A LONGSTANDING trademark dispute over Russia’s best-known export was finally settled yesterday when Diageo, the drinks giant that owns the bestselling Smirnoff vodka brand, acquired control of the smaller Smirnov vodka business.

Subject to regulatory approval, Diageo and Alfa Group, the owner of the Smirnov Trading House, are to set up a joint venture to market, sell and distribute spirits in Russia. Diageo will pay $50 million for a 75 per cent stake in the venture.

Although Smirnoff sells more than 25 million cases worldwide, more than ten times the sales of its rival, Smirnov easily outpaces its bigger cousin in the Russian market, which accounted for the bulk of the 220,000 cases that it sold last year.

The Smirnov name has been synonymous with vodka since the 1860s, when Pyotr Smirnov founded a distillery in Moscow. During the revolution, the business was confiscated and one of his sons, Vladimir, moved to Paris, where he changed the spelling of his name to Smirnoff.

In 1933, he sold the rights to the Smirnoff name to a fellow Russian working in America, who in the 1950s sold on the rights to Heublein, a drinks group now part of Diageo.

The original Russian distillery ended up being converted into a garage, but in 1991, Boris and Andrei Smirnov, descendants of Pyotr Smirnov, started up in business and claimed that Diageo’s use of the Smirnoff mark was illegal.

Whereas Smirnov is distilled in Russia, Diageo’s spirit is made in Scotland, America, Ireland, Italy, South Africa, Kenya and Australia. In 1996 it took the vodka war to Smirnov’s home territory when it signed a contract with a Russian distillery to make Smirnoff.

In 1994, there was a partial resolution to the legal spat when Diageo agreed to remove cyrillic lettering and Russian emblems from its label. Yesterday’s deal resolves it once and for all.

“Smirnoff and Smirnov, with their unique Russian heritage, are uniting,” declared Igor Baranovsky, managing director of A1 Group, the Alfa subsidiary that owns Smirnov.

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