Carlsberg and Heineken both unanimously announced today to leave the country. After a strategic review the Dutch brewer decided “that Heineken’s ownership of the business in Russia is no longer sustainable nor viable in the current environment.” Equally Carlsberg said “we have taken the difficult and immediate decision to seek a full disposal of our business in Russia.”
Immediately after Russia’s President Putin's started invading Ukraine on February 24, both companies announced that there would be no new investments in Russia. One week later, the two brewers joined many other Western companies to halt operations in Russia. (inside.beer, 10.03.2022)
Today’s announcements go one step beyond because the companies commit to completely exit the country. “ Until this can be achieved they “maintain the recently announced reduced level of operations” (Carlsberg) or “continue with the recently reduced operations” (Heineken). Upon completion both brewers “will have no presence in Russia,”(Heineken & Carlsberg)
Heineken also said it “will not profit from any transfer of ownership” and Carlsberg announced that “any profits generated during the humanitarian crisis will be donated to relief organisations.”
Heineken expects “impairment and other non-cash exceptional charges of approximately EUR 0.4 billion in total,” while Carlsberg did not immediately quantify the effect. In a statement, Carlsberg said that “the business will be reassessed at fair value, which will result in a substantial non-cash impairment charge. In 2021, the business in Russia reported revenue and operating profit of DKK 6.5bn and DKK 682m respectively.” Further details on the accounting impact of the planned disposal and the reintroduction of earnings guidance will be published later.
The announced step is not easy for both brewers, as Russia is the world's fifth largest country in terms of beer consumption. Especially for Carlsberg it is a major step since Carlsberg last year achieved 10% of its total sales and 6% of its operating profits in Russia.
For Heineken the decision is less painful as Russia makes up only around 2% of its global sales.
While Carlsberg and Heineken, the # 1 and 3 in the Russian beer market both took a clear position in respect to Russia`s invasion of the Ukraine, AB InBev that has a joint venture in Ukraine and Russia with Turkish brewer Anadolu Efes is more vague about the future of its business in Russia.
On March, 11 AB InBev issued a press statement saying: “We do not have a controlling stake at the joint venture and do not consolidate it in our accounts. We have requested the controlling shareholder to suspend the license for the production and sale of Bud in Russia. Furthermore, we are forfeiting all financial benefit from the joint venture operations.” (inside.beer, 11.03.2022)
However, after the new announcements from Heineken and Carlsberg, AB InBev is now also under pressure to terminate its operations in Russia. Most likely, AB InBev CEO Michel Doukeris will not wait for human rights organizations and engaged consumers to place AB InBev and its management against the wall of shame. A new statement is to be expected soon.
