Heineken has successfully sold its Russian assets to Arnest Group, a Russia-based packaging and cosmetics group, as the company prepares to quit the Russian market.
This decision comes 18 months after Heineken declared plans to depart Russia in response to the country’s military operations against Ukraine. According to The Wall Street Journal, the sale was for a measly $1.
Arnest Group will buy Heineken’s seven breweries and 1,800 employees as part of the agreement.
The agreement states that these individuals will continue to work for Arnest for at least the next three years.
Dolf van den Brink, CEO of Heineken, stated that recent events highlight the difficulties that large manufacturing businesses confront when attempting to withdraw their operations from Russia.
The context for this divestment is a shifting landscape for Western companies operating in Russia. Several Western corporations have left Russia since Russian President Vladimir Putin declared war on Ukraine.
However, the Russian government has become increasingly repressive, allowing the authorities to confiscate assets from enterprises deemed “unfriendly.” Notably, the Russian authorities recently seized the local operations of French food behemoth Danone and Danish brewer Carlsberg.
Heineken successfully avoided this risk by relocating its operations to Arnest. Arnest had paid $530 million for the Russian unit of the American-based Ball Corporation.
In terms of the agreement with Heineken, Arnest will pay a debt of 100 million euros ($108 million) owed by Heineken’s Russian division to its parent firm.
Although Heineken has completed its exit from Russia, its eponymous brand was discontinued in the nation last year. The Amstel brand will be phased out over the following six months, according to the business. To get the acquisition approved, Heineken agreed to a licensing agreement that permits the Austrian beers Gösser and Edelweiss, as well as the Czech beer Krusovice, to continue to be sold. These beers will continue to be sold in Russia, but only under their Cyrillic brand names, and the licensing deal will expire in three years.
The acquisition reduces beer options for Russian consumers; however, the country’s traditional fondness for vodka may mitigate the impact of Heineken’s departure.
Foreign Businesses Exiting From Russia
The Ukraine War has acted as an inflection point for many foreign businesses operating in Russia. Several businesses have decided to disengage from the Russian market in response to escalating tensions, economic sanctions, and a globally scrutinized geopolitical climate. Here are big companies that take exit from Russia:
Tech Giants Take a Step Back
- Apple: Apple suspended sales in Russia out of concern for government policies and broader ethical considerations.
- Microsoft: The tech giant went a step further by suspending new sales and announcing it would review its operations in the country, making a strong statement regarding its stance on the conflict.
Automotive Industry Hits the Brakes
- Volkswagen: Volkswagen has halted production, citing supply chain disruptions and political instability.
- Ford: Already contending with a shrinking Russian market, Ford used the Ukraine War as an impetus to withdraw from Russia.
Retail Exodus: From Fast Food to Fast Fashion
- McDonald’s: One of the most striking exits, the fast-food giant announced a temporary closure of all its outlets in Russia, sparking widespread discussions on the role of businesses in geopolitics.
- H&M: The fashion retailer suspended its Russian operations, expressing concerns over human rights violations and the ongoing conflict.
Energy Sector: A Strategic Withdrawal
BP: The British energy firm decided to divest its 19.75% stake in Russian oil company Rosneft, marking a significant shift in the industry dynamics.
Shell: Following suit, Shell announced plans to exit joint ventures with Gazprom and other Russian entities, signaling a strategic realignment.
Financial Services: The Exit of Key Players
Visa and Mastercard: Both payment giants suspended services for Russian banks, disrupting the payment ecosystem and making a clear statement on their position.
This corporate exodus not only has immediate financial repercussions but also establishes a precedent for how corporations navigate complex geopolitical terrain. As sanctions tighten and the global community takes sides, the list of companies leaving Russia continues to grow, signaling a significant shift in the global business community’s ethics and strategy.