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Friday, May 20, 2022

Liberate your spirit

When one of the world’s best known premium vodkas got caught in the crossfire of Russia’s invasion of Ukraine, it became a critical test of the brand, its strategy and values. By Damian McKinney

Stolichnaya is a hugely valuable and historic vodka brand.

It has deep roots, dating back to 1948 as a standard bearer of Soviet/Russian vodka, and is now one of the world’s best-selling premium vodkas.

In recent years the amount of money and time invested by the Stoli Group in promoting the brand around the world while protecting it from 20-years of aggressive legal action in various countries from a Putin-backed Russian business, has been enormous.

Yet, when I spoke with our owner and management team in late February, just two days after Russia’s invasion into Ukraine had begun, the decision to rebrand our flagship product from Stolichnaya to Stoli could not have been more unanimous.

Outrage across the western world and many other countries at Russia’s invasion of Ukraine had immediately presented us with an existential threat. Any brand perceived to be Russian was facing boycotts and the removal from supermarket shelves.

It was a critical test to our leading product’s brand, our strategy… and also our values.

The crisis provided both focus and impetus for us to make big steps away from our Russian history, while not ditching the heritage and authenticity that makes our vodka so popular.  It also provided a critical personal test for my team and I – would our reaction to the crisis be guided by the values we espouse?

In 2021 we had expressed our values with our “Liberate your Spirit” campaigns which highlighted our values of standing up on important issues such as inclusivity, sustainability, climate and particularly LGBT rights. There was no question that we could be silent to the plight in Ukraine.

Businesses often give a good talk about values, yet fail to live up to them – Stoli would not be one of these, and I was determined we would be a leader in the drinks sector by taking fast action to support Ukraine.

By way of background, few vodkas available in the West are made in Russia, and Stolichnaya has for many years been produced in Latvia (below). Our business is registered in Luxembourg and our team operates in many countries around the world – but not in Russia. Such facts, however, were getting lost in the anti-invasion sentiment.

For instance, in our largest market America, some bar owners and politicians went viral on social media pouring Russian-sounding vodkas down the drain, including Stolichnaya.  In Britain, supermarkets rushed to remove Russian brands, and it was only a call from me to one of the very largest supermarkets to explain our position that stopped us being cancelled too.

This visceral reaction of consumers against Russia was a huge threat to the brand, although our immediate concerns were topped by ensuring the safety of our people in Ukraine. Our first steps included:

  • We wanted to make sure our team in Ukraine was safe. This included Ukrainian employees, partners and distributors. Some have been forced from their homes and others are staying, and we are providing them all financial, emotional and practical support.
  • An announcement to talk about a subject that we have been wary about publicising in the past – our history of opposition to Putin.
  • By March 3rd, we announced a relationship and financial support for World Central Kitchen, a non-profit organisation that is first to the frontlines, providing meals in response to climate, humanitarian, and community crises. The support will go directly to relief in Ukraine.
  • We switched to Slovakian sources to make sure that none of our ingredients are sourced from Russia.
  • I took to the airwaves on CNN, Fox News and other media to banish misconceptions about Stolichnaya specifically, and Vodka generally.

Stolichnaya will be rebranded by its popular nickname Stoli within 3-months around the world. Gone too will be the Moscow hotel from its retro-styled label.

As a business we do not want to be associated with Putin, war and authoritarianism, and instead want Stoli to be associate with quite the opposite: peace, freedom and toleration.

In fact, the Stolichnaya brand had already started on this journey quite some time before.

This journey began two decades earlier when our owner, Russian businessman Yuri Shefler, left the country for exile in the West after the then-new Russian government, under the newly-elected Vladimir Putin, disputed the legality of the earlier sale of the Stoli brand. It instead vested those rights in a Russian state-owned company (FKP Sojuzplodoimport).

Since that point we have had 20 years’ of legal challenges as this Russian company has sought to challenge us through the courts in numerous countries to enable their (inferior) vodka to be sold there as Stolichnaya.

“As a business we do not want to be associated with Putin, war and authoritarianism, and instead want Stoli to be associate with quite the opposite: peace, freedom and toleration.” – Damian McKinney

The upshot is that two different companies claim ownership of the Stolichnaya brand, with the confusing situation that a different version, with near-identical branding, is sold in Russia, Benelux and Austria.

On top of this confusion, even before the Ukraine crisis, it was also becoming clear that the Russian brand association was a double-edged sword. This came to a head in 2013 when Russia introduced anti-LGBT laws, and a campaign was launched in the gay community in America to boycott purportedly Russian products – including Stolichnaya.

America is our biggest market, and at the time the business already had numerous initiatives with the gay community.  We made clear our opposition to the moves in Russia with prominent statements that included having “been actively advocating in favour of freedom, tolerance and openness in society, standing very passionately on the side of the LGBT community and will continue to support any effective initiative in that direction”.  This strong association with the LGBTQ community continues to this day.

When I joined in 2020, my first order of business was to establish a mission of Stoli Group becoming the most powerful and sustainable ultra-premium spirit and wine portfolio in the industry by 2025. As a result, we have recommitted to existing brands and launched new premium ones.  We see wine as hugely complementary to our spirits portfolio. Most luxury drinks consumers enjoy a portfolio of different wines and spirits, and by having both wine and spirits our aim is to be able to offer those consumers something special for every occasion, whatever the drink they choose for that moment.

While our rich history is what brought us here, Stoli did not have powerful nor consumer-led brands, nor a strong established global team or culture. If you were to ask Stoli personnel a year ago, who is Stoli? You would be hard pressed to find a consistent or compelling answer.

Many readers will know Stolichnaya from Absolutely Fabulous in the 1990s, with Stoli being the favourite drink of Patsy Stone (Joanna Lumley).

This new generation needs something else to consider when thinking about its products.

Today’s vodka drinker cares about a “better for you” product. They are motivated by mindful consumption, quality, transparency and sustainability.  Consumers want to connect with “authentic brands” and are less interested in traditional advertising campaigns.

Instead, they want to see brands that act, not just share words. You will see our support of this with the Liberate Your Spirit campaign which is a platform to liberate voices around the world and highlight issues that can be overcome if we all pull together (i.e. gender, equality, inclusion, peace, and the climate crisis).

But for now, our brand identity is intertwined with the response to the war in Ukraine. Ahead of our new brand appearing in the next few weeks, we continue to show our support including with a limited edition Stoli made from Ukrainian grain and sporting blue and yellow (below), whose proceeds will also go to World Central Kitchen.

Often businesses think of their brands dispassionately – something that you slap onto a product, regardless of the views of the team behind it.  That is why so many businesses were slow to react to Ukraine and other times when short-term money and long-term values come into conflict.  Their values are a marketing bolt-on slogan, not intrinsic.

By contrast, not only are we building a brand that stands for something, we’ve been recruiting people over the past two years because they believe in the brand and this mission.

For us, the takeaway from the past month is that the Stoli slogan “Liberate Your Spirit” aptly represents our employee culture. In this crisis, we have been reminded of the value and fragility of democracy – that it is worth fighting for and it is not negotiable. It is abundantly clear that our teams live these principles and I am confident our customers do too.

Damian McKinney
Damian McKinney, Global CEO, Stoli Group. Damian has been in his latest role since October 2020 but is no stranger to the alcohol industry. In 1999, he founded global consultancy McKinney Rogers and was subsequently awarded Keeper of the Quaich for both his role in the development of Diageo’s Johnnie Walker brand, and his services to the Scotch Whisky industry. In his earlier career, he was a Royal Marine. He authored the business book ‘The Commando Way’. www.stoli-group.com

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