Here at b33r.xyz we always considered beer to be a thing that unites people and maybe even fosters international cooperation and world peace. However, in the case of Carlsberg’s Russian brewery, this approach seems to have experienced a Russian reversal.
In Putin’s Russia, Market Leaves You
After Russia’s blatant and illegal aggression against its neighbor, many European companies decided to leave the Russian market in a show of solidarity with the Ukrainian people. Carlsberg Group, a Danish multinational brewing company and one of the largest beer producers in the world, was among the companies that declared their intention to quit the Russian market until the country’s government came to its senses and stopped the bloodshed.
Known for its rule of law and respect for private property, the Russian government decided to instead steal (“assume control under temporary management”) Carlsberg Group’s Russian brewery—a unit called Baltika Breweries—in July 2023. Russian parliament rubberstamped a law allowing the state to confiscate Carlsberg’s shares while Carlsberg was in the process of negotiating the sale of its Russian brewery to local business people. Some sources say that the idea for this innovative legal maneuver came from the very same local businessmen who decided that there was a more straightforward way to acquire a company without paying any money to its owners. This may only be a rumor. However, we find it quite convincing.
Reacting to this, in October 2023, Carlsberg Group terminated its licensing agreements with Baltika Breweries, effectively stripping the former subsidiary of any rights to Carlsberg’s brands. It was also reported that the parent company ceased some properties of Baltica in Denmark.
Being vindictive, Putin did not stop there. A week ago, two high-level employees of Baltika Breweries were arrested and are poised to remain in custody at least until the end of this year. The reason for the searches was a criminal case, initially initiated under Article 165 of the Criminal Code of the Russian Federation (“causing property damage by deception or abuse of trust”), but then the investigation saw signs of fraud on a particularly large scale (part 4 of Article 159 of the Criminal Code of the Russian Federation).
According to state prosecutors, Denis Sherstennikov and Anton Rogachevsky, who are identified as Baltika’s CEO and vice president (legal) on LinkedIn, allegedly transferred certain intellectual property rights to Carlsberg “unlawfully” when Russia decided to steal the company. They currently face 10 years in prison.
Of course, Baltika is suing Carlsberg in Russia for the right to continue using the trademarks. Considering Russia’s well-known respect for intellectual property and international law, it doesn’t take a legal expert to guess the results of these proceedings.
Some experts comment that the goal of the criminal case is to scare other companies into remaining in Russia by making an example of the fate of Carlsberg’s Russian brewery and its executives.
In our opinion, fear is never a good motivator for doing business. The conclusion should be a bit different: never do business in Russia, as there you never actually own your property—you are only temporarily allowed to manage it.