Moscow has taken control of the Russian breweries of the Carlsberg group – that’s what Vladimir Putin ordered. The company considers this an “unprecedented development”.
The Danish brewing group Carlsberg has said it was “shocked” by the confiscation of its subsidiary Baltika in Russia. “We knew from the start, since we announced our intention to leave Russia in March last year, that there was a lot of interest in the business from people inside Russia,” said Carlsberg CEO Cees ‘t Hart at the launch today the half-year figures. Nevertheless, the confiscation is “an unprecedented development”.
Russia took control of the group’s eight breweries and 8,400 employees in Russia last month. Carlsberg had recently agreed to sell the unit to an unknown buyer. Baltika is the largest beer brewer in Russia.
According to a Russian presidential decree last month, Carlsberg retains ownership of the entity but no longer has control or influence over it. A decree by President Vladimir Putin published on the official justice portal said that the Russian state would “temporarily” manage Baltika’s shares.
Almost ten billion written off
“Technically, it’s not a nationalization,” Hart said. How the matter will develop is “not clear at this point in time” for the company. “This latest development will make leaving Russia even more painful.”
There is no longer any contact with the employees, but they are trying to clarify the situation with the Russian authorities, says Hart. Last year, the group wrote down 9.9 billion kroner ($1.5 billion) on the Baltika businesses.
The Carlsberg subsidiary has a market share of around 30 percent in Russia. At the end of March 2022, the group announced that it would stop production and sales in Russia. However, the subsidiary Baltika should continue to operate as an independent company in order to support the 8400 employees in Russia.
Slight increase in sales
As Carlsberg announced, the brewery group’s sales in the second quarter rose by four percent year-on-year to 21.4 billion crowns. The Danes also raised their earnings forecast for this year.
The group is one of the largest brewing companies in the world. Carlsberg also owns brands such as Duckstein, Holsten, Kronenbourg, Tuborg and Somersby.
Carlsberg announced that sales per liter sold rose by ten percent worldwide in the first half of 2023. At the same time, however, the costs per liter of beer sold have risen by 13 percent – due to higher wages and prices for raw materials and energy.