Vladimir Yevtushenkov will take "Narzan"

Sistema bought a stake in the manufacturer Essentuki. The project in the corporation is overseen by a relative of Alexander Khloponin.
The structure of Sistema acquired a 33.3% stake in Aqua Invest from Egor Loginov, investment director Nikita Shashkin told Vedomosti and Loginov confirmed.

Loginov created Aqua Invest in 2017, the company began to combine assets in bottling and production of drinking mineral water in the North Caucasus. At the beginning of 2018, Aqua Invest became the owner of a plant in the Stavropol Territory, then, together with the state-controlled company Kavminkurortresursy (CMCR; the largest subsoil user in the Caucasian Mineral Waters), created the company Aqua Holding, which became another large subsoil user - “Cold bottling” to produce bottled water: “Essentuki” No. 4 and No. 17, “Narzan”, “Slavyanovskaya” and “Nagutskaya”.

At the end of 2018, Aqua Invest acquired the Essentuksky Mineral Water Plant from PepsiCo, which also produces Essentuki No. 4 and No. 17 and is entitled to production. "Cold bottling" can also enter the holding (now 99% of its shares belong to the company itself, 1% from Shashkin, according to the register), the AFC representative said.

Another 5% of “Aqua Invest” from Loginov acquired Shashkin, according to the data of the Incorporation and confirmed by the representative of Sistema. According to him, Shashkin also has an option to increase his share in Aqua Invest. Prior to working in the structures of Sistema, Shashkin was first deputy general director of the Resorts of the North Caucasus (KSK; management company of the tourism cluster in the North Caucasus). Experience in the KSK played a significant role in attracting Shashkin to work with Caucasian mineral waters, the AFC representative knows.

The interlocutors of “Vedomosti” call Shashkin the son-in-law of the former deputy chairman of the government and the former plenipotentiary of the president in the North Caucasus Federal District, Alexander Khloponin. Khloponin's son-in-law is engaged in mineral water, confirms a former government official and friend Shashkin. The representative of the "System" does not comment. Khloponin failed to get comments.

It was Khloponin who demanded to restore order in the mineral water market and, possibly, to unite the producers. About 30 companies are pouring Essentuki, where a well, from which they take water, was outraged a year ago in an interview with Rossiyskaya Gazeta Khloponin. The problems with mineral water were also announced by CMCR: the production of Essentuki was 104 million liters, and sales - 155–230 million liters (data from Nielsen). The certificates for the appellation of origin "Essentuki number 4" and "Essentuki number 17" Rospatent recalled all plants that do not have access to mineral water Essentukskogo field, said the representative of CMCR.

CMCR, her representative said, reported to Minkavkaz that water is sold more than it is produced, and it was discussed in the government, instructions were given about the need to combat counterfeiting and market structuring.

After that, the combined structure became the only subsoil user with the legal right to pour Essentuki, said Maxim Novikov, President of the Union of Soft Drinks Producers: the state will increase the efficiency of subsoil use and clean the market from counterfeit.

Entry into the business of Sistema will allow attracting investments in the modernization and increase in production capacity, it will be possible to return to the market the legendary mineral water of the Caucasian Mineral Waters region, said a holding company. Holding Aqua is already reconstructing the plant to increase production from 3–4 million bottles per month to 9–10 million. A large vertically integrated holding of bottled drinking and mineral water is planned, it will be one of the main players on the Russian market, Shashkin is sure.

Sistema is interested in another mineral water, Arkhyz, said the partner of the manufacturer Arkhyz and an employee of the manufacturer of soft drinks. The representative of the "System" does not comment. The rights to the Arkhyz brand are held by Visma, it is going through a bankruptcy procedure.

The demand for mineral water is growing, Shashkin says, the market has the potential to develop due to the consolidation and elimination of counterfeit. This is confirmed by Nielsen data: for the year ended September 2018, sales of drinking water increased by 12.7% in liters, mineral water - by 6.5%.

In addition to Sistema and Shashkina, the co-owner of Aqua Invest, according to the register, was Gisar JSC with a 28.3% stake. Its founder, Valery Kovalev, head or co-owner of dozens of Russian companies (data from SPARK-Interfax), could not be reached. 33.3% of “Aqua Invest” remained at Loginov himself, he said that he would continue to participate in the project.

A PepsiCo spokesman declined to comment.