The maker of Stolichnaya vodka has filed for bankruptcy following a massive cyberattack in September and a continuing legal battle with Russia over who owns the brand.
Stoli Group USA filed for Chapter 11 in U.S. Bankruptcy Court in Dallas last week after a “malicious cyberattack” forced it to manually run its global operations “while its systems are rebuilt.” The company has applied for coverage, CEO Chris Caldwell said in a statement.
Caldwell is also involved in an ongoing legal battle with Russia, which earlier this year labeled the company and its owner, Russian-born exiled billionaire Yuri Scheffler, an “extremist group working against Russian interests.” He also mentioned the struggle.
Schaeffler has been in exile since 2002 for his opposition to President Vladimir Putin.
After the invasion of Ukraine in March 2022, Schaeffler changed its name from Stolichnaya to Stoli.
At the time, people around the world began dumping Russian vodka and spirits in protest.
“Today, we have decided to completely rebrand as the name no longer represents our organization,” Schaeffler said in a statement at the time. “More than anything, I want Story to express peace in Europe and solidarity with Ukraine.”
The brand has long been advertised as a Russian vodka, even though it is produced in Latvia. Stoli Group is a subsidiary of Luxembourg-based SPI Group, which owns Kentucky Owl bourbon and other spirits and wines. Stoli Group USA and Kentucky Owl are the only companies in bankruptcy, the company said.
Schaeffler has been at odds with President Vladimir Putin for decades, and in 2013 publicly condemned a number of harsh anti-gay laws.
Russia and Stoli Group have also clashed in court.
According to reports, the Russian government produces a state-run version of the brand and sells it domestically with a label clearly indicating that it is made in Russia.
Ownership of the brand is disputed between Schaeffler's Stoli Group and the Russian state-owned company Sojuzprodoimport.
The filing says Stoli Group is “in financial difficulty” and lists its debts at between $50 million and $100 million.
The bankruptcy comes as overall sales of alcoholic beverages have slumped this year as consumers cut back on consumption for reasons of saving money or for health reasons.
In the first seven months of 2024, U.S. consumption of distilled spirits decreased by 3% and beer consumption decreased by 3.5%, according to global beverage data and analytics company IWSR.
According to the report, young people are drinking less alcohol than previous generations, and non-alcoholic drinks are seen as a rapidly growing niche market.
Experts say the legalization of marijuana in many states is also contributing to the decline in alcohol sales.
