Dutch beer giant Heineken N.V. has yet to halt sales of some of its brands in Russia, despite promises made in March 2022, due to local bureaucracy “beyond its control,” Reuters reported.
Last March, Heineken announced its “ownership of the business in Russia is no longer sustainable nor viable in the current environment,” following the country invading Ukraine. As a result, the company said it would cease “new investments and exports to Russia,” halt “production, sale and advertising of the Heineken brand” and no longer accept “any financial benefits or profit” from its business in the country, as it attempted to sell the business operations.
However, the hashtag #BoycottHeineken was trending on some Twitter timelines last month following a report by Follow the Money, a Dutch investigative news site, which accused the Dutch brewery of launching new products and continuing to sell its non-Heineken international brands in Russia.
Heineken has since confirmed delays in its plans to pull out of the country, but said it still plans to exit the country when it can, Reuters reported. The country published a blog post Monday that acknowledged the delays and outlined the company’s plans moving forward.
“Heineken is committed to leaving Russia and we’re doing everything we can to find a suitable new owner for our business while taking care of our local employees,” Heineken wrote. “The situation in Russia is unprecedented and the reality for businesses with large production and manufacturing operations in the country is challenging and complex. That’s why we share here the dilemmas we have faced, the principles that guide us, the actions we have taken and the next steps towards our exit from Russia.”
The two main “dilemmas” Heineken has dealt with over the past year have been protecting “the livelihoods and safety of local employees” and “avoiding nationalization,” according to the post.
“People ask why not simply suspend or close the Russian operations?” Heineken wrote. “The truth is the business would’ve very quickly gone bankrupt, and as a result, employees would have lost their livelihoods.
“Bankruptcy could also have led to criminal prosecutions of our managers in the country,” the company continued. “Two days after we announced the withdrawal of brand Heineken, we received letters from local authorities warning of prosecutions if this decision led to the suspension or closure of our Russian operations. This is because ‘intentional bankruptcy’ is a criminal offense in Russia.”
Heineken expects to have further news on its departure and the sale of its businesses in the country by “the first half of 2023.” The company also expects a €300 million ($320 million) impairment charge as a result, Reuters reported.
“We fully recognise that it’s frustrating that the sale is not yet completed,” Heineken wrote. “We’re also frustrated by how long the process is taking. It’s challenging to close a transaction in Russia at the moment as rules continue to shift. All business transfers need multiple approvals by the local authorities. We can’t control that timetable or process, but we’re working hard to do what is in our control.”
Heineken’s Russian business accounts for about 2% of the company’s global sales, according to the blog post. The company operates seven breweries with about 1,800 employees in the country, where it has operated for 20 years.