Heineken left but stayed

Buying a bottle of Bochkarev beer in Russia, you send money to the budget: even though Heineken announced its withdrawal from the Russian Federation, it did not do it completely. Together with the Dutch journalist Olivier van Beemen and Follow The Money, Khroniki studied the public statements of the Russian division of Heineken for 2021 and 2022 and came to the conclusion that more than a year after the start of the CBO, the company is still owned and financed by a transnational corporation, increasing profits and capturing the niche left by the departure of other international giants.

Loans to Russia

Heineken not only still owns the Russian Heineken United Breweries LLC, but continues to manage and finance it.

Two weeks after the start of the CBO in Ukraine, on March 9, 2022, the parent company Heineken announced, which stops selling beer under its own brand in Russia, waives income, royalties (a type of license fee – for example, for the use of a trademark) and dividends of the Russian division, but the plants will continue to produce drinks under local brands. Since then, the company has repeatedly made similar statements.

“Chronicles” together with colleagues from the Netherlands studied the audit conclusion Russian subsidiary of Heineken for 2021. The document was prepared by the Russian division of the international company Deloitte (part of the so-called “Big Four” audit and consulting companies in the world). The conclusion was signed on April 29, 2022, that is, after the start of the war and the parent company’s statement about curtailing activities in the Russian Federation. This was reflected in the audit report – in the “Events after the reporting date” section, which is dedicated to the changes after the Russian invasion of Ukraine on February 24, 2022.

Heineken’s public reporting for 2021, which also covered the first months of 2022, says that “in order to maintain liquidity and continue operating activities” of the Russian representative office, the parent organization approved a loan for it. So, on March 3, 2022, before the announcement of the termination of sales in Russia, a loan agreement was concluded with Heineken International BV (it owns a Russian company). The amount was 25 million euros. The first tranche in the amount of 6 million euros was received on March 11, 2022, after the announcement of the termination of sales, the waiver of income, royalties and dividends.

On March 28, 2022, parent company Heineken made the second statement about working in Russia. The transnational corporation announced that it would completely leave the Russian Federation and transfer the local business to new owners. However, already on March 30, 2022, according to public reports, the Russian company received the second tranche of the “loan line” in the amount of 3 million euros. And this is despite the fact that the return of foreign currency loans is limited. decree of the President of the Russian Federation on March 5, 2022, as the Russian division of Heineken writes in the reporting for 2022.

Heineken in a comment to the Dutch publication Follow The Money answeredthat it was not a loan, but a gift. The money was needed only to pay off debts, pay salaries and fulfill obligations to suppliers. No interest was charged for this “gift” and it does not need to be returned. The €25m credit line has not been withdrawn, but Heineken says it has not approved any new transfers to Russia since the second tranche and will not do so.

Nevertheless, the parent company provided the Russian daughter with a number of loans in the amount of about 7.5 billion rubles (more than 80 million euros for 2023). These loans are still on the subsidiary’s balance sheet, Heineken admits, but the corporation says it won’t demand to repay them. Heineken does not want to name the exact amount, but said that the risk of default on loans was included in the write-off of 88 million euros for operations in Russia during 2022.

It is worth noting that Heineken International BV, according to reports, has lent to the Russian subsidiary before – also in the form of three loans per year. In 2021 – by 7.4 billion rubles, in 2020 – by 8.9 billion rubles, in 2019 – by 6.9 billion rubles. But these were always loans at lower interest rates (1.75–2.6%) than those that the company took from banks (5.12–7.45%). But, as follows from the reporting for 2023, after the start of the Russian invasion of Ukraine and the announcement of the curtailment of Heineken’s activities in Russia, against the backdrop of the refusal of the parent company from royalties and dividends, the rates on intra-group loans increased to 4.7-6.7%.

In fact, it turns out that the Dutch company, which announced its imminent withdrawal from Russia, continued to finance its activities in the country without much prospect of returning this funding.

New beer for Russians

A few months ago Follow The Money wrotethat Heineken is not only in no hurry to leave the Russian Federation, but even seems to be taking advantage of the current situation: in 2022, the Russian division of the company registered a number of trade names, including those designed to replace the departed Coca-Cola and Pepsi.

In reply to Heineken released statement in February 2023. The company denies that it violated the promise to leave Russia, calls the subsidiary legal entity completely independent and seeking to save the business from nationalization. Heineken estimates the loss from the future sale of the Russian company at 300 million euros. The brewing giant promised to completely get rid of Russian assets in the first half of 2023.

In March 2023, The New York Times wrotethat Heineken allegedly received threats from the Russian authorities that a quick exit from the country could be regarded as a deliberate bankruptcy. This may serve as a pretext for the nationalization of business. That is why the company continued to work so as not to look insolvent in the eyes of Russian officials.

For public corporation updates a special page on her website with the most frequently asked questions about her remaining business in Russia. For example, Heineken writes that it will name the buyer of its breweries only when it receives all the approvals of the deal from the Russian authorities. The corporation also draws attention to the fact that the Russian market has never been the main one for it.

In April 2023 the company published financial statements for 2022, including notes to the balance sheet and income statement. From these documents it follows that the following brands were brought to the Russian market: Dr Diesel Hard Zeltser, Okhota Platinum, Amstel Fresh, Black Sheep, Bochkarev Czech, Bochkarev British, Royal Cola, Tony Lemony, Botanic Secret and others. In open sources There is data on new applications for registration of other trademarks.

Although the parent company Heineken announced on March 9, 2022 that it was also waiving royalties, according to the reports of the Russian representative office for 2022, the costs for them amounted to 1 billion rubles, which is comparable to the figure for pre-war 2021 – 1.4 billion rubles .

Despite statements about leaving the Russian market and refusing to sell the main brands of beer, the Russian division of Heineken almost tripled increased net profit for 2022 (2.6 billion rubles compared to 879 million rubles for 2021).

Following this increased and the estimated tax on the company’s profits to the Russian budget – from 239 million rubles. for 2021 to 601.5 million rubles. for 2022 (2.8 million euros and 8.5 million euros, respectively, at the average nominal euro exchange rate in 2021).

However, in the quarterly report of the parent company Heineken reportedthat the company is transferring ownership of the business to other entrepreneurs and has already filed a corresponding application for approval by the Russian authorities.

The scandal did not shake the position of the corporation. Since the beginning of the war in Ukraine, Heineken shares have risen in price by about 7%.

PS Economists of the Swiss University of St. Gallen calculatedthat since the beginning of the NWO in Ukraine, less than 9% of foreign companies have left Russia.

Plant in St. Petersburg