Heineken plans to sell off production facility in Russia

RUSSIA – Heineken, the world’s third-largest brewer, has announced its plans to sell its production site in Kaliningrad, Russia for US$4.3 million.

According to Reuters, the Dutch company had already halted production at the Kaliningrad plant in January, citing a steady decline in Russia’s beer market due to the tightening of the regulation and recession.

“We have a sober estimate of the economic situation in the country as a whole and in the region in particular,” the company said in a statement announcing the sale.

The company said it planned to raise the US$ 4.3 million from sale to invest in the proceeds of other projects.

Heineken shareholder FEMSA had also sold 5% of the company for approximately US$3 billion in September to raise funds as the company was experiencing a decline in sales.

Heineken’s share dropped a lot in September after Mexican Femsa decided to sell some of its shares in order to invest the funds in Mexico.

Femsa holds 12.53% of Heineken Net Value and 14.94% of Heineken Net Value parent Heineken Holding, which amounts to an economic interest of almost 20% in the group.

LArche Green, the company through which the Heineken family exercises control of Heineken Holding, said it would buy back shares worth US$235 million and price per share would be determined by FEMSA’s offer.

The production at the site in the Russian exclave was stopped also due to sustained inflation, unfavourable exchange rates, low consumer confidence and high price competition.

The site consists of warehouses and five plots of land with a total area of 7.2 hectares.

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