Carlsberg Group announced the termination of licensing agreements with the Russian beer company Baltika, which had allowed Baltika to produce and sell Carlsberg’s products in the Russian market.
“We have informed Baltika Brewing Company LLC that the licenses enabling Baltika to produce, promote and sell all Carlsberg Group products, including international and regional brands, are terminated,” reported the Carlsberg press service. Baltika was permitted to use existing product and material stocks only until April 1, 2024.
Carlsberg stated that the move was a response to President Vladimir Putin’s July decision to place Baltika under interim management by the Federal Property Management Agency. “We have concluded that there is currently no viable path to exit the Russian market through negotiations. We refuse to participate in terms that are unacceptable and would justify the illegal takeover of our business in Russia,” Carlsberg said in a formal statement.
Baltika’s response
On October 2, Baltika filed a lawsuit in the Arbitration Court of St. Petersburg and Leningrad Region, seeking to prevent Carlsberg from terminating the licensing agreement for brand use. The brewing company asked that Rospatent be prohibited from making changes to agreements for global brands Tuborg, Kronenbourg, Seth & Riley’s Garage, Holsten and LAV.
The arbitration court noted that Carlsberg could pursue a separate action in the Danish Maritime and Commercial Court to potentially deprive Baltika of rights to some brands. Carlsberg, however, asserted on October 2 that it was not pursuing legal action regarding this matter at that time.
Transfer to the Federal Property Management Agency
Shares in the Russian operations of Danone and Baltika were placed under temporary control by the Federal Property Management Agency in July 2023. This follows Danone’s prior move to hand over control of its dairy and plant-based beverages segment in October 2022. Carlsberg also announced in late June that it had completed a search for investors and had signed an agreement with the prospective owner of Baltika’s assets.
Overall, 98.56% of Baltika shares formerly held by Carlsberg, 1.35% by Hoppy Union LLC, and 0.09% by Carlsberg Deutschland GmbH were transferred to the interim management of the Russian state company.
Industry observers have suggested that the transfer of Danone and Carlsberg’s Russian assets to a state-owned entity could limit large-scale proceeds from asset sales leaving the country, potentially influencing the ruble’s exchange rate.
Baltika appointed Taimuraz Bolloev as general manager. Bolloev previously led the company from 1991 to 2004. The company’s main shareholder was Baltic Beverages Holding, which later came under Carlsberg’s control. Baltika operates eight factories producing more than 50 beer brands and had a production volume of 197.42 million decaliters of beer and beer beverages in 2022, ranking second in Russia after AB InBev Efes.
Carlsberg’s June statements indicated that asset sales in Russia could result in a sizable loss, estimated at around 1.4 billion dollars, reflecting the financial impact of the evolving ownership and licensing landscape.