27th Feb 2006 09:18
Diageo PLC27 February 2006 27 February 2006 DIAGEO AND A 1, an alFa group company, create strAtegic partnership for expansion in russia Diageo and an Alfa Group company, A 1 Group Limited, the owner of the SmirnovTrading House announce that they have signed an agreement to form a jointventure company to market, sell and distribute spirits in Russia. It isanticipated that the joint venture will become fully operational in July 2006.The joint venture is conditional on, among other things, receipt of regulatoryclearance from the Russian anti-monopoly authorities. Through the joint venture with A 1, Diageo, the world's leading premium spiritscompany, acquires a majority interest in the fast growing Smirnov brand andbusiness which will form the basis of the new operation in Russia. The Smirnovbrand will join Diageo's portfolio within the newly formed company. The future joint venture company will be owned 75% by Diageo and 25% by A 1 withboth parties contributing to the strategic management of the joint venture'sdistribution entity in Russia, Diageo Distribution ZAO. This company will bethe exclusive distributor of Diageo spirits brands and the Smirnov vodka brandin Russia. It will be a strong sales and marketing organisation, capable ofaccelerating growth across the entire spirits brands portfolio with operationsin Moscow and major cities across Russia. On completion of the transaction, Diageo will pay to Alfa Group a total of US$50million for its interest in the joint venture. The transaction is expected tomeet Diageo's usual financial investment criteria. Alison Forrestal, General Manager, Diageo Russia, will be appointed GeneralDirector of Diageo Distribution, and Andrey Kravets, currently General ManagerSmirnov Trading House, will be appointed Deputy General Director. The new business will represent a strong presence in Russia. When fullyoperational, it is expected to employ between 250-300 people, resourced from thecurrent businesses with additional employees recruited from the Russian market.The increased focus behind the brands is expected to improve growth. Completionof the transaction will also unite the Smirnoff / Smirnov brands under commonownership. Andrew Morgan, President Europe, Diageo plc says, "This joint venture representsa significant step in Diageo's strategy to invest in the markets we haveidentified for future growth - strengthening our existing presence here inRussia. A 1 has significant experience of partnering with companies in Russia.Combining this with Diageo's expertise in spirits' marketing means that thisventure creates a strong foundation for our joint ambition to become the leadingspirits business in this market. Following a successful distributor relationshipwith Roust Inc, we are keen to take our investment in Russia to the next stage." Igor Baranovsky, Managing Director of A 1, says, "The joint venture combines thepotentials of the Alfa Group, the leading Russian investor, and Diageo, theworld's leading premium spirits company. This marks the appearance of a newplayer with an extremely promising future. Diageo is a very strong partner, withexemplary business philosophy, and a highly professional team. As for theSmirnov vodka brand and business - it's a very attractive asset for strategicinvestment. Building the Smirnov brand will now acquire a new emphasis.Legendary Smirnoff and Smirnov, with their unique Russian heritage are uniting,in an outstanding portfolio. This opens new horizons for their future growth." -Ends- Contacts Investor enquiries: Catherine James +44 (0)20 7927 5272 [email protected] For further information please contact: Isabelle Thomas Elena Kuznetsova Diageo plc Diageo Russia +44 207 927 5967 +7 495 961 25 47 [email protected] [email protected] Vera Bragina Smirnov Trading House A 1 Investment Company +7 9055881568 + 7 495 976 00 66 [email protected] [email protected] Notes to editors Diageo is the world's leading premium drinks business. With its global vision,and local marketing focus, Diageo brings to consumers an outstanding collectionof beverage alcohol brands across the spirits, wine and beer categoriesincluding Smirnoff, Johnnie Walker, Guinness, Baileys, J&B, Captain Morgan,Cuervo, Tanqueray, Crown Royal and Beaulieu Vineyard and Sterling Vineyardswines. Diageo is a global company, trading in over 180 markets around the world andlisted on both the New York Stock Exchange (DEO) and the London Stock Exchange(DGE). We employ over 20,000 people worldwide with offices in around 80countries. We have manufacturing facilities across the globe including GreatBritain, Ireland, United States, Canada, Spain, Italy, Africa, Latin America,Australia, India and the Caribbean. Diageo was formed in 1997, following the merger of Guinness and GrandMet and isheadquartered in London. The word Diageo comes from the Latin for day (dia) andthe Greek for world (geo). We take this to mean every day, everywhere, peoplecelebrate with our brands. For more information about Diageo, its people, brands and performance, visit usat www.diageo.com A 1, a subsidiary of Alfa Group, is the key investment division of the largestRussian consortium. A 1 typically focuses on value-oriented, longer-term investment projects. Itsobjective is releasing the potential of portfolio companies through strategicmanagement, consolidation, restructuring assets, crisis management and otheraspects of corporate business development. A 1's long-term interests are in the creation of sustainable competitivebusinesses via the introduction of modern management systems. A 1's professionals have unique experience of successful projects in variousindustries: Alfa Group strategic assets (Alfa Bank, TNK, national retail chainPerekryostok, Vimpelcom and Megaphone - the largest Russian telecommunicationsoperators), as well as establishment of new businesses in oil and gas,metallurgy, pulp and paper industry, agribusiness, FMCG sector, etc. The Smirnov Trading House, one of the A 1's FMCG assets, was set up in Moscow in2002 to resume production of vodka from recipes of the Russia's famous winemaker Petr Arseniyevich Smirnov (1831 - 1898). In 2005, The Smirnov TradingHouse introduced the new collection of alcoholic beverages to the Russian marketso that production and sales volumes have increased four and a half timescompared to 2004. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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