Heineken Leaves Russia, Takes $320 Million Hit

Dutch brewer Heineken on Friday announced it was pulling out of Russia after selling its operations there to the Arnest Group, the largest Russian manufacturer of cosmetics, household goods, and metal packaging. Heineken said it would incur a total loss of about 300 million euros ($323.6 million) in the sale, including all the breweries in the country and 1,800 local staff. The company has guaranteed employment for those employees through three years. Heineken will also issue a three-year license to “smaller regional brands to ensure business continuity and to secure transaction approval.” However, it will not provide brand support or receive any proceeds, royalties, or fees from those unnamed brands.

Heineken’s withdrawal from Russia is the latest chapter in a corporate exodus sparked by Putin’s invasion of Ukraine last year. Many prominent Western companies pledged to quit Russia, but researchers found that some companies failed to follow their promise. Some, such as oil giant Exxon Mobil and tobacco giant Philip Morris International, have shifted their strategy to maintain production in Russia despite Russian sanctions. The Kremlin has made it challenging for foreign companies to abandon the country, demanding that they sell assets at a discount and warning of nationalization. That snag has prompted some Western executives to argue they are responsible to shareholders to find buyers for their billions in Russian assets rather than surrender them to Moscow.

Other companies have been able to exit the country more efficiently, including oil giant Chevron and German automaker Volkswagen. The exodus has led to a decline in the ruble’s value and caused a drop in oil prices that has sparked a global recession in the case of Heineken, a drop in sales to Russia, and a price increase to offset rising costs battered profits.

Heineken’s decision to pull out of Russia follows a similar move by rival Carlsberg earlier this year. The brewers say the decision to sell their businesses in the country was taken after considering several factors, including the impact on employee morale and the fact that it could not find a buyer for the Russian business. They plan to transfer ownership of their seven breweries in Russia to the Arnest Group, which plans to operate them. Heineken’s departure from Russia will take effect in six months. Amstel will be pulled from the Russian market after that, it said.

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