Two Russian spirits companies are looking to merge next year to form a company that would control 8% of the country's vodka market, according to local reports.

Russian Wine and Vodka Company (RVVK) and OST-Alco are in merger talks and may sign a memorandum of understanding later this week, Russian business newspaper Vedomosti said yesterday (7 December). The merger is thought to be on the cards for early next year.

Vedomosti cited the general director of OST-Alco's parent group, OST-Group, in the report, noting that the new company would control around 8% of Russia's vodka market. "We are considering two options: both companies holding 50% in the venture, or OST holding 51% and RVVK holding 49%," Yelena Sorokina told Vedomosti.

Although RVVK declined to comment on the prospective deal to the paper, a source familiar with the company's plans confirmed that RVVK is in negotiations with OST-Alco.

Consolidation in the country's vodka sector is on the horizon, as legislative changes early next year take effect. New alcohol laws, set to be introduced on 1 January, will set minimum charter capital levels of RUB50m (US$1.7m) for vodka producers and RUB10m for vodka traders, Vedomosti said.

"Consolidation in the sector will begin, and we want to be the first in this process," Sorokina said.