RUSSIA: Diageo decides to pull Smirnoff
The UK drinks giant said today (5 September) that it would focus on selling Smirnov in Russia as it formally opened its new operations in the country.
The decision marks the final chapter in an at times fractious relationship between the two brands, which battled it out over the Smirnoff brand name.
In February, Diageo gained a majority stake in the Smirnov brand after signing an agreement with the brand's owner, Russian company A 1 Group. The deal, which also saw the two companies agree to form a sales and marketing venture in Russia, ended years of legal wrangling over the Smirnoff trademark. Diageo paid A 1's parent, Russian conglomerate Alfa Group US$50m for a 75% shareholding in the joint venture, Diageo Distribution. The venture is set to focus on pushing Diageo's premium spirits stable in Russia.
"We've decided to concentrate on the Smirnov brand in Russia," a Diageo spokesperson told just-drinks. "The Smirnov brand has one of the highest levels of brand recognition in Russia and it's a great basis on which to build the brand."
Alison Forrestal, the venture's general director, said: "We expect to accelerate our growth in Russia and aim to become the leading spirits company in this market."
Alexander Savin, managing director of A 1, said the venture has an "extremely promising future".
He added: "As for the Smirnov vodka brand and business - it's a very attractive asset for strategic investment. Building the Smirnov brand will now acquire a new emphasis. This opens new horizons for its future growth."
Last week, Diageo said sales volumes in Russia leapt 25% last year driven by a 26% jump in local sales of Johnnie Walker Scotch whisky.
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