Stoli’s US Bankruptcy is Just the Latest Sign of Hard Times for Spirits

Stoli Group USA, the maker of the eponymous vodka, had bankruptcy protection to be thankful for during last week’s holiday, filing for Chapter 11 with liabilities between $50 million and $100 million.

But it’s not the only spiritmaker with cause to worry that the market is about to prove harder than its products.

Shaken and On the Rocks

Stoli, a unit of Luxembourg-based SPI Group, has its own unique problems. It was long marketed as a Russian vodka, but has been made in Latvia for several decades. That’s in part because its billionaire founder, Yuri Shefler, is a Russian exile who has feuded with the country’s President Vladimir Putin, condemning the latter’s invasion of Ukraine and anti-LGBT laws. Russian authorities have cracked down on the company at home, branding it an “extremist” organization, demanding it hand over its profits to a state entity, and moving to seize its assets.

Enough to drive one to drink, in other words. But Stoli’s not alone in spiritmakers worrying about geopolitics:

• President-elect Donald Trump has promised blanket tariffs, but he’s also gone after spirits specifically in past trade spats. For example, he hit the Scotch whisky industry with tariffs as part of a trade spat from 2019 to 2021, costing the sector £600 million ($760 million), according to the Scotch Whisky Association. If an agreement isn’t struck by June 2026, they could be brought back.
• Blanket tariffs would also go down like contaminated moonshine: Pernod does one third of its trade with America and Diageo does 40%. Campari, Moet Hennessy, and Remy Cointreau also count the US as their biggest market.

Hops would get deflated, too: Wells Fargo said last week that the cost of Modelo, a popular beer brand imported from Mexico, could jump 4.5%, while importer Constellation Brands would get smacked with a 16% cost increase.

America First? UBS’s analysts also estimated that 79% of spirits sold in America are imported, so could that actually be a leg up for domestic producers? Maybe. They just have one problem to contend with: Americans. For the first time in almost three decades, the International Wine and Spirits Record last year noted a decline — in this case of 2% — in the volume of spirits sold in America. This year has been even worse, with a 3% decline in the first seven months.