Kremlin Assumes Control Over Nestlé Russia Operations
The Russian government has transferred the control of Nestlé's Russian business to a state-appointed administrator while maintaining ownership with the Swiss company. This development followed a decision by the Kremlin to place Nestlé Russia and its subsidiary Nestlé Kuban under temporary management by LEV Management, a Moscow-based entity. This move, as dictated by a decree on Russia's legal portal, restricts Nestlé from managing or making decisions regarding these assets during the period of administration.
In response to the Kremlin's unexpected decision, Nestlé has expressed its commitment to protect its rights and ensure business continuity for its stakeholders, specifically emphasizing its employees' interests. The company released a statement acknowledging the Russian presidential decree but declined further comment.
This action is part of a broader pattern by the Russian government to exert control over foreign assets following the Ukraine invasion. A decree by President Vladimir Putin in 2023 empowers Moscow to administer assets from countries classified by Russia as 'unfriendly'. Prior instances of this policy have targeted Western companies, including Danone and Carlsberg's Russian operations.
Nestlé's local workforce in Russia is considerable, comprising approximately 7,000 employees, with the company's sales in the country in 2021 amounting to around CHF2 billion (€2.1bn). Following the Ukraine conflict, Nestlé suspended various non-essential business activities in Russia while prioritizing the supply of essential products.
In related developments, the Kremlin has also seized control over the Russian operations of the French supermarket chain Auchan and the French retailer Leroy Merlin. Auchan employs about 30,000 staff and runs 230 stores in Russia but has not yet issued a statement regarding this move.
The latest actions by the Kremlin reflect its continued strategy to manage foreign enterprises operating in Russia, a complex situation that international businesses must navigate.
