Nestlé justifies staying in Russia as criticism mounts

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 Zelensky called out Swiss group Nestlé 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 it 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 Zelensky and his government to lobby multinationals that are staying in Russia.

In a speech to the US Congress last week, Zelensky 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 Vevey-based 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.”

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 SFr87bn 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.

But consumer goods makers have been among the more reticent to pull out, arguing that they sell essential goods like food, beverages, shampoo, and baby formula and also have a responsibility to their often large Russian staff. For example, PepsiCo, Danone, L’Oréal, Carlsberg, and Anheuser-Busch InBev are all still manufacturing and selling in Russia.

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

Some companies have already been targeted by consumers on social media. Anonymous, the online activist group, called for a boycott of Nestlé brands, labelling them “sponsors of tyranny”.

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

After speaking to Nestlé chief executive Mark Schneider by phone last week, Ukrainian prime minister Denys Shmyhal tweeted that Schneider “shows no understanding” about the impact of staying in Russia.

“Hope that Nestlé will change its mind soon,” he said.

Source: Financial Times