Ukrainian vodka exports to Russia soar. China on target

New figures show imports of strong alcohol to Russia this year have risen 40% by volume and 80% by revenue to $US 839 million. The biggest gainer has been Ukrainian vodka giant Nemiroff, whose director in Russia explained how he now plans to use a Russian

The Russian spirits market is still recovering from a botched government decree in 2005 to put hi-tech stickers on all bottles. Domestic producer Crystal Gross put all new projects on hold.

By contrast Ukraine’s Nemiroff spotted an opening and started a massive marketing campaign.

According to Tigran Hovhannissyan, Chief Analyst in Sobinbank in Moscow, “Nemiroff's brand awareness is higher or maybe even the highest in Russia. If anything spring to mind it's Nemiroff. They use appearance in the media quite smartly by sponsoring different sports, etc. I f I think of Russian vodkas I can't remember any single brand.”

This has paid off. Nemiroff is now number three by volume and number one by revenue in the heavily fragmented Russian market, with a 4.6% share.

Rivals are back on the offensive. But Nemiroff has revealed first plans for a Russian plant to supply the next target – China.

Andrey Nikitin, Commercial Director of Nemiroff Russia stresses that “China’s a very important market for us, now we begin sales to China, China Metro Cash and Carry, duty free shops. We are planning to construct a factory here in Moscow, to supply Moscow region, Russia and China.”

Last month’s proposals to create a Swedish-style state alcohol monopoly have now been rejected as spurring bootleg vodka. The last state intervention through customs stickers is said to have backfired spectacularly, doubling illegal vodka’s market share to 50%. Left alone spirits remain a cash cow for the authorities Nemiroff claims it will pay $US 128 million in tax to the Russian government this year alone.