Introduction: In late February, shortly after the Russian invasion of Ukraine, Latvian company Amber Beverage Group announced its strong support for the Ukrainian people. The company donated financial resources to the Stand With Ukraine initiative and encouraged the governments of Latvia, Lithuania and Estonia to streamline legislation to enable the group and other companies to offer jobs and temporary residencies to Ukrainian refugees.
Amber Beverage Group Chief Executive Officer Jekaterina Stuģe commented: “With deep roots in the Baltic region, we could not silently observe what is happening from the sidelines. Together with much of the world we are sharing sadness and deep concerns due to the escalating situation in Ukraine and we are looking for practical opportunities to help.
“Military action in Ukraine is unacceptable for us and we aim to offer support to the people affected. Apart from the donation, we will be looking for further opportunities to give aid to our near neighbours.”
Shortly after that statement Stuģe spoke to The Moodie Davitt Report Chairman Martin Moodie about the company’s stance on Ukraine and, separately, about its rapid growth of recent years and heady ambition to be among the world’s top ten spirits houses.
‘Make Peace not War!’ The home page of Moskovskaya vodka, one of Amber Beverage Group’s core brands, leaves no doubt as to the company’s position on the Russian invasion of Ukraine. The striking statement, positioned directly under the word ‘Freedom’, also emphasises that despite its name Moskovskaya is Latvian not Russian vodka.
It’s a critical clarification, not just for commercial reasons within a world outraged by the actions of Russian leader Vladimir Putin but because it represents Amber Beverage Group’s strong position on those actions.
Group Chief Executive Officer Jekaterina Stuģe says that her company has always stayed away from politics until now but that the injustice and brutality of the invasion required a stand to be taken. “We are completely against this violence that is happening,” she tells The Moodie Davitt Report during a Microsoft Teams call. “It’s not acceptable. We stand for stopping the aggression. We think that the people of Ukraine deserve to be free and to live in peace.”
Stuģe highlights Amber Beverage Group’s (ABG) Baltic roots and emphasises the commonality of history that Latvia shares with Ukraine in also having been part of the former Soviet Union.
“If you assume that what has been done could be done to any previous Soviet country, it’s absolutely unacceptable… just as unacceptable for a Baltic country as it is for Ukraine.”
ABG, part of the powerful SPI Group, was established in 2014 as a merger of five Baltic companies. Eight years later, ABG comprises 20 businesses, including Rooster Rojo and KAH tequilas from Mexico, and late 2021 acquisition Walsh Whiskey (Writers’ Tears and The Irishman) of Ireland.
“We are growing in different [geographic] directions but our roots are in the Baltics, so Baltic independence is very important,” Stuģe says. “At the same time we think it’s important for any country to be independent and not to feel aggression from any third party.”
ABG has focused on offering practical support, ranging from offering jobs to displaced workers and to helping Ukrainian spirits producers however it can. “I think that is part of the ABG culture,” Stuģe says. “We are not ones for talking a lot, we are doers. So when we decided to offer some support, we wanted it to be real pragmatic steps.”
Stuģe concedes that the war in Ukraine is likely to have a big impact on the group’s business. “It’s still early days so we cannot assess it [the extent of any business decline] at this moment. It is not the Russian people who decided to make this aggression, it is a political decision and the Russian people should not suffer. We do not think it is unethical to sell our products in Russia but the question is whether it is economically viable. We cannot know, given what’s happening with the Russian Rouble.
“All our people in Russia… understand that we are not against the Russian people. We are against the [invasion] policy and the violence that’s happening in Ukraine,” she comments.
That policy is underlined by the company’s communications for Moskovskaya, an outstanding vodka of historic pedigree dating back more than 120 years and one with obvious Russian connotations by dint of name and history.
“There is still an association with Russia but we need to understand that it’s not Russian vodka and it’s not made with Russian products. It is produced in Latvia using only European Union ingredients,” Stuģe points out.
Moskovskaya sold 324,000 9-litre cases across 81 markets in 2020, generating some €7.9 million in sales. To help protect that position, ABG will focus on consumer and trade education, she says, to ensure awareness of where and how Moskovskaya is made and of the company’s emphatic position regarding the invasion of Ukraine.
ABG underlined that stance in a statement in early March, declaring: “Due to the brand’s name, the true provenance of Moskovskaya vodka may surprise many people.” The company pointed out that its vodka is produced in the group’s Latvian distillery, Latvijas Balzams, which opened in 1900.
ABG’s main shareholder Yuri Shefler said: “As the founder of the SPI Group – the holding company of Amber Beverage Group – I relocated all production to Latvia when I was forced into a conflict with Putin’s regime in 2000 and left Russia.
“I am grateful to Latvia and its people for providing a safe haven for the company. It has been a great journey, bringing close to €1.5 billion paid in taxes to the state of Latvia. Today, the company stands for peace in Europe and in solidarity with the Ukrainian people.”
Extending the portfolio – more M&A on the horizon
Moving the discussion onto the group’s wider commercial ambitions, Stuģe confirms her previously stated aspirations for ABG to become one of the world’s top ten spirits groups.
“That’s absolutely right. So I have high ambitions,” she comments. “But behind those high ambitions we see very practical steps in how to achieve them. We have tasks for each and every person within the organisation in achieving those results. So it’s not just the ambitions of the management, it’s also about the involvement of all employees within the company.”
The company is one year into an aggressive five-year growth plan, having enjoyed a strong performance in both 2020 and 2021 despite the pressures of the pandemic. 2022 will certainly be adversely affected by the war in Ukraine and the knock-on effect in Russia but Stuģe says the fast-moving nature of the crisis makes any assessment difficult.
“It’s so unpredictable. You could not include in any plan anything like this – you could not even imagine that something like this would ever happen. It’s more like a daily reassessment than long-term planning at this stage.”
Nonetheless the company remains committed to its five-year plan, anchored by its core brands – Moskovskaya vodka; Riga Black Balsam (136,000 9-litres cases sold in 2020); Cosmopolitan Diva sparkling wine (100,000); Rooster Rojo and (super-premium) KAH tequilas; Cross Keys gin; Gradus vodka; The Irishman and Writers’ Tears; and selective acquisitions.
“We have quite a big list of possibilities and opportunities,” Stuģe replies when asked about acquisition targets. “We have several groups that are working non-stop reviewing those possibilities. For us, it’s important not to be just M&A by itself, but meaningful M&A so that it is included wisely in our portfolio. So we have identified gaps where we want to be… and we’re working specifically to fill those gaps.”
Any clues as to the categories? “We are looking at the brown spirits category… Scotch whisky potentially, bourbon from America is also a possibility.”
Travel retail – “a fantastic tool also for marketing to people” – is a key channel in delivering the company’s growth targets. And all such commercial aspirations will be underpinned by a growing focusing on sustainability Stuģe says.
“We’re talking a lot about sustainability right now. For example, we have been working to decrease CO2 emissions and positioning Moskovskaya as a green brand. We are planting trees in Latvia in order to fully cover CO2 emissions from our factory so we are doing a lot of stuff to help with environmental issues.”
Jekaterina Stuģe cannot in her worst nightmare have imagined that the company’s Corporate Social Responsibility programme would be extended to support for a war-ravaged nearby nation. But that is the reality and Amber Beverage Group, impressively, is leaving no-one in doubt over its support for the people of Ukraine.
