Despite Debt Overhaul, Roust Sees U.S. Fortunes Rising

While it has made headlines recently for a prepackaged debt overhaul related to its 2013 acquisition of financially-troubled Central European Distributing Co. (CEDC), Russia’s Roust Corp. has been making solid progress in the U.S. with its core Russian Standard brand, defying difficult trends in the imported vodka category.

Regarding the company’s finances, Roust chairman Roustam Tariko tells SND that bondholders have overwhelmingly approved a plan that reduces debt by nearly half, or by approximately $500 million, while offering bondholders a debt-for-equity swap. With court approval of the plan expected, Tariko—who will remain Roust’s controlling majority shareholder—said the reorganization sets up the company for accelerated revenue and profit growth and strengthens its position as the world’s second-ranked vodka marketer by volume, behind Diageo. Globally, Roust sells approximately 24 million cases of spirits annually, according to Impact Databank.

Meanwhile, Roust has seen its U.S. business continue to advance. The Russian Standard brand, which sells above 200,000 cases in the market, was up 15% in Nielsen channels last year, and matched that progress in control states in the year-to-date through November. By comparison, the overall imported vodka category grew only 1.4% in control states over the same period.

“This is obviously a very strong result, especially given the widespread trend of consumers moving from imported vodka to domestic brands. We’re seeing tremendous loyalty from Russian Standard consumers,” says Roust Americas CEO Leonid Yangarber. “After 10 years in the U.S., we’ve now decided to change the lead language on the Russian Standard label from Russian to English. The new pack will be hitting shelves in the next couple of months and will help us recruit new consumers.” Russian Standard’s plans for 2017 also include a new “Vodkathority” social media campaign and a “major multi-year sponsorship deal with one of the world’s most recognized entertainment brands,” to be announced in the next few weeks, Yangarber adds.

Elsewhere within the U.S. portfolio, Roust’s Zubrowka vodka from Poland is performing well in the on-premise, Yangarber notes, and the company’s Gancia sparkling wines from Italy grew depletions 60% last year from a relatively small base (Gancia, previously imported by The Wine Group, is now handled by Roust Americas). 2016 also marked Roust Americas’ first full year selling agency brand Cognac De Luze, which has been well-received and sold 5,000 cases for the year. —Daniel Marsteller

Tagged : Roust Corp., Russian Standard, spirits, vodka

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