FINLAND: Brown-Forman will buy Finlandia vodka in "next few weeks", sources say

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Within the next two weeks, US spirits and wine giant Brown-Forman will add Finland's homegrown vodka, Finlandia, to its portfolio, industry sources have told

"The deal is virtually done. Brown-Forman needs a premium vodka and it already has the US distribution rights for the brand," said the source.

Rumours during the last few months have surrounded Brown-Forman's strategy in Europe and have gathered pace since it bought a 10% stake in Scotch producer Glenmorangie PLC in May. "Brown-Forman is renowned for spending its money wisely. It raised a lot of cash to buy Dewar's and Bombay Sapphire but Bacardi-Martini pipped them to the post. So it still has roughly £1 billion to spend," said a leading drinks analyst.

In February this year, the Finnish Ministry of Trade and Industry announced it was planning to sell one-third (33%) of the shares in the state-owned spirits and wine conglomerate, Altia Group, which produces the Finlandia brand. At the same time, Altia's management decided to restructure the group to incorporate the Finlandia vodka business, hiving it off as a third subsidiary similar to the group's other two existing companies, Primalco and Havistra.

Officials said in February that an international auction to sell the new company, to be rebranded Finlandia Worldwide, would begin in June 2000. "The auction is taking place. An announcement will be made soon, probably this month, but I cannot say anymore," Markku Tapio, the Ministry's director general told

Though the actual sale is 33% of Altia, the draw for prospective foreign buyers is Finlandia. The convoluted nature of the deal, plus the state retaining 67%, however, has led some major drinks players to ignore the deal. Allied Domecq's CEO Philip Bowman, rumoured at one time to be a keen bidder, said at the company's results last month that "Finlandia is not for sale" and any assertion was "false".

In 1999, Altia Group's turnover was FIM 1.3 billion (218m euros) but any sale of Finlandia would not be a clear cut, 33% of this total. Trade ministry officials believe any final sum would be based on performance and future earnings potential of the brand, taking it well above the 72m euros mark.

Elliot Lane

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