Carlsberg CEO accuses Russia of corporate espionage of their Russian asset, Baltika

In a decisive move, Carlsberg, the Danish brewing giant, has officially cut all ties with its Russian business, refusing to engage in any dealings with the Russian government that would legitimize the seizure of its assets. This decision was announced by Jacob Aarup-Andersen, Carlsberg's newly appointed CEO, on Tuesday, 31 October, 2023. This decision comes as a significant development in the ongoing conflict between the brewer and Russian authorities.

Carlsberg had been actively pursuing the sale of its Russian subsidiary, Baltika, for the past year, following a trend among Western companies exiting the Russian market in the wake of Russia's invasion of Ukraine. However, in an unexpected turn of events, after Carlsberg declared in June 2023 that it had found a buyer for its business in Russia, Russian President Vladimir Putin ordered the temporary seizure of Carlsberg's stake in the local brewer in the subsequent month.

Jacob Aarup-Andersen, who assumed the role of CEO in September 2023, expressed the company's steadfast stance, stating, "There is no way around the fact that they have stolen our business in Russia, and we won’t help them make that look legitimate."

Carlsberg, which had eight breweries and approximately 8,400 employees in Russia, had to incur a substantial write-down of 9.9 billion Danish crowns (approximately $1.41 billion) on its Baltika subsidiary last year.

Since July 2023, Carlsberg has engaged in limited interactions with Baltika's management and Russian authorities, but it appears that no mutually acceptable solution has been reached. Aarup-Andersen showed his fury by stating, "We're not going to enter into a transaction with the Russian government that somehow justifies them taking over our business illegally."

In retaliation, Carlsberg has chosen to terminate the license agreements that allowed Baltika to produce, market, and sell Carlsberg products in Russia. These agreements are set to expire with a grace period, following which Baltika will no longer be permitted to produce Carlsberg-branded products in Russia. Aarup-Andersen clarified, "Of course, I cannot guarantee that happens, but that is our expectation."

Russia's finance ministry has responded to the situation, announcing that Rosimushchestvo, the federal government property agency, has been appointed as a temporary manager for Carlsberg's assets, exercising the powers of the owner, excluding the power to get rid of the property. In a statement, the finance ministry's media service emphasized, "At the same time, the introduction of temporary management does not entail a change in the ownership structure."

Carlsberg's bold decision to sever all ties with its Russian business underscores the escalating tensions between Western companies and the Russian government and raises questions about the future of foreign investments in Russia.