For the global brewers, as they grapple with changing consumer tastes and gently declining beer consumption in established markets like the US, Germany, the UK and Japan, Russia has been comparatively resilient.

Russia, the world’s fifth largest country in terms of overall beer drinking, was one of the few major markets around the world where beer consumption actually rose during the pandemic-hit year of 2020 and it also grew by a further 3.3% during 2021.

That is why Heineken’s decision on Monday to pull out completely from Russia will have been a difficult one.

For the Dutch giant, second only to US giant AB InBev in the global brewing league table, Russia makes up around 2% of global sales. The company will take a €400m hit as it seeks “an orderly transfer” of the business to a new owner. It will not seek to profit from the disposal.

It said: “We are very shocked and very saddened to see the war in Ukraine continuing and escalating.

“Following the strategic review of our operations already announced, we have concluded that Heineken’s ownership of the Russian business is no longer sustainable or enduring in the current context.”

Heineken’s decision highlights the headache other fast-moving consumer goods companies have had with Russia.

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The company had previously halted the sale, production and advertising of the Heineken brand in Russia and had suspended new investments and exports to the country.

But it had not, until today, decided to exit Russia altogether – a more drastic step that to date has only been taken by a handful of businesses, among them Imperial Brands and British American Tobacco, the UK tobacco giants.

Its approach had been more in line with the likes of Nestle, Procter and Gamble, Reckitt, Unilever, PepsiCo and Danone, all of which have to date decided against a complete pull-out from Russia and have continued to sell some products judged to be essential.

That has proved controversial and Nestle, in particular, has come under fire for its approach.

Denys Shmyhal, Ukraine’s prime minister, had tweeted on 17 March: “Talked to Nestle CEO Mr Mark Schneider about the side effect of staying in Russian market. Unfortunately, he shows no understanding. Paying taxes to the budget of a terrorist country means killing defenceless children and mothers. Hope that Nestle will change its mind soon.”

The Swiss giant subsequently widened the number of brands it will no longer sell in Russia.

So Heineken’s decision to completely withdraw from Russia will put further pressure on those companies.

It will also throw a spotlight on the other big international brewers playing in the relatively consolidated Russian market.

Heineken, whose local beer brands in Russia include Bochkarev, Okhota and Tri Medvedya, is the third largest player in the country with roughly 10% of the market.

In second place, with a market share of 27%, is a joint venture between AB Inbev, the owner of Budweiser and Anadolu Efes, the Turkish brewer.

The pair operate 11 breweries and three malt factories in Russia and employ some 3,500 people in the country. Efes is the controlling partner and there are thought to have been disagreements between the pair as to how to go forward. AB Inbev reportedly asked its Turkish partner to suspend the sale and production of Budweiser in Russia more than two weeks ago but Efes is understood to have argued against a complete shutdown on the grounds that this would hurt its local employees and the farmers who supply the business.

The partnership has continued to produce beers other than Budweiser but AB Inbev has since sought to ring-fence its interests in the country and has pledged to forego any profits from Russia. A decision to completely exit Russia would be painful for Efes since the country is estimated to account for some 44% of its sales and 34% of its earnings.

Another major brewer with a big headache in Russia is Carlsberg. The Danish group owns Baltika, Russia’s biggest brewer, which has a market share of just shy of 30%. Carlsberg has already said that it will stop selling its flagship brand in Russia and will not make any new investments in the country, where it employs 9,000 people.

Russia and Ukraine are both major markets for Carlsberg. The pair are part of a central and eastern European division, along with 11 other countries, which together account for around a quarter of Carlsberg’s total sales. Within that, Russia is reckoned to account for just under 10% of the group’s total sales.

Baltika’s history, interestingly, is intertwined with that of Scottish & Newcastle, the last of the so-called ‘Big Six’ British brewers, all of which have now disappeared into foreign hands.

S&N acquired a 50% shareholding in BBH, the owner of Baltika, when it bought Hartwall, a Finnish drinks group, for £1.2bn 20 years ago. Its co-owner was Carlsberg and the business thrived under the pair’s joint ownership, buying up a number of smaller competitors and becoming a major source of growth, particularly as Russian beer consumption grew during the mid-noughties.

S&N even struck a deal to produce Baltika, Europe’s third-biggest beer brand after Heineken and Amstel, in 2007.

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At the time, the move seemed a masterstroke, enabling S&N to tap into the growing number of Russians moving to Britain.

It was the first time a Russian brand had been licensed to a western company and, in a signing ceremony at Edinburgh Castle, Baltika’s president, Anton Artemiev, said: “The start of licensed production in western Europe of Baltika is a natural step in the process of integrating Russia into the world economy.”

How long ago that now seems. Carlsberg and Heineken teamed up to buy S&N for £7.8bn in March 2008 – just as the global financial crisis was erupting. The pair are widely thought now to have over-paid for the business.

As part of the deal, Carlsberg took full control of Baltika. It is a reasonable bet that the Danes are now regretting the move.

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