Nestlé to halt sales of most brands in Russia

Nestlé, the world’s largest food company, is to halt sales of KitKat, Nesquik and several dozen other brands in Russia after criticism from Ukraine’s leaders over its presence in the country.

The Swiss group said on Wednesday it would “suspend the vast majority of our prewar volume in Russia”, paring down its offering to products such as baby formula and medical nutrition. This adds to measures already announced such as a pause in capital investment.

The move comes almost a week after Ukraine’s prime minister Denys Shmyhal tweeted that he had spoken with Nestlé’s chief executive Mark Schneider about “the side effect of staying in the Russian market”.

“Unfortunately, he shows no understanding. Paying taxes to the budget of a terrorist country means killing defenceless children and mothers, ”Shmyhal said at the time. Ukraine’s president Volodymyr Zelensky also attacked Nestlé in a speech at the weekend, as part of a broader campaign against multinationals operating in Russia.

Nestlé said on Wednesday that it did “not expect to make a profit in the country or pay any related taxes for the foreseeable future in Russia”, adding that “any profit will be donated to humanitarian relief organizations”.

While the company does not expect to pay corporate tax, which is levied on profits, it remains liable for other Russian levies such as value added tax and property tax.

It has more than 7,000 staff in Russia, but said on Wednesday it was “identifying solutions for our people and our factories in Russia”. “We will continue to pay our people,” it said, but did not specify a timeframe.

The suspensions include most products in categories such as coffee and pet food, said a person familiar with the situation, with exemptions for items such as specialist pet foods provided to veterinary clinics.

The company said its approach “upholds the principle of ensuring the basic right to food”. It has also suspended advertising and “non-essential” imports and exports.

Nestlé, which made just under 2 per cent of its total SFr87.1bn ($ 93.1bn) revenues from Russia in 2021, is not the only company being targeted by the Ukrainian campaign over its Russian presence.

Zelensky on Wednesday called out French retail group Auchan and carmaker Renault, which he called “sponsors of the Russian war machine”. He has previously criticized rival consumer goods groups Unilever and Mondelez, European banks Raiffeisen and Société Générale and pharmaceutical groups Bayer and Sanofi.

More than 400 companies have scaled back their operations in Russia since its February invasion of Ukraine, according to Yale School of Management professor Jeffrey Sonnenfeld. But consumer goods groups have been among the more reluctant to cease operations altogether, citing their large numbers of staff in the country and provision of essential goods.

Carlsberg, which owns Russia’s largest brewery Baltika and makes around 9 per cent of sales there, has suspended imports and exports from the country and said that “Baltika Breweries will be run as a separate business, with the purpose of sustaining our employees and their families “.

Nestlé and other companies have faced anger on social media following the Ukrainian campaign, with figures including Bill Browder, an investor and Kremlin critic, attacking the food company.

Nestlé continues partial operations in Ukraine, where it has 5,800 employees.

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