Soyuz-Victan Trade has become the new distributor of the company in Ukraine.

strategy

As Kommersant has learned, one of the largest alcohol producers in Russia, the Russian Alcohol company, has changed its distributor in Ukraine. From December, Soyuz-Victan Trade will sell Green Mark vodka instead of Bayadera, and the retail price of vodka itself will decrease by 4 UAH per bottle. According to experts, in order to occupy 2% of the Ukrainian market, Russian Alcohol will have to invest $3-4 million a year in promoting the Green Mark brand.

CJSC "Russian Alcohol Group of Companies" was created in 2003 to manage the assets of the "Industrial Investors" group of Russian entrepreneur Sergei Generalov. The main production asset is the Topaz distillery (TM "Green Mark" and "Topaz"). Sales volume in the first half of 2006 amounted to 2.9 million decaliters, or 4.5% of the Russian vodka market in quantitative terms. The company's annual turnover is over $100 million.

Soyuz-Victan Trade is one of the largest distributors of alcoholic beverages in Ukraine (part of the Soyuz-Victan group of companies), uniting 29 regional branches. It has 12 brands in its portfolio, including SV, Medoff, Mernaya, Zhitnitsa and Russian Size. Average monthly turnover is UAH 100 million ($19.8 million).

The sales director of the Soyuz-Victan group of companies, Igor Kharmansky, told Kommersant that the Russian Alcohol company changed its distributor by concluding an agreement with Soyuz-Victan Trade. According to him, the company will begin selling Green Mark vodka in December of this year. Soyuz-Viktan declined to comment in more detail.

According to the vice-president of the Russian Alcohol company Vadim Kasyanov, with the change of distributor from December, the company intends to reduce the retail price of its products from 20-21 UAH to 16-17 UAH per bottle (0.5 liters). Mr. Kasyanov refused to provide more detailed plans. Earlier, Russian Alcohol announced its intention to invest about $3 million in the promotion of the Green Brand in Ukraine this year.

Let us recall that Russian Alcohol entered the Ukrainian market in 2004, signing a contract for the distribution of Green Mark with the Bayadera-Import company. At the end of September 2005, the parties signed an agreement on the production of the Green Brand at the factories of the National Alcohol Traditions (NAT) company, part of the Bayadera holding (see Kommersant dated September 26, 2005). However, in May of this year the contract was terminated.

Bayadere reported that the reason for the termination of the contracts was the failure of Russian Alcohol to fulfill its obligations. “In exchange for the sale and production of the Green Mark by us, Russian Alcohol undertook to promote our products in Russia. But the game was one-sided, and in May we parted,” said Dmitry, Marketing Director of National Alcohol Traditions LLC Samsonenko. Mr. Samsonenko explained the low sales figures of the “Green Mark” in Ukraine by the insufficient investments of the Russian partner in its promotion.

The market share of the Green Mark TM, according to market participants, is less than 1% in quantitative terms. According to the Union of Wholesalers and Manufacturers of Alcohol and Tobacco, the volume of alcohol production in Ukraine in 2005 amounted to 48.3 million decaliters. Market leaders in terms of production volumes are Soyuz-Victan (17.3%), Nemiroff (17.2%) and Olimp (16.3%).

Market operators believe that the change in distributor will have a positive impact on Green Mark sales in Ukraine. “Soyuz-Victan Trade is a stronger distributor than Bayadera,” says Igor Topchiy, General Director of the Megapolis Trade House (Khortytsia TM). However, according to Igor Turlakov, director of Ukryugtorg LLC (one of the largest distributors in the southern region), investments in brand promotion should be no lower than those of market leaders - $4-5 million per year. "If the price is reduced to 14-15 hryvnia per bottle (0.5 liters - Kommersant) and annual marketing costs are at least 3-4 million dollars, the Green Brand TM has every chance of occupying about two percent of the Ukrainian vodka market within a year ", says Mr. Topchiy.

ALENA Kommersant-Golubeva

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