Among the various sanctions-related headlines we’ve seen recently, one of the more interesting products to be sanctioned is vodka. Today, it was announced that President Joe Biden’s administration will ban Russian vodka, caviar and other items. This news has actually sent shares of Vodka Brands (OTCMKTS:VDKB) higher today. Currently, VDKB stock is up more than 15% on the news.
Taking a step back, it’s important to keep these economic sanctions in context. Previous sanctions targeting the functioning of the Russian financial system and energy sectors will likely have much more impact. That said, the Biden administration has clearly sought out products to sanction that would have little impact on American consumers while still inflicting the maximum pain on the Russian economy.
Thus far, reports indicate that many businesses and consumers have already boycotted Russian vodka, caviar and other products because of the war. Accordingly, this round of sanctions appears to be a no-brainer for the administration (the market may have already pre-sanctioned these products on its own).
That said, let’s dive into why Vodka Brands is taking a big win today on this news.
What’s Behind Today’s Big Move in Vodka Brands?
Interestingly, Vodka Brands, as its name suggests, is a large importer of vodka into the U.S. However, this company’s focus is not in Russian vodka. Rather, the company’s Blue Diamond vodka is distilled in Estonia. This is one of the vodka brands that competes with some major Russian brands.
Notably, Vodka Brands’ positioning in terms of its supply chain is lucky, if not smart. Providing a unique product produced in a unique region can come in handy in situations like this. It appears the market is beginning to price in some rather steep demand for Blue Diamond vodka on the heels of this news. Accordingly, despite sky-high shipping costs and other factors hurting importers today, Vodka Brands is a stock that’s gaining a lot of upward momentum.
The question many investors may rightly be asking right now is how long these sanctions will persist. Whether we see a Cuban-cigar-style embargo take hold for decades or the sanctions are overturned in short order remains to be seen. For now, investors appear to be playing it safe, and VDKB stock is one such way to do so.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.