Heineken and Carlsberg: Russia is the culprit

Europe | Both Heineken and Carlsberg partly blamed their exit from Russia for their sales declines in the third quarter this year.

In August, Heineken sold its Russian business to domestic firm Arnest Group, which took 100 percent of shares and assets, including its seven breweries, for a symbolic single euro. Heineken said Arnest had provided employment guarantees for 1,800 employees for three years. It also said at the time that it expected a EUR 300 million (USD 322 million) hit from the process.

Heineken did not provide further details in its third quarter update, but listed the Russia exit and a fall in sales in Vietnam as the main reasons for the overall decline in volumes – a drop of 4.2 percent over the previous year’s quarter.

Baltika was stolen from Carlsberg

Carlsberg, for its part, saw an organic decline of 3 percent in volume sales. It has cut all ties with its Russian unit Baltika and refuses to enter into a deal with Russia's government, that would make the confiscation of Baltika look legitimate, the Danish brewer’s new CEO said on 1 November.

“There is no way around the fact that they have stolen our business in Russia, and we are not going to help them make that look legitimate,” said Jacob Aarup-Andersen, who took over as CEO in September.

Carlsberg had eight breweries and about 8,400 employees in Russia, and took a DKK 9.9 billion (USD 1.4 billion) write-down on Baltika last year.

Let’s see what happens

Mr Aarup-Andersen said that from the limited interactions with Baltika's management and Russian authorities since July, Carlsberg had not been able to find any acceptable solution.

In October, Carlsberg ended all licencing agreements for its brands in Russia. When these licences run out after the grace period, the now state-administrated Baltika will not be allowed to produce any of Carlsberg’s brands any more. “Of course, I cannot guarantee that happens, but that is our expectation,” Mr Aarup-Andersen conceded.