Premium
4 min read . Updated: 23 Mar 2022, 07:48 PM IST Nestlé SA is to significantly scale back what it sells in Russia, suspending production of pet food, coffee and confectionery, a move that comes after the KitKat maker has faced pressure from politicians, employees and consumers for its continuing presence in the country.
The Swiss packaged-foods giant said Wednesday that it would focus on providing essential food while the war continues. It said that while it doesn’t expect to make a profit in Russia or pay any taxes in the country for the foreseeable future, any profit it does generate would be donated to humanitarian relief organizations.
Nestlé said the only products it would continue to sell in Russia would be baby food and other infant nutrition products, specialist veterinary meals and medical-nutrition products.
While Nestlé had previously suspended imports and exports of products it deemed nonessential, such as Nespresso pods and San Pellegrino water, the company has kept all six of its Russian factories open to produce goods for local sale, including confectionery and coffee. About 90% of what Nestlé sells in Russia is made there. It previously described its products as essential saying it had a responsibility to its employees in the country.
Wednesday’s announcement means Nestlé will suspend the “vast majority of our prewar volume" in Russia, according to a spokesman. “We are in the process of identifying solutions for our people and our factories in Russia," he said. “We will continue to pay our people." The company has about 7,000 workers in Russia.
While many of the world’s largest makers of household staples, including Procter & Gamble Co. and Dove soap maker Unilever PLC, are continuing to sell food and other consumer products in Russia, Nestlé has attracted particular scrutiny.
Ukrainian President Volodymyr Zelensky has mentioned Nestlé by name in several speeches when calling for Western businesses to pull out of Russia.
“‘Good food. Good life.’ This is the slogan of Nestlé, your company that refuses to leave Russia," Mr. Zelensky said in a Saturday audiolink address to people attending an antiwar protest in Bern, Switzerland.
The company had also been criticized by the Ukrainian Prime Minister Denys Shmyhal, who tweeted that he had talked with Nestlé Chief Executive Mark Schneider, who he said showed no understanding of the side effect of continuing to sell in Russia.
Several of Nestlé’s Ukraine-based employees—it has about 5,000—have also voiced their dissatisfaction with the company’s response to the invasion on social media.
Late last week, Nestlé’s Europe head, Marco Settembri, drew the ire of some employees during an internal webcast for staff in the region when he said the company’s Ukrainian workers should be united with their Russian colleagues, according to participants.
“At this point I would say this is a crazy thing to say," said Sofia Vashchenko, who oversees a team working on web content for Nestlé in Ukraine. “People really, really started getting mad," she said. Ms. Vashchenko said in a separate LinkedIn post that her team was “mentally broken" after the webcast.
Nestlé didn’t immediately respond to a request for comment about the webcast.
Russia has been an attractive market for Nestlé. Last month, the company credited strong demand in the country for helping its Europe, Middle East and North Africa region log its highest sales growth in a decade.
Overall, Russia generates about 2% of Nestlé global sales, and the company has announced investments in the past year to bolster its pet food and confectionery operations in the country.
Ukraine, meanwhile, has an outsize importance for Nestlé because it is home to a hub supporting several key global business functions. The company’s business service center in Lviv employs about 1,800 workers handling accounting, IT support, supply support, administration, payroll and other tasks for Nestlé offices in more than 70 countries around the world.
Following the regional webcast, some employees usually based in Lviv said their team leads had written to Nestlé’s top management calling for the suspension of the company’s operations in Russia.
A Nestlé spokesman didn’t immediately respond to a request for comment about the letter.
Ukrainian workers have also discussed going on strike if Nestlé continues to sell products in Russia, some employees said.
“Saying ‘we condemn it’ isn’t a lot," said Osee Petyo, a Lviv Nestlé worker who has since fled to Paris. “They have to do things to affect the financial position of Russia."
This story has been published from a wire agency feed without modifications to the text
Never miss a story! Stay connected and informed with Mint. Download our App Now!!