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The Battle for Stolichnaya Vodka

In Russia today oil and gold are making their mark as the most sought after and exported commodities but vodka and caviar remain as a source for needed revenue. During the cold-war the only glimpses we had of Russia were limited to its military and space exploration programs and in the form of vodka, namely Stolichnaya. Except for a sporadic article here and there, little is known about a major battle taking place in the Russian courts and is now finding its way into other parts of the world.

The battle is being waged over who really owns Stolichnaya vodka and its valuable trademark rights. On one side you have the Russian Government and its export company FKP Soyuzplodoimport and on the other SPI (Formally ZAO Soyuzplodimport, with a missing “o”) a Cyprus based company. Both sides are conducting an extensive public relations campaign in preparation for the legal battle and showdown which has already started in western European courts and is expected to eventually find its way to North American shores.

In order to appreciate how this all came about, one has to review the breakup of the Soviet Union and its rush to a market economy. During the Yeltsin era and with the promise of substantial financial assistance if Russia started to privatize, In the middle 90’s it was arranged to have Yuri Schefler placed as the head of Soyuzplodoimport which was the Russian export arm for all food and alcohol products. Approval was given to sell to the public a portion of the Russian operation which eventually became the whole operation and Schefler quickly seized the moment and with it all its alcoholic production. After Yeltsin left the scene, the then new President Vladimir Putin started attempts to recover the valuable export commodities and the successor to the KGB the FSB started to investigate how Schefler and his company took control of Stolichnaya vodka and a number of other popular liquor products. Russian courts ruled in 2001 that SPI and Schefler acted illegally and as a result the Putin administration quickly nationalized the brands and their export rights were taken from Schefler.

In January 2002, the former American labor leader Ronald Fino realizing that their was an opportunity present, he concluded an agreement with a distillery in Pskov, Russia (licensed by the Ministry of Agriculture after the nationalization) that received rights to import Stolichnaya vodka. Fino was no stranger to the industry and in 1997 as the result of close relationships in Belarus, he started a liquor company which handles a number of liquor products. He decided to implement a profit sharing program for the Pskov employees in what he is quoted as saying “to show the better side of capitalism” and what his detractors call a marketing ploy and his supporters how much he cares for workers and his beliefs.

April 11, 2002 Russian authorities seized 150,000 cases of Stolichnaya that were bound for the USA and Allied Domecq and as a result Schefler and SPI transferred all production to Riga, Latvia.



July 4, 2002 FKP Soyuzplodoimport announced that it was officially recognized
by the Ministry of Agriculture and Ministry of Property of Russia as the official owner of Stolichnaya and 17 other brands and its Director Vladimir Loginov stated that they would recapture those products from Schefler and SPI.

In a press conference held in Moscow in August 2002 Ronald Fino and
A representative of FKP Soyuzplodoimport stated that they were working in concert to recover the Stolichnaya and the other brands and both Loginov and Fino claimed that threats were made against their person by Schefler and his associates. According to Schefler, he claimed that their remarks were not true and without merit.

According to insiders, SPI and its distributors which include Allied Domecq feel that they will win any court battle and that Soyuzplodoimport does not have the ability to fund nor conduct a any meaningful legal suit in the USA and even if they do, they have registered the trademarks and they will make it almost impossible for anyone to take them from them. To set the stage, SPI hired the law-firm of Greenberg Traurig and the public relations company Barton & Guestier and together quickly set out to label Soyuzplodoimport’s exploits as thievery and Vladimer Putin as a thug. They lobbied a number of members of congress who asked President George Bush not to assist Russian entry into the World Trade Organization (WTO) and not to repeal Jackson-Vanik amendment which prevents normal trade relationships with a couple of countries including Russia.

Soyuzplodoimport on its part named Suren Santurian “resides in the US and
heads up the Valhalla, New York based Plodimex USA, a company that sells Russian bicycles and food products” as the Deputy Director. Santurian represented Russia’s liquor interest in the USA during the cold war and is considered to be attempting to utilize his previous relationship with liquor giant Diageo to counter its rival Allied Domecq. His strategy is to not attack SPI and Allied Domecq in the USA, Canada, Mexico and the U.K. until some victories are won in Western Europe. According to insiders and legal experts, this may not bode well for an eventual legal battle and reflects a lack of financial resources as well as worry on winning in North America and the UK. They all agree that the key to victory for Soyuzplodoimport may lay with their associate Ronald Fino who has made enemies in the USA with his testimony against organized crime but is held in high regard by quite a few in Congress, the law enforcement community, labor unions and in the media. In a conversation with Fino on January 14, he refused to comment the subject. According to Fino associates, they claim he has developed a program for recapturing Stolichnaya and the other brands but is keeping its contents a secret.

All in all, 2003 should prove to be an interesting for the liquor industry as well as US and Russian relations.


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