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Mass exodus: Big brands balance Ukraine support with critical F&B supplies in Russia

March 13, 2022
Consumer Packaged Goods

A host of major corporations such as McDonald’s, PepsiCo, Starbucks, Coca-Cola, Heineken, Unilever, KFC, Yum! Brands and Danone are faced with a humanitarian dilemma as they assess their operations in Russia amid the war with Ukraine.

As solidarity tributes stream in, these food and beverage giants try to navigate the challenging choice between supporting Ukraine or leaving employees destitute and causing a shortage of infant nutrition in Russia.

The CEO of PepsiCo Ramon Laguarta, for example states: “We have been operating in Russia for more than 60 years, and we have a place in many Russian homes. Pepsi-Cola entered the market at the height of the Cold War and helped create common ground between the US and the Soviet Union.”

“However, given the horrific events occurring in Ukraine, we are suspending the sale of Pepsi-Cola and our global beverage brands in Russia, including 7Up and Mirinda. We will also be suspending capital investments and all advertising and promotional activities in Russia,” Laguarta explains.

PepsiCo will continue operations in Russia by offering essential products such as milk and dairy products, baby formula and baby food, among others, in order to “stay true to the humanitarian aspect of its business”.

Meanwhile, France-based dairy products giant Danone, which has a significant infant nutrition portfolio, will close operations at one of its two factories in Ukraine but will continue to sell products in Russia.

Unilever has paused all imports and exports into and out of Russia, and will stop its advertising there. The company will, however, continue supplying essential food and hygiene products made in Russia.

Ukrainian suspension initiated for safety reasons

PepsiCo will continue to provide aid on the ground to assist Ukrainian refugees in neighboring countries.

“By continuing to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and uncertainty ahead,” says Laguarta.

Heineken will stop the production, advertising and sale of the brand in Russia.

The beer giant is now assessing the strategic options for the future of its Russian operations. “We see a clear distinction between the actions of the government and our employees in Russia,” says Dolf van den Brink, CEO of Heineken.

“We will take immediate steps to ring-fence our Russian business from the wider Heineken company to stop the flow of monies, royalties and dividends out of Russia. Heineken will no longer accept any net financial benefit derived from our Russian operations. This is in addition to the earlier announced stop on all new investments and exports to Russia,” Van den Brink states.

“We hope very much that a path for a peaceful outcome emerges in the near future,” he says.

Tributes and support stream in for war recovery
McDonald’s has provided immediate financial support to its team in Ukraine. Yum! Brands is suspending operations of KFC company-owned restaurants in Russia and will suspend all Pizza Hut restaurant operations in Russia.

“McDonald’s has decided to temporarily close all our restaurants in Russia and pause all operations in the market. We understand the impact this will have on our Russian colleagues and partners, which is why we are prepared to support all three legs of the stool in Ukraine and Russia. This includes salary continuation for all McDonald’s employees in Russia,” says CEO Chris Kempczinski in his official email to employees and franchisees.

The Ronald McDonald House Charities (RMHC) Russia will continue its full operations, just as RMHC Ukraine is partnering with local hospitals and providing humanitarian aid throughout the country.

“We are continuing to pay full salaries for our Ukrainian employees and have donated US$5 million to our Employee Assistance Fund, and continue to support relief efforts led by the International Red Cross in the region,” says CEO Chris Kempczinski in his official email to employees and franchisees.

“In Poland and many other markets across Europe, our system has literally opened their homes, their hearts, and their restaurants,” says Kempczinski.

McDonald’s is experiencing disruptions to its supply chain along with other operational impacts. Yum! Brands’ suspension of operations in Russia builds on the company’s decision to suspend all investment and restaurant development in Russia and redirect all profits from operations in Russia to humanitarian efforts.

“We remain focused on the safety of our people in the region and will continue to support our teams in Ukraine while evaluating the ways Yum! Brands can make a positive impact in the region,” the company states.

Kevin Johnson, president and CEO of Starbucks stated in a letter to the company’s partners: “We condemn the horrific attacks on Ukraine by Russia and our hearts go out to all those affected. We continue to watch the tragic events unfold and we have decided to suspend all business activity in Russia, including shipment of all Starbucks products.”

The company’s licensed partner has agreed to immediately pause store operations and will provide support to the nearly 2,000 partners in Russia who depend on Starbucks for their livelihood.

The Coca-Cola Company announced yesterday that it is suspending its business in Russia.

“Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine. We will continue to monitor and assess the situation as circumstances evolve,” a company statement says.

By Inga de Jong


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