Heineken has sold its business in Russia for one euro. The company had announced its plan to leave Russia over a year ago as a result of the Ukraine invasion.
The Dutch company will be losing over €300 million by selling the Russian branch of the business to Arnest Group, a Russian company. Companies have constantly been pulling out of Russia since the beginning of the war.
Multinational Companies Pull Out of Russia
The more obvious food and beverage brands pulling out of Russia caused a shock to the population in the beginning of the war and pushed the Russian government to quickly try and create homegrown alternatives to services.
At the beginning of the war, companies like McDonald’s pulling out of the country made the news, but other major companies also pulled out, creating issues with the economy. Major banks, payment circuits, automobile industries, Internet giants and others have put pressure on the country. The fast-food international chain expected to lose over one billion dollars.
Since the beginning of the war, more than a thousand global companies have pulled out of business plans in Russia or heavily reduced operations in the country, says Yale University.
Heineken’s Issues With Pulling Out of Russia
This makes the famous Dutch beer company one of the latest companies to pull out of Russia since the start of the war in Ukraine in February 2022. This is despite having promised to do so at the very beginning.
Heineken had faced criticism by mainstream media for the pace of its exit after an early announcement.
CEO Dolf van den Brink has stressed that this is due to the company’s efforts to protect its Russian employees during the sale. The company will be guaranteeing employment of Heineken’s 1,800 local staff for three years.
“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,” he said on Friday.
Russia has been tightening requirements for foreign business exiting the country after the initial blow of sanctions last year. Part of the loss expected on Heineken’s behalf includes a commitment from Arnest Group to “repay the historical intercompany debt of the Russian business of approximately €100m.”
The Russian government requires that foreign companies pay fifty percent on their businesses upon an evaluation carried out by government-selected consultants. It also requests foreign companies contribute ten percent of their business’ sale price to the Russian budget.
Surely, the sale of Heineken, affecting its seven breweries in the country, will not greatly impact the Russian budget!