Heineken Announces Exit From Russia, Expects to Lose 400 Million Euros

Heineken beer bottles are seen at a bar in Monterrey, Mexico, on June 20, 2017. (Daniel Becerril/File Photo/Reuters)

Dutch brewer Heineken has said it will exit its business operations in Russia—a move the company expects will cost 400 million euros ($438 million).

Heineken previously announced it was halting new investments and exports to Russia, as well as the production, sale, and advertising of the Heineken brand. The Amsterdam-headquartered company had also said it would no longer accept any net financial benefits or profit from its business in Russia.

But on March 28, the international brewer said in a statement that it was “shocked and deeply saddened to watch the war in Ukraine continue to unfold and intensify” and has concluded that its “ownership of the business in Russia is no longer sustainable nor viable in the current environment.”

“As a result, we have decided to leave Russia,” the company said.

Heineken is the third-largest brewer in Russia, where it owns local brands Bochkarev, Okhota, and Tri Medvedya, and employs 1,800 Russian workers.

The company said it is aiming for an “orderly transfer of our business to a new owner in full compliance with international and local laws” and will guarantee the salaries of its Russian employees to the end of 2022. Heineken expects an impairment charge and other non-cash exceptional charges of about 400 million euros ($438 million).

“To ensure the ongoing safety and wellbeing of our employees and to minimise the risk of nationalisation, we concluded that it is essential that we continue with the recently reduced operations during this transition period,” Heineken stated.

“Upon completion of the transfer, Heineken will no longer have a presence in Russia. We continue to hope that a path to a peaceful outcome emerges in the near term,” the statement concluded.

While Heineken is a major player in the Russian market, sales in the country only account for 2 percent of the company’s total business and it is unclear how the move will impact the company’s overall revenue.

The company’s announcement was followed shortly by a similar announcement from Danish rival Carlsberg, which owns Russia’s biggest brewer, Baltika.

Carlsberg had previously suspended new investment and exports in Russia and stopped all advertising of both the Carlsberg Group and Baltika Breweries in the country, and any profits generated by its business in Russia were being donated to relief organizations, the company said.

Carlsberg has now pledged to stop producing and selling its flagship brand in the Russian market.

On March 28, the Copenhagen, Denmark-headquartered brewer said it had taken the “difficult and immediate decision to seek a full disposal” of its business in Russia, adding that it believes this is “the right thing to do in the current environment.”

“Upon completion, we will have no presence in Russia,” Carlsberg said in its written statement.

Ukrainian President Volodymyr Zelenskyy and other officials have been calling for weeks for both U.S. and multinational companies to leave Russia.

So far, a string of companies including Netflix, PayPal, Mastercard, Visa, Renault, Apple, and more have ceased operations in Russia.