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. Last Updated: 07/27/2016

Diageo May Drop Smirnoff for Smirnov

MTSmirnoff is made at St. Petersburg's Liviz distillery. Liviz owner Alexander Sabadash was fired as a senator last week.
British-based liquor giant Diageo is considering whether to ditch its Smirnoff brand in favor of Smirnov in Russia, the company said Thursday.

Kommersant on Thursday cited certain regional distributors as saying Diageo had stopped deliveries of its longstanding Smirnoff brand and was promoting its newly acquired Smirnov label.

Diageo ended a decade of bitter rivalry between the two brands in February when it formed a joint venture with Alfa Group's A1 Group, which owns Smirnov vodka. Diageo owns 75 percent of the venture, which markets, distributes and sells spirits in Russia, while Alfa owns 25 percent.

"We would like to concentrate our efforts on the product that has a strong appeal to local consumer and significant market potential in Russia," Diageo said in a statement. "Diageo's global consumer and market expertise gives us confidence that Smirnov as the Russian version of the global brand will become a significant player" on the local market.

Diageo is due to take over distribution in Russia from a sub-contractor, Rust, by July 1.

If Diageo stopped producing Smirnoff in Russia, it would contradict some industry predictions that Diageo planned to phase out the Smirnov brand.

Sergei Dubrovsky, commercial director of the Liviz vodka distillery in St. Petersburg, which bottles Smirnoff, said the distillery did not know of Diageo's plans.

The distillery hit the headlines last Friday when owner Alexander Sabadash was expelled from the Federation Council over his business activities. Analysts have speculated that state-owned vodka brands manager Soyuzplodoimport might be interested in acquiring the distillery, the country's third-biggest, after the brands manager said Wednesday it was shopping around for its own production facilities.