Coca-Cola HBC has struck a deal to acquire the Finlandia vodka brand from spirits giant Brown-Forman.

The Coca-Cola bottler, which also distributes Brown-Forman products in nine markets, is to pay $220m for Finlandia and Brown-Forman Finland, the subsidiary housing the brand.

Brown-Forman has owned Finlandia outright since 2004 when, as the holder of 80% of the business, it bought the remaining shares from Finnish state-owned business Altia.

Created in 1970, some 2.7m nine-litre cases of Finlandia are sold each year, according to data released by Coca-Cola HBC. The brand’s prospective new owner said 60% of Finlandia’s sales are generated in its markets, which include the Russian Federation, Armenia, Bosnia & Herzegovina, Romania, Bulgaria and Serbia.

Coca-Cola CEO Zoran Bogdanovic described the deal as a “unique and regionally relevant opportunity that will support the acceleration of our on-premise business across more of our markets”.

He added: “The proven complementarity of our premium spirits business with our strong NARTD [non-alcoholic ready-to-drink] portfolio enables us to offer solutions for a broad range of 24/7 consumption occasions, particularly socialising moments. We view this as an attractive investment and a natural evolution of our role as one of Finlandia’s distribution partners, further attesting to the strength of our time-tested and wide-ranging partnership with Brown-Forman.”

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Nordic wine and spirits house Anora distills and bottles Finlandia. It also distributes the vodka in Finland, Sweden and Norway. Anora CEO Pekka Tennilä said the company “looks forward to continuing and deepening the strategic partnership with Coca-Cola HBC”.

In March, Brown-Forman recorded a non-cash impairment charge of $96m in relation to the Finlandia vodka brand. The group said the impairment reflected higher interest rates and input costs, as well as the impact of Russia’s invasion of Ukraine.

At the time, Brown-Forman CEO Lawson Whitting said: “Obviously, Russia and then not only Russia but also the countries that touch it all around there are all very, very weak and so it’s just been a tough situation.

“As you all know, it is a regional brand for us. It’s not really even sold in much of the world at this point in time anymore. It is an important brand in certain countries, particularly in eastern Europe. The suspension of the business in Russia was the biggest single factor that made it so difficult, but we’re going to continue trying to improve the performance of the brand and continue to fight through what is a very difficult situation.”

In a note to clients, analysts at AllianceBernstein described Finlandia’s recent performance as “sluggish” and said it accounts for 2% of Brown-Forman’s net sales.

Vodka has been the only category in which Brown-Forman has seen net sales fall in absolute dollar terms in the past five years, they noted.

“Net, the divestment improves Brown-Forman’s top-line growth outlook from both a volume and mix perspective,” the analysts added.

In a statement, Whiting said: “We believe Coca-Cola HBC is well-suited to support Finlandia’s future stages of development.”

In August 2020, Coca-Cola HBC said it had stopped the production and sales of The Coca-Cola Company’s brands in Russia. However, it noted it would continue to produce and sell the local brands Dobry, Rich and Moya Semya in the region, under the company name Multon Partners.