Heineken Puts Russian Brewery Kaliningrad Up For Sale

Heineken Puts Russian Brewery Kaliningrad Up For Sale

Heineken has put its mothballed production site in Kaliningrad up for sale, according to a report from Reuters on Monday. The world’s third-largest brewer halted production at the plant in January after a steady decline in the Russian beer market.

“We have a sober estimate of the economic situation in the country as a whole and in the region in particular,” the company said in a statement announcing the sale.

The Dutch company purchased the brewery in 2005, when it bought Ivan Taranov Breweries for an undisclosed sum. At the time, Russia was the world's fifth-biggest beer market - after China, the United States, Germany and Brazil. All of the leading brewing companies were keen to expand into one of the world's fastest-growing beer markets.

There has been a steep decline in sales for companies like Heineken and Carlsberg in Russia, due to new regulations on alcohol consumption in the region. The Kremlin launched an anti-alcohol campaign in 2010, which aims to cut alcohol consumption in half by 2020. It has also banned advertising, raised taxes and limited the size of plastic beer bottles to a maximum of 1.5 liters.

According to the Beer in Russia market report from Euromonitor International, beer recorded a total volume decline of 3% in 2016. It says, in the context of significantly reduced beer consumption in Russia since 2013, the drop in 2016 signalled the start of demand stabilisation.

It says one of the main supporting factors behind this was the rise of affordable beer, both offered by market leaders via aggressive discount pricing and by regional inexpensive brands.

Heineken said it planned to raise at least 250 million roubles ($4.3 million) from the sale and invest the proceeds in other projects.

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