Food and Beverage Industry Reducing Russian Market Exposure

Companies across a wide spectrum of industries have announced plans to halt investments or sales in Russia in response to the country’s violent invasion of Ukraine. Now many food and beverage manufacturers are joining the trend to reduce their exposure to the Russian market.

Powder & Bulk Solids editors compiled this list of major food and beverage players that have made changes to their operations in Russia to illustrate how the industry is approaching the ongoing tensions and uncertainty.

AB InBev

The world’s largest brewing company has a presence in Russia through its joint venture AB InBev Efes. Sales and production have stopped in the country, according to The Financial Times. Several breweries are operated by the venture in Russia.

Coca-Cola

Iconic American beverage maker Coca-Cola suspended its activities in Russia this week. “Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine,” a company statement said. “We will continue to monitor and assess the situation as circumstances evolve.” Coca-Cola Hellenic Bottling Co. acquired Coca-Cola Co.’s plants in Russia and bottling rights in 2021.

Danone

French dairy, food, and nutrition products manufacturer Danone will keep production and distribution of fresh dairy and infant nutrition products running in Russia “to still meet the essential food needs of the local population,” General Secretary Laurent Sacchi announced in a March 6 tweet. In addition, all local investment projects will be suspended. Around 8,000 Russians work for Danone across more than 12 manufacturing facilities, according to The Financial Times. In an interview with the British publication this week, the firm’s CEO, Antoine de Saint-Affrique said the company has “a responsibility to the people we feed, the farmers who provide us with milk, and the tens of thousands of people who depend on us.”

Diageo

Spirits manufacturer and distributor Diageo said in a March 3 Reuters report that it has suspended shipments of its products to Russia. The company’s brands are sold in over 70,000 shops and 19,000 bars in the country, according to information on its website. Diageo entered the Russian market in 2006.

Heineken

Dutch brewer Heineken Co. announced Wednesday that it will stop production and sales of its products in Russia “in response to the continued escalation of the war,” and vowed to “no longer accept any net financial benefit derived from our Russian operations.” New investments are also paused, along with exports to the country.

“We are assessing the strategic options for the future of our Russian operations. We see a clear distinction between the actions of the government and our employees in Russia,” CEO Dolf van den Brink said in a release. “For more than 20 years, our local employees have been valued members of the Heineken business. Supporting our employees and their families is a key principle as we define the path forward.”

Kellogg Co.

Three Russian food manufacturing plants owned by cereal and snacks maker Kellogg Co. will remain in operation, but the American firm is freezing new investments and will not import products there, coverage by Bloomberg said. On Wednesday, the company tweeted that it is “saddened by recent events in Ukraine,” and reiterated its “belief that food is a basic human right.” Kellogg’s bought The United Bakers’ Group, one of Russia’s biggest cereal, biscuit, and cracker manufacturers, in 2008.

Kraft Heinz Co.

This week Kraft Heinz stated that it will no longer export its products to Russia or import goods from the country. New investments in Russia are also suspended. The company has several facilities in the country, including a Kraft plant in Otradnoe that  manufactures a range of sauces for the EMEA region. In 2008, the company invested $100 million to open a soluble coffee plant in Leningrad Oblast.

Lindt & Sprüngli

A statement issued Wednesday by Switzerland-based chocolate maker and cocoa processor Lindt & Sprüngli said the company has “re-evaluated” its business in the country and “decided to temporarily close our shops with immediate effect and suspend all deliveries to Russia.” The company said its local workers “will continue to receive our support” and that it “will remain in close contact with them.” Notably, Lindt & Sprüngli did not mention Ukraine in the release.

Louis Dreyfus Co.

Major agricultural commodities player Louis Dreyfus Co. (LDC) told Reuters last Friday that it has paused its business activities in Russia. The firm exports 1.5 million to 3 million mt/yr of grain from the country, according to information on its website, and operates seven inland silos and a grain terminal there. LDC also has some sugar distribution facilities in the market.

Mars Inc.

Confectionery and food manufacturer Mars Inc. has about $2 billion invested in Russia, but the firm recently said it will pause new investments in the country, according to The Hill. Among the company’s projects, a $55 million expansion of the firm’s pet food plant in Rostov Oblast, Russia is reportedly slated to come online in 2023. Mars CEO Grant F. Reid said in a March 1 statement that the company is “appalled” by recent events in Ukraine and that it supports “the innocent victims of this war.”

McCain Foods

Canada-based potato products manufacturer McCain Foods pulled the plug on construction of its first production facility in Russia on February 24 in response to the country’s war against Ukraine, The Globe and Mail reported Thursday. The firm also said it will no longer ship products to Russia.

Mondelez International

Dirk Van De Put, chief executive officer of the snacks and confectionery firm, said in a letter to employees published this week that the company is “scaling back non-essential activities in Russia while helping maintain continuity of the food supply during the challenging times ahead.” The executive said Mondelez will continue to support its employees in the country, but the company is pausing new investments and advertising media spending in the market.

Nestle

Swiss food and beverage giant Nestle revealed plans Wednesday to pause capital investments in Russia in response to the Ukraine invasion, Reuters reported. However, the company said it will still provide essential food products in the market.  In a recent LinkedIn post, Nestle CEO Mark Schneider voiced his “dismay regarding the invasion of Ukraine” and said that “war is not the solution.”

PepsiCo

Ramon Laguarta, chief executive officer of PepsiCo, described Russia’s invasion of Ukraine as “horrific” in a letter to employees released to the public Tuesday, and said the company will halt investments and sales of Pepsi-Cola and other global beverage brands in the market. The beverages and snacks maker, which has had a presence in the Russian market since the Cold War, stopped short of a full shut down in the country, citing a need to exercise compassion.

“As a food and beverage company, now more than ever we must stay true to the humanitarian aspect of our business. That means we have a responsibility to continue to offer our other products in Russia, including daily essentials such as milk and other dairy offerings, baby formula, and baby food,” Laguarta wrote. “By continuing to operate, we also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and uncertainty ahead.”

Where Do We Go From Here?

It is likely that more international food and beverage manufacturers will make similar announcements in the coming days and weeks as international outrage against Russia’s aggression toward Ukraine continues to grow.

As the food industry navigates the current situation, it is clear that many companies trying to strike a balance between exerting economic pressure on Russia to stop the war and maintaining supplies of essential foods like baby formula on humanitarian grounds. Several prominent players have said their decision to remain active in the market is also intended to support its local employees and supply chains.