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Bacardi breaks its promise to end trade with Russia, sees profits triple
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Following Russia's invasion of Ukraine in 2022, alcohol manufacturer Bacardi International announced that it would stop exporting its alcoholic beverages to Russia and freeze investment and promotion programs. However, over the past year, Bacardi's Russian subsidiary has experienced a threefold increase in profits.
- In March of last year, Bacardi International issued a statement on its website condemning Russia's attack on Ukraine. The company pledged to donate $1 million to the Red Cross and Mercy Corps, as well as halt all exports to Russia and freeze investments and advertising. However, the pledge to stop sales and marketing disappeared from the statement shortly after it garnered international media attention.
- Instead, Bacardi's Russian subsidiary, Bacardi Rus, has thrived financially over the past year. The company's revenue rose from $338 million to $367 million, and net profits nearly tripled to almost $53 million.
- Bacardi continues to export its products to Russia through its subsidiary. Furthermore, Bacardi Rus has registered 37 new products in Russia since the invasion — these products have already cleared customs and are available in Russia.
- In addition to its own brands, Bacardi profits in Russia through a contract for bottling William Lawson's whisky. The company reached an agreement with Beluga Group in 2016 to bottle Scotch whisky at Beluga's plant.
- Despite the announcement to halt marketing and advertising in Russia, Bacardi Rus spent $75 million on commercial expenses last year, only slightly down from 2021. The company continues to invest in marketing in both drinking venues and retail settings, according to trade reports.
Why the world should care
Bacardi is not the only international alcohol company that continues to maintain trade with Russia. France's Pernod Ricard also ships its products to Russia and invests in advertising. The companies’ actions raise questions about the extent of Russia's isolation from the global consumer market.
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