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 –premium vodka brand;
||possible candidate is Bacardi (alma mater of the brand’s CEO);
||funds managed by Roustam Tariko (Russia), billionaire businessman;
||to gain a key platform in the new frontier of ‘100% authentic’ vodka;
||attractive valuation, timing, focus on core business of consumer finance;
||Russian Standard claims 60% market share of super –premium 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. That’s 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 –out 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 latter’s 1,0 mln. It also arguably has an advantage in sustainable value. Most surveys show that the ‘default identity’ 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 –premium 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 Standard’s owners are merciless in marketing what they claim to be the world’s first 100% authentically Russian super –premium 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 Mendeleev’s 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 € 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 you’ll 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 Ricard’s Stolichnaya, in the US, on the grounds that the latter can’t claim to be authentically Russian, even if it’s distilled in Russia, because it’s actually bottled in Latvia. This attack underlines that Russian Standard’s ambitions go beyond the super –premium segment, and into the mainstream of premium vodkas. Certainly Tariko’s stated ambition is to bring luxury into the reach of the ordinary person. That’s another key reason, maybe the biggest one, why the global vodka majors cannot afford to ignore the Russian Standard brand’s 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, we’re thinking of recent precedents – 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 Tariko’s fortune, estimated variously from € 2,5 – 5 bln, is derived from an altogether different line of business – 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 –Martini. One theory is that Radicato, as well as attacking Stolichnaya in the premium mainstream, is targeting his alma mater’s Grey Goose in the super –premium segment, because he wants to entice Bacardi to acquire Russian Standard. Tariko has already identified that brand as his main competitor.