Danone's delicate dance in Russia: amid chechen takeover, yogurt giant navigates uncharted territory for strategic exit
Source: The DairyNews
The saga with Danone in Russia is certainly a complex one. The Chechen takeover seems to have created a rather unique situation where, despite the change in ownership, the company is still operating relatively smoothly and maintaining an amicable relationship with the new management.
The behind-the-scenes efforts to complete the formal sale of the Russian business suggest that Danone is navigating a delicate balance, seeking the right Kremlin-approved buyer while protecting its rights as a shareholder.
It's interesting to see the contrasting approaches between Danone and Carlsberg in response to the seizures. Danone's measured statements and efforts to protect its rights without accusing Russia of expropriation indicate a cautious but strategic approach, possibly driven by the belief that a proper match with an approved buyer could still yield some financial return. On the other hand, Carlsberg has condemned the move, alleging that innocent employees are being targeted as part of a broader attempt to seize the company's business.
The intricacies of Danone's yogurt-making process and its unique ingredients appear to provide the company with some leverage over the new management, showcasing the complexities involved in such a business transition. The evolving situation, with signs of the new management exerting more control, adds a layer of uncertainty to the company's future in Russia.
Although Kadyrov’s 33-year-old nephew Yakub Zakriev is listed on Russia’s corporate registry as general director of the renamed “Life & Nutrition”, Dutch Danone veteran Charlie Cappetti unofficially fulfils many of the role’s duties, according to people with direct knowledge of the matter, - writes The DairyNews with reference to Financial Times.
Renowned for its intricate yogurt-making process, Danone finds itself in a unique position of influence as it grapples with the complexities of a management transition in Russia. The intricate supply chains for colors, flavors, ferments, and bioplastics required in the production process provide Danone with strategic leverage over the new management.
Since the arrival of the new managers, Danone has become a sought-after entity, with new parties expressing interest in acquiring the company, as confirmed by insiders familiar with the ongoing discussions. The company, guided by Rothschild, the orchestrator of the previous sales process, is actively exploring its options. However, navigating the future of its Russian asset proves challenging due to varying perspectives within the Russian government.
Recent indicators suggest a shift in control dynamics, with the new management asserting authority, particularly in decisions related to product and marketing strategies. Observers note a gradual transition fr om initial appearances of a mere property tour to a more assertive takeover by the new leadership.
Nataliia Shapoval, Chair of the KSE Institute at the Kyiv School of Economics, underscores Danone's delayed exit from Russia as a contributing factor to its current predicament with the Chechens. She highlights that Russia had explicitly signaled its intent to take control of international businesses' assets, violating investor rights well before the actual expropriation. Shapoval suggests that Danone's initial hesitancy to pursue investment arbitrage or execute a timely exit played a role in the subsequent hostage-like situation, wh ere Russia sought to leverage foreign governments through these assets. The complexities of the geopolitical landscape underscore the importance of strategic decision-making for multinational corporations navigating exit strategies in challenging environments.
Danone's slower exit strategy and the geopolitical leverage game played by Russia highlight the complexities and risks faced by international businesses in such situations. It will be interesting to see how the situation unfolds and if Danone can successfully navigate its exit from Russia while protecting its interests.
It's interesting to see the contrasting approaches between Danone and Carlsberg in response to the seizures. Danone's measured statements and efforts to protect its rights without accusing Russia of expropriation indicate a cautious but strategic approach, possibly driven by the belief that a proper match with an approved buyer could still yield some financial return. On the other hand, Carlsberg has condemned the move, alleging that innocent employees are being targeted as part of a broader attempt to seize the company's business.
The intricacies of Danone's yogurt-making process and its unique ingredients appear to provide the company with some leverage over the new management, showcasing the complexities involved in such a business transition. The evolving situation, with signs of the new management exerting more control, adds a layer of uncertainty to the company's future in Russia.
Although Kadyrov’s 33-year-old nephew Yakub Zakriev is listed on Russia’s corporate registry as general director of the renamed “Life & Nutrition”, Dutch Danone veteran Charlie Cappetti unofficially fulfils many of the role’s duties, according to people with direct knowledge of the matter, - writes The DairyNews with reference to Financial Times.
Renowned for its intricate yogurt-making process, Danone finds itself in a unique position of influence as it grapples with the complexities of a management transition in Russia. The intricate supply chains for colors, flavors, ferments, and bioplastics required in the production process provide Danone with strategic leverage over the new management.
Since the arrival of the new managers, Danone has become a sought-after entity, with new parties expressing interest in acquiring the company, as confirmed by insiders familiar with the ongoing discussions. The company, guided by Rothschild, the orchestrator of the previous sales process, is actively exploring its options. However, navigating the future of its Russian asset proves challenging due to varying perspectives within the Russian government.
Recent indicators suggest a shift in control dynamics, with the new management asserting authority, particularly in decisions related to product and marketing strategies. Observers note a gradual transition fr om initial appearances of a mere property tour to a more assertive takeover by the new leadership.
Nataliia Shapoval, Chair of the KSE Institute at the Kyiv School of Economics, underscores Danone's delayed exit from Russia as a contributing factor to its current predicament with the Chechens. She highlights that Russia had explicitly signaled its intent to take control of international businesses' assets, violating investor rights well before the actual expropriation. Shapoval suggests that Danone's initial hesitancy to pursue investment arbitrage or execute a timely exit played a role in the subsequent hostage-like situation, wh ere Russia sought to leverage foreign governments through these assets. The complexities of the geopolitical landscape underscore the importance of strategic decision-making for multinational corporations navigating exit strategies in challenging environments.
Danone's slower exit strategy and the geopolitical leverage game played by Russia highlight the complexities and risks faced by international businesses in such situations. It will be interesting to see how the situation unfolds and if Danone can successfully navigate its exit from Russia while protecting its interests.
