Business

Nestlé justifies staying in Russia in the face of mounting criticism

Nestlé has defended its decision to stay in Russia by saying it would not benefit from its operations there, as Ukraine has increased pressure on the world’s largest food company to pull out as war intensifies and casualties mount.

Ukrainian President Volodymyr Zelensky called the Swiss company Nestlé in a streamed speech to protesters in the Swiss capital 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 are dying and our cities are being destroyed,” he said, according to local media reports.

The comments are part of a broader campaign being waged by Zelenskyy and his government to lobby multinationals staying in Russia.

In a speech to the US Congress last week, Zelensky called on politicians to do their part to get companies to stop funding “Russia’s military machine,” naming some of them including food companies Unilever and Mondelez International , the European banks Raiffeisen and Société Générale, and the pharmaceutical groups Bayer and Sanofi.

For its part, Nestlé said it had already “significantly scaled back” its operations in Russia, halting all imports and exports except for “essential products” and ceasing investments and advertising.

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

Nestlé, which owns brands like Gerber baby food, Nespresso coffee and Perrier water, employs more than 7,000 people in Russia and generated about 2 percent of its 87 billion franc sales in the country in 2021. Six factories there are still operating and supplying products to retailers.

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

According to Jeffrey Sonnenfeld, a professor at the Yale School of Management who has been following the moves, about 400 companies have pledged to scale back operations, halt operations or withdraw entirely from Russia, while about 80 have maintained all or some of their operations.

But consumer goods manufacturers are also included more reserved arguing that they sell essential goods such as food, drink, shampoo and baby formula and also have a responsibility to their often large Russian staff. For example PepsiCo, DanoneL’Oréal, Carlsbergand Anheuser-Busch InBev all still manufacture and sell in Russia.

The cigarette manufacturers British American Tobacco and Imperial Brands have agreed transfer their business to local partners.

Some companies have already been attacked by consumers on social media. Anonymous, the online activist group, called for a boycott of Nestlé brands, which she describes as “sponsors of tyranny”.

Ukrainian politicians have not hesitated to stoke the flames online. The foreign minister Posted two photos he suggested contrasted “Nestle’s positioning” with “Nestle’s position”: the first showed a child in front of healthy food and the second a dead child in Ukraine.

After a phone call with Nestlé CEO Mark Schneider last week, Ukrainian Prime Minister Denys Shmyhal tweeted that Schneider shows “no understanding” of the implications of staying in Russia.

“I hope Nestlé changes its mind soon,” he said.

https://www.ft.com/content/1484606c-3e8f-494e-9e88-528a79aeeeaa Nestlé justifies staying in Russia in the face of mounting criticism

Adam Bradshaw

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