Carlsberg cuts ties with “stolen” Russian business

Carlsberg cuts ties with “stolen” Russian business
"There is no way around the fact that they have stolen our business in Russia, and we are not going to help them make that look legitimate," said Carlsberg CEO Jacob Aarup-Andersen. / bne IntelliNews
By bne IntelliNews November 2, 2023

Danish brewing major Carlsberg has cut all ties with its Russian business and has refused to enter a deal with the Russian government that would make its seizure of the assets look legitimate, Reuters reports, citing the company’s new CEO.

In July 2023 Russia in effect nationalised two major players in the brewery and dairy markets, Danone and Carlsberg. 

"There is no way around the fact that they have stolen our business in Russia, and we are not going to help them make that look legitimate," Jacob Aarup-Andersen said, as cited by Reuters. Carlsberg had eight breweries and about 8,400 employees in Russia, and took a $1.41bn write-down on its Russian business Baltika in 2022.

According to Aarup-Andersen, the limited interactions with Baltika's management and Russian authorities since July did not lead to any “acceptable solution”.

Last month Carlsberg terminated all licence agreements on its brands in Russia, the company announced, blocking the Russian Baltika business to produce, market and sell such brands as Carlsberg, Tuborg, Zatecky Gus, Kronenbourg 1664, Holsten, Warsteiner and others.

After both Carlsberg and Danone's operations in Russia were unabashedly handed to Vladimir Putin's cronies, unconfirmed reports claimed that Kremlin-affiliated businessmen are developing an appetite for agro and food assets supported by their stable demand and high margins.

Baltika, the local subsidiary of Danish Carlsberg, will now be helmed by its former president Taimuraz Bolloyev, a good friend and business partner of Putin’s “stoligarch” allies Yuri Kovalchuk and Arkady Rotenberg.

Bolloyev is the actual founder of Baltika, who became director of the new Leningrad brewery in 1991 and ran it until 2004. Under Bolloyev, already in 1993 the brewery was privatised by foreign investors, and Vladimir Putin, back then the deputy mayor of St. Petersburg, supervised the deal. 

After leaving Baltika, Bolloyev founded the clothing company BTK Group, which in 2021 became the sole supplier of clothing for the Russian army. From 2009 to 2011 Bolloyev headed the state-owned company Olympstroy, which was created to build facilities for the Sochi Olympics, according to The Bell.

The Bell also reminds that Bolloyev is a long-time acquaintance of Putin and people in his inner circle. Together with Putin and Rotenberg, he is a member of the management of the Yavara-Neva judo club in St Petersburg, where Putin's childhood coach Anatoly Rakhlin worked. Bolloyev also has a joint business with Yuri Kovalchuk he owns a 10% stake in Gelendzhik Airport, with another 40% held by Kovalchuk's sanctioned Rossiya Bank.

The Kovalchuk brothers had previously signalled their interest in Baltika, according to two people familiar with the matter cited by the Financial Times. “It’s a new redistribution of wealth” to Putin’s circle, said an unnamed Russian oligarch who has known the president for decades.

“Someone decided to take these assets into their own hands,” a source cited by the Financial Times said back in July, noting that the businesses were so profitable and well run that “any buyer can just skim off the cash flow without doing anything”.