Nestlé is now assessing all feasible legal and operational options following Russian President Vladimir Putin's signing of a decree that places the Swiss food company's local assets under temporary external management.
On Friday, Nestlé stated it was considering all available options to safeguard its rights following the Kremlin's decision to seize control of the Swiss food company's Russian operations, the most recent action targeting a Western firm since the war in Ukraine started.
The company that produces Nescafé coffee and KitKat chocolates stated it had taken note of the decision, announced in a presidential decree on Thursday, and was evaluating the situation, Reuters reported.
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"Nestle is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees," the company said in a statement.
Since the beginning of the Ukraine war in 2022, Russia has increased its control over assets owned by foreign entities. In 2023, a decree signed by President Vladimir Putin granted Moscow the authority to place assets from nations it considers "unfriendly" under temporary administration.
Moscow has also leveraged the law to generate revenue via forced sales, exit taxes, and discounts, while favouring insiders loyal to the Kremlin.
Also affected by Thursday's decree was the French supermarket group Auchan, with its Russian assets placed under the temporary management of L.E.V. Management.
Kremlin spokesperson Dmitry Peskov said politics played a role in the decisions. Without naming Switzerland and France, he claimed they were " actively involved in military actions" against Russia, including "strikes by the Kyiv regime on our peaceful economic infrastructure."
Nestle operates six factories in Russia that manufacture coffee, pet care, and infant formula products. In 2021, the last year it disclosed figures, it generated approximately 2 billion Swiss francs ( $2.4 billion) in sales in Russia and employs around 7,000 people there.
The sales figure represents roughly 2% of Nestle's overall sales, though analysts believe this contribution has dropped following the company's reduction in activities in the country.
According to Bank Vontobel analyst Jean-Philippe Bertschy, Nestlé has halted most sales, non-essential imports and exports, advertising, and capital investment, estimating that Russia now accounts for roughly 1% of the company's total sales.
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Nestle has defended its ongoing operations in Russia by claiming that, as a food producer, it provides essential items.
In 2023, Moscow assumed control of Danone's Russian operations and Carlsberg's stake in a local brewery.
In March 2024, Danone was taken off the list of assets under temporary Russian state control, following reports that a Russian businessman with known pro-war ties intended to acquire the company at a significant discount.
Carlsberg sold its Baltika Breweries shares in December 2024 as part of a management takeover.
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