Nestlé assesses options as Russia places business under external administration

Nestlé is assessing its options after Russia placed its local business under temporary external administration. The development adds to the food industry’s challenges in navigating the market following the invasion of Ukraine. 

The Swiss food group confirmed the move on September 18, following a Russian presidential decree published the previous day. It said it would take steps to protect its rights and maintain business continuity, with particular attention to employees. 

In its brief announcement, Nestlé said it was “assessing the situation and its options.” 

The company has not announced a sale of its Russian businesses or withdrawal from the country. Its statement also gives no estimate of the financial impact or details of how the administration will affect production, suppliers, or distribution.

Facing costly departures

The development follows earlier interventions affecting Danone and Carlsberg, both of which subsequently sold their Russian businesses. 

Danone began the process of transferring its Russian Essential Dairy and Plant-based business in October 2022. By July 2023, it had lost management control and removed the business from its consolidated accounts.

Nestlé’s Russia uncertainty highlights the risks facing foreign food companies.

The French group later reported a total accounting loss of €1.2 billion (US$1.4 billion) associated with the business.

In May 2024, Danone completed its sale to Vamin R after obtaining Russian regulatory approvals.

Carlsberg also encountered state intervention during its attempt to leave Russia. Authorities placed its Baltika brewing business under temporary management in July 2023, disrupting the Danish group’s planned exit.

The multinational brewer eventually sold Baltika in December 2024. The agreement also addressed legal and intellectual property disputes and included the return of Baltika’s interests in Carlsberg’s businesses in Azerbaijan and Kazakhstan.

Meanwhile, Heineken sold its Russian operations to Arnest Group for €1 (~US$1.2) in August 2023, taking a €300 million (US$345 million) loss.

That transaction covered seven breweries and included a commitment from the buyer to retain approximately 1,800 employees for three years. Heineken had announced its intention to leave in March 2022, but completing the exit took almost 18 months.

Regarding Nestlé, its statement makes business continuity a priority, but does not explain whether purchasing, payments, or supply arrangements will change.