Pernod offloads Seagram's vodka in quest for Stolichnaya

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Joe Bates

20-Jul-2005

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The French liquor supplier has its eyes on the distribution rights for the Russian vodka as it nears completion of the purchase of Allied Domecq

Pernod Ricard looks set to acquire the US distribution rights for Stolichnaya vodka as part of its imminent purchase of Allied Domecq, reliable press sources have confirmed.

According to Business Week and Reuters, the French drinks group has sold its growing Seagram's vodka brand in the US for an undisclosed sum to Young's Holdings Inc, a California-based wine and spirits distributor, to appease US competition authorities' concerns over the acquisition of Stolichnaya.

The acquisition of distribution rights for Stolichnaya, which sells about 18m cases a year and is owned by SPI Group, would be a major coup for Pernod Ricard, whose only other major vodka brand Wyborowa has struggled to build distribution outside its native Poland. According to International Wine & Spirits Record, Stolichnaya recorded duty-free volumes of about 90,000 cases last year, virtually unchanged on 2003.

A degree of uncertainty still surrounds the destination of global distribution rights for Russia's most famous vodka brand, however, as Pernod Ricard or SPI are yet to make an announcement. Allied secured the rights for most regions late last year (DFNI January 15).

Although much smaller than Stolichnaya, Seagram's vodka was a prized asset for Pernod and its loss will be felt. Launched in October 2002 after requests for a new vodka from US distributors, the brand had grown to reach sales of 640,000 cases per year, enjoying a significant business with US and Canada border duty-free stores.

Now that all regulatory obstacles have been removed the sale of Allied Domecq is expected to be completed by the end of July.

For more analysis on Pernod Ricard and Fortune Brands' acquisition of Allied Domecq, please see the next issue of DFNI, out August 1.

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