Carlsberg, Heineken, AB InBev Slow To Exit Russia Fearing Profit Losses

Movendi International previously reported on Big Alcohol’s continued business in Russia providing an overview of how Big Alcohol behaved since Putin invaded Ukraine. Movendi International also reported details of Carlsberg’s and Heineken’s final decisions to exit Russia. This reporting also brought scrutiny to Carlsberg’s reliance on Russia for major profits and its reluctance to exit as the move would significantly hit profits.

Since Movendi International directed attention to the alcohol industry’s unethical approach to Putin’s regime, in contrast to hundreds of other multinational corporations – including other unethical industries – the scrutiny intensified and the pressure grew for Big Alcohol to cut its ties with Putin’s regime.

Big Alcohol Companies Finally Exit Russia, Long After Most Other Multinationals

Big Alcohol’s Actions in Russia After Putin’s Invasion of Ukraine

++ Update: Carlsberg Maintains ‘Business As Usual’ in Russia ++ Why Beer Giant Carlsberg Stays Tied to Putin’s Regime As Other Multinationals Exit

Carlsberg and Heineken

As Movendi International reported in early April, beer giants Carlsberg and Heineken have both announced that they would exit Russia. However, while the transition is slowly commencing, both beer producers will continue working in Russia under their “reduced operations”.

These reduced operations mainly mean the following:

No new investments or exports into Russia from the two beer giants.
Suspending production, advertising, and sale of the flagship brands of the two companies. Named after the companies as Carlsberg and Heineken.

Additionally, Carlsberg – which owns the most consumed beer brand in Russia – said they would:

Cease advertising of the Balitka brand.
Run Baltika Breweries as a separate business.
- Any profits generated by the business in Russia will be donated to relief organizations.

This means the two beer giants have only actually discontinued their flagship brands in Russia. Heineken continues to produce, advertise and sell over 35 of its other brands in Russia including Amstel, Affligem, and the Russian brands Botchkarev, Ochota, and Tri Medvedya. Almost 80% of Heineken’s Russian revenue comes from these other brands.

Meanwhile, Carlsberg continues to produce and sell the most popular Russian Baltika brand. Carlsberg earns about 11% of its overall revenue from its Russian business, according to Goldman Sachs.

Meanwhile, Heineken only earns about 2% of its overall revenue from Russia.

Both the beer giants have decided to ring-fence their Russian operations during their transition out of the country. This means the Russian businesses will continue separately from the global entity.

Carlsberg which earns the most in Russia among Western brewers expects that selling its Russian business will result in a writedown of approximately 9.5 billion Danish crowns ($1.39 billion). There would be a further currency loss adjustment to its Russian business worth 4 billion crowns triggered by a recent depreciation of the Russian rouble. According to Carlsberg’s annual report the company had non-current assets in Russia worth 19.2 billion Danish crowns by the end of 2021.

It could take up to 12 months for Carlsberg to actually quit Russia. This means the company will remain and continue business in Russia for at least another year.

As Movendi International anticipated it might take at least till the end of this year for Heineken to leave Russia. The company said they will pay the Russian employees until the end of this year.

Maintaining a presence in Russia under “reduced operations” during the transition period means Carlsberg and Heineken will continue to pay taxes and duties to the Russian government which indirectly supports Russia’s assault on Ukraine.

AB InBev

Anheuser-Busch InBev (AB InBev) has finally decided to exit Russia as well. Carlsberg and Heineken were late to leave Russia as it is and AB InBev is even later to announce plans to exit Russia. As Movendi International last reported in mid-March, AB InBev requested the controlling shareholder of its Anadolu Efes joint venture to suspend the license for the production and sale of Bud in Russia. The company also said they will forfeit all financial benefits as a non-controlling partner in the venture. Since then there was no news of what AB InBev plans to do about its Russian business till late April.

AB InBev announced in late April that it will sell its stake in a Russian joint venture. The company is reported to be in “active discussions” with partner Turkish alcohol maker Anadolu Efes about buying the stake according to a statement it released on April 22, 2022. AB InBev expects a $1.1 billion non-cash impairment as a result of exiting Russia.

Anadolu Efes has no problem staying tied to Putin’s Russia

While AB InBev plans to exit Russia and end its Russian joint venture, its partner Anadolu Efes appears to have no problem staying in Russia. Anadolu Efes is a Turkish brewer and is Europe’s fifth-largest beer maker by production volume. Its joint venture with AB InBev comprises eleven breweries and three malting complexes in Russia and three breweries in Ukraine, according to Bloomberg.

Anadolu Efes confirmed it is working on agreeing with binding terms to buy out beer giant AB InBev.

Anadolu Efes appears to be using the same “loyalty to employees” strategy that has previously been used by Heineken to remain in Russia despite egregious human rights violations caused by the Putin regime. As exposed by journalist Olivier van Beemen Heineken has used this strategy to avoid exiting a territory where its presence could contribute, indirectly, to war crimes or other human rights violations, for example in Burundi or in the Democratic Republic of Congo.

By continuing business in Russia and paying taxes to the Russian government, Anadolu Efes is indirectly funding Putin’s war in Ukraine and the resulting human rights violations. It appears the profits left to conquer in Russia after competitors’ exits are of bigger importance to Anadolu Efes than human rights.

Big Alcohol: Playing the waiting game and white-washing brand image

Big Alcohol has been playing the waiting game in Russia with a focus on protecting brand image instead of focusing on an ethical stance about the ongoing humanitarian crisis in Ukraine. Even after announcing exiting Russia, the companies are slow to transition out of their Russian businesses. Meanwhile all three alcohol companies Carlsberg, Heineken and AB InBev as well as several others have been whitewashing their brand image to distract the international community from their ongoing businesses in Russia in a bid to avoid criticism and boycott threats.

Previously, Carlsberg white-washed its image by publicizing its €10 million donations to support humanitarian efforts in Ukraine and stating any profits generated from the Russian business will be donated to relief organizations. Heineken did the same by publicizing its €1 million donations to unspecified local NGOs to provide humanitarian aid in the region.

AB InBev followed the same Big Alcohol white-washing strategy by publicizing relief efforts and as an opportunity to join with the Red Cross, local NGOs, and other consumer product groups. Recently, AB InBev went even further to cover up their business ventures in Russia by taking Ukrainian beer global to raise relief funds. AB InBev introduced Chernigivske, Ukraine’s most popular beer brand, to countries such as the UK, Germany, Belgium, France, Netherlands, Denmark, Austria, Poland, Italy, Colombia, and Brazil. The company claims all profits from the sales of Chernigivske will go to support humanitarian relief efforts.

Why is it a problem that Big Alcohol giants are publicizing their donations and relief efforts?

Their products and practices kill millions of people worldwide. For example, over the years the people of Ukraine, their health, the country’s economy, and health infrastructure have been badly harmed by the products and practices of Big Alcohol.
By publicizing donations and relief efforts Big Alcohol is exploiting the Ukrainian humanitarian crisis for good PR. This will create a positive brand image among consumers leading to higher sales and more profit for these companies.

Ultimately, for Big Alcohol this type of CSR activity is an unethical method to maximize profit by exploiting human suffering.

It’s taking Big Alcohol much longer than other multinationals to exit Russia. Even after announcing their plans to exit, the transition is slow. Meanwhile, every day these companies remain in Russia they indirectly support Putin’s invasion of Ukraine, which is internationally considered an act of aggression and has created Europe’s largest refugee crisis since World War II.