Among the various sanctions-related titles we’ve seen recently, one of the most interesting products to sanction is vodka. Today it was announced that the administration of President Joe Biden would ban vodka, caviar and other Russian products. This news actually sent shares of Vodka brands (OTCMKTS:VDKB) higher today. Currently, VDKB stock is up more than 15% on news.
With hindsight, it is important to put 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 clearly sought sanctioned products that would have little impact on American consumers while inflicting the maximum pain on the Russian economy.
So far, reports indicate that many businesses and consumers have already boycotted Russian vodka, caviar and other products because of the war. As a result, this round of sanctions seems like a no-brainer to the administration (the market may have already pre-sanctioned these products on its own).
With that said, let’s see why Vodka Brands has a big win today on this news.
What’s behind today’s big move in vodka brands?
Interestingly, Vodka Brands, as the name suggests, is a major vodka importer in the United States. However, this company does not focus on Russian vodka. On the contrary, the company’s Blue Diamond vodka is distilled in Estonia. It is one of the vodka brands that competes with some big Russian brands.
Notably, Vodka Brands’ supply chain positioning is lucky, even smart. Providing a unique product made in a unique region can come in handy in situations like this. It looks like the market is starting to price in quite a strong demand for Blue Diamond Vodka on the heels of this news. As a result, despite exorbitant shipping costs and other factors hurting importers today, Vodka Brands is a stock that is gaining a lot of upside momentum.
The question many investors may rightly be asking right now is how long these sanctions will persist. It remains to be seen whether we will see a Cuban-style embargo prevailing for decades or whether the sanctions will be reversed in a short time. For now, investors seem to be playing it safe, and VDKB shares are one of those ways to do that.
As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.