehman Brothers to explore a possible sale of Stoli?
Andrey: The situation is that in fact we’ve been working with Lehman for several years. We’ve been working with them on several assignments. We have been working with them on several projects in the development of SPI, but to say that we have hired them in order to sell the brand, it’s not correct at the moment.
WSD: There have been a couple of major vodka acquisitions recently, including Diageo and Ketel One, Pernod and Absolut, and Bacardi and Grey Goose. What are your thoughts on the major spirits companies racing to acquire vodka? How will this affect the industry as a whole?
Andrey: The trend is there, you are correct. Everybody wants to have their own brand in an important category and vodka is one of the most important categories in the spirits industry. Without it, it would be difficult to develop the other part of the portfolio.
I believe that in some time, how many years it wouldn’t be for me to define right now, but in some time Stoli will have to be a product in the portfolio of a larger group. This is an attractive trend and you cannot change it, but right now, this is not the moment when we should take this decision. We need to do something with the brand, as I said, and then we will find the good family for our brand. Whether it will be one of the current large companies or it will be a new company, I do not know.
The market is moving and somebody acquires somebody so you can then end up with one, two, three, more major companies in the world and Stoli can become part of those portfolios. If you look at the industry map, you will see that there are several players which on a single basis don’t have the whole portfolio, the whole line, and something can happen with them. They can merge, they can follow some acquisitions. It’s quite possible that there will be new players. For us, I would say too prematurely for us to start thinking where we will land. We need to do some work on the brand side and then in parallel, follow the development of the market. We will see.
WSD: Pernod always said it would acquire either Stoli or Absolut. What are your thoughts on Pernod purchasing Absolut instead of Stoli?
Andrey: There are some limits on what I can say out of confidentiality provisions, but the discussion, yes, took place for quite some time with Pernod. SPI did not have any strong or serious disagreements with them. I would say we had achieved our agreement on all major parts of the possible deal.
The issue is that the discussion included the Russian government. Unfortunately, I cannot say the Russian government acted in those negotiations very reasonably or wisely or swiftly.
All together, it led the situation to the point when Pernod Ricard had to take the decision. When the Swedish government announced the parties must file their initial bids by the end of January, it was in the very sense of business for Pernod Ricard to take that option. They should have finalized one of the possible deals either with Stoli or with Absolut and because the Russian government is not very predictable, they had to follow the option of Absolut. It was a wise decision which we thought would take place. It was not something unexpected for us. We really thought it would happen.
We just analyzed the history with our distributors for the last 10 years. As you know, within this period in the United States we have had several distributors. We realized that this frequent change of hands is not beneficial for the brand. The brand suffered. Stoli is a great brand – I would say one of the greatest brands of vodka in the United States and it has been in the market for almost 40 years. Everybody knows it.
WSD: Just today, I read an article in the New York Post that one of the presidential candidates, Obama, says he enjoys drinking Stoli in Chicago at the bar.
Andrey: It’s a great brand and it’s been really resilient. Because of that, change of the distributor was not very detrimental to the brand but we lost some momentum due to the lack of focus and consistency in the marketplace by different distributors. We believe this did not help the growth rate, which unfortunately right now is higher with our competitors than with us. We want to change that and then come back to the discussion to link Stoli with some other portfolio. First, we need to bring this focus on the brand back and then we’ll see.
WSD: Thank you for your time, Andrey.
MAXXIUM CHIEF RESIGNS, V&S EXITS JULY 31ST
Ben van Doesburgh, ceo of Maxxium Worldwide, will be leaving the spirits marketing and distribution joint-venture on July 31, the company announced today. After leading Maxxium for almost four years, he “will be starting a new chapter in his professional career.”
Vin & Sprit also announced it will be leaving Maxxium July 31st, which was expected after Pernod acquired the Swedish drinks group earlier this year. Remy announced in 2006 it would leave Maxxium in 2009.
Recall that Maxxium is currently owned by Beam Global, Remy Cointreau, The Edrington Group and Vin & Sprit
A temporary Maxxium Management Transition Group has been set-up to ensure a smooth transition. It is comprised of the existing Maxxium Executive Board, who will assume collective responsibility and report to the Maxxium Supervisory Board members Bill Farrar from The Edrington Group and Donard Gaynor from Beam Global, who will co-Chair the Group.
Donard Gaynor stated: “The Maxxium Supervisory Board would like to express its appreciation and thanks to Ben van Doesburgh for his contributions to Maxxium over the past four years.”
Immediate changes are as follows: Erik Juul-Mortensen, president of Maxxium global travel retail and Michael Sainsbury, global wine director will report to Brian Mackie, Maxxium Worldwide cfo, The Americas.
EU EXTENDS ANTI-TRUST REVIEW OF ABSOLUT
The European Commission said today that it extended its antitrust review of Pernod’s plan to acquire Vin & Sprit for almost $9 billion following Pernod’s agreement to make divestments. Specifics were not disclosed.
The deadline has been extended to July 17 from July 3 to let the EU survey customers and competitors about remedies offered by the parties. A Pernod spokeswoman said the deadline extension is part of the "normal process" of the EU's review.
Until Monday, Megan
“Love truth, and pardon error.”
Voltaire
--------- Sell Day Calendar ----------
Today's Sell Day: 20
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
WSD had the chance to chat with Andrey Skurikhin, a minority shareholder for SPI (owner of Stolichnaya vodka), earlier this week. Despite media reports, Andrey insisted Stoli is not for sale and the company is instead focused on making improvements to the brand before seriously exploring any options. SPI also wants to put an end to litigation with the Russian government. Take a look below as you, dear reader, are a fly on the wall.
Wine & Spirits Daily: There are a lot of rumors in the press right now about Stolichnaya, and I understand that SPI would like to clear the air.
Andrey Skurikhin: Yes.
WSD: What will Stoli do after its distribution agreement with Pernod ends?
Andrey: We didn’t want to make any announcement now, but because of not fully correct information from the media we [felt compelled to say something]. It’s not our intention at the moment to sell the brand. We have had lengthy negotiations with Pernod Ricard about a possible deal...now, we are not looking for another partner to buy Stoli.
We believe that for the nearest future, we need to do some job on the brand side. I mean, right now we are restructuring the distribution, not only in the US but worldwide. You may have known that before 2004, we used to distribute the brand ourselves in the rest of the world outside the United States.
We are going to implement the same system now, as we do have relevant distribution experience and we are quite sure that by doing that, we will be able to better control the brand’s performance. In the United States, we are at the moment moving into the direction of establishing a new importer and hiring of a marketing team which will be in the United States representing our interest.
Then, we can explore different routes to market and ways of building up the sales team. We can do it ourselves and work directly with the local wholesalers in the States or we can create a joint venture with somebody, either a single brand, a great single brand company, or a larger company that has a significant portfolio at the premium level. Here, we still have not made the decision, some negotiations are ongoing, but the main decision has been taken that we’re not selling the brand and we want to do a better job on the marketing and distribution side in order to improve the brand’s positions and increase the volumes with time. Then we can come back later to the discussion on the possible sale.
Moreover, what I will call “Russian litigation” is still ongoing in some of the countries. We believe it must be finished in order not to distract from possible buyers of Stoli and not to be a factor when talking about the value of the brand.
Our chances are extremely high in the litigation. For instance, you may have heard in 2006 we won the proceeding in New York in the Southern District Court of New York in the United States,
WSD: Yes.
Andrey: Chances to win in the Russian litigation are very, very high according to the opinion of our lawyers and I am sure the lawyers of Pernod Ricard share this view. As you know, they are co-defendants in the court case.
WSD: The Court case has been stayed for a year, right?
Andrey: Correct, in order to agree on some amicable solution. When we won the court case in the United States, the economical ground behind the attack on Stoli disappeared because the United States in general is the major spirits market in the world. And for Stoli, it is by far the most important, both in volume and revenue.
The economical basis for the litigation, for the Russian government does not exist anymore and we believe having this in mind an amicable solution must be found anyway. Otherwise it’s absolutely a useless exercise on their side without any goal to be achieved.
We want these issues to vanish, to disappear before we move to the stage of the discussion of possible sale to whomever.
WSD: Okay. So I’m guessing there’s not much truth to the rumor that SPI hired the Lehman Brothers to explore a possible sale of Stoli?
Andrey: The situation is that in fact we’ve been working with Lehman for several years. We’ve been working with them on several assignments. We have been working with them on several projects in the development of SPI, but to say that we have hired them in order to sell the brand, it’s not correct at the moment.
WSD: There have been a couple of major vodka acquisitions recently, including Diageo and Ketel One, Pernod and Absolut, and Bacardi and Grey Goose. What are your thoughts on the major spirits companies racing to acquire vodka? How will this affect the industry as a whole?
Andrey: The trend is there, you are correct. Everybody wants to have their own brand in an important category and vodka is one of the most important categories in the spirits industry. Without it, it would be difficult to develop the other part of the portfolio.
I believe that in some time, how many years it wouldn’t be for me to define right now, but in some time Stoli will have to be a product in the portfolio of a larger group. This is an attractive trend and you cannot change it, but right now, this is not the moment when we should take this decision. We need to do something with the brand, as I said, and then we will find the good family for our brand. Whether it will be one of the current large companies or it will be a new company, I do not know.
The market is moving and somebody acquires somebody so you can then end up with one, two, three, more major companies in the world and Stoli can become part of those portfolios. If you look at the industry map, you will see that there are several players which on a single basis don’t have the whole portfolio, the whole line, and something can happen with them. They can merge, they can follow some acquisitions. It’s quite possible that there will be new players. For us, I would say too prematurely for us to start thinking where we will land. We need to do some work on the brand side and then in parallel, follow the development of the market. We will see.
WSD: Pernod always said it would acquire either Stoli or Absolut. What are your thoughts on Pernod purchasing Absolut instead of Stoli?
Andrey: There are some limits on what I can say out of confidentiality provisions, but the discussion, yes, took place for quite some time with Pernod. SPI did not have any strong or serious disagreements with them. I would say we had achieved our agreement on all major parts of the possible deal.
The issue is that the discussion included the Russian government. Unfortunately, I cannot say the Russian government acted in those negotiations very reasonably or wisely or swiftly.
All together, it led the situation to the point when Pernod Ricard had to take the decision. When the Swedish government announced the parties must file their initial bids by the end of January, it was in the very sense of business for Pernod Ricard to take that option. They should have finalized one of the possible deals either with Stoli or with Absolut and because the Russian government is not very predictable, they had to follow the option of Absolut. It was a wise decision which we thought would take place. It was not something unexpected for us. We really thought it would happen.
We just analyzed the history with our distributors for the last 10 years. As you know, within this period in the United States we have had several distributors. We realized that this frequent change of hands is not beneficial for the brand. The brand suffered. Stoli is a great brand – I would say one of the greatest brands of vodka in the United States and it has been in the market for almost 40 years. Everybody knows it.
WSD: Just today, I read an article in the New York Post that one of the presidential candidates, Obama, says he enjoys drinking Stoli in Chicago at the bar.
Andrey: It’s a great brand and it’s been really resilient. Because of that, change of the distributor was not very detrimental to the brand but we lost some momentum due to the lack of focus and consistency in the marketplace by different distributors. We believe this did not help the growth rate, which unfortunately right now is higher with our competitors than with us. We want to change that and then come back to the discussion to link Stoli with some other portfolio. First, we need to bring this focus on the brand back and then we’ll see.
WSD: Thank you for your time, Andrey.
MAXXIUM CHIEF RESIGNS, V&S EXITS JULY 31ST
Ben van Doesburgh, ceo of Maxxium Worldwide, will be leaving the spirits marketing and distribution joint-venture on July 31, the company announced today. After leading Maxxium for almost four years, he “will be starting a new chapter in his professional career.”
Vin & Sprit also announced it will be leaving Maxxium July 31st, which was expected after Pernod acquired the Swedish drinks group earlier this year. Remy announced in 2006 it would leave Maxxium in 2009.
Recall that Maxxium is currently owned by Beam Global, Remy Cointreau, The Edrington Group and Vin & Sprit
A temporary Maxxium Management Transition Group has been set-up to ensure a smooth transition. It is comprised of the existing Maxxium Executive Board, who will assume collective responsibility and report to the Maxxium Supervisory Board members Bill Farrar from The Edrington Group and Donard Gaynor from Beam Global, who will co-Chair the Group.
Donard Gaynor stated: “The Maxxium Supervisory Board would like to express its appreciation and thanks to Ben van Doesburgh for his contributions to Maxxium over the past four years.”
Immediate changes are as follows: Erik Juul-Mortensen, president of Maxxium global travel retail and Michael Sainsbury, global wine director will report to Brian Mackie, Maxxium Worldwide cfo, The Americas.
EU EXTENDS ANTI-TRUST REVIEW OF ABSOLUT
The European Commission said today that it extended its antitrust review of Pernod’s plan to acquire Vin & Sprit for almost $9 billion following Pernod’s agreement to make divestments. Specifics were not disclosed.
The deadline has been extended to July 17 from July 3 to let the EU survey customers and competitors about remedies offered by the parties. A Pernod spokeswoman said the deadline extension is part of the "normal process" of the EU's review.
Until Monday, Megan
“Love truth, and pardon error.”
Voltaire
--------- Sell Day Calendar ----------
Today's Sell Day: 20
Sell days this month: 21
Sell days this month last year: 21
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: 0
WINE & SPIRITS DAILY
Subscribe or check back issues at: www.winespiritsdaily.com
Send news and comments in confidence to: megan@winespiritsdaily.com
© 2008 Wine & Spirits Daily, all rights reserved. May quote with attribution.
posted at 6:24 AM
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