Central European Distribution Corporation has been on a binge lately; a growth binge, that is. After buying up several local distributors and alcohol producers in the past few years, CEDC announced Thursday that it had taken a 40% stake in Russian vodka producer Russian Alcohol Group. Included in the deal were exchangeable notes that can be exercised in 2010.

As evidenced by the attached charts, CEDC has produced lucrative returns for investors, not only during the emerging market boom years, but even into 2008. As a proxy for the region, I've chosen to compare CEE, a Central Europe closed end fund, and the S&P500 as the standard U.S. benchmark. Year to date in 2008, CEDC has returned close to 20% versus small losses for the to comparators.

Yes, hold your breath for this one, but during the prior 5-year period, CEDC has returned an astounding 660% versus an impressive return of 250% for CEE and 50% for the S&P500.

CEDC has benefitted substantially from the tremendous growth in Eastern Europe and Russia, which is likely to continue given the increased standard of living and consumption patterns of consumers in the region. The Polish stock market has been on fire in the past several years (albeit a slight breather YTD), with the economy growing faster than the U.S. and the currency to show for it. Russia has already proven itself as a top tier emerging market transition country and with oil at monumental levels, Mother Russia will continue to be a force to reckon with. The company already controls 1/3 of the vodka trade in Poland, a bit shy of the 40% allowed by law to prevent monopoly. However, with growth into an enormous Russia and emerging regions like Hungary, CEDC has plenty of room to run. Alcoholic beverage consumption in Poland and other surrounding countries has been growing rapidly, especially for vodka. Nielson Media reported that the 2007 year over year growth in alcoholic beverage consumption was 15% in Poland. Given the increasing economic conditions in the region, consumers are apt to switch over to brand-name liquors, such as those offered by CEDC.

While CEDC jumped a few points with Thursday's announcement, there is still little coverage or media attention paid to this one, so there should be room for further P/E expansion, notwithstanding its current torrid growth rate. With CEDC continuing its momentum in the region and the Eastern European growth story unfolding, it is certainly worth a look. CEDC was initially highlighted in 2007 in the "Stocks Gown Wild: International Hotties" series; feel free to peruse for additional emerging market plays or view the Everyday Finance Portfolio Update for current holdings.

Disclosure: The author does not have a position in CEDC at this time.

Proxy Statement and Annual Report:

http://www.cedcreports.pl/.