Global companies with exposure to Russia braced for sanctions impact

Some of the world's largest consumer-facing companies - from Nestlé and Danone, to Coca-Cola HBC, Volkswagen and Renault - are preparing for western sanctions on Russia over the Ukraine crisis.

International companies with exposure to Russia are preparing for the West to impose fresh sanctions on the country after an escalation in the Ukraine crisis.

The world’s largest food company Nestlé – which has factories in Russia – said it is “closely monitoring” the situation and has business continuity plans “in place” that can be “activated as needed”.

“The safety and protection of our employees remains our highest priority,” Nestlé said. “We will not speculate on any potential sanctions,” it said.

As of 2020, the company had six factories in Russia, including plants making confectionery and drinks. Its 2020 sales from Russia were worth about $1.7bn.

The US is expected to announce new sanctions after the EU and the UK set out initial packages of targeting Moscow after Russia’s recognition of two self-proclaimed republics in eastern Ukraine.

Russian carmaker Avtovaz, controlled by France's Renault, is seeking alternative supplies of electronic chips in case US sanctions curb deliveries. Volkswagen said it had noted the escalation of the situation “with great concern” and said it hopes the conflict will be quickly resolved, peacefully and on the basis of international law.

Coca-Cola HBC, the bottling giant with Russian operations, said it learned lessons from its experience during the 2014 Russian-Ukrainian conflict. "We have contingencies in place for all scenarios, including alternative sourcing, so that we can act swiftly to whatever happens," it said.

The soft drinks company, which operates in 29 European and African countries and counts Russia and Nigeria as its two biggest markets said: "We ensure that we have the right level of stocks in our markets to avoid disruptions."

Global dairy giant Danone, which controls Russian brand Prostokvashino, said it is “monitoring the situation”.

Meanwhle, Germany said it needs to reduce its “one-sided” dependence on Russian gas. German economy minister Robert Habeck said Kremlin officials had shown themselves to be “geopolitically unreliable” or “playing a calculated game”.

He confirmed that the supply security report prepared by his ministry that is part of the Nord Stream 2 certification process, has been withdrawn and a new assessment will be made. As long as this process is ongoing, the pipeline cannot go online. 

- Reuters and Bloomberg