Russian authorities have temporarily nationalized the assets of two significant food and beer producers. In accordance with a presidential decree, the Russian Federal Property Management Agency now holds all foreign shares of the French-owned Danone Russia and the Danish Carlsberg Group-owned Baltika Breweries.
Both international behemoths have disclosed intentions to sell their operations in Russia. According to the declaration posted on the official government website on Sunday, Produits Laitiers Frais Est Europe transferred over 83 million shares of Danone Russia under state administration. Nearly all of the shares included in the registered capital of Baltika Breweries were likewise covered by the ruling.
In the midst of the dispute between Russia and Ukraine, the French food firm Danone recently came under pressure from consumers and activists to leave the Russian market. In its initial justification for staying, the firm claimed that it owed a duty to “the people we feed, the farmers who provide us with milk, and the tens of thousands of people who depend on us.”
With 13 plants and 7,200 workers, the company’s operations in Russia accounted for 5% of its approximately €24 billion ($27 billion) in annual global sales. According to reports in Western media, Danone revealed in October 2022 that it was looking to sell its operations in Russia in a deal that might result in a loss of up to €1 billion.
RIA Novosti reported that Danone wanted to retain its power to repurchase shares in its Russian operations, as well as a share of up to 25% of the company’s capital and a position on the board. According to the news agency, the corporation selected about 20 prospective purchasers for its Russian assets by the end of February.
According to RIA Novosti, in June it was claimed that the transaction wouldn’t be finalised until the first half of 2024 because Danone was allegedly holding up the process.
In March, Carlsberg Group declared that it was ceasing to make investments in its Russian companies.
One of the biggest breweries in Russia was Baltika Breweries. All international players engaged in the Russian beer market, including the Carlsberg Group, the Dutch Heineken Company, and the Belgian Anheuser-Busch InBev, were reportedly lowering their production there in 2022 and parallel to this local firms were growing.
Despite a record-breaking wave of sanctions imposed against Russia by the US and its allies, data published by the Kiev School of Economics in April shows that less than 10% of foreign companies had pulled out more than a year after the start of the conflict between Moscow and Kiev.
