Ukraine crisis will impact spirits market, Stolichnaya owner warns

The crisis in Ukraine “will not be another Cold War”, but could delay the end of the recession in some European markets, Stolichnaya vodka’s owner has warned.

Stolichnaya owner SPI Group has voiced its concerns over the Russia-Ukraine crisis

Val Mendeleev, CEO of SPI Group, the owner of the Russian-distilled but Latvian-bottled vodka, believes trade sanctions forced on Russia by the EU and US could significantly impact the spirits market across the whole of Europe in the short to medium term.

Russia’s annexation of Ukraine’s Crimea region has prompted some consumers and retailers to halt stocking Stolichnaya along with other Russian vodka brands in protest.

“We have Russian heritage, and we are related to Russia by all means, but we are not the voice or means of Russian government or the Russian state,” he told The Spirits Business.

“We need to see what effect, if at all, this anti-Russian sentiment will mean for us. I guess it will reinforce that we are a vodka produced in Latvia from Russian grain spirit, but of course it’s the perception. Educating people will be our number one priority, but I don’t think the backlash will be as strong as the situation last year.”

While last year Stoli bore the brunt of a US consumer boycott of Russian goods in retaliation to the country’s anti-gay education laws, Mendeleev is now more concerned with the economic tolls the Russia-Ukraine crisis may present.

“Sanctions imposed on Russia by the EU and US will probably delay the end of the recession in some markets,” he said. “This crisis certainly will have some effect on Europe, less so the US, because the world is so interconnected. It will have a huge effect on the economy and the market and ultimately the way people drink, so of course that’s something that concerns me.”

While destocking of Russian vodka in the US during the Cold War in 1983 severely impacted sales of Stolichnaya, Mendeleev believes the current crisis will not escalate to such levels.

“If Russia takes Crimea the whole world should not accept it, but we realise in the short term it might be quite a tough situation for the world economy,” he said.