Heineken has decided to leave Russia permanently. In a press release On Monday, the brewery said it was “shocked and deeply saddened” by the ongoing war in Ukraine.
The seven breweries in the country will go on sale immediately, 1,800 Russian employees will receive their salary until the end of 2022. The beer group has concluded after a “strategic review” that doing business in Russia “is no longer sustainable or viable in the current environment.”
The write-off of the Russian activities will cost Heineken 400 million euros. Heineken gets about 2 percent of its total beer turnover – 440 million euros – from Russia. This makes it the third largest brewer in the country.
The decision came shortly after it became clear that some of its employees were dissatisfied with the reaction to the Ukraine war so far. Heineken announced on March 9 that it would discontinue sales of the Heineken brand in Russia, but the group’s other beer brands remained available. For example, Russians could still buy beer from international brands such as Amstel and Affligem, as well as the local lager brands Bochkarev and Tri Medvedya.
Internal criticism
On the internal employee forum Workplace, some employees criticized this, wrote research platform Follow the Money last Friday. They called the fact that Heineken did not leave Russia completely “shameful” and “immoral”. More than 80 percent of the Russian turnover would come from brands other than the Heineken brand.
A Heineken spokesperson said internal criticism played no part in the decision to leave. According to him, since the announcement of the first measures on March 9, the brewer has needed time to evaluate the situation in Russia. Immediately after this evaluation was completed, the company announced its departure, the spokesman said.
Like many multinationals, Heineken struggled to find a suitable answer from the start of the Russian invasion. CEO Dolf van den Brink initially announced via LinkedIn indicated that the brewer would donate 1 million euros to local NGOs, in order to provide humanitarian aid to war victims.
Also read: Putin’s war is a moral test for Western companies
The report came in for strong criticism, partly because he avoided the word “war” and only spoke of a “large-scale military action” – the Kremlin’s phrasing. Van den Brink then apologized. Some of the readers on the social medium also called on him „the guts [te tonen] to stop all activities in Russia”.
The subsequent decision to stop supplying only the Heineken brand from March 9 “because of the Russian war in Ukraine,” was described by a company spokesperson as “a major decision.” “We have never decided to take away the Heineken brand for geopolitical reasons.”
It is not unique that Heineken has now decided to completely sever ties with Russia on the basis of advancing insight. Oil group Shell announced shortly after the invasion to sell its investments in oil and gas production projects in Russia, but continued to purchase oil and gas and also kept gas stations open in the country. Shell’s purchase of a batch of Russian oil at a discount resulted in a lot of criticism, after which it eventually closed the door to Russia completely.
Maritime construction company Van Oord initially did not intend to leave Russia, but announced last weekend that it would phase out its activities “in a controlled manner”. Zuidas office Houthoff also initially wanted to continue to assist the Russian state in legal cases in the Netherlands, but after publicity pressure it announced that it would cease assistance to the Kremlin.
Snowball effect
Jeffrey Sonnenfeld, a professor at the Yale School of Management, previously spoke to NRC of ‘a snowball effect’: the more companies from a country or sector decide to leave, the greater the pressure on companies that do not. According to him, many companies are afraid of a consumer boycott.
In addition, younger employees in particular often exert pressure on top management to make a moral judgement. Healthcare group Philips, for example, only condemned the war in Ukraine after employees internally asked for a ‘firmer position’.
For Heineken, the departure announced Monday marks the end of twenty years of doing business in Russia. Under the leadership of the later CEO Jean-François van Boxmeer, the group invested at least half a billion euros from 2002 in the acquisition of four existing Russian breweries. Later, three more breweries were added. It is not yet known who will take over the Heineken factories. Heineken has announced that it certainly does not want to make a profit on the transaction.