Treasury Ministry shortlists buyers for Polmos zyrardow
The Treasury Ministry shortlisted three companies this month to buy a strategic stake in Polmos zyrardow, the state-owned producer of Belvedere vodka, the ministry said.
U.S.-based Phillips Millennium, France's Belvedere and Unicom Bols of the Netherlands are scheduled to submit their offers for the stake in mid-December.
While Unicom Bols would be a new partner for zyrardow, both Phillips and Belvedere have already worked with the Polish vodka producer. The latter two have, however, had vastly different experiences.
Phillips signed an exclusive distribution deal with zyrardow six years ago. Since then the company has spent about $50 million to position Belvedere as one of the leading luxury vodka brands in the United States, where consumers snapped up 2.5 million units last year at $30 a bottle.
"Phillips may be the natural investor because it's (already working with zyrardow) and has made the brand popular," said Dariusz Wit vel Wilk, managing director of Evip Corporate Management Consultants.
Meanwhile, Belvedere and zyrardow are embroiled in an ugly legal conflict over the rights to the Belvedere vodka trademark. In 1996, zyrardow management transferred the trademark rights at no cost to Euro Agro Warszawa, a subsidiary of Euro Agro France, which had been supplying Polmos with bottles for the vodka brand. The subsidiary then transferred those rights to its parent company, which was renamed Belvedere in 1997.
According to Jerzy Jurczynski, Belvedere's spokesman, "Polmos itself transferred the trademark right to Belvedere in exchange for the right to be the exclusive producer of Belvedere vodka."
Jerzy Wodz, appointed president of zyrardow two years ago, is now trying to regain the trademark, whose value experts estimate at $8 million, said company spokesman Karol Jackowski.
Earlier this year, a Lodz court of appeals ruled the trademark transfer to Euro Agro Warszawa invalid because it lacked the agreement of the zyrardow worker's council. The court also said Euro Agro cannot claim ownership rights since it neither produces nor holds a license for the production of the alcohol. The court has yet to rule on Belvedere's right to hold the trademark.
What makes Belvedere attractive to potential investors is not only its image as a high-quality, top-shelf vodka, but also zyrardow's state-of-the-art production process. Its factory can produce up to 30 million liters of pure spirits per year. In addition, the firm that wins the tender will gain access to the lucrative U.S. vodka market.
If zyrardow had its way, Jackowski said, it would choose Phillips as its strategic investor. "Choosing Phillips would ensure prosperity for the company," he said, adding that Belvedere would not be welcomed by Polmos' management. "(It's) a company that is dragging Polmos to court all the time and making it liable for (legal) costs."
Nevertheless, Belvedere's Jurczynski remained optimistic about his company's chances of being selected as zyrardow's main investor.
"We believe that in spite of the conflict the ministry will choose the appropriate investor," he said, adding that Polmos' authorities are intentionally lowering the company's value.
"They are not renegotiating the conditions of the distribution deal with Phillips," Jurczynski said.
While he admitted that Phillips had introduced Belvedere vodka to the U.S. market, Jurczynski said the company would not be able to take the brand further. "It's time to expand the Belvedere brand around the world," he said.
"Each (of the three shortlisted companies) have advantages and disadvantages," said Pawel Jagiello, president of Pro-Invest International, the ministry's privatization adviser. Wit vel Wilk said the ministry, its adviser and zyrardow would pick the company that had the best development strategy and had "proved itself."
"And Phillips Millennium has done that, hasn't it?" Wit vel Wilk said, referring to the company's success with Belvedere in the United States.
