Nestlé to stop selling pet food, coffee and KitKat in Russia

Nestle HER

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plans to drastically reduce what it sells in Russia, suspending production of pet food, coffee and confectionery as the KitKat maker faces pressure from politicians, employees and consumers over its continued presence in the country.

The Swiss packaged food giant said on Wednesday it would focus on providing essential food as Russia’s war on Ukraine continues. While it does not expect to make a profit in Russia or pay taxes in the country for the foreseeable future, the company said any profit it generates will be donated to humanitarian aid organizations.

Nestlé said the only products it would continue to sell in Russia would be baby food and other infant nutrition items, specialty veterinary meals and medical nutrition products.

While Nestlé previously suspended imports and exports of products it deemed non-essential, such as Nespresso pods and San Pellegrino water, the company kept its six Russian factories open to produce goods for local sale. , including confectionery and coffee. About 90% of what Nestlé sells in Russia is made there. It has previously described its products as essential, saying it has a responsibility to its employees in the country.

The consequences of the harsh economic sanctions against Russia are already being felt around the world. The WSJ’s Greg Ip joins other experts in explaining the significance of what has happened so far and how the conflict could transform the global economy. Photo illustration: Alexandre Hotz

Wednesday’s announcement means Nestlé will suspend the “vast majority of our pre-war volume” in Russia, according to a spokesperson. “We are in the process of identifying solutions for our employees and our factories in Russia,” he said. “We will continue to pay our people.” The company has around 7,000 workers in Russia.

While many of the world’s largest manufacturers of basic housewares, including Procter & Gamble Co.

and soap maker Dove Unilever PLC, continue to sell food and other consumer products in Russia, Nestlé has come under particular scrutiny.

Ukrainian President Volodymyr Zelensky has mentioned Nestlé by name in several speeches calling on Western companies to pull out of Russia.

“‘Good food. Good life.’ This is the slogan of Nestlé, your company that refuses to leave Russia,” Zelensky said in an audiolink speech Saturday to people attending an anti-war protest in Bern, Switzerland.

Ukrainian Prime Minister Denys Shmyhal also criticized the company, tweeted last week that he had spoken with Nestlé chief executive Mark Schneider, who he said showed no understanding of the side effects of continued sales in Russia.

Several Nestlé employees based in Ukraine – it has around 5,000 – have also expressed their displeasure on social media with the company’s response to the invasion.

Nestlé European director Marco Settembri has been criticized for urging Ukrainian and Russian workers to unite.


Photo:

Alessia Pierdomenico/Bloomberg News

Late last week, Nestlé European director Marco Settembri angered some employees during an internal webcast for staff in the region when he said the company’s Ukrainian workers should be united with their Russian colleagues, according to the participants.

“At this point, I would say that’s a crazy thing to say,” said Sofia Vashchenko, who oversees a team working on web content for Nestlé in Ukraine. “People really, really started going crazy,” she said. Ms Vashchenko said separately in a LinkedIn post that her team was “mentally broken” after the webcast.

A Nestlé spokesman said Mr Settembri told his colleagues across Europe on the webcast: “Let’s try to stay united against the nonsense of war”.

Russia has been an attractive market for Nestlé. Last month, the company credited strong demand in the country for helping its Europe, Middle East and North Africa region record its strongest sales growth in a decade.

Overall, Russia generates around 2% of Nestlé’s global sales, and the company has announced investments over the past year to strengthen its pet food and confectionery businesses in the country.

A Nestlé factory in Russia, pictured in 2017. The Swiss packaged goods giant currently has around 7,000 workers in Russia.


Photo:

Japaridze Mikhail/Zuma Press

Ukraine, meanwhile, is of outsized importance to Nestlé as it is home to a hub supporting several key global business functions. The company’s business service center in Lviv employs approximately 1,800 people who handle accounting, IT support, procurement support, administration, payroll and other office duties of Nestlé in more than 70 countries around the world.

After the regional webcast, some employees typically based in Lviv said their team leaders had written to Nestlé senior management asking the company to suspend operations in Russia. Nestlé’s spokesperson declined to comment on the letter.

Ukrainian workers have also considered going on strike if Nestlé continues to sell products in Russia, some employees said.

“To say ‘we condemn him’ is not much,” said Osee Petyo, a Lviv-based Nestlé employee who has since fled to Paris. “They have to do things to affect Russia’s financial situation.”

Write to Saabira Chaudhuri at [email protected]

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