RUSSIA – World’s largest dairy exporter, Fonterra has announced that it will completely exit the Russian market following the country’s invasion of Ukraine.  

Fonterra had in February halted exports to Russia but maintained its operational status in the country, a situation which has now changed.  

“Following careful consideration of the impact on our people and our long-term plans for the Russian market, we will now close our office in Moscow, re-deploying staff where possible, and withdraw from our joint venture Unifood,” CEO Miles Hurrell said in a statement 

Fonterra clarified it had been an exporter of a “small amount of product” to Russia, mainly butter, amounting to 1% of its annual shipments. 

“Our first step following Russia’s invasion of Ukraine was to establish the safety of the team in Russia, and our priority through this process continues to be doing the right thing by our people,” Hurrell added. 

“We then suspended shipment of product to Russia while we assessed the impact of economic sanctions and discussed our long-term plans with our customers and joint-venture partner.” 

Commenting on the financial implications of the Russia withdrawal, Hurrell expressed confidence that given the current strong demand for New Zealand dairy the company will be able to re-allocate its products to other markets. 

Nestlé vows to stay in Russia despite Ukrainian PM intervention 

Meanwhile, Swiss food group Nestlé has refused to yield to pressure to pull out of Russia claiming that it had moral responsibility to keep providing ordinary citizens access to nutrition. 

Recent calls for the company to completely pull out of Russia came from the highest possible quarters, the Ukranian Prime Minister’s office 

Prime Minister Denys Shmyhal revealed in a tweet that he spoke with Nestle CEO Mark Schneider about the ‘side effects’ of staying in the Russian market.  

“Unfortunately, he shows no understanding,” Shmyhal complained. “Paying taxes to the budget of a terrorist country means killing defenseless children & mothers [sic]. Hope that Nestle will change its mind soon.” 

 In response, Nestlé said that its operations in Russia were “focused on meeting the needs of the local people,” adding that it also had a “responsibility toward our more than 7,000 employees in Russia — most of whom are locals” 

Nestlé typically earns EUR1.6 billion of sales from Russia. It has stripped down much of its Russian operations to basic necessities and says it doesn’t make a profit from its remaining activities in the country.  

 Similarly, Unilever has suspended all imports and exports of its products into and out of Russia but will continue to supply everyday essential food products such as milk, baby formula and baby food.  

Danone, too, has suspended investments in Russia, where it generates around 6% or EUR1.4 billion in sales and employs around 8,000 staff, but will continue selling dairy and baby food in the country via the popular local brand Prostokvashino.  

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