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A supermarket in St Petersburg: multinationals that supply Russians with daily necessities face tough decisions. Keystone / Anatoly Maltsev
Vladimir Putin's invasion of Ukraine has led to an exodus of well-known western brands from Russia, but not every company has joined the rush.
This content was published on March 10, 2022 - 10:36 March 10, 2022 - 10:36
financial Times
As Apple has suspended sales and BP hurriedly announced its exit over the past two weeks, those multinationals that manufacture products that Russians rely on for daily life, from food through baby formula to personal care items, have wrestled with the decision on whether to stay.
Besides supplying staples since the fall of the Soviet Union, these companies, including US soft drinks group PepsiCo and UK household goods maker Unilever, typically have significant manufacturing operations in Russia and employ thousands of local staff.
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“You're damned if you do [pull out] and you're damned if you don't,” said advertising veteran Sir Martin Sorrell, who now runs digital marketing company S4 Capital, referring to the quandary facing the companies.
Some consumers in the west want brands to leave, Sorrell said.“You see the atrocities that are being committed, and obviously it's going to stir tremendous emotions in people, quite rightly.” But companies continuing to supply basic goods were doing so in large part“because they don't want the population to suffer more than they're suffering already”.
In an apparent domino effect, several global companies announced withdrawals from Russia on Tuesday and Wednesday. Those included PepsiCo and Unilever but the halt to their operations was only partial. PepsiCo, for example, which employs 20,000 people in Russia, is suspending sales of global drinks brands including its namesake cola, but maintaining sales of foods and local brands, including from its large dairy operation.
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Christopher Rossbach, managing partner at fund manager J Stern & Co, said:“Companies should make a distinction between what are essential goods like basic foods or infant nutrition, and more discretionary ones. It's a difficult line to draw.”
Some consumer multinationals, such as Dettol maker Reckitt Benckiser, chocolate maker Lindt & Sprüngli and cigarette maker Japan Tobacco, continue to operate in Russia. Supermarket operators such as France's Auchan and Germany's Metro have also opted to stay, an approach that contrasts with some other retailers such as Inditex, parent company of fashion chain Zara, which has shuttered stores but retained its 9,000 staff.
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