For every company a level of diversification is a very good thing and some companies eventually become global players which means they have operations in every country in the world. The biggest counties tend to have larger operations because of the ability for the population to buy the products. One such global player is Nestle.

In an article by John Revill of Reuters, Swiss based Nestle is one of those global companies wherever you go to a supermarket around the world, you will find their brands. The brands include Nescafe coffee and KitKat and Smarties chocolates, Carnation, Haagen-Daz ice cream, Purina dog and cat food and the list goes on.

After Russia invaded the Ukraine, the European Union imposed sanctions on Russia in a bit to curtail the war. Russia which has 143 million people and has largest oil and gas reserves has been a very desirable country for European companies to do business with and not surprising many European brands could be found and bought in Russia.

Since the sanctions, Russian has tightened control over foreign-owned assets. A 2023 decree signed by President Putin gives Moscow the power to place assets from countries it deems “unfriendly” under temporary administration.

Moscow has used the law to raise cash through forced sales, exit taxes and discounts while rewarding Kremlin-backed insiders.

French supermarket Auchan saw its 230 stores and online business in Russia transferred to L.E.V. Management. The group had 30,000 employees.

Nestle has 6 factories in Russia producing coffee, pet-care and infant formula products. The company had 7,000 employees and generated $2.4 billion in sales. Fortunately for Nestle, Russia is between 1 and 2% of their total global sales.

Governments make decisions and companies have to react to the decisions, do they stay, cut back, hope for the best, try to stay neutral, work with the government, given the time and resources needed to restart the business if the political situation changes. None of the above have easy answers, for they have multiple options and only times says what is the best answer.

There are more questions than answers, till the next time – to raising questions.