Yuriy Sorochynskiy Artem Galkin

Nemiroff Vodka: building back better

This article first appeared in The Millionaires’ Club 2024
19 June, 2024

When Russia invaded Ukraine, Nemiroff­ was hit hard – but new markets and a new partnership are seeing the vodka regain and grow its standing.

Last year, Nemiroff­ had the unenviable honour of topping our biggest decliners list. War had arrived at the door of the Ukrainian vodka brand and the associated chaos resulted in a 57% drop in sales. But while Nemiroff­ was down, it was by no means defeated. In 2023, it grew by 40% and the brand is firmly on the road to recovery, with pre-Covid volumes once again in touching distance despite a conflict that hasn’t shown signs of reaching a resolution.

“When the full-scale invasion happened, as a company based in Ukraine, we su­ffered a lot,” explains Nemiro­ff chief executive Yuriy Sorochynskiy.

“It’s easier to examine our feelings around the invasion now, but at the time it was a huge shock. We decided that, in order to keep our people safe, it would be better to not do business for a while, so we closed the distillery for a month to focus on keeping our employees safe, which included relocating some of them.

“At the time, the situation in Ukraine was very turbulent. The borders and a lot of the roads were closed for two or three months, and when the invasion happened, the government of Ukraine implemented a temporary law to prohibit the sale of alcohol, and of course we immediately terminated licences that we had with two large vodka markets, Russia and Belarus.”

But while the Ukrainian market was suddenly o­ff limits, if Nemiroff­ could get stock out of the country, it was able to trade in international markets that were eager to support Ukrainian companies.

“Our growth isn’t down to finding an unexpected market share or something that our competitors couldn’t find, it’s down to doing our jobs well every day in spite of the suffering from the circumstances in Ukraine,” says Sorochynskiy.

“By the end of March, our partners outside of Ukraine started to ask how they could help us. We said that probably the only way they could help was to change the payment terms to pay us as soon as we transferred the products from the Ukrainian border, as soon as the products crossed outside the risky territory.

“This allowed us to keep products available in the market and meant that we could benefit from a momentum that was happening at the time when people all around the world were buying Ukrainian products to support us.

“We were already in 60 markets around the world but this momentum actually allowed us to even open in new markets as sanctions on Russian products meant that Russian vodkas were being removed from shelves, and this resulted in a lot of requests from new partners. By the middle of 2022, Whyte & Mackay approached us and we came to an agreement where they started to distribute Nemiroff­ in the UK and Northern Ireland, and that’s going really well.”

Changing perspective

The UK has since become the brand’s fastest-growing market with the long-term partnership established with Whyte & Mackay proving to be a shrewd move. And in a dim silver lining, the conflict has given Ukrainian brands the opportunity to reach suppliers that were uninterested previously.

“Previously, it was difficult to open in markets like the UK or certain markets in the EU as there was a negative reputation of Ukraine in the world – people thought that there was a lot of corruption and that the people weren’t able to do proper business. We always were a company that tried to change that perspective, but it’s hard to change perceptions just by doing proper business yourself.

“When we began to work with Whyte & Mackay, it asked if we could provide six months of safety stock to the UK because of the turbulences in Ukraine. We said it wasn’t a problem and started delivering immediately to con‑ rm to our new partner that we are absolutely a reliable supplier even with the turbulence in Ukraine.”

Suddenly finding yourself operating in a warzone would be a valid excuse for a few disruptions to the supply chain, but that’s not the position held by Sorochynskiy – for him, there’s no excuse for bad business.

“In the spirits industry, we are in competition with the world. If partners can make a profit from more reliable suppliers from anywhere in the world, why would they have to choose one that’s not so stable? That’s why it’s important for us to disregard all of the negative circumstances and deliver our products, to build proper marketing support and brand awareness in the markets. We’re building this brand for the future, it’s vital we confirm to our partners that we can do business.”

Immediately after the full-scale invasion, Nemiroff­ had lost its ability to sell domestically and lost presence in two major vodka markets – no wonder the brand saw declines in 2022. But now, just 12 months on, the brand has rallied and undergone rapid growth.

“We’ve seen a lot of growth in our new markets such as the UK, Netherlands, Belgium and Scandinavia, but also in the traditional vodka markets that supported Ukraine in Eastern Europe, like Poland and the Baltics. But really our most important market now is our home market. Ukrainians became more supportive of Ukrainian businesses. For people who didn’t escape the country, they realised the businesses that were still in Ukraine were providing jobs and salaries the whole way down the supply chain and so, despite the squeeze on the market, we saw an overall increase in sales domestically.

“Prior to the invasion people were buying more international spirits brands, but after February 2022, Ukrainians wanted to purchase Ukrainian products. It was a feeling of united support, they are in Ukraine, and we are in Ukraine too.

“And also, it aided the war effort. The taxes that people in Ukraine pay on vodka support the Ukrainian army because only taxes paid by Ukrainian businesses can be used for military purposes.

“The situation has created a sense of unity and desire to support one another inside of Ukraine. And this why, despite the war, we’re now growing as a company and as a brand.”

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