Ukraine Invasion: Nestle Justifies Decision to Continue Operations in Russia

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

Ukrainian President Volodymyr Zelensky criticised Nestle on Saturday for not taking enough action to punish Russia for its invasion of Ukraine, and Nestle leads a small but powerful list of multinational companies maintaining Russian business operations.

Zelensky criticised Swiss food giant Nestle for continuing to sell goods in Russia during a video address to a rally in Switzerland, saying, “Business works in Russia even though our children are dying and our cities are being destroyed.”

But Nestle maintains it only sells essential products and has suspended all advertisements and capital investment in the country.

“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 two percent of its 2021 revenue of SFr87bn in the country. Six factories there are still operating and delivering product to retailers.

The Ukrainian President’s 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.

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.

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