Heineken leaves Russia

Under pressure from Russian sanctions and public opinion, Heineken sold its entity in Russia. The shares were bought by Arnest Group for just 1 euro. This comes after 1.5 years in which Heineken first indicated it was leaving. But didn’t do this. Which has been reported several times in the news by Follow The Money. With this divestment in Russia, Heineken has left the problematic market behind.

Expropriation

The current situation, in light of the expropriation of Carlsberg (and Danone) and some pressure from Russia, is not unrealistic. Especially given the Dutch government’s support to start supplying F-16 fighter jets. Heineken may still have been able to avoid expropriation in this way.

For Heineken, this means that they got rid of 1,800 employees working in 7 breweries and recorded a loss of 300 million euros for it. The impact on the numbers will become apparent with the next quarterly statements. But assuming a reservation, this may not be too bad.

Arnest Group

Arnest Group’s interest is understandable. They are a major manufacturer of all kinds of products. Mostly related to Heineken. Or in other words, this means a stronger position for Arnest Group. While this is also a desirable party for Heineken because it is not on a sanctions list. Which means, therefore, no restrictions or further negative publicity.

However, Heineken can now conclude that they have acted in accordance with top executive Dolf van den Brink’s comment. In it, he indicated that Heineken will take good care of its own people. Despite these developments, however, it can be said that Heineken’s image has taken a big dent. Especially after Follow The Money’s coverage.

What is clear is that Heineken, and other Western companies still operating in Russia, initially underestimated the situation. Possibly it was thought at the time that it would not be such a big deal. Or that the situation around the restrictive measures (sanctions to and from Russia) would be short-lived. The question here is to what extent management have sought information from the export controls officer. This one had undoubtedly given a warning regarding developments, which in retrospect proved correct.

Yale activities companies Russia

Whether other companies have left completely, are still partially operational or have unchanged operations in Russia is tracked by the Yale School of Management and can be viewed via this chart.

And despite Heineken’s departure, there still seems to be a tailwind. This can be read in Follow The Money’ s latest news item.

If you would like more information about the Russian situation and what it means for you, please take Contact us.