Nestlé Russia has pledged to continue its operations in the country after the Kremlin moved to place the company’s Russian assets under temporary state control, saying it intends to unconditionally meet its obligations to clients, partners, and employees.

The pledge was conveyed via the Russian state news agency TASS and follows a decree signed by Russian President Vladimir Putin that confiscated the assets of several international companies, placing them under temporary state control. The measure affects Nestlé Russia and Nestlé Kuban, both of which have been placed under administration by a company called AO L.E.V. Menedzhment. External administration of this kind places day-to-day management of the targeted entities in the hands of the appointed administrator for as long as the decree remains in force.

“The Nestlé Group in Russia is continuing its commercial activities in Russia in full and wishes to state its intention to unconditionally fulfil all obligations to clients, partners, and employees,” TASS quoted the company as saying.

The Kremlin said hostile actions by “unfriendly” countries influenced its decision to take control of the Russian assets of Nestlé, alongside those of the French company Auchan.

Headquartered in Vevey, Switzerland, Nestlé is the world’s largest food and beverage company. In March 2022, following Russia’s invasion of Ukraine, the group suspended advertising and brands such as KitKat and Nesquik in Russia and paused capital investment, while continuing to supply essential products such as baby food and medical nutrition. That split approach — scaling back advertising and investment while maintaining supplies of essentials — has defined the company’s Russian presence since 2022.

As of 2021, the most recent year for which figures were provided, Nestlé operated six factories in Russia with about 7,000 employees. Russian sales of roughly two billion Swiss francs (US$2.44 billion) accounted for about two per cent of the group’s global sales. With Russian sales representing such a small share of the group’s total, Nestlé’s direct financial exposure is comparatively limited, but the decree places day-to-day control of the operations behind those factories, jobs, and essential supply lines with a state-appointed administrator.

“Nestlé takes note of Russia’s presidential decree, published yesterday, that places Nestlé Russia under temporary external administration. The company is assessing the situation and its options,” a statement from the business reads. “Nestlé is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees.” The statement did not detail those options, and how the company’s pledge of full commercial continuity will function under the administrator’s control remains to be seen.

Source: Global Coffee Report