In an unprecedented move, the brewing giant Carlsberg has officially severed its business ties with Russia following the Kremlin’s forcible oversight of the company’s operations within the Russian borders. According to the firm, it will no longer engage in unwilling and improperly justified transactions intended to legitimize the undue acquisition of its business in Russia.
Prior to the abrupt intervention of the state, Carlsberg had been progressing towards the sale of its Russian subsidiary, Baltika Breweries. However, this was abruptly halted in July when Russian authorities took control of the management.
The CEO of the prominent Danish brewer, Jacob Aarup-Andersen, expressed outright dissatisfaction with the Russian government’s actions, accusing them of unlawfully confiscating their business in Russia. Reaffirming his stance, Aarup-Andersen stated unequivocally that they would not be complicit in making the Russian government’s actions appear lawful.
This comes amidst a growing trend since the Ukrainian invasion in February of the preceding year, where numerous Western companies have experienced mounting pressure to withdraw from Russia and cease operations.
Carlsberg was part of the many companies attempting to exit the Russian business sector in light of the events. In June of the previous year, they had reached an agreement for the sale of Baltika Breweries, though the deal was not yet finalized. However, in July, Baltika was seized by the Russian government under an order endorsed by President Vladimir Putin, subsequent to regulations permitting the seizure of assets from firms hailing from “unfriendly” nations.
Baltika is renowned for producing some of the most popular beer brands in Russia and employed approximately 8,400 individuals across their eight manufacturing units, as described on Carlsberg’s official website.
Their portfolio of brands includes household names like Kronenbourg 1664, Tuborg, Brooklyn, and Somersby cider. Despite this, in a trading update, Carlsberg denounced the possibility of reaching an agreeable conclusion for their departure from Russia.
The brewing giant informed Baltika that it was concluding all licensing agreements related to the production, marketing, and sale of its products within Russia. However, a grace period until April 1, 2024, will be observed, during which the existing stock will be expended. Despite this, the company forewarned that Baltika’s future remains shrouded in uncertainty.
Carlsberg’s recent quarterly reports, covering the period till the end of September, highlighted sales conforming to projections, although Western Europe volumes were adversely affected by unseasonable weather during the summer. The global brewing powerhouse recorded sales of 20.3bn Danish kroner (£2.4bn; $2.9bn), a slight increase from 20.2bn kroner a year before. Nevertheless, Carlsberg cautioned a potential downturn in beer markets resulting from weaker consumer sentiment in Europe and Southeast Asia towards the year-end.