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Odds & Sods
Enough to Make a Russian Revolt
Tuesday, 18th April, 2006  - Richard Farmer

Stolichnaya Vodka brought to you all the way from Latvia! Surely Lenin and Stalin would turn in their graves at this travesty. It just shows what happens when multi-national companies get their hands on a nation’s treasures. Consider this statement from the PR machine of Stolichnaya distributor Pernod Ricard:

Pernod Ricard Notes the Statement Issued Today by Russian Standard Concerning Stolichnaya Vodka and Refutes the Allegations in That Statement

PARIS -- (MARKET WIRE) -- 04/06/2006 -- Pernod Ricard reiterates that Stolichnaya Vodka is truly Russian, being distilled and produced in Russia (Tambov in Central Russia and Kaliningrad) using Russian grain and water. It is then shipped in bulk and bottled in Latvia.

Pernod Ricard considers the statements made today by Russian Standard to be grossly misleading and as a result the Group fully intends to explore legal remedies to these allegations in due course.

Russian Standard, owned by Moscow-based vodka entrepreneur and banker Roustam Tariko, had the temerity to claim that its Imperia brand, launched in the United States last year, was the only authentically Russian vodka on the U.S. market. In a statement issued to the media. Russian Standard "maintains that Stolichnaya brand vodka is not authentically Russian, and believes that Stolichnaya's marketing messages are inaccurate and misleading to vodka consumers". With world wide sales of some $US2 billion at stake, $400 million of them in the US, Stolichnaya’s owner, a Russian-owned company called S.P.I, and its distributor Pernod Ricard have plenty at stake in this squabble. Genuine Latvian does not have the same ring to it as Genuine Russian. Hence the threatened legal action mentioned in the two sentence statement.

Business Week reports that the Russian government stripped S.P.I. of its right to the Stolichnaya brand in 2002 and also banned the company from exporting Stolichnaya vodka from Russia. That's when S.P.I. responded by moving the bottling of Stolichnaya to Latvijas Balzams distillery in Latvia. Yet the Stolichnaya on sale in the U.S. continues to be labelled as "genuine Russian vodka." S.P.I. and Allied Domecq (now part of Pernod Ricard) testified in a recent U.S. court hearing that the vodka continues to be produced in Russia, at distilleries in Kaliningrad and Tambov.

The Business Week report says SPI and Allied Domecq say their vodka is shipped in bulk to Latvia for bottling and export to the U.S. Russian Standard is now challenging that claim. The company cites Russian customs documents that apparently show that none of the vodka shipped from Russia to Latvia in 2004 and 2005 was registered as Stolichnaya, or used the Stolichnaya recipe. "If Stolichnaya vodka comes from Latvia rather than Russia, then they should be honest about that. We think they should be proud of their Latvian heritage," Tariko commented in the April 6 statement.

Behind the dispute is a claim by the Russian government that the Stolichnaya brand was stolen when the state agency that ran the Soviet-era vodka export monopoly was illegally privatized back in 1992 with Stolichnaya and 42 other vodka brands being sold in 1997 to S.P.I. for only $US300,000. In 2002 a Russian court overturned the transaction and S.P.I's founder, Yuri Shefler, who now lives in Switzerland, faces arrest if he returns to Russia.

In the U.S. District Court of the Southern District of New York early in April, S.P.I. won the right to keep using the Stolichnaya trade mark when the court ruled that "when trademark rights within the United States are being litigated in an American court, the decisions of foreign courts concerning the respective trademark rights of the parties are irrelevant and inadmissible." The court also ruled that after five years of continuous use in the U.S., a trademark becomes "incontestable."

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