Heineken has sold its operations in Russia to domestic FMCG giant Arnest Group for €1 ($1.1) following government approval.

The deal, announced in April without identifying the buyer, is expected to leave the brewer with losses of €300m – despite debt repayment of approximately €100m.

All assets in Russia, including seven factories, have been sold. Around 1,800 employees have been guaranteed jobs for the next three years.

The Dutch brewer has been looking for a new owner for its assets in Russia since March last year when it stopped the production, advertising and sale of its namesake brand in the country.

Heineken described its business in Russia as “no longer sustainable nor viable in the current environment” due to the ongoing war with Ukraine.

Arnest Group owns a “major can packaging business” and is the largest Russian manufacturer of cosmetics, household goods and metal packaging.

In a statement today (25 August), Heineken CEO Dolf van den Brink said: “We have now completed our exit from Russia. Recent developments demonstrate the significant challenges faced by large manufacturing companies in exiting Russia.

“While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner.”

Heineken said production of Amstel would be phased out within six months and no other international brands would be licensed in Russia. The company’s namesake beer was removed from the country in 2022.

It added that a three-year licence for “some smaller regional brands” would be granted, “to ensure business continuity and secure transaction approval”, but without marketing support from Heineken. The Amstel brewer said it would not receive any proceeds, royalties, or fees from the unnamed smaller brands.

It follows criticism in February this year after it emerged Heineken had launched products in Russia, despite alleged efforts to sell the business.

In a Q&A published on its website, the Amstel brewer apologised for a failure of communication over the launches, admitting some local launches were made with approval of its global team.

However it defended its decision to launch products and employ more staff in Russia, saying at the time: “The dilemma we face is that if we suspend or stop operations, the business will quickly go bankrupt, and as a result employees, would lose their livelihoods.

“As everyone knows, it’s hard to sell a loss-making business.”

Heineken said the sale will have “negligible impact” on diluted EPS and its full-year 2023 outlook remains “unchanged”.