RUSSIA – Russia’s Baltika Breweries has initiated legal proceedings against four Carlsberg subsidiaries, seeking damages totalling Dkr 6.24 billion (US$902 million), as reported by Reuters.
The lawsuit comes amidst a heated dispute between the two brewing giants over the fate of Russia’s largest brewer.
Court filings in St Petersburg named Carlsberg Sverige, Carlsberg Deutschland, Carlsberg Breweries, and Carlsberg’s Russian subsidiary Hoppy Union as defendants in the case.
However, the specifics of the damages being sought were not disclosed, with previous court sessions closed to the public due to the presence of sensitive trade secrets.
A spokesperson for Carlsberg refrained from commenting on the specifics of the case but reiterated the company’s commitment to protecting its interests.
“We continue to take all possible actions, including legal, to protect our employees, assets, and operations in relation to Baltika,” the spokesperson stated.
The first arbitration hearing for the case has been scheduled for May 15th, indicating a protracted legal battle between the two parties.
Tensions between Carlsberg and the Russian government escalated last year when the Kremlin seized Carlsberg’s Russian operations, placing them under temporary management.
This move was followed by a decree transferring control of Carlsberg’s Russian subsidiary, a move Carlsberg denounced as “illegal.”
In response to these developments, Carlsberg terminated its brewing contract with Baltika Breweries in Russia, citing unacceptable terms and an absence of a negotiated solution over its withdrawal from the country.
Meanwhile, legal disputes extended beyond Russia’s borders, with Carlsberg’s operations in Kazakhstan filing an appeal to overturn a ban on selling Baltika brands in the region.
This appeal followed a January court ruling revoking Carlsberg’s right to distribute Baltika brands across multiple markets.
Further, Russian authorities detained two Baltika Breweries employees over fraud allegations, accusing them of transferring intellectual property to Carlsberg before the Kremlin’s takeover.
Carlsberg disclosed that the Russian state had implicated several other brewery employees in similar crimes.
Despite these challenges, Carlsberg reported positive financial results for 2023 revenue rising 4.7 percent to DKr73.59bn (US$10.62bn). On an organic basis, revenue was up 9.2 percent despite a 0.5 percent dip in volumes.
Reported operating profit fell 3.2 percent to DKr11.11bn, impacted by the deconsolidation of its Russian business, leading to significant losses attributed to currency translation and impairment.
“Reported net profit was impacted by the deconsolidation of the Russian business, leading to recognition of accumulated currency translation and hedge losses for the period of 2004 to 2023 of DKr41.5bn and impairment losses of DKr7bn, giving a total net result from the Russian operation of DKr47.7bn,” Carlsberg highlighted.
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