Ignoring its own promise to stop investing in Russia after Putin’s invasion of Ukraine, beer giant Heineken launched a whopping 61 new products on the Russian market in 2022, according to Follow the Money (FTM). Investigative journalist Olivier van Beemen conducted an examination of the annual report by Heineken Russia.
In April 2022, Movendi International reported that Big Alcohol companies Carlsberg and Heineken both had announced their plans to exit Russia. Already at that point the decisions of the beer giants came long after many other multinationals had already left Russia, after the country invaded Ukraine.
But one month later, in May 2022, Movendi International revealed that Carlsberg, Heineken, and AB InBev were all slow to really exit Russia over fears of profit losses.
Now Mr. van Beemen exposed through his latest investigation that Heineken’s subsidiary in Russia launched a whopping 61 new products in 2022, accounting for 720,000 hectoliters of extra sales of beer and soft drinks.
Via Follow the Money Mr. van Beemen reports a statement from Heineken that reveals the degree to which the beer giant was focused on maximizing profits through its operations in Russia, instead of making good on its promise to exit Russia.
2022 was a turbulent year for all market players, but at the same time it offered plenty of opportunities and opened up new possibilities for the development and growth of our business.
We are proud to announce that we have reached record highs in multiple segments.”Review on the Heineken Russia website.
The development, production and marketing of new products is usually a costly process. But Heineken keeps the public in the dark about the real costs of their recent investments in Russia.
Deception as core business strategy
Despite this lack of transparency it is clear that Heineken is breaking its own commitment not to make any new investments in Russia.
In the spring of 2022, Heineken merely engaged in reputation management. But the beer giant continues to deceive the public with its announcements of first to stop investments in Russia and then to exit completely. One year later, none of this has happened. Instead, Heineken is celebrating the production, marketing, and sales of its products in Russia.
As Movendi International previously reported, last year on March 7, 2022 Heineken had announced it would stop new investments in Russia and halt exports to Russia from other Heineken Group companies.
While Heineken suspended the production, advertising, and sale of the flagship Heineken brand in Russia as of March 9, 2022, the company continued production, advertising, and sale of its other brands in Russia, including over 35 brands, such as Amstel, Affligem, and the Russian brands Botchkarev, Ochota, and Tri Medvedya.
As Olivier van Beemen wrote in Mediapart at the time, the Heineken brand accounted for only about 12% of the volume of beer sold in Russia and 18% of revenue. 80% of Heineken’s Russian operations continued business as usual in 2022.
A whistleblower exposed how Heineken was attempting to maximize profits even while there was an ongoing humanitarian crisis in Ukraine, caused by Russia.
In a cynical way, Heineken uses the fact that the name of the company and one of its brands are identical,” said the whistleblower, as per Mediapart.
Heineken escapes both criticism and possible boycott of companies that remain open in Russia.”Heineken whistleblower
In 2022, Heineken’s Russian operations made up 2% of its overall sales.
One year later, revelations show that Heineken did not want to miss this sales revenue.
New products to protect profits
Mr. van Beemen reports in Follow the Money that the beer giant stopped producing Heineken beer in Russia. But at the same time, the company drove strong growth of its Amstel brand. This way Heineken managed to largely fill that gap from suspending their Heineken beer brand. To achieve this, Heineken launched three new sub-brands on the Russian market: Amstel Fresh, Amstel Extra and Amstel Natur Wild Berries.
We managed to grow the brand twice as fast as last year, which translated into a market share of 2 percent in October! Amstel thus achieves the same sales figures as Heineken last year,” said the website report, as per Follow the Money.Review on the Heineken Russia website.
One new product serves as example to illustrate how Heineken worked in Russia, despite its claims to stop investments and to exit the country.
Heineken launched the new ‘Black Sheep’ brand, a so-called stout beer, which was developed as a replacement for Guinness, according to Follow the Money. In a very short period of time, Heineken managed to create a product that managed to replace the 263-year-old Guinness brand.
Heineken deployed aggressive marketing and sales strategies to rapidly increase the availability of ‘Black Sheep’. It is now present in 900 places just a few months after its launch, according to Olivier van Beemen.
Profits for Heineken and funding for the Russian war machine
Operating and investing in the expansion of operations with 61 new products means Heineken continued to fund the Russian government in 2022. But Heineken wants to keep the public in the dark about the amount.
For previous years it is known how much Heineken contributed to Putin’s regime. Mr. van Beemen reports that Heineken contributed more than €400 million to the Russian government in 2019.
The beer giant hired 243 new employees in 2022, launched 61 new products, and made investments in the promotion of these products.
For 2023, the company announced even more new investments, such as more modern packaging and new flavors, according to Mr. van Beemen.
On the one hand, I get it: if you want to sell the company, you maximize market share in the short term, to increase value,” says a Heineken executive, as per Follow the Money.
The better they do that, the sooner they find a buyer.
But on the other hand – after all our announcements from last year – it is hypocritical. Heineken is cynically benefiting from the fact that major international brands have withdrawn from Russia – the Budweiser and Carlsberg brands were much bigger there. Heineken fills this gap by investing heavily in its own local and international brands. …
The product launches, advertising campaigns and aggressive growth plans require heavy investments. That is in absolute contradiction with the official story about the divestment of our Russian subsidiary.”a Heineken executive
The way Heineken pushed its Amstel beer brand is evidence Heineken took its own brand off the market to avoid reputational damage. Deception appears to be more important to Heineken than doing the right thing in Russia.
Track record of putting profits over Human Rights
Heineken has a grave track record of putting profits over Human Rights. This includes environmental and water rights, women’s rights, the right to health, and many others.
For example, in Mexico people and communities are facing water crises. Especially the northern parts of the country are acutely affected. People suffer with no water coming from taps and children are getting sick due to poor sanitation. But Heineken ignores the dire water insecurity. Heineken factories continue to guzzle what little water there is to produce their beer products.
Another example is Heineken’s unethical marketing and sales practices. Most countries across the African region have no or very weak laws governing alcohol marketing and many countries have weak alcohol policies in general, which are exploited by Heineken. Several of Heineken’s unethical marketing practices have been documented by Mr. van Beemen:
- Painting entire neighborhoods in the colour of a popular local beer brand;
- Painting beer logos on police stations, pharmacies, and school buses;
- Renovating primary schools and putting up their logo on the school walls;
- Organizing ‘beer and health’ conferences to mislead the public and encourage consumption of 1.5 litres of beer per day for better health; and
- Using “beer promotion girls” who are economically and sexually exploited.
After the uncovering of wide sexual abuse within Heineken operations in Africa, Heineken promised quick improvements. Saying if the company couldn’t guarantee good working conditions in a particular country within three months, it would cease its promotion activities there.
However, since the scandal, nothing has changed in Kenya to this day. In fact, Heineken has made matters worse by not taking responsibility, according to Mr. van Beemen.
On March 29, 2018, the Global Fund announced that it had suspended its partnership with Heineken due to the beer giant’s exploitation of young women who are being used as “beer girls” to drive sales in ten African countries. It’s a practice that exposes the young women to sexual exploitation and health risks.
Heineken is exploiting people, communities and countries around the world. The book “Heineken in Africa” details a shocking list of unethical practices deployed by the world’s second largest beer producer:
- Support for apartheid
- Complicity in genocide
- Support for authoritarian regimes and collaboration with rebel groups
- Tax avoidance
- Aggressive political lobbying to obstruct, derail and undermine public health policy making
- Unethical alcohol marketing, like beer promotion in schools
- The beer promotional girls scheme, running for almost two decades
- Exploitation of young women
- Sexual abuse
- Serious problems with protecting worker’s rights
- Severe issues with ensuring adequate workplace safety
- Misinformation about alcohol’s effects
- Fuelling stereotypes about Africa
Heineken extracts windfall profits from countries around the world, but leaves families, communities and entire societies behind, heavily burdened with the massive costs from its harmful products and practices,” says Kristina Sperkova, International President, Movendi International.
In the era of sustainable development, the story of “Heineken in Africa” shows how sustainable development is NOT done.
The track record of one alcohol industry giant is appalling. And Heineken keeps adding new and serious examples of unethical practices, such as its continued support for Putin’s regime even during Russia’s war against Ukraine.”Kristina Sperkova, International President, Movendi International