AB InBev Efes continues operations in Russia
AB InBev announced back in April that it was selling its stake in the joint venture to its Turkish partners, Efes, but nothing has been heard about the deal so far. On the contrary, the Turkish-Belgian joint venture has expanded production in Russia, writes EP.
A closer look at the major international companies that have responded in one way or another to Russia's full-scale invasion of Ukraine reveals that Turkish businesses are the least concerned about this issue.
Even some Chinese companies have revised their plans for the Russian market, but Turkish corporations remain steadfast. They are not abandoning Russia and have no plans to change their position. Just like Turkish leader Recep Tayyip Erdogan, who is not plans to decide, whose side is he on.
A pleasant exception is Ukraine's cooperation with the Turkish military company Baykar, which refuses sell Russia has previously announced plans to develop its own drones produce Unmanned fighter jets in Ukraine.
According to the Yale School of Management, which tracks the behavior of more than a thousand international companies in Russian markets, all Turkish companies are in its “red list"That is, they continue to operate in Russia without restrictions.
Moreover, even joint ventures between Western European and Turkish corporations are not leaving Russia. Specifically, the beer holding AB InBev Efes, owned by Belgium's Anheuser-Busch InBev and Turkey's Anadolu Efes.
The Belgians back in April promised Sell their stake in the joint venture to their Turkish partners and exit Russia, but unlike their European counterparts, they have not yet initiated the process of exiting the Russian market. On the contrary, the Belgian-Turkish joint venture is currently expanding its capacity in Russia.
Despite the negative reaction in Belgium and abroad, the company localized production of Leffe beer and other AB InBev brands in seven Russian cities. It seems the Belgians have mastered "Ottoman diplomacy."
What you need to know about the Turkish-Belgian concern AB InBev Efes
AB InBev Efes was created In March 2018, following the merger of Belgian Anheuser-Busch InBev and Turkish Anadolu Efes in Ukraine and Russia. The merger was a 50/50 merger. The company's board of directors consists of representatives from both companies in equal numbers.
AB InBev Efes is headquartered in Moscow. Previously, Belgian AB InBev stated that it did not hold a controlling stake in the joint venture and would not consolidate its financial results.
The combined company's network includes 11 breweries and three malt complexes in Russia, as well as three breweries in Ukraine. The Ukrainian breweries, located in Mykolaiv, Chernihiv, and Kharkiv, employ 1800 people.
Ukrainian factories have been closed since February 24, while Russian ones are operating as usual.
AB InBev Efes continues operations in Russia
Prior to the merger, the factories in Ukrainian cities were owned by a Belgian concern. A Turkish company owned a brewery in Donetsk, which is now located in uncontrolled territory. The company's website notes that it lost control of these facilities on February 1, 2017.
The brand portfolio includes the global brands Bud, Corona Extra, and Stella Artois; the international brands Hoegaarden, Leffe, Beck's, Lowenbrau, Franziskaner, Spaten, Staropramen, and Taller; and the local brands Chernigovske, Rogan, Yantar, and Zhigulevske. InBev Efes also produces cider and kvass.
AB InBev Efes continues operations in Russia
According to Anadolu Efes, the Turkish-Belgian joint venture holds the largest market share in Russia (30%) and the second-largest in Ukraine (28%). The Ukrainian subsidiary accounts for 5% of the company's revenue, selling beer, malt, and soft drinks in Europe, Central Asia, and the Middle East.
AB InBev Efes is deeply upset, but not by the war
Anadolu Efes, like other Turkish corporations, is taking a neutral stance on the events in Ukraine. "I am deeply upset by everything that is happening in Ukraine. I hope that a common basis for dialogue and the restoration of order and peace will be found as soon as possible," said Anadolu Efes CEO Cana Caki.
According to him, the company is the main source of employment for thousands of Russians and Ukrainians and a source of income for thousands of clients and farmers in these countries.
Belgian partners are also careful not to upset their Russian customers, avoiding the word "war." In one of its latest reports, AB InBev refers to the major war in Ukraine as a "conflict between Russia and Ukraine."
In one of the first statements The Belgian company emphasized that it would pay salaries and support InBev Efes employees in Russia and Ukraine. At the same time, AB InBev announced its intention to leave the Russian market. Specifically, the Belgian corporation renounced all financial benefits from the Russian division.
In its first-quarter 2022 financial statements, the company reported a $1,1 billion write-down of non-cash assets received from joint ventures.
AB InBev also requested that its Turkish partners suspend their license to produce and sell the BUD brand in Russia. In April, the Belgian company finally announced that it was selling its stake in the Russian division.
This was also confirmed by the Turkish side.
"We have begun active negotiations with our partner AB InBev regarding the sale of AB InBev's non-controlling stake in the Anadolu Efes joint venture. AB InBev's request to suspend Bud production and sales in Russia will also be part of the agreement," emphasized Anadolu Efes CEO Can Caka.
How other brewers responded to Russia's aggression
Carlsberg group, which has eight breweries and 8,400 employees in Russia, announced its exit from the Russian market in March. The sale will be completed within a year of the announcement. сообщили in company.
The Russian newspaper Kommersant reported that AB InBev Efes might acquire the business. Due to its exit from the Russian market, the company lost €1,3 billion in the first half of the year.
Dutch brewing company Heineken NV. announced its withdrawal from Russia on the same day as the Danes. Before that, Heineken stopped new investments and exports to Russia, brand advertising, production and sales of products.
The Dutch company stated that it plans to reach an agreement on the sale of assets by the end of 2022. The company promises to pay salaries to 1800 employees in Russia until the end of 2022. The corporation calculated losses of 400 million euros.
Czech manufacturers Plzensky Prazdroj (Pilsner Urquell, Gambrinus brands), Budejovicky Budvar, Staropramen and Bernard have stopped supplying products to Russia.
AB InBev Efes delivered to Russia?
In the spring, representatives of both companies noted that discussions regarding the sale of the Belgian stake were "at a very early stage." EP inquired with the joint company's Ukrainian office about whether negotiations had progressed and whether an agreement was being prepared.
"Active discussions continue between the parties regarding the sale of AB InBev's non-controlling stake in the AB InBev Efes joint venture to its partner, the Turkish brewer Anadolu Efes," said Denis Khrenov, Acting CEO of AB InBev Efes Ukraine.
However, before this, another remarkable event occurred, unnoticed. While many Western companies were closing their stores and factories in Russia, a joint Turkish-Belgian company was expanding its operations there.
In August, seven Russian factories began producing products under the Belgian-owned Spaten, Franziskaner, Leffe Blonde, and Brune brands. These world-renowned brands are now bottled at the company's factories in Ulyanovsk, Kaluga, Omsk, Volzhsky, Saransk, Klin, and Ivanovo.
"The decision to localize was made due to logistical challenges observed in the market, with the goal of ensuring the continuity of commercial processes and product availability," the company explained.
This news caused a stir in Belgium, and local politicians were outraged.
Edition Politico.eu wrote that the Belgian company had begun to face a boycott. It quoted the wife of the former Ukrainian president, Kateryna Yushchenko, who chided Western Europeans on Twitter: "They lecture others about corruption while they themselves choose money over morals. Boycott #Leffe beer."
Oh @abinbev not a good look supporting genocide. How Western Europeans like to lecture others about corruption when they themselves choose money over morals. Boycott #Leffe beer. https://t.co/bnKT55Hkvm
— Kateryna Yushchenko 🌻 🇺🇦 (@KatyaYushchenko) August 15, 2022
The company's statements about selling its business in Russia remain just that: statements. However, Khrenov says that production of products under some brands has been halted.
"The suspension of the license to sell certain brands is part of ongoing discussions regarding an agreement with Anadolu Efes. While negotiations are ongoing, Leffe production in Russia has been suspended," he told Ekonomicheskaya Pravda.
What about Ukrainian assets and workers?
Without suspending operations in Russia, the Turkish-Belgian company is attempting to rehabilitate itself before Ukrainian workers and customers. On February 24, AB InBev Efes suspended operations at its breweries in Chernihiv, Kharkiv, and Mykolaiv. The company assures that production in Chernihiv will soon resume.
"We're working to quickly restore the brewery and get it up and running again. Before the war, it employed 288 people, just like it does now," Khrenov emphasized.
According to him, the situation in Kharkiv and Mykolaiv makes it impossible to conduct a detailed assessment, assess the damage, and begin repairs. Before the war, the Mykolaiv brewery employed 206 people, while the Kharkiv brewery employed 315.
The manager assured that "during Russia's anger against Ukraine," the company had not cut staff or wages. It evacuated workers and their families to safer regions of Ukraine, the Czech Republic, Belgium, and Germany, where the company has offices.
The company also began producing Chernihivske beer with a special design in support of Ukrainians. This limited edition was brewed at breweries in Germany, Belgium, and the UK. It was also produced in the US and Colombia. AB InBev guaranteed at least $5 million in revenue from this initiative.
Translation by Skelet.Org
By topic: Alfa Group: Which Russian businesses are doing well in Ukraine?
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