Nestlé faces pressure in Russia as company seeks administration of its subsidiaries

Nestlé faces increasing pressure in Russia, as a local company, KS Logistika, has urged President Putin to place five of Nestlé's Russian subsidiaries under temporary administration. This action, reported by the Russian business newspaper "Kommersant," could signal a potential first step toward a future change in ownership. The Russian government is reportedly considering this demand and is expected to make a decision by the end of the year.

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Nestlé has not been contacted by state authorities on this matter.

KS Logistika's justification for the request includes Nestlé's alleged failure to expand production capacity and halt exports of Russian-manufactured goods. These reports have already impacted Nestlé's stock, which saw a 1.6 percent decline on Monday, making it the weakest performer in the Swiss SMI index. Analysts at JPMorgan have acknowledged the possibility of Nestlé losing its Russian business, estimating a potential 3 to 4 percent reduction in earnings per share if forced to sell with minimal proceeds.

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The factories and offices are continuing to work and the company is fulfilling its obligations.

In response, a Nestlé spokesperson confirmed that the company has not been officially contacted regarding the matter. Operations at its six Russian production sites and offices continue as usual, and the company remains committed to fulfilling its obligations. Nestlé maintains that a withdrawal from Russia is not currently under consideration. The company generates approximately 2 percent of its total revenue from Russia, producing goods such as coffee, confectionery, baby food, and pet food. Nestlé, along with other Western consumer goods companies like Barry Callebaut, L'Oréal, and Beiersdorf, continued operations in Russia after the 2022 invasion of Ukraine, citing a commitment to supplying essential food products.

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A withdrawal from the country is not an issue at the moment.