Nestlé Russia has pledged to continue its operations in the country after the Kremlin decided to place the company's assets in Russia under temporary State control, stating that it intends to unconditionally fulfill its obligations to clients, partners, and employees.

The pledge was conveyed through the Russian State news agency TASS and follows a decree signed by the President of Russia, Vladimir Putin, which confiscated the assets of several international companies, placing them under temporary State control. The measure affects Nestlé Russia and Nestlé Kuban, both of which were placed under the administration of a company called AO L.E.V. Menedzhment. This type of external administration places the day-to-day management of the affected entities in the hands of the appointed administrator for as long as the decree remains in force.

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

The Kremlin stated that the hostile actions of "unfriendly" countries influenced its decision to take control of Nestlé's assets in Russia, as well as those of the French company Auchan.

Headquartered in Vevey, Switzerland, Nestlé is the largest food and beverage company in the world. 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 investments, while continuing to supply essential products such as baby food and clinical nutrition. That dual approach —reducing advertising and investments while maintaining the supply of essential products— has defined the company's presence in Russia since 2022.

As of 2021, the most recent year with available figures, Nestlé operated six factories in Russia with approximately 7,000 employees. Sales in Russia, of around two billion Swiss francs (US$2.44 billion), accounted for approximately two percent of the group's global sales. Although sales in Russia represent such a small share of the group's total, Nestlé's direct financial exposure is comparatively limited, but the decree places the day-to-day control of the operations behind those factories, jobs, and supply chains of essential products in the hands of an administrator appointed by the State.

"Nestlé takes note of the presidential decree of Russia, published yesterday, which places Nestlé Russia under a temporary external administration. The company is evaluating the situation and its options," stated a communiqué from the company. "Nestlé is committed to taking all necessary measures to protect its rights and ensure the continuity of business operations in the interest of all stakeholders, particularly its employees." The communiqué did not detail those options, and how the company's pledge of total commercial continuity will operate under the administrator's control remains to be seen.

Source: Global Coffee Report