Russia: Cristall vodka owner gets rival's management team

22 April, 2009

Russia: The company behind Cristall vodka has employed the management team that made a success of its rival Russian Alcohol. 

Russia: The company behind Cristall vodka has employed the management team that made a success of its rival Russian Alcohol. 

State-owned Rosspirtprom has appointed the 10-strong management team that made a success of Russian Alcohol - now the country’s market leader.

Established by private investors in 2003, Russian Alcohol, whose flagship product is Green Mark vodka, achieved sales of £178m before being taken over last year by the Polish group Central European Distribution Corporation and the Lion Capital Fund. It has since been valued at $680m.

In a major management shake-up the former director general of Russian Alcohol Vladimir Ivanov and his commercial director Vadim Kasianov become deputy directors general at Rosspirtprom. They have been joined by another former senior executive of Russian Alcohol Sergei Sorokin. Rosspirtprom produces more than a hundred brands – including Cristall vodka - from 16 distilleries and has controlling shares in 40 companies and minority stakes in 35.

Its share of the domestic vodka market in 2007 was around 13%. However, compared with other distillers, Rosspirtprom is massively underperforming. At the beginning of 2008, Russian Alcohol, for example, had 8.5% of the market with only two distilleries. Rosspirtprom has also been plagued by regional companies going bankrupt and disputes and strikes due to increases in the federal excise tax. An unidentified government source told the RIA Novosti news agency that the restructuring would encourage Rosspirtprom to adopt a more aggressive stance in purchasing and marketing strategies. These would include taking a new approach to exporting high-quality alcoholic beverages to markets in Europe and America. To compete with Green Mark, Kasianov is to launch two to three federal vodka brands in a price range of 100 to 130 roubles for a half litre (£2 to £2.60).

Meanwhile, Russian Alcohol says there is nothing unexpected about their executives jumping ship. “We still have experienced operators and there are many others available in the job market,” commented Russian Alcohol’s spokesman Aleksander Korovka.

However, others were far less enthusiastic as to Rosspirtprom’s future. Vadim Drobis, director of the Centre for Research of Federal and Regional Liquor Markets, told The Moscow News: "Instead of developing new brands and working on improving production, Rosspirtprom is occupied with internal struggles and restructuring. The best thing to do would be to disband Rosspirtprom and hand control of the distilleries to regional officials."

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