Heineken Exits Russian Market

Dutch brewery company Heineken announced on August 25th that it has completed its exit from Russia, selling its Russian assets to the Arnest Group for a symbolic one euro. The world's second-largest brewer stated that the deal received all necessary approvals and is expected to result in significant losses of around 300 million euros, according to Reuters.

Heineken had announced its intention to leave Russia in March 2022 following Russia's invasion of Ukraine, acknowledging that the process took longer than anticipated.

"The recent events showcase the substantial challenges that major production companies face when exiting Russia," stated the company's CEO, Dolf van den Brink.

Many multinational companies rushed to exit Russia after the West imposed unprecedented sanctions against Moscow, but the Kremlin responded by seizing some assets.

Some foreign companies attempting to leave Russia are encountering steep cost increases, as Moscow demands larger discounts on the assets they intend to sell, according to three individuals familiar with the matter.

In July, Russian President Vladimir Putin signed a decree to take control of the Russian subsidiary of the French yogurt maker Danone, as well as a portion of the beer company Carlsberg's stake in a local brewery. Anheuser-Busch InBev also announced plans to exit its joint venture in Russia with Turkish company Efes.

Responding to journalists' questions about whether Danone and Carlsberg's experiences heightened the need for Heineken to strike a deal, van den Brink said, "Our concern grew, but not the urgency. This has shown that there is a real risk of nationalization, and all you can do is strive to be the master of your fate."

He didn't delve into details about why the search for a buyer took longer than expected, calling the process "very complex."

"We're happy to have found the right buyer. We believe it's a reliable party... We're glad this process is coming to an end and we can leave Russia," added van den Brink.

Heineken had seven brewing facilities in Russia and 1,800 employees, who will receive job guarantees for the next three years.

Last year, the Dutch brewery company pulled its Heineken brand out of Russia, and Amstel beer production will be halted within six months.

Heineken stated that the agreement, without a business buyback option, includes a three-year license for certain smaller regional brands for which Heineken will not provide brand support and will not receive any income.