Nestlé’s Russian subsidiary says it will honour all obligations to customers, partners and employees, even though a presidential decree has handed control of its assets to an obscure Russian company. According to Nestlé, the move amounts to neither nationalisation nor a change of ownership.

The Russian subsidiary of Swiss food group Nestlé is maintaining its full commercial activities, even though its assets in the country have been placed under temporary administration. This emerges from a statement by Nestlé’s Russian press service, carried by the Russian state news agency TASS, Reuters reports.

“The Nestle Group in Russia is continuing its commercial activities in Russia in full and wishes to state its intention to unconditionally fulfil all obligations to clients, partners, and employees,” the statement reads, according to TASS.

The statement follows a presidential decree issued last week, which transfers temporary control of the Russian assets of Nestlé and French supermarket chain Auchan to L.E.V. Management, a firm about which almost nothing is publicly known. According to the statement, the transfer constitutes neither nationalisation nor a change of ownership. Nestlé also voices confidence that working with L.E.V. Management will help the company keep growing and become more efficient. When the decree was first announced, Nestlé said it was “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”.

Temporary administration has previously led to expropriation
The Kremlin says hostile actions by “unfriendly” countries contributed to its decision. Kremlin spokesman Dmitry Peskov says that, for now, only temporary administration is being considered. In earlier cases, however, temporary administration has frequently paved the way for expropriation by the state, with the assets subsequently passing to people or firms with ties to the Kremlin, Reuters reports. The same legislation was used in 2023 to seize control of the Russian business of French dairy group Danone. In March 2024, Danone was removed from the list of companies under temporary administration after a Russian businessman was reportedly set to acquire the business at a steep discount.

Nestlé operates six factories in Russia, producing coffee, pet food and infant formula. The group has scaled back its activities in the country. According to analyst Jean-Philippe Bertschy of Bank Vontobel, Russia now accounts for around one per cent of Nestlé’s total turnover.

By Maja Løvstrup
Source: Reuters
Photo: Nestlé