RUSSIA: Diageo may pull Smirnoff from market
The UK drinks giant said yesterday (1 June) that it might only sell Smirnov in Russia once it receives regulatory clearance for its joint venture with Russian firm A1.
Diageo ended a long-running dispute between the two brands in February when it joined forces with A1, a subsidiary of Russian conglomerate Alfa Group, to form a spirits joint venture, Diageo Distribution. Diageo paid Alfa Group US$50m for a 75% shareholding in the venture, which will handle Smirnov and Diageo's portfolio in Russia, and which is expected to be up and running next month.
The venture plans to merge the Smirnov and Smirnoff brands and it looks likely that Smirnov will be sold in Russia due to its greater awareness among Russian consumers. "We would like to concentrate our efforts on the product that has a strong appeal to local consumer and significant market potential in Russia," Diageo said.
"Diageo's global consumer and market expertise, gives us confidence that Smirnov as the Russian version of the global brand will become a significant player at the local market." The company insisted, however, that it had yet to reach a final decision on its plans for the two plans.
Smirnoff is bottled in Russia at the Liviz vodka distillery in St. Petersburg. Diageo again insisted it had yet to decide whether to stop bottling its flagship vodka brand at the plant.
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