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. Last Updated: 07/27/2016

Poland's Vodkas Hitting the Big Time

For MTAs Bialystok prepares to go public, some of the world's biggest spirits makers are lining up for a shot at a stake.
BIALYSTOK, Poland -- "Coffee, tea or vodka?" beams a top executive at Polmos Bialystok, emerging from behind a desk stacked with his distillery's main export hit: a flavored vodka with a blade of grass in the bottle. Polmos Bialystok, Poland's last big distiller still in state hands, is preparing to go public just as vodka sales in the country take off in the wake of excise tax cuts and a crackdown on smuggling.

Already the fourth-largest vodka market in the world, registered hard liquor sales in Poland jumped by nearly half in the past two years to the equivalent of 100 million liters of pure alcohol in 2004.

No longer the drink of choice only for poorer Poles seeking to forget their troubles, the clear, nearly tasteless tipple has also made inroads into an urban audience recently drawn to fancier foreign liquor, beer or wine by aggressive ad campaigns.

"Poles are a bit ashamed of their love for vodka. It's ridiculous how often they prefer to serve French wine, not vodka, at official banquets," said Henryk Wnorowski, head of sales at Bialystok.

Poland seeks to float about 20 percent of Bialystok on the Warsaw bourse next month in addition to finding a strategic investor for the company, which has annual sales of $400 million.

Bialystok's products include local top seller Absolwent, a brand it says was the world's fifth best-selling last year. Its export hit, Zubrowka, or Bison Grass, is flavored with a grass that grows in a nearby forest, home to a herd of rare European bison.

Realizing that the window of opportunity to buy into Poland's growing 7 billion zloty ($2.3 billion) domestic vodka industry is closing quickly, some of the world's biggest spirits makers are lining up for a Bialystok stake.

Polish industry leader Sobieski Dystrybucja, owned by France's Belvedere, U.S. spirits distributor Central European Distribution, and the local unit of France's Remy Cointreau have all shown interest.

Fellow Polish distiller Polmos Lublin may team up with global leader Diageo in a bid. "This will be the final phase of consolidation on the Polish market. We have to take part," said Janusz Palikot, Polmos Lublin's majority owner.

Drawn to Poland's vodka industry mainly for its export potential, foreign players are finding that the domestic market has also become vibrant since tax cuts lowered prices and borders were fortified.

According to Poland's BRE Bank, $500 million of vodka was sold on the black market in 2001, smuggled from neighboring Belarus and Ukraine. As Poland shored up its borders to join the European Union last May, bootleggers brought in only $25 million.

Bialystok said with 3.8 million cases sold last year, its flagship brand Absolwent was the world's fifth-biggest, after Stolichnaya, Smirnoff, Moskovskaya and Absolut. With a label similar to Smirnoff's and a name that sounds similar to that of Sweden's Absolut, Absolwent has gained 14 percent of the Polish market since its launch 10 years ago.

"Absolwent is for everybody. You can drink it as much as you want one day and function normally the next," Wnorowski said of the 6 euro ($8) per bottle spirit.