Stoli Vodka Files for Chapter 11 Bankruptcy After Crippling Cyberattack

Stoli vodka, formerly branded as Stolichnaya, is facing some hurdles as of late. The brand’s parent group, Stoli Group USA, along with its whiskey unit Kentucky Owl American, have filed for Chapter 11 bankruptcy in order to deal with a number of financial liabilities, as The Spirits Business reported.

Stoli Vodka To Continue Operations Despite Bankruptcy Filing

Fans of the clear spirit shouldn’t be overly worried, however. Stoli Group CEO Chris Caldwell pointed out that the move toward restructuring through bankruptcy was strategic in nature and shouldn’t interfere with the delivery of product to store shelves.

“The Chapter 11 filing is a temporary measure to protect our people, our brands and our business while the group’s US entities restructure their financing,” Caldwell stated. “We will continue to work with our trade partners to drive the brands forward and deliver our award-winning brands with no disruptions.”

The Spirits Business cited bankruptcy consulting firm RK Consultants as estimating Stoli’s assets at a value of between $100 million and $500 million, while liabilities rested at approximately $50 million to $100 million.

Stoli Vodka Targeted by Russian Government

Despite often being thought of as a Russian vodka — a prospect that spurred the shortening of its name, alongside Russia’s invasion of Ukraine, according to CNN — production has taken place in Latvia for some time.

Another issue facing the company recently: a series of cyberattacks targeting its enterprise resource planning (ERP) platform and operational systems. While not directly attributing these attacks to Russian sources, Caldwell did indicate that the company had been singled out by the Russian government as a target.

“The Stoli Group has been targeted by the Russian Federation since it was formed nearly 25 years ago. Earlier this year, the company and our owner were both named by the Russian state as ‘extremist groups working against Russia’s interests,’” Caldwell explained.

CNN outlined that the vodka company has been embroiled in a legal battle with the Russian government for the past few years, one which has sapped it of millions of dollars.

Spirit Sales Flagging, Spelling Some Trouble for Stoli and Others

As CNN detailed, overall sales have been flagging for spirits, including vodka, since the conclusion of the COVID-19 pandemic.

In its filings, Stoli reinforced this narrative, indicating a “decline and softening of demand for alcohol and spirits products post-Covid and especially beginning in 2023 and continuing into 2024.”

All of the above factors may have contributed to the spirit company’s most recent move to restructure, though it sees this as an opportunity for renewal rather than a more ominous signal of its future business prospects.