World’s Second Largest Brewer, Heineken Announces Exit From Russia

Dutch multinational Heineken, the world’s second-largest brewer, has finalised its exit from the Russian market, the company announced on Friday.

According to a statement on the company’s website, its assets have been acquired by Arnest Group, a Russian manufacturer of cosmetics and household goods, which also owns a major can packaging business.

Titled: “HEINEKEN completes exit from Russia,” the company explained that the transaction has received all the required approvals and concludes the process HEINEKEN initiated in March 2022 to exit Russia, incurring an expected total cumulative loss of €300million.

“Arnest Group owns a major can packaging business and is the largest Russian manufacturer of cosmetics, household goods and metal packaging for the Fast Moving Consumer Goods (FMCG) sector,” the statement added

Explaining the transaction highlights, the company stated that the purchase price for the “HEINEKEN Russia business is €1 for 100% of the shares,” adding that “All remaining assets including 7 breweries in Russia will transfer to the new owners.”

Arnest Group the statement noted “has taken responsibility for the 1,800 HEINEKEN employees in Russia, providing employment guarantees for the next three years.

“In addition to the Heineken brand which was removed from Russia in 2022, production of Amstel will be phased out within 6 months. No other international brands will be licensed in Russia with the exception of a 3-year licence for some smaller regional brands which are required to ensure business continuity and secure transaction approval.

“HEINEKEN will provide no brand support and will receive no proceeds, royalties or fees from Russia. There is no call option to return to Russia.”

On the financial implications, the brewery giant stated, “As a result of exiting Russia, Heineken expects total non-cash exceptional losses amounting to €300m including cumulative foreign exchange losses relating to Russia currently recorded in equity.

“This includes a commitment from Arnest Group to repay the historical intercompany debt of the Russian business of approximately €100m due to Heineken in instalments.

The transaction will have negligible impact on diluted EPS (beia) and Heineken’s full year 2023 outlook is unchanged from the sale,” the statement indicates.

 

Heineken’s CEO and Chairman of the Executive Board Dolf van den Brink was quoted in the statement to have said: “We have now completed our exit from Russia. Recent developments demonstrate the significant challenges faced by large manufacturing companies in exiting Russia.

“While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner.”