International was the first company to start bottling whiskey in Russia

Synergy with whiskey

Company Bacardi, one of the top 3 global manufacturers of strong alcohol, has signed a contract for the bottling of his cheap Scotch whisky William s Lawson’with Synergy, one of the largest Russian producers of vodka, I told the Vice-President of Bacardi Alejandro Ouziel and Chairman of the Board “Synergies” Alexander Mechetin. Bottling of the whisky will begin in late April at the Moscow factory “Synergy” “Traditions of quality”. “Synergy” will act as Butler the plant will receive 60% of the distillate from Scotland, in Russia it will kupiruetsa to the desired strength (40% alcohol), and then bottled in bottles of 0,5 l, 0,7 l and 1 l). Distribution of whisky William Lawson’s Russian manufacturer will not be engaged in “Synergies” have a valid contract for the sale in Russia of whisky with a competitor of Bacardi — the company William Grant & Sons (brands Grant’s, Glenfiddich, Tullamore Dew), which she can’t take whiskey for distribution to another company.

Investment in joint project Alexander Mechetin estimated at “several tens of millions of rubles”: “Large expenditures are not needed, we’re not going to create a new production from scratch, and upload existing plant, he explains. — We will need to configure whiskey bottling line to increase alcohol cellar, blending shop is not such a big cost”. In his words, “synergy” will assume the costs of the necessary technical re-equipment of production facilities, Bacardi will invest in working capital the project will allocate funds for the purchase of bottles, components, and so on.

Cooperation should be mutually beneficial to both parties, according to representatives of both companies. The contract with Bacardi will allow Synergy to increase the existing production capacity, which now, according to Mechetina, work only 50% of my capacity. Mechetin said that under a contract with Bacardi, operating until the end of 2017, “Tradition of quality” needs to produce about 10 million liters of whiskey. For comparison: the “synergy” in 2015 sold about 98.7 million liters of strong alcohol. In addition, Bacardi will pay “Synergy” for the bottling of products, but the amount representatives of the companies not name. According to a top Manager of a large Russian vodka company, the average market price for the contract on third-party bottling plant now accounts for 6-7 rubles. for one bottle of 0.5 l (excluding the cost of the bottle itself and accessories) and up to 12 rubles., if we are talking about premium vodka with the “complex” bottle. Thus, for bottling under the contract of 10 million liters of whiskey “synergy” can earn about 140 million rubles.

The Russian market of whiskey

At 22.2 percent (up to 33.6 million litres) dropped volume of Russian import of whisky in 2015

79.2 per cent of the Russian import of whiskey in 2015 were in the UK

At 14% decreased sales of whisky in Russia in natural expression in the first and third quarters of 2015 compared to the same period of 2014

31.4% of the total imported in 2015 in Russia of whisky accounted for the largest importer Diageo

70-75 bn in the year — in the same amount estimated last year the volume of Russian market of whiskey, the Director of Agency tsifrra Vadim Drobiz

1 July 2015 in Russia came into force GOST, allowing any grain distillate, including whisky

31st place in the world in consumption of whisky per capita (0.2 l) was occupied by Russia in 2014

Source: Nielsen, tsifrra, Statista

Salvation from fluctuations

Alejadro Uziel of Bacardi says that the transfer of production William Lawson’s in Russia will allow the company less dependent on price fluctuations of the Russian ruble. “We didn’t increase the price of our whisky in proportion to the depreciation of the ruble, stresses Uziel. — With the start of the active fall of the ruble price of our product on the shelf increased by 25-30%, while the ruble fell much stronger.” The Director of branch Agency tsifrra Vadim Drobiz believes that the decision of Bacardi on the localization of their brand in the low price segment was taken because of the devaluation of the ruble and “the impoverishment of a significant number of consumers”: “at the same time the Company was losing money due to the weakening of the ruble and reduced sales due to falling of incomes of the population — says Drobiz. Whiskey again became too expensive for the mass consumer, and the manufacturer must somehow respond to the situation. I am sure that localization William Lawson’s in Russia is only the first step, soon there will be followers”.

Save many Bacardi, moving the bottling of whisky in Russia, Uziel not disclose. Manager of a large Russian alcohol company, having experience in working in foreign markets, believes that, subject to the production of components in Russia Bacardi will be able to save up to 100 rubles with a bottle 0.5 l Half liter bottle William Lawson’s in the largest Russian network of liquor stores “Red & White” now costs about 450 rubles.

Bacardi’s second biggest importer of whisky to Russia — brought in last year 6.1 million litres, which is 26.2 per cent lower than a year earlier. However the sharp drop was due also to the large number of commodity stocks in warehouses. In 2014 after the introduction of food sanctions by Russia against EU countries and the USA, large Western companies stepped up imports of its products in Russia due to fear that Russia may turn on the sanctions list and imported alcohol, explained previously, co-owner of wine importer Simple, Maxim Kashirin. The volume of supply of whiskey in Russia in 2015, according to the Federal customs service declined by 22.3% to 33.6 million L.

According to Euromonitor International, William Lawson’s is the best-selling brand in Russia in the category “Scotch whisky”. According to Osiele, William Lawson’s accounts for about 90% of the sales of whisky Bacardi in Russia. From this figure, in 2015, the company would import about 5.5 million litres of whisky of this brand. Alejandro Uziel acknowledges that the sales volume of this brand in Russia in 2015 has declined, but says the decline was below market.

Whiskey “the law”

Previously, foreign producers of spirits entered into with domestic factories contracts for the production of beverages in other categories. So, Pernod Ricard produces vodka “Altai” on the capacity of the Itkul distillery in southern Siberia. Diageo localized in Russia production of vodka “Smirnov”. In addition, Diageo in 2013, introduced to the Russian market “rum drink” (containing a small amount of rum) Shark Tooth. In 2015, this brand occupied the third position on the market of Roma after Bacardi and Captain Morgan (Diageo data with reference to Nielsen). Having seen convincing growth in sales of the Shark Tooth, Diageo in August 2014 launched the “drink Viskuly” Rowson’s Reserve. New product less than a year, came in second place in the category of Irish whiskey after Jameson popular.

However, the localization of production of foreign whisky in Russia — the first precedent in the market. Previously the company could not arrange the bottling of imported products at its own facilities due to the lack of appropriate standards. GOST 55799-2013 “grain Distillate. Technical conditions”, legalizing the production of any distilled beverages made from grain — whether invented in Britain whisky or traditional Russian moonshine, entered into force on 1 July 2015.

The only brand of whiskey, which was produced in Russia before the adoption of the standard, — Praskoveyskoe Praskoveyskoe on the plant in the Stavropol region. The company has managed to register its own technical specifications (TS) to produce his own whisky in 2003 and in 2006 presented the first of three whiskies at the exhibition “Prodexpo” in Moscow. This brand of whiskey is still produced, but the production is insignificant.