These Western liquor companies said they stopped doing business in Russia. But the booze keeps flowing, 15 November 2023

Russia invades Ukraine. The West imposes sanctions. And hundreds of foreign firms announce they are pulling out of the Russian market.

But, somehow, in a country with a historic predilection for alcohol, the booze keeps flowing...If you’re in Moscow or St. Petersburg, a company called Luding — which describes itself as Russia’s largest wine importer — is offering 18-year-old Macallan Double Cask Highland Single Malt Scotch to local buyers at a “best price” of nearly $500 a bottle with a selection of more affordable 12-year-old single malts available for immediate delivery.

If Kentucky bourbon is more to your taste, a range of Jim Beam whiskeys awaits you on the well-filled shelves of your local Perekrestok supermarket.

What do those tipples have in common? They are made and sold by two companies — U.S.-Japanese multinational Beam Suntory and Scottish distiller Edrington — that before the war marketed their liquors through a joint venture in Russia. 

Both companies announced their withdrawal from Russia in July 2022, nearly five months after President Vladimir Putin’s troops invaded Ukraine. But, more than a year on, their products are still freely available in Russia. And, as a POLITICO investigation has found, their prewar distribution operation continues to function much as it did before it was sold to Russian local management.

Beam Suntory and Edrington stated categorically in response to POLITICO’s findings that they no longer had any business relationship with their former Russian employees. They also said they had done all they could to stop shipments of their spirits to Russia through the informal “gray” market...

After the full-scale invasion of Ukraine, a roll call of foreign alcohol suppliers announced they would pull out of the Russian market. Moët Hennessy’s Russian businesses, for example, reported a 70 percent drop in sales last year after the division of French luxury group LVMH suspended operations and closed its stores in Russia in March 2022.

Yet some changed their mind: Bermuda-based Bacardi, for example, resumed supplies after a pause, and its local business even reported an 8 percent increase in 2022 sales to 32.6 billion rubles (€431 million at the prevailing exchange rate). Profits trebled...

Beam Suntory and Edrington, for their part, announced a clean break: Initially, Beam Suntory issued a statement on March 8, 2022, saying it was suspending supplies to Russia. 

Then, on July 18, both Beam Suntory and Edrington said they had agreed to sell their Maxxium Russia joint venture to local management. Shipments would “remain suspended as we continue to abide by all applicable laws including international sanctions,” Beam Suntory added in its statement.

The announcements followed the imposition of U.S. sanctions four months earlier on supplying luxury goods — including wines, beers and spirits — to Russia and its ally Belarus. The sanctions, issued by the Department of Commerce, targeted “oligarchs and malign actors” in both countries. They required licenses to be issued for export, re-export and in-country transfer under U.S. Export Administration regulations.

Unlike the United States, the European Union did not enforce a complete export ban on luxury goods, but it did impose a price cap — €300 a bottle — on wines, beers and spirits. The United Kingdom, where Edrington is based, imposed similar sanctions at the same time on the sale of luxury goods, including alcohol, to Russia...

Before Beam Suntory and Edrington divested their Russian businesses on July 18, 2022, the two companies shipped their products to Russia via a Cypriot company owned by the U.S.-Japanese multinational. This company, Maxxium Cyprus, owned a Russian subsidiary called Denview, which in turn owned another company called Maxxium Russia...

POLITICO sent questions by email to Maxxium Group but the company did not comment on them.

Other leading Russian distributors and retailers have meanwhile filed import declarations for sizable shipments of products from Beam Suntory and Edrington this year, according to filings reviewed by POLITICO. Total shipments of Macallan whiskies by one importer called Distribution Centre run, for example, to more than 100,000 bottles....