Following reports that Heineken is still operating in Russia after vowing to leave the country due to its invasion of Ukraine, the company addressed its presence there.
“Sadly, some of the reporting of Heineken’s position has been misleading and we feel it’s necessary to explain the decisions we have made, the steps we have taken, and our continued commitment to finding a buyer for our business in Russia,” said the multinational brewing company, which is headquartered in the Netherlands.
Last March, Heineken announced that it would stop new investments and exports to Russia, end production, sale and advertising of the Heineken brand, no longer accept any net financial benefits or profit (ring-fencing) from its business in Russia.
A report this week from watchdog journalism group Follow the Money said that, despite its promise, “Heineken launched no less than 61 new products on the Russian market last year.”
However, according to Heineken, reports that it has “has broken its promise to leave Russia” are “untrue and misleading.”
It said that local colleagues at Heineken in Russia “are doing what they can to keep the business going, after fully delisting the Heineken brand, to avoid nationalization and ensure their livelihoods are not at risk,” as Heineken works to transfer the business to a viable buyer. Due to the challenging circumstances, Heineken said it expects a financial loss of around $300 million.
“Of course, we would have preferred to have concluded the process before now,” it said. “However, we have encountered a complex and ever-changing regulatory environment which has made concluding a deal and securing the necessary approvals ever more challenging.”
One challenge the company laid out is what it called “the very real risk that if we were to stop our operations the Russian Government may take action against employees or decide to nationalize,” the business. To avoid this, Heineken said it opted to reduce operations during a transition period instead of stopping them altogether. It also addressed a list of criticisms related to its Russian operations.
“Let us be clear that there is no exchange of funds between Heineken and our local business in Russia and we do not receive any dividends, corporate fees or royalties (for any brand),” the company said. Heineken said that it aims to have the first half of the transaction complete during the first half of this year.
Eventually, Heineken – which has invested around $1 billion in Russia over several years – plans to have no presence in the country.
“People ask will we return to Russia? All our energies today are on securing the right buyer for the business and leaving Russia, not on planning a return,” it said. “Of course, in a company with our long-term thinking we never say never, but there is simply no prospect of a return in the foreseeable future.”
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