Tuborg is not merging from Russia

An attempt by the Danish Carlsberg Group to deprive the Baltika brewing company of the rights to some of its brands encountered opposition from the Russian company. Baltika in court wants to invalidate Carlsberg’s unilateral refusal of the agreement on supplies and brand licenses and has so far achieved a ban on Rospatent to terminate the Russian company’s rights to brands such as Holsten, Kronenbourg and Tuborg. Baltika must have the technology and materials to continue producing beer under these brands, market participants say.

Brewing company “Baltika” filed in the Arbitration Court of St. Petersburg and the Leningrad Region, a claim to invalidate the unilateral refusal of the Danish Carlsberg Group from the framework agreement on supplies and licenses for the Seth & Riley`s Garage, Holsten, Kronenbourg and Tuborg brands. The definition was published on the evening of October 19. As part of the case, the court prohibited Rospatent from terminating Baltika’s licenses for these marks. A preliminary hearing is scheduled for November 15. Baltika does not comment on the lawsuit; the Danish office of the Carlsberg Group did not promptly respond to Kommersant.

Baltika is part of the Carlsberg Group, but since July of this year, by decree of Russian President Vladimir Putin, the shares of the Danish group have been under the temporary management of the Federal Property Management Agency (Rosimushchestvo).see “Kommersant” dated July 17). Its founder, Taimuraz Bolloev, was appointed president of Baltika. At the same time, Carlsberg stated that they would assess the consequences of transferring the Baltika business to the Federal Property Management Agency and take the necessary retaliatory steps.

According to data from market participants, in 2022 the company produced 197.42 million dal of beer and beer drinks, which corresponds to second place in Russia after AB InBev Efes.

In early October, Carlsberg reported that in response to the decree of the President of the Russian Federation, they informed Baltika about the termination of licensing agreements allowing the production and sale of Carlsberg Group products, including international and regional brands. The Danish group noted that until April 2024, Baltika will be able to use existing reserves and materials. Prior to this, in September, Baltika applied to the court to prohibit Carlsberg from initiating a process in Denmark to terminate the framework licensing agreement, and also asked to prohibit Rospatent from making changes to brand agreements. But then the court refused to take interim measures (see “Kommersant” dated October 2).

Vasily Zuev, head of the intellectual property practice at the Intellectual Capital law firm, says that the possibility of unilateral refusal of the contract depends on the conditions, for example, on a significant delay in the payment of the license fee. If the conditions under which a unilateral refusal of a contract is possible were not met, then such a refusal can be considered invalid, he explains. According to Mr. Zuev, while interim measures prohibit Rospatent from registering the termination of licenses, Baltika can refer to formal compliance with the law and continue to use trademarks under the relevant agreements.

Nikolai Zhelagin, founder of the “Take a Day Off” beer store chain, says that Baltika could have retained access to the database of recipes and yeast used, and this could allow it to continue producing brands without Carlsberg’s consent.

Igor Khavsky, co-owner of the distributor SWAM Group and the Gletcher brewery, notes that Carlsberg is known for its own development of brewer’s yeast, but if they are already available at Baltika’s factories, the company will be able to use them. According to him, the technologies and recipes are known to Baltika, but the packaging materials are not unique.

In mid-October “Baltika” reported on the resumption of beer production under the Baltika 3 brand with the signature of Taimuraz Bolloev on the label. In addition, the company submitted applications to Rospatent to register new brands Branden Bier, Krone Blanche, Darkenbrau, etc. But, Nikolai Zhelagin notes, Baltika obviously does not want to lose its competitive advantage in the form of well-known brands. Local brands can support sales in certain regions, but in general beer patriotism in Russia is not very developed, he says.

As follows from the file of cases, in parallel with the new claim against the Danish Carlsberg Group, Baltika filed claims against the Belarusian company Vista Buy Co. and Carlsberg structures in Kazakhstan and Sweden. In a court ruling dated October 19 in a lawsuit against Vista BiUi Co. (.pdf) it is said that the plaintiff demands that the license agreement be declared invalid. Documents on the lawsuit against Carlsberg in Kazakhstan have not yet been published. Igor Khavsky believes that Baltika may try to ban the use of its brands for production at Carlsberg facilities in other countries. Kommersant’s source in the industry also knows that Baltika expressed concern that the plant in Kazakhstan could begin supplying the company’s old brands to Russia.

Anatoly Kostyrev