V&S is sole bidder for Luksusowa producer

Swedish alcoholic beverages group Vin & Sprit, producer of Absolut Vodka, has won exclusive rights to negotiate the purchase of Polish state-owned distillery Polmos Zielona Gora, the treasury ministry said this week.

Zielona Gora, which makes the Luksusowa brand, is Poland's third-largest vodka producer with 10 per cent of the local market and annual sales at around PlZ500 million (€125m).

Difficult market conditions and stiff competition from foreign giants worsened the company's health in the past few years, hampering its ambitious plans to boost its presence abroad.

The planned acquisition should help the Swedish state-owned group strengthen its position on global markets and gain a foothold in Eastern Europe's largest country.

Earlier this year Vin & Sprit said it wanted to become one of the world's top five liquor groups in five years.

The sale of the firm, based in the western city of Zielona Gora, will be the second major disposal in the fragmented sector after France's Pernod-Ricard bought Poland's number two distillery with the Wyborowa brand in 2001.

Pernod-Ricard spent some $70 million for a controlling stake in Polmos Poznan, and the Zielona Gora deal is expected to fetch around $50 million, Polish daily Gazeta Wyborcza​ reported.

Zielona Gora, which employs 380 workers, expects a private owner to provide much-needed financial muscle to protect its position at home and introduce its flagship brand to foreign markets, chief executive Ryszard Jakubiuk told Reuters.

"Polish producers do not have sufficient funds for marketing and promotion. If we want to keep our domestic market and reach global clients, we need a foreign partner,"​ Jakubiuk said.

The Luksusowa brand is already present in the US and Canada as well as in some countries of the European Union.

"We have the ambition to introduce Luksusowa to all major markets and to make it recognisable worldwide,"​ said Jakubiuk.

Next year the government wants to float a stake in its top producer Polmos Bialystok, owner of Zubrowka vodka, after two abortive attempts to sell the company to a foreign partner.

Poland's vodka industry has been hit by changing drinking habits as Poles switch to beer and wine as well as by the large amounts of vodka smuggled in from former Soviet republics and the growing popularity of international brands.

Vin & Sprit is the world's eighth biggest alcoholic beverages group measured by volumes. Its Absolut Vodka, the global number two premium vodka after Diageo's Smirnoff, accounts for around half of its sales volumes.