Ukraine Labels Nestle ‘Sponsor Of The War’ For Staying In Russia

The Nestle logo.

(Bloomberg) -- Ukraine's anti-corruption agency has accused Nestle of being an “international sponsor of war” for continuing to sell goods and pay taxes in Russia.

The world's biggest food maker has been added to a list that includes rival consumer companies Mondelez International Inc., PepsiCo Inc. and Unilever Plc, the National Agency on Corruption Prevention told Bloomberg.

“Despite the ongoing Russian aggression against Ukraine, Nestle continues to operate in the aggressor state,” the agency said. The designation is designed to cause reputational harm to businesses but carries no legal consequences.

Nestle has said it stands with Ukraine and its 5,500 staff there. The maker of Maggi stock cubes has stopped advertising and investing capital in Russia and has ceased selling the vast majority of its products, such as KitKats, in the country. Nestle isn't contravening any sanctions by staying in Russia. The company didn't comment on the agency's decision.

The Swiss company and Unilever have pledged support for Ukraine, but continue to sell products like ice cream and stock cubes in Russia.

When Nestle announced the suspension of exports and imports to Russia, except for “essential and basic goods for the local people,” it gave the mistaken impression that it planned to leave, according to Oleksandr Novikov, the head of the corruption prevention agency.

Western multinationals have been under public pressure to turn away from the Russian market following President Vladimir Putin's invasion of Ukraine in 2022. Russia plans to spend around a third of its government budget on the war next year and taxes paid by companies contribute to that. But exiting the country could mean handing over assets to the state or local investors connected to it.

Dairy group Danone had planned to sell its Russian unit but in July Russia seized its assets there. Carlsberg's local Baltika business suffered a similar fate.

“There is no way around the fact that they have stolen our business in Russia, and we are not going to help them make that look legitimate,” Carlsberg's new Chief Executive Officer Jacob Aarup-Andersen said on a media call this week for third-quarter sales.

The Ukraine Solidarity Project in July installed a billboard outside Unilever headquarters in London which said the group was helping fund Russia's war in Ukraine. Chocolate maker Mondelez faced a boycott in the Nordics.

Nestle has six factories in Russia, according to its last annual report, including a confectionery site. Russia generated around 2% of its sales in 2021. No 2022 accounts were available on the Russian tax service website, but consumer goods peers like PepsiCo saw their businesses there boom in 2022.

--With assistance from Daryna Krasnolutska.

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