3 Apr 2022
Stoli’s Damian McKinney: ‘I have one more special forces mission in me’
Immediately after the invasion of Ukraine was launched, videos started to appear on social media of people, including state governors and bar owners in the US, pouring Stolichnaya vodka down the drain in protest against all things Russian.
The brand was caught in the popular swell of opinion against Soviet-linked products, from vodka to caviar, despite the fact that the spirit is made in Latvia and owned by a Russian-born critic of Vladimir Putin.
“I get it. It’s emotional,” says Damian McKinney, chief executive of Stoli Group, a British former Royal Marine who served in Northern Ireland, Central America, Bosnia and the Gulf war. He also ran a refugee camp in Kurdistan.
McKinney knows what a crisis looks like — even if the war this time for him at least has meant a corporate one rather than getting involved on the front line in Europe.
McKinney talks like the job at Stoli is a military mission, stressing the need to help his teams “on the ground” in Russia and the Ukraine, as well as the need for strong leadership and decisive action to prevent the brand being sucked into an inadvertent boycott.
Even when he took the job almost two years ago, having moved into management consultancy after his career in the military, he remembers thinking about the work needed to turn round the fortunes of the company: “I have one more special forces mission in me.”
Now he says the job is to turn round people’s perception of a brand that has been a symbol of Russian drinking culture. “I have a lot of experience in crisis management. Knowing about an ambush is quite useful in this case.”
The rights to the Stolichnaya brand were acquired in 1999 by SPI Group, a Luxembourg company founded and owned by Russian businessman Yuri Shefler. McKinney says Shefler is an outspoken critic of Putin, who left Russia under pressure to sell the brand two decades ago.
McKinney made sure that he carried out extensive due diligence on Shefler before taking the role to make sure he was working with someone he considered one of the “good guys”.
At the time, this meant that he was ready to shift the company’s position on areas such as sustainability and diversity, but has taken on a new meaning since the war in Ukraine started.
“I did my due diligence — this was a guy on the resistance side. He left Russia because he totally disagreed with Putin and his way of working,” he says.
“[But] it wasn’t just about is he on the wrong side, because that was clearly a red flag. Is he the sort of guy I could work with who truly is going to sign up to sustainability? Is he really going to? And what comes back is an individual who really does believe.”
The company has been in a decades-long legal fight around the world with a Russian business that has sought to use the trademark, and sells under the brand in Russia. Shefler had by then left Russia for a new home in Switzerland.
This dispute may become less awkward given plans to ditch the name Stolichnaya for its nickname, Stoli, in future.
The spirit is already manufactured in Latvia, but the company will now source grain from Slovakia, rather than Russia. The company also wants to build distilleries in Scotland, Kentucky and Japan.
“I realised that people would see us as Russian,” says McKinney. “The Latvian piece is very important.”
This also reflected a wider problem for the drinks industry: he says that spirits makers had long been reliant on Russian and Ukrainian grain, especially for Scotch whisky. “There’s so much dependence all over the place on Russia.”
Many western companies have cut ties to Russia, selling or closing local operations, and denouncing the war. Stoli has also criticised the invasion, and made donations to World Kitchen — a charity that is providing food to Ukrainian refugees.
The company has launched a limited-edition vodka to raise funds for humanitarian efforts.
“People want to hear what side you are on,” says McKinney. “Let’s stand tall. This is about Putin, not the Russian people. The key is leadership.”
McKinney says that the Russian invasion has sparked a renewed awareness in the private sector “that we can’t just rely on business and government sanctions over there, we have to play our part”.
“There are a lot of people getting out of Russia [after] a huge amount of pressure. It’s a business imperative pushed by the politics,” he says. “For me it was really simple. Whose side do you want? We are not supporting Putin.”
Three questions for Damian McKinney
Who is your leadership hero?
My grandfather Redge Cater, citizen soldier. Joined up at 16 to fight in the first world war, wounded at 17 at the Somme, but after nearly losing his leg returned to fly in the Royal Flying Corps. Joined up again at 40 to fight in the second world war. Won a Military Cross by taking his company of soldiers, through enemy positions, having been completely encircled, back to his own lines. All this having been injured earlier when he stood on a mine.
His three leadership pieces of advice to me when I joined the Royal Marines as an 18-year-old: when you are shot at, you will be terrified, but as a leader it is unacceptable to show fear, otherwise everyone else will run away. When attacking, never stop, momentum is everything. If you stop, it will be difficult to move again. Your job is to always deliver the mission, but always think about your people. They are precious. Never leave anyone behind!
If you were not a CEO/leader, what would you be?
I would be a farmer. I love the joy of planting seeds/trees, breeding animals and then seeing them grow. Dealing with the vagaries of weather and fate on the way.
What was the first leadership lesson you learnt?
At 13, I was given a book of black marks to hand out to younger children for misdemeanours. Before I knew it, I fell into a pattern with my peers of who could hand out the most. I quickly realised with horror of the negative effect we were having. A year later I was given a leadership position at a new school. I tried the opposite which was to inspire people and understand reasons/context.
Sales of the brand dipped after the invasion, he says, but the company has so far not lost money given the stock was largely held by alcohol distributors.
“There was a moment when we thought, ‘Oh, this is going to be difficult, and we’re losing’. But actually, if anything, it’s come back very strongly. And we’re feeling pretty good.”
He adds: “I’m putting it down to the fact that people are seeing us as a different sort of company.”
Other initiatives include the rebranding of the Stoli sponsorship of a racing car team. But he says that the activity in supporting causes will not be limited to just the duration of the war in Ukraine. He sees this crisis as a resetting of the principles more broadly for business, and how companies and their management operate on the global stage.
“You set the standards, and it’s really hard. But if we don’t aspire to that, you get the bad guys coming in. And you get all the stuff that goes wrong, whether it’s politics or otherwise. For me, personally, it’s renewed an awareness that I’d like to play a bigger role in saying: this is wrong.”
When he took over the job in 2020, McKinney thought the challenge would be a more conventional management task: to take a once well known brand that had lost its way and refresh its identity.
The company sells more than two-thirds of its spirits in the US, with a portfolio also including rums and tequilas. McKinney says it has a particular following in bars in states such as Florida.
About a fifth is sold in Europe, with the remainder from other parts of the world. But it has had a slow decline in countries where it was once a standout market leader, such as Britain.
The brand was made popular in the UK in the 1990s after two characters in the hit British television show Absolutely Fabulous created a cocktail called the Bolli-Stoli, made of Bollinger champagne and Stolichnaya vodka.
He says his 35-year-old child can still just about remember this British cultural moment — but his 25-year-old daughter has no recollection at all. This new generation needs something else to consider when thinking about its products.
But the importance of brand identity for now is intertwined with the response to the war in Ukraine. “There is a really basic lesson — make sure that you are building a brand that stands for something and you’re recruiting people in because they believe in their brand. We’ve got to do that.”
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