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Beam, Stoli Tussle Over Costello Appointment

January 19, 2018

Beam Suntory is taking aim at former executive Rudy Costello, who recently resigned to become chief commercial officer at Stoli Group USA, asserting Costello’s new role violates a non-compete agreement he signed with Beam in August of 2016. Beam claims that the non-compete “prohibits Costello from going to work in the spirits business of a Beam Suntory competitor for 12 months following the end of his employment.”

Specifically, Beam says “Stoli’s spirits brands compete directly with Beam Suntory’s … including in the vodka category—where Beam Suntory’s Effen vodka competes head-to-head with Stolichnaya vodka. What is more, Stoli recently entered the Bourbon segment—Beam Suntory’s core spirits offering—with its 2017 purchase of Kentucky Owl (and its plans to build a) whiskey distillery in the backyard of Beam Suntory’s Kentucky Bourbon distillery.” Beam also says that with “Costello’s intimate knowledge of Beam Suntory’s confidential contract with Southern Glazer’s—including pricing, margin and investment details—Costello and Stoli will be armed to cut a better deal for Stoli” with SGWS when the two parties renegotiate their distribution agreement in the coming months, gaining a competitive advantage.

Costello and Stoli Group counter that “Beam never identified Stoli as a competitor when Costello was employed at Beam. The first time Beam ever identified Stoli as a competitor was to threaten Costello with this lawsuit. What Beam fails to disclose to the Court is that whereas 99% of Stoli’s sales are of Stolichnaya, only 1% of Beam’s sales are of Effen vodka—the brand that Beam now claims is a ‘direct competitor’ of Stoli vodka.”

In a statement to SND, Stoli Group added, “We are aware that Beam Suntory filed a complaint in the Federal Court in Chicago yesterday regarding the appointment of Rudy Costello as senior vice president and chief commercial and sales officer at Stoli Group USA. Mr. Costello filed his opposition earlier today, in which he denies the allegations and claims put forth by his former employer. Stoli Group USA looks forward to the proceedings resuming early next week.” —Daniel Marsteller

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