By the end of 2018, the alcohol plants that are part of the Rustam Tariko Roust holding produced a total of 10.29 million dal of vodka, which follows from the preliminary data of Rosstat provided to RBC by one of the participants in the alcohol market. In Roust, RBC clarified the final finished production figure - 10.35 million dal, which is 25.9% higher than last year. In addition, one of the distilleries owned by the holding, Topaz in Pushkino, Moscow region, became the largest enterprise in the country with a production volume of 4.26 million dal. Thus, for the first time since 2015, Roust regained its leadership in terms of annual production.
At the end of 2017, the largest producer of vodka in the country was Beluga Group with a production volume of 9.58 million, but this year the company produced only 8.6 million decals, which ensured it the third place in the ranking. In the second place, as last year, Tatspirtprom - over the past year, the manufacturer slightly, but increased its production from 8.58 million dal at the end of 2017 to 8.75 million dal.
In total, according to the data of the National Union of Consumer Protection, at the end of 2018, 78.61 million decaliters of vodka were produced in Russia, which is 1.5% lower than the 2017 level.
According to the forecast of the head of the Center for Research of the Federal and Regional Alcohol Markets (TsIFRRA) Vladimir Drobiz, in the following years the market will continue to gradually decline - in 2019 and 2020 we can expect a decline in production by 1.5% annually.
According to the expert, this is primarily due to the demographic factor, namely, the increase in the share of older people in the total population, which reduces the number of consumers of strong alcohol. This factor will determine the market further, I'm sure Drobiz.
Why the leader has changed and what else happened to the Russian vodka market - in the RBC review.
Return of Lost
The status of Rustam Tariko, the second largest producer of vodka in Russia, but also the second in the world after Diageo, was obtained after consolidation of the Central European Distribution Corporation (CEDC), which took place in 2012–2013. As part of the deal, the Russian businessman’s holding received both production sites, including Topaz, and popular alcohol brands - Green Mark, Zhuravli, and Parliament.
But in 2015, the company loses leadership. The volume of production is sharply increased by its main Russian competitor, the Beluga Group (at that time, Synergy), and the state-owned Tatspirtprom. The latter, following the results of eight months of 2015, is becoming the leader of the Russian market among vodka producers and has maintained this status for a long time.
Worsened Roust positions and internal problems. As part of the CEDC takeover, the Tariko structures received bonds - problems with their redemption arose in 2016. In a presentation for investors in the first quarter of that year, the alcohol company pointed to force majeure circumstances which led to the fact that its operating cash flow was below the optimal level:
The company began to return lost positions and actively increase production from the end of 2017, and by the end of the first half of 2018, it again took the first line of the manufacturers rating, slightly, but still ahead of Tatspirtprom - 4.38 million against 4.06 million gave In the company, a sharp increase in production (by 32% compared to the first half of 2017) was explained by the increased sales of vodka in the economy segment, where the state’s lowest retail price (MRC) is the lower limit of cost. In 2018, Roust resumed production of vodkas under the stamps “Stamp”, “Topaz” and “Kalinov Lug”. Due to this sale Roust in the economy segment - up to 229 rubles. for 0.5 l - increased by 145%, specified in the holding. Go
The press service of Roust explained that the growth in production by 26% and sales volumes by a record 37% in 2018 is associated with the implementation of the strategy, which included entering the economy segment, developing distribution, supporting key strategic brands and launching new products.
"In 2018, we managed to significantly increase sales in the economy segment, which occupies 50% of the vodka market in Russia," a company representative told RBC. “The sales of Topaz, Yamskaya and Urozh brands, which operate in this segment, amounted to an unprecedented 150%.”
Sales of “Talki” reached record-breaking results for the last four years, they grew by 30% and exceeded 2.2 million nine-liter boxes (1.98 million dal). Other key vodka brands, including Green Mark, Parliament and Zhuravli, also showed double-digit growth rates, the RBC source said. Sales of the flagship premium brand of the company - “Russian Standard” - grew by 10% by the end of the year, and sales growth in the popular and profitable segment of small packages amounted to 75%.
Vodokovniki change portfolio
Rearrangements in the top three can be explained by a change in the approach to business by one of the key players - the Beluga Group. As explained by RBC source in the alcohol market, in the group's portfolio, vodka production last year accounted for 73% of the total volume of alcohol produced by the company. For comparison: in Roust, the share of non-vodka products is 2.6%, and in Tatspirtprom it is about 8%. In addition, in recent years, the Beluga Group has relied on imports - in particular, the company is an importer of the famous Torres and Frescobaldi Group wines. By the end of 2018, the volume of shipment of partner brands Beluga Group increased by 29.5%, to 1.198 million dal.
According to the chairman of the Beluga Group, Alexander Mechetin, the company experienced an insignificant, approximately 4%, decrease in sales in the vodka category, primarily in the economy segment. Beluga Group, according to him, does not see for itself big prospects in the development of this segment - it has concentrated on more profitable areas - premium vodka and non-vodka products. These are brandy, whiskey, wine and alcoholic beverages of own production, as well as imported products. The growth of these categories in the past year has compensated for the fall in sales of inexpensive vodka, the interlocutor of RBC noted.
Newbies pushed oldies
According to Alexander Mechetin, in 2018 the vodka market did not grow: there was a redistribution of volumes from players who left the market, such as Status Groups and Kristall-Lefortovo, who produced vodka at MRC level. To the players who began to work actively in this segment, he took, in particular, Roust. Both former leaders — Crystal Lefortovo and Status Groups — stopped their work in 2018.
Based on the data on production volumes, the fifth place instead of the Kristall-Lefortovo rating that fell out of the rating is officially unknown company Marketing System Distribution - according to its own data, it owns the Russkiy Sever and Rodnik and Co plants, which in total produced 4.94 million dal of vodka last year.
But in the alcohol market, the owner of these plants is called the company Global Spirits, which gained fame at the expense of the Khortytsa brand. Global Spirits acquired the Russian North plant in Vologda back in 2011, and in December 2015, Rodnik i K in the Moscow region. Market participants explained the second deal with the company's desire to preserve the important Russian market in the context of restrictions on the import of alcoholic beverages from Ukraine. The owner of Global Spirits, Yevgeny Chernyak, in an interview with Ukrainian media denied information about the deal. But according to SPARK, the beneficiary of both companies is still Global Spirits.
As the General Director of MSD Inna Kosintsova told RBC through a company representative, MSD is a Russian company with 100% domestic capital. “Entrepreneurial activity is based on obtaining royalties from the Khortytsya vodka brand and other vodka brands. The brand's products are produced on the terms of contract bottling at four third-party distillery enterprises and sold through external distributors, ”she said. What kind of production sites besides the “Russian North” and “Spring and K” are we talking about - the company did not specify. Contact with Global Spirits in the company is denied.
“Global Spirits has no factories and has not been operating in Russia for several years,” said an MSD representative.