The Russian government has assumed control of assets held by French dairy producer Danone and Danish brewing company Carlsberg, in a move initiated by Vladimir Putin to fund his unlawful campaign in Ukraine.
Russia will be “temporarily” managing shares associated with Danone Russia and Baltika, a subsidiary of Carlsberg. This action comes as part of a presidential edict targeting firms from nations deemed “unfriendly,” and is authorized by Putin himself.
In response, Danone announced it was closely examining the development and “making preparations to take all essential steps to safeguard its shareholder rights in Danone Russia and ensure the uninterrupted operation of its business, keeping the best interests of all stakeholders, especially its employees, in mind.”
Despite Putin’s Ukraine invasion, Danone was among the few Western companies to persist in Russia. It justified its decision last year, emphasizing its “duty towards the individuals we provide food to”.
Baltika, a top brewer in Russia, holds about 30% of the market share. In March, Carlsberg made it public that it intended to divest completely from its Russian operations, where it had a workforce of 8,400.
The international brewing giant revealed it had located an anonymous buyer for its business a month ago, more than a year post its decision to withdraw from the market due to the Ukraine crisis.
In a statement, Carlsberg mentioned, “In light of the presidential decree, the future of this sale is now significantly uncertain. The Carlsberg Group has yet to receive formal notification from Russian authorities about the presidential directive or its implications for Baltika Breweries.”
Danone, one of the few international companies to have remained in Russia since the Ukraine conflict started, announced in October plans to exit most of its business operations. Subsequently, Danone stated it would surrender its dairy and plant-based operations in Russia, maintaining only its infant nutrition division.
The firm suggested this move could lead to a write-off of up to €1bn (£860m).
Being one of the most exposed consumer goods companies to Russia, where it sells yoghurt and other dairy items and employs about 8,000 workers, Danone is watched closely.
Reflecting on its choice to persist in Russia last year, CEO Antoine de Saint-Affrique mentioned it was “quite simple to be swept up in binary thinking and populist stances, but ultimately our reputation hinges on our actions”.
Several notable Western corporations have exited Russia since Moscow initiated its Ukraine invasion in February the previous year.
