A Drink With… Veniamin Grabar, Ladoga Group
According to the long-standing president of Russia’s Ladoga Group, companies need resilient attitudes to win in the competitive game of spirits.
*This interview was first published in the June 2017 issue of The Spirits Business magazine
How did you start your career in the spirits industry?
I got into this field in 1992 and two years later I created the first spirits distribution company in Saint Petersburg. From 1996 to 1998 I was CEO at Russian spirits trading company RosalkoNeva, and in 1998 I continued my activity in the spirits industry, but in government services. As a governor’s counsellor I dealt with alcohol market regulations. At the same time in Saint Petersburg I created a unique system of accounting and control over the trade in alcoholic beverages. Two years later I decided to dedicate myself to business and in 2000 I became the head of Ladoga Group. As its president I have seen the company go through many hardships, crises, and legislative limitations, as well as prosperity. There were good times as well as less successful years, but all this instilled in me and my team a resistance to almost any disadvantage. As the saying goes, that which does not kill us makes us stronger.
Which brands were particularly successful for Ladoga in 2016?
There were three leaders in our portfolio: Tsarskaya/Imperial Collection Gold, which hit one million nine-litre case sales; the FrukoSchulz liqueurs range has taken first place in Russia for the past two years; and products of Bodegas el Cidacos – a wine from Rioja – are number one here.
Why was Tsarskaya so successful in 2016?
In comparison with 2015, sales of Tsarskaya throughout the world grew by 51% in 2016. This explosive growth is the result of a variety of efforts. In particular, volume export sales of the brand increased by 37%, although, of course, Russia remains the largest market for Tsarskaya. Direct distribution starting in the largest Russian market for vodka sales – Moscow – was an important stage. Essential growth was also achieved with an aggressive price policy throughout the year in our main distribution channel – retail chains.
Which markets have been important to the development of the brand?
Our strongest market is Russia: in 2016 we achieved the leading position in the premium vodka segment. The largest export countries are China, Germany, Eastern Europe and Southeast Asia. In 2016, shipments to China increased five times in comparison with 2015 thanks to joint efforts with our new local distributor. In 2016 we developed some new export destinations, such as Japan, Portugal, Denmark, Finland, Georgia, Azerbaijan and Belarus. One of our most crucial tasks is to secure these markets.
How competitive is the vodka category at the moment?
The alcohol market has always been extremely competitive. Customers’ ability to reconsider their choice in favour of legal premium vodka was one of the most pertinent consumer trends in Russia in 2016. It was partly caused by the introduction of EGAIS (Unified State Automated Information System), which helped to decrease counterfeit spirits in the market. But the biggest impact was the price policies of premium brands in federal and local retail chains. The difference in cost between economy vodka and the promotional prices of premium vodka is not so great, and customers tend to buy higher quality drinks.
Are you targeting new markets?
We will expand our footprint in emerging markets. The first phase will target Middle Eastern countries and Sub-Saharan Africa. The focus of our marketing strategy is to establish Tsarskaya in duty free and travel retail, enhancing visibility in the channel starting with Dubai Duty Free. The second phase will target Southeast Asia.
Would you like to enter any new spirits categories via acquisitions?
As for categories, no. At the moment our company’s portfolio is well balanced. However, within categories we constantly follow consumer preferences, enter new positions and discontinue less in-demand expressions.
Are you targeting aggressive growth for any other spirit brands?
This year we plan not only to repeat last year’s results with the Tsarskaya/Imperial Collection Gold brand, but also to improve it. Even now we have grown 20% compared with the same time last year.