Sector News

Tetra Pak abandons Russian operations as sanctions strangle supply chains

July 31, 2022
Chemical Value Chain

Tetra Pak is discontinuing its remaining operations in Russia. The decision is based on the impact of export restrictions in Russia, which has led to an “unsustainable” supply chain.

“Over the last few months, there have been a series of sanctions imposed on Russia, including the prohibition of sale, supply or export (directly or indirectly) of certain products and services relevant to Tetra Pak’s business, which have significantly affected the supply chain of our Russian operations,” a Tetra Pak spokesperson tells PackagingInsights.

“The cumulative impact of such restrictions on exports to Russia has now led to an unsustainable supply chain, as a result of which the company is left with no other option than to exit the country.”

Minimizing damage
The spokesperson explains that Tetra Pak’s exit will impact various stakeholders.

“We have taken a decision to divest the Russian business to local management, to enable business continuity for customers and suppliers, minimizing the impact on employees, and continuing to support consumers’ access to essential food.”

“As per the divestment agreement under discussion, all existing contracts with customers will remain unchanged and will be under the sole responsibility of the management of the new company upon completion of the transaction,” they add.

In March, we reported on how major paper packaging groups and forestry standards authorities were freezing their operations in Russia and Belarus in a show of protest against the invasion of Ukraine. The divestments were expected to deliver a heavy blow to the Russian economy, further threaten global price rises and degrade environmental sustainability efforts.

In May, Stora Enso also pulled out of Russia, divesting its three corrugated packaging plants in the country. The company said that local ownership and operations would provide a more sustainable long-term solution for these businesses and their respective employees due to uncertainties in the Russian market.

Building on previous decisions
The move follows the company’s earlier decision to suspend all new investments and projects in Russia, restricting its operations to support customers for essential food items only, in line with its held commitment to the principle of people’s right to access safe food.

When asked why the company did not fully halt operations in Russia sooner, the spokesperson says: “Soon after the invasion, we suspended all new investments and projects in Russia, scaling down our operations to support customers for essential food products only, such as milk and children’s food.”

“This was in line with our company’s purpose of enabling food access and our strongly held commitment to the principle of all people’s right to safe food, irrespective of the geography they are based in. Even the UN declaration on human rights supports this philosophy, with the World Food Programme actively working to ‘prevent the use of hunger as a weapon of war and conflict.”

Besides donating €10 million (US$10,1 million), the company says it committed all its Russian earnings toward humanitarian aid for Ukraine since the start of the conflict.

“Tetra Pak’s exit marks the end of 62 years of presence in Russia. The company would like to thank its customers and partners for their valuable support and its employees for their dedication and service throughout these years,” concludes the spokesperson.

By Natalie Schwertheim

Source: packaginginsights.com

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