Russian Standard vodka emerging as a quality acquisition candidate in super-premium vodka
- October 04, 2007
||product launches in France, US and UK during 2007;
||Russian Standard (Russia), leading domestic super âpremium vodka brand;
||possible candidate is Bacardi (alma mater of the brandâs CEO);
||funds managed by Roustam Tariko (Russia), billionaire businessman;
||to gain a key platform in the new frontier of â100% authenticâ vodka;
||attractive valuation, timing, focus on core business of consumer finance;
||Russian Standard claims 60% market share of super âpremium vodka segment in Russia.
Established in the late 90s, Russian Standard has the ambitions and arguably the genuine potential to become a global vodka leader. It was ranked by Impact magazine as the 4th fastest growing spirits brand globally, growing by 32% in 2006 in volume terms. Thatâs two places behind Svedka, acquired by Constellation Brands earlier in 2007. It is also attempting to break new ground in the area of authenticity claims, and its international roll âout is being executed in the most professional manner. This is a brand to watch or, for a spirits major with the foresight and the money, to acquire
Russian Standard is already bigger than Svedka, at 1,4 mln cases compared with the latterâs 1,0 mln. It also arguably has an advantage in sustainable value. Most surveys show that the âdefault identityâ of vodka, in the minds of the average consumer, is Russian, and not Swedish, nor Polish etc. Another natural advantage that Russian vodka has over other nationalities, particularly in the super âpremium category where product placement amongst celebrities is so important, is that only Russian vodka can legitimately be served with caviaar.
Mindful of all of this, Russian Standardâs owners are merciless in marketing what they claim to be the worldâs first 100% authentically Russian super âpremium vodka. To this end, their recently-completed distillery in St Petersburg is fully integrated, from grain procurement to bottling; the grain is traceably Russian wheat grown on the Steppes; the vodka is made according to a certain Dmitri Mendeleevâs original formula from 1894; the specially textured bottle has been inspired by a famous Moscow bell.
Complementing the authenticity is a very western professionalism in the international launch of Russian Standard, in 40 countries from India to the US. Supported by a âŹ 5 mln marketing budget for each key market, with more for the UK and even more for the US, the brand seeks out strong distributors in markets that are carefully targeted. The French market, curiously, is a high priority. Examine why, and youâll see that France is experiencing a substitution of whisky by vodka now, and that the Stolichnaya and Sobieski vodka brands have grown phenomenally fast there in the last year.
The Russian Standard PR machine has also launched a court case against Pernod Ricardâs Stolichnaya, in the US, on the grounds that the latter canât claim to be authentically Russian, even if itâs distilled in Russia, because itâs actually bottled in Latvia. This attack underlines that Russian Standardâs ambitions go beyond the super âpremium segment, and into the mainstream of premium vodkas. Certainly Tarikoâs stated ambition is to bring luxury into the reach of the ordinary person. Thatâs another key reason, maybe the biggest one, why the global vodka majors cannot afford to ignore the Russian Standard brandâs value and potential.
But might it be for sale? No official word on this yet; but constructive evidence points to Tariko being a seller. Partly, weâre thinking of recent precedents â in all of the spirits deals reviewed by Glenboden, in the last year, the sellers were invariably entrepreneurs (White & Mackay, Svedka, Cabo Wabo, X-Rated, Nuvo). Another reason is that most of Tarikoâs fortune, estimated variously from âŹ 2,5 â 5 bln, is derived from an altogether different line of business â financial services (consumer finance, credit cards, insurance). This is surely where he should focus, given the massive potential and challenges of financial services in Russia.
The CEO of Russian Standard, the Italian Carlo Radicati, had over 20 years experience at Bacardi âMartini. One theory is that Radicato, as well as attacking Stolichnaya in the premium mainstream, is targeting his alma materâs Grey Goose in the super âpremium segment, because he wants to entice Bacardi to acquire Russian Standard. Tariko has already identified that brand as his main competitor.