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Yuriy Sorochinskiy

CEO, Nemiroff Vodka Co

Despite Nemiroff Vodka’s numerous global awards, it is not well known to international consumers, partly because Ukraine itself is not widely identified with vodka production. But the company that gave the world Nemiroff Delikat Vodka, considered by industry experts one of the best in the world, aims to change that with a renewed global strategy that takes aim at the United States and Germany, where the brand is already strong among Eastern European communities. Company CEO Yuriy Sorochinskiy explains how Nemiroff is building on 140 years of manufacturing tradition that go hand in hand with the history of the country itself, to go to the next level and show why the world needs another vodka.

The principles behind Nemiroff Vodka emerged in 1872, but the company that we know today got its start in 1992 and it was one of the first businesses in Ukraine to be formed in partnership with foreign investors. Where does the company stand today?

The company got started in 1872, but during Soviet times private property was nationalized and in 1992 Nemiroff was restarted as one of the first privately owned companies to receive a license to produce spirits. So you can say that we have grown and evolved together with our country: Ukraine became independent in 1991 and Nemiroff started to do business one year later.

How has the political turmoil of recent years affected you?

Amid all the ups and downs associated with changing political strategies and the business environment, the last five years have been very interesting for us. Political issues in 2014 created a real crisis for our company, as we were operating in 80 countries but our two biggest markets were Ukraine itself and Russia. The situation between both countries created many obstacles for us, and we sought new opportunities. Two years ago we launched a new strategy to become a global player, and in September 2018 we became the first official vodka of UFC, the world’s premier mixed martial arts organization, which organizes a huge global championship.  The fact that an American company accepted us as a partner is a positive sign for Ukraine as well, because companies around the world, in Western Europe and the US in particular, have long viewed Ukraine as a highly corrupt country, and harbored suspicions that maybe businesspeople here are not so trustworthy. And this was maybe a somewhat reasonable assumption as we were part of the Soviet Union for a long time. But now we are developing as an independent country, and for me it was a good sign when a US company accepted us as a partner for global development.

What is the thinking behind your global strategy? What markets are you eyeing?

The 2014 crisis pushed us to seek new opportunities for growth. We were doing business transparently yet losing our business. And when you have a high-quality product and a highly trained staff, you have to find a way to utilize this. At that point we were not so strong in the US, but we spent two years studying how to enter the market, and now we have a presence there. At first we were working mostly with the ethnic markets, made up of Russian and Ukrainian speakers, but then we moved to the broader, 50-state market. This was not easy because we had to answer to ourselves and our partners: why does the world need Nemiroff vodka, if there are already so many strong brands out there? Why should consumers switch to us, and how do we convince them of that?

The fact that an American company accepted us as a partner is a positive sign for us but for Ukraine as well

What about Germany? What is your position there?

We have had a presence in Germany since 2003 or 2004, but again mostly in the ethnic markets. There are many Russian and Ukrainian speakers who emigrated to Germany  from the Soviet Union and started businesses there. To them, this is a familiar product. But I met a German businessman a few months ago who works in the spirits industry, and he was surprised to learn how much of our product we were selling in Germany yet he did not know about it. This is because we are in a closed circuit: Germans shop at retailers that they are already familiar with, while our own products are selling in small supermarkets specializing in groceries, chocolates and other products that Russians and Ukrainians are familiar with. Germany is a very important country for us, and we intend to grow into the general market through the right partnership with a distributor who can help us expand out of the ethnic market.

Your company is at a crucial moment in the German market, where you already have a presence but want to take it to the next level. This involves distribution but also branding. Why does a German distributor need another vodka from Ukraine?

We have made a video to explain who we are, and why the world needs another vodka. It tells our story, and shows the all-natural ingredients that we use, and our facilities located in agricultural areas without heavy industry, as the quality of the water is very important in producing vodka. We use real honey made by our own bees, real chili pepper, and 27 herbs and spices to create aromatic flavors. We have been tested  by independent German companies that have confirmed this, and to us, this outside certification is very important. We have a high-quality product created with love and built on 140 years of heritage and history, ready for consumers who would like to try something new and unique from an interesting part of the world that happens to be the biggest country in Europe.

Over 40% of all Ukrainian vodka that is exported worldwide is Nemiroff vodka

You talk about Nemiroff and the country simultaneously. How much will Ukraine’s own improving image help to sell your product?

On one hand, we are promoting Ukraine through our brand. Each bottle says Imported from Ukraine, and we are proud to be a Ukrainian vodka.  At the same time, all the changes going on in this country will help us as a business, and we will be increasingly viewed as trusted partners by other businesses in the world.

You are using some of the best manufacturing equipment in the industry. How does that give you a competitive advantage?

It started in 1997-8 when our strategy was to grow in Ukraine and the neighboring markets, and we needed to expand our capacity. We looked around for manufacturers of bottling lines, and the best one was a German company named Krones, founded by Hermann Kronseder, and the relationship moved to the next level and we ordered more lines for our production facility. We now have six bottling lines made in Germany, all of high quality. The capacity of the plant is around 12 million cases of nine liters each, and we are able to satisfy an unlimited demand from the markets. If we are talking about the top players worldwide, the second one sells 9.5 to 10 million cases around the world. We have the capacity from the production point of view to do this as well.

Who is your competition?

The top worldwide brands are Absolut, Finlandia, Smirnoff, and Grey Goose. If we talk just about the Ukrainian market, there are a lot of different brands, but we are number one in Ukraine from the export point of view. Over 40% of all Ukrainian vodka that is exported worldwide is Nemiroff vodka. And we are number 3 in worldwide duty free and travel retail by volume.

From the point of view of capacity, we are able to satisfy an unlimited demand from the markets

Why should investors be interested in Vinnytsia over Kiev?

This is a unique area, very agricultural and devoid of heavy industry. And we have very motivated staff because we are creating a friendly environment for them to live and work. Nemyriv, where we are located, is a town with a population of around 12,000 and at one point nearly every family had someone working here, as we used to have 1,600 employees. Now we have around 450 employees but we also buy locally to support the local business fabric. The region is now very attractive for different kinds of businesses.

What are your growth projections for the coming two to three years?

We are world-oriented, but in terms of Ukraine, the economy is growing and we see opportunities to grow faster. I’m very positive about the future. I have a lot of contact with businesspeople  from all over the world, and sometimes direct contact makes it much easier to set up business relationships. I am ready to help with this, providing all necessary explanations to potential investors to help my country grow and contribute to its prosperity.

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