Business

Heineken fears Russia could take over business by leaving the country

Heineken on Monday expressed concern that the Kremlin is trying to take over its local operations as it seeks to leave Russia following the invasion of Ukraine.

The Dutch beer giant plans to sell its business in Russia after a strategic review concluded it was “no longer sustainable or viable in the current environment”.

However, Heineken will nevertheless maintain limited operations in Russia due to fears that Russian President Vladimir Putin could nationalize the company in retaliation.

“We are aiming for an orderly transfer of our business to a new owner in full compliance with international and local laws,” Heineken said in a statement. “To ensure the continued safety and well-being of our employees and to minimize the risk of nationalization, we have concluded that it is essential that we continue with recently reduced operations during this transition period.”

Heineken issued his warning weeks after Putin backed a plan to “introduce external management” into Western companies that leave Russia in response to the invasion “and then transfer those companies to those who want to work”.

Heineken said it would continue its limited operations in Russia to minimize the risk of nationalization.
Bloomberg via Getty Images

The Kremlin has repeatedly threatened to retaliate against companies from “hostile” countries involved in an economic crackdown on Russia.

Heineken previously said it would halt sales, advertising and production in Russia, as well as all new investments and exports to the country.

The company said it “will not benefit from any transfer of ownership” of its operations in Russia and expects an “impairment” of around 0.4 billion euros (about $440 million) in relation with the output.

Heineken said its business in Russia was “no longer viable”.
Bloomberg via Getty Images

“Under all circumstances, we guarantee that the salaries of our 1,800 employees will be paid until the end of 2022 and will do everything possible to safeguard their future employment,” company officials added.

More than 400 Western companies have already left Russia because of the war in Ukraine, with many citing operational difficulties or a moral objection to the war as the catalyst for their decisions.

McDonald’s was one of the companies to suspend sales in Russia. Days after the fast-food chain’s decision, a local operator called Uncle Vanya filed a trademark application with a logo nearly identical to McDonald’s golden arches. Russian officials have approved the takeover bid.

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