Russia places Nestle business under temporary administration

RUSSIA – The Russian government has placed Nestle’s Russian business under temporary administration alongside French supermarket chain Auchan, following a presidential decree signed by Vladimir Putin. 

The decree, published on Russia’s official legal portal, transfers the Russian assets of Nestle and Auchan to temporary management by AO L.E.V. Management. Russian reporting said the company was registered in Moscow in 2024 with authorised capital of 15,000 rubles (US$177) and activity.  

Nestle said it had taken note of the decree and was assessing the situation and its options. The Swiss food group said it remained committed to protecting its rights and maintaining business operations for its stakeholders, particularly employees. Reuters reported that Nestle has more than 7,000 employees and six factories in Russia.  

“Nestle is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees,” the company said. 

Nestle has operated in Russia since the 1990s but reduced its activities after Russia’s invasion of Ukraine in 2022. The company suspended some brands and halted non-essential imports and exports, advertising and capital investment, while continuing to produce what it described as essential and everyday food products. 

Russia accounts for a small share of Nestle’s global business. The company previously said the market generated about 2% of global sales, equivalent to roughly 2 billion Swiss francs annually. 

Growing state control 

The action against Nestle and Auchan comes as Moscow has increased state control over assets belonging to companies from countries it considers “unfriendly.” (Reuters) 

Since 2023, Russia has used a temporary management mechanism to take control of foreign-owned assets. Companies affected have included Finnish utility Fortum, French food producer Danone and Danish brewer Carlsberg. 

Temporary administration has in some cases been followed by transfers of assets to Russian buyers approved by the authorities. Danone and Carlsberg briefly regained control of their assets before being required to sell them to Russian companies. 

The Kremlin has also tightened conditions for foreign companies seeking to exit Russia. Transactions involving investors from “unfriendly” countries require sellers to accept a discount of at least 60%, alongside a special exit tax. 

In August, Putin signed a law allowing Russian courts to block foreign investors that left the country after the 2022 invasion of Ukraine from buying back assets they had sold. 

The Nestle action comes alongside the transfer of Auchan’s Russian business to L.E.V. Management. Auchan has continued operating in Russia despite the post-2022 restrictions. 

Nestle’s response indicates that the company is reviewing the decree and its legal and business options while seeking to maintain continuity for its employees and other stakeholders.  

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