Belarus will be covered by Tundra

Russian alcohol companies are forced to look for new development options abroad due to the risks of stagnation of demand within Russia and a ban on exports to Western markets. So, Tatspirtprom, controlled by the authorities of Tatarstan, was the first among Russian players to launch a bottling of vodka in Belarus. Consider a similar scheme and competitors. But it will be difficult for former large exporters to reach the previous indicators in this way.

Tatspirtprom has begun contract production of Tundra vodka at the Grodno plant of Minsk-Kristall, a large Belarusian alcohol holding, a representative of Tatspirtprom told Kommersant. According to him, the alcohol producer from the Russian Federation for the first time arranged the bottling of products in Belarus.

During the year, the plant in Grodno should produce about 200 thousand liters of vodka, cooperation can be expanded in the future.

Minsk-Kristall will also supply Tundra. And Tatspirtprom, they say in the company, will start distributing vodka from the Grodno plant Signitum in Russia. In Minsk-Kristall, Kommersant’s questions were forwarded to Tatspirtprom.

Tatspirtprom is owned by the government of Tatarstan. According to Kommersant’s data from market participants, in January-October this year, the company produced 7.25 million decaliters of vodka, ranking second after Alexander Mechetin’s Beluga Group. Tatspirtprom’s brand portfolio also includes Russian Currency vodka, Graf Ledoff, and Bugulma balsam.

Director of TSIFRRA Vadim Drobiz notes that Ukrainian brands such as Nemiroff and Khortytsya were bottled in Belarus, while Russian brands were not really produced. The country’s alcohol market is very closed, and it is extremely difficult to compete with local factories, he points out. But, the expert adds, if the launch of Tatspirtprom is successful, it will be able to increase the spill in the country in the future. According to Mr. Drobiz, vodka consumption in Russia is likely to reach a new high this year, after which demand will stagnate or decline.

In January-October, the production of vodka in the Russian Federation increased by 7.7%, to 67.01 million decaliters, according to the Rosalkogolregulirovanie.

After the outbreak of hostilities in Ukraine, the EU, US and UK authorities imposed a ban on the import of vodka from the Russian Federation. According to Agroexport, in 2021, about 45% of the supply of Russian strong spirits in money terms accounted for a total of Latvia, the UK and Germany.

In June, Tatspirtprom began bottling vodka in Uzbekistan, where it intends to occupy up to 10% of the market, and also plans to launch production in Azerbaijan and Kazakhstan. According to the company, contract bottling is more interesting than direct export, as it allows saving on logistics.

Rustam Tariko (Russkiy Standart, Zelenaya Marka) says at Rust Group that they are still studying the issue of starting a contract spill outside the Russian Federation. The Beluga Group (Beluga, Myagkov, Belenkaya, Arkhangelskaya) said they were not considering such a possibility. Earlier, amid export difficulties, the group announced the sale of international rights to the Beluga vodka brand and plans to concentrate on the Russian market. The Alcoholic Siberian group (“White Birch”, “Five Lakes”) declined to comment.

The owner of the Kaufman brand agency, Stanislav Kaufman, says that the Belarusian market has not previously been of particular interest to Russian alcohol producers due to its small size, additional taxes and the dominance of local brands. And today it can give an increase in sales along with entering new product categories, he notes. According to the expert, in case of contract bottling, the customer usually pays the manufacturer based on volumes. Minsk-Kristall can also take a percentage for the distribution of Tundra or provide this service in exchange for Tatspirtprom’s obligations to supply the Belarusian brand, he says.

In addition, adds Stanislav Kaufman, the production of vodka at the Belarusian plant can help circumvent export bans, although the risks, of course, remain. And Vadim Drobiz notes that the former large exporters of vodka are unlikely to be able to reach their previous volumes only through contract bottling.

Anatoly Kostyrev