Farming & Food

Nestlé justifies staying in Russia as criticism mounts

Ukrainian government raises pressure on western firms still doing business in Russia

Protesters at the House of Parliament in Bern, Switzerland as Swiss firm Nestlé claims it would not profit from its business in Russia. Photograph: Fabrice Coffrini/AFP via Getty Images

Leila Abboud
Mon Mar 21 2022 - 16:24

Nestlé has defended its decision to stay in Russia by saying it would not profit from its operations there as Ukraine upped the pressure on the world's biggest food company to withdraw as the war intensifies and casualties mount.

Ukrainian president Volodymyr Zelenskiy called out the Swiss group in a streamed speech to protesters in Switzerland's capital of Bern on Saturday, pointing out the incongruity between its slogan "good food, good life" and its actions.

“Business in Russia works even though our children die and our cities are destroyed,” he said, according to local media reports.

The comments are part of a broader campaign carried out by Mr Zelenskiy and his government to lobby multinationals that are staying in Russia.

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In a speech to the US Congress last week, Mr Zelenskiy urged politicians to play their part in getting companies to stop financing the "Russian military machine", naming a number of them including food companies Unilever and Mondelez International, European banks Raiffeisen and Société Générale, and pharmaceutical groups Bayer and Sanofi.

Nestlé for its part said that it had already “significantly scaled back” its activities in Russia by stopping all imports and exports, except for “essential products”, and ceasing investment and advertising.

“We do not make a profit from our remaining activities,” the company said. “The fact that we, like other food companies, supply the population with important food does not mean that we simply continue as before.”

Baby food

Nestlé, which owns brands including Gerber baby food, Nespresso coffee, and Perrier water, has more than 7,000 employees in Russia and earned about 2 per cent of its 2021 revenue of 87 billion Swiss francs (€84.7 billion) in the country. Six factories there are still operating and delivering product to retailers.

The corporate exodus from Russia has accelerated, with some groups citing dismay at Moscow’s aggression, while others admit privately that they are also motivated by the logistical challenges of operating there amid heavy sanctions.

About 400 companies have pledged to scale back, suspend operations or withdraw completely from Russia, while some 80 or so have kept all or some of their operations, according to Jeffrey Sonnenfeld, a Yale School of Management professor who has been tracking the moves.

Consumer goods makers have been among the more reticent to pull out, arguing that they sell essential goods such as food, beverages, shampoo and baby formula and also have a responsibility to their often large Russian staff. PepsiCo, Danone, L'Oréal, Carlsberg and Anheuser-Busch InBev are among those still manufacturing and selling in Russia.

Cigarette makers British American Tobacco and Imperial Brands have pledged to transfer their operations to local partners.

– Copyright The Financial Times Limited 2022

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