After having received all required approvals and amidst mounting criticism, Heineken has officially departed from the Russian market, finalizing its departure by selling its seven breweries to the Arnest Group. Russia's largest producer of cosmetics, household goods, and metal packaging is set to acquire all assets, including the seven breweries, for the nominal price of one Euro, the company announced today.
The Arnest Group has secured a job guarantee for around 1,800 employees over the next three years.
Dolf van den Brink, CEO of Heineken, expressed his relief regarding the socially responsible solution for employees, as well as the successful completion of the long and intricate search for a buyer and the subsequent exit from Russia. Market observers also believe that the CEO of Heineken is glad to have managed to avoid the fate of his company being placed under receivership, a destiny that befell competitor Carlsberg amidst its selling process a month ago (inside.beer, 16.7.2023)
The retreat from Russia took longer than expected. Van den Brink emphasized, "Although it took much longer than we had hoped, this transaction will secure the livelihoods of our employees and allow us to depart the country responsibly."
Ball Corp, the global leader in metal can manufacturing, which like Heineken had also declared its intention to exit the Russian market back in March 2022 due to Russia's invasion of Ukraine, managed to successfully divest its business, to the Arnest Group in September 2022. The sales price for the business including three factories for the production of aluminum cans for beer and soft drinks, located in the Moscow, Leningrad, and Chelyabinsk regions amounted to USD 530 million. Evidently, Ball Corp's proactive strategy appeared to be notably more effective, as Heineken was left with considerably less negotiating leverage by the time they ultimately decided to divest their business about half a year later.
For Western companies, the already intricate process of exiting Russia has become more challenging. Multiple insiders revealed to Reuters that Russian authorities are urging companies to reevaluate the valuations of their assets up for sale, demanding significant markdowns.
The Heineken CEO stated that the company anticipates a loss of approximately EUR 300 million. The sale and production of the Amstel beer brand, also under Heineken, will be discontinued in the next six months. Except for a three-year license granted to a few smaller regional brands crucial for maintaining business operations and obtaining transaction approval, no foreign brands will receive licensing in Russia. Heineken will not extend any brand support and will not receive any proceeds, royalties, or fees from its operations in Russia, the company said.
There is also no call option to return to Russia, Heineken stated.
Following the onset of the Russian invasion of Ukraine in February 2022 and the subsequent imposition of Western sanctions, numerous Western companies announced to halt operations and bid farewell to the Russian market, including Carlsberg and Heineken. Heineken, which operated seven locations in the country, anounced its withdrawal in March 2022 (inside.beer, 10.3.2022). Beers under the Heineken brand ceased to be sold. However, the brewer faced criticism as other activities continued and new brands entered the market. One year after its inital anouncement to wihdraw from the Russian market, the company acknowledged "communication errors". (inside.beer, 6.3.2023)
In April 2023 the Dutch brewer revealed that it had found a buyer, but it did not want to make its identity public before the deal was finally agreed upon by all parties involved, including regulators in the Russian Federation. (inside.beer, 22.4, 2023).
