Carlsberg follows rival Heineken in pulling out of Russia. It’s ‘the right thing to do’

March 28, 2022, 4:32 PM UTC

The world’s largest beer brewers are exiting Russia, as the beverage industry continues to step away from the market after the invasion of Ukraine.

Dutch brewing giant Heineken was the first to announce it would exit its business in Russia entirely, announcing this morning it would take a €400 million ($438 million) hit to sell off its Russian-based businesses. Having previously only said it would halt new investment and exports to the country, Heineken said in a statement that its “ownership of the business in Russia is no longer sustainable nor viable in the current environment.”

A couple hours later, Danish brewer Carlsberg—the largest beer-maker in Russia—said it was also taking “the difficult and immediate decision” to do the same and leave the Russian market.

Beer companies follow oil companies, tech giants, car manufacturers and clothing manufacturers in departing from the country as Russia continues to be sanctioned for its ongoing war on Ukraine.

Carlsberg, which earlier in the month stopped investing in Russia, said it believes leaving the country “is the right thing to do in the current environment. We continue to strongly condemn the Russian invasion, which has led to so much loss of life, devastation and human tragedy.”

Both companies were rewarded by the stock market for their behavior. Shares in Heineken were up 0.8% at €88.16 by 8:30 a.m. GMT in Amsterdam and Carlsberg shares surged as much as 8.3% on the announcement, and settled at 3.35% above the morning price at DKr809.20 ($119.30) at 4:30 p.m. GMT.

The Russian beer market

Carlsberg holds a 27.3% share of the $16 billion Russian beer market, according to Bloomberg, and was previously wary of the impact that leaving would have on its sales. Russia and Ukraine account for around 13% of Carlsberg’s revenue in 2021 and approximately 9% of the operating profit. Through its local Baltika Breweries subsidiary, which it is now exiting, Carlsberg employs 8,400 people, which represents more than one in every five of its total global workforce.

The second-largest brewer in Russia is a joint venture owned between the world’s largest brewer, Belgium’s InBev, and Turkey’s Anadolu Efes (AEFES.IS). In early March, InBev said it was forfeiting any profits from the joint venture and had requested the controlling partner suspend Bud sales. The JV owns 11 breweries and employs 3,500 employees in the country.

Heineken is the third-largest brewer in Russia, owning local brands Bochkarev, Okhota and Tri Medvedya. While Heineken is a major player in the Russian market, its sales only account for 2% of the company’s total. It said in a statement it was aiming for an “orderly transfer” and would continue the business with reduced operations in the transition period to minimize the risk of nationalization.

Heineken said it expects an impairment and non-cash related charges of €400 million ($438 million) from the sale and noted it would guarantee the salaries of its 1,800 Russian employees to the end of this year.

Beer companies are only the latest in the long line of sectors exiting Russia. Ukraine’s President Volodymyr Zelenskyy has been urging international companies to leave the Russian market after Moscow launched its brutal war on Ukraine, and only a few dozen remain.

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