RUSSIA – The world’s second-largest brewer, Heineken, has sold its Russian business for just US$1, incurring a total loss of 300 million euros (US$325m).
Heineken said it has agreed to sell the Russian business, which has seven breweries and 1,800 employees, to local manufacturer Arnest Group. Heineken said the transaction will have a negligible impact on its full-year outlook.
Arnest Group owns a major can packaging business and is the largest Russian manufacturer of aerosols, as well as selling cosmetics and household goods.
It is almost 18 months since Moscow launched its full-scale invasion of Ukraine, forcing the Dutch brewer to withdraw its operations from the country.
“While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner,” Heineken CEO Dolf van den Brink said in a statement.
In March last year, Heineken said it was quitting Russia as its business there was “no longer sustainable nor viable in the current environment” but added that it wanted to ensure an “orderly transfer” to a new owner.
The brewer pulled brands including Heineken, Miller, and Guinness from Russian shelves, although Amstel has remained on sale in part to keep the local business afloat, and new products have been launched by local management.
Dutch investigative website Follow the Money accused the Amsterdam-based brewer of “breaking a promise” to leave Russia.
The development occurs at a time when the British CPG company is still considering options of either abandoning, selling or retaining its operations.
The company, together with other multinationals, with operations in Russia has been facing heated backlash for remaining in Russia, with the Ukraine Government naming it as an “International Sponsor of War.”
“The first option is to abandon our business. We feel that, in effect, that could result in it being nationalized, given all the developments that have recently taken place,” CEO Hein Schumacher told journalists.
“The second option is to sell the business, but the reality is, we have not found a viable solution that meets our stated objectives. None of the options are good, but the final option of operating our business in a constrained manner is the least bad, and that is where we are.”
Schumacher pointed out that the company has not been in touch with the Russian government in the wake of its moves on Danone and Carlsberg.
Moscow introduced rules earlier this year, allowing it to seize the assets of firms from “unfriendly” countries and the temporary acquisition was made under a new order signed by Russian President Vladimir Putin.
The order placed the shares of Danone Russia and the Carlsberg-owned Baltika Breweries, who were both in the process of selling their Russian operations, under the control of Russian property agency Rosimushchestvo.
The country later announced Yakub Zakriev, deputy prime minister and agriculture minister of Chechnya as the new head of the yogurt maker Danon’s Russian subsidiary.