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. Last Updated: 07/27/2016

Alcohol Raises Pepsi's IQ

Pepsico has obtained a liquor license and teamed up with domestic soft-drink manufacturer Ost-Akva to tap Russia's promising alcoholic cocktail market, which is expected to grow as much as 60 percent this year.

The two companies are hoping that their IQ drink -- made from juice and vodka -- will lead the market by the end of this year.

Ost-Akva general director Yevgeny Zuyev said Pepsi helped develop the new drink, referred to in the industry as an alco-pop, and partly financed the project.

Ost-Akva will control the trademark rights to IQ and production will take place at its factory in the Moscow region. Pepsico meanwhile will sell the drink through its extensive distribution chain, Pepsico external communications vice president Alexander Shalnyev said. A source in the company said that Pepsico would receive a share of the profits.

Depending on demand, Ost-Akva will fill and sell 10 to 15 million cans and glass bottles each month, comparable to current market leader Happiland.

"Pepsico itself doesn't produce drinks that contain alcohol," said Larry Jabansky, a U.S.-based Pepsico representative. "Some of our bottling plants may bottle alcohol, but these products are not sold under the Pepsi trademark."

Happiland general director Igor Barbashov said, "We welcome the appearance of new players, and we respect our competitors. But we were a little surprised that Pepsico is participating in the new project and that the best a world leader could do is imitate other tastes."

Barbashov said IQ's chief flavors would be feijoa and melon, which are Happiland's best sellers.

The alcoholic soft drink market is expected to grow by 50 percent to 60 percent this year and could exceed $600 million in retail revenues, said Maria Vanifatova, general director of the Biznes Analitika–Retail Audit marketing agency.

"If the marketing is done well, there will be room for everyone," she said.

Pepsico began bottling its products at Ost-Akva two years ago.