Russian Drinks Firms Accelerate Latin American Expansion
Russian drinks producers are intensifying their efforts to expand into the Latin American market, seeking new opportunities following restrictions in Western countries. This move is part of a broader strategy to find alternative markets for their products as traditional outlets become less accessible.
One of Russia’s leading vodka and strong alcohol manufacturers, Tatspirtprom, recently commenced exports to Peru, delivering an initial batch of 10,000 litres of vodka. Shamil Kamaev, the company’s director of foreign economic activity, highlighted Peru’s market potential in a recent interview, suggesting a promising future for Russian alcohol in the region.
Similarly, the Alcohol Siberian Group has embarked on its first-ever exports to Cuba and is exploring opportunities in Mexico, Brazil, and Peru. The company is actively seeking local retail partners to facilitate this expansion, aiming to establish a significant presence in Latin America.
There is a noticeable growing demand for Russian vodka across Latin America, leading to optimistic sales forecasts in several countries. This increasing interest is further evidenced by recent agreements and discussions around Russian vodka supply in the region.
During the St. Petersburg International Economic Forum, new contracts were announced, including a notable supply agreement between Russia and Argentina. Pablo Coucinho, head of the Argentina-Russia Council of Entrepreneurs, revealed the signing of two deals, spotlighting the growing ties between Russian producers and Latin American markets.
However, the Russian-Ukrainian conflict has necessitated a shift in export strategies, with companies now turning towards Latin America as political and economic barriers emerge in traditional markets such as the EU and US. This pivot has led to an overall decrease in the export of Russian beverages, dropping by 36.6% to 25.1 million decaliters in 2023. Analysts predict this trend might continue as companies explore alternative markets.
Despite challenges in Asia and the Middle East due to taste preferences and high import duties, Latin America presents a welcoming environment for Russian vodka. Brands like Stolichnaya have enjoyed popularity in the region since Soviet times, suggesting a solid foundation for expanding Russian alcohol brands.
Competition with local beverages, such as the Peruvian and Chilean pisco or Brazilian cachaça, may arise, but the rich history and unique flavor profiles of Russian products provide a competitive edge.
Yet, the journey into Latin American markets is not without its hurdles. Veniamin Grabar, head of Ladoga, notes that certification of alcoholic products poses a significant challenge, often taking more than a year to complete. Payment and logistics issues also present barriers to direct trade, complicating efforts to establish a stable supply chain.
As Russian firms navigate these challenges, some are also exploring opportunities in the African market, despite it being relatively uncharted territory. This global pivot underlines the adaptive strategies Russian drinks producers are employing to maintain and grow their international presence amidst changing geopolitical landscapes.
