Danone will shed its dairy and plant-based business in Russia in a move set to cost the company EUR1bn (US$0.97bn).
The Paris-based food giant said its essential dairy and plant-based (EDP) business in Russia made up around 5% of its net sales in the first nine months of this year.
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The move will “ensure long-term local business continuity, for its employees, consumers and partners,” it said in a statement.
Danone has more than a dozen factories in Russia, where it sells products under brands including Activia yogurt, Nutrilon infant formula and Prostokvashino milk. EDP forms the majority (90%) of its Russia activities, the rest being what Danone calls specialised nutrition.
The Alpro and Activia brands owner intends to continue operating its specialised nutrition business in Russia, which includes baby formula.
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In March, Danone halted its investment in Russia in response to the invasion of Ukraine but maintained its manufacturing and distribution of products “to still meet the essential food needs of the local population”.
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By GlobalData“We are all deeply affected by what we are seeing every day since the invasion of Ukraine,” general secretary Laurent Sacchi said in March. “Danone and all its employees express their solidarity with the people who are now suffering the atrocities of war.”
Today, Danone said operating in Russia had become increasingly difficult and the move was necessary to ensure the long-term sustainability of the EDP business.
Danone would not confirm further details of its exit or whether the business would be taken over by local management, calling it a “transfer (of) effective control”. In March, dairy major Arla sold its Russia operation to the family of local management, who planned to continue to run the business with the current workforce.
Unilever also halted investment in Russia in March but maintained its supply of “everyday essential food and hygiene products”.
Likewise, Milka chocolate maker Mondelez International decided to focus on selling “basic offerings” in the country. Yesterday, Mondelez CEO Dirk Van de Put defended his company’s position to continue business in Russia.
Van de Put told Yahoo the company was apolitical, and had around 3,000 employees and 30,000 suppliers in Russia. He said it was “a bit of a harsh decision to leave all that overnight”. He added Mondelez is “seeing what happens”.
