Nestle 'assessing options' after Putin places Russian assets under state control

File photo: Russian President Vladimir Putin at the Kremlin in Moscow

Russian president Vladimir Putin has placed the Russian assets of Swiss food giant Nestle and French supermarket group Auchan under temporary administration, according to a presidential decree published on Thursday.

Nestle has said that they are assessing the situation and their options.The assets have been transferred to the temporary management of Russian company L.E.V. Management. The decree also covers assets linked to FM Logistics and the Russian business of former Leroy Merlin, now operating as Lemana Pro.The move affects two Nestle entities, Nestle Russia and Nestle Kuban, with shares held by Nestle's Swiss and German subsidiaries brought under the temporary management arrangement.

Auchan's Russian subsidiary has also been placed under the same management.Nestle said on Friday that it was assessing the situation and its options, with a particular focus on its employees. The company operates six production sites in Russia and continues to manufacture products including coffee, confectionery, baby food and pet food there.Nestle had scaled back its Russian operations after Moscow launched its full-scale invasion of Ukraine in 2022.

It halted investment, stopped advertising and withdrew several brands, including KitKat and Nesquik, while continuing to produce essential food products.Auchan, meanwhile, retained its Russian business after the invasion and placed its subsidiary under local management in 2023.

Moscow's growing control over Western assets

Russia has increasingly used temporary administration to take control of assets belonging to companies from countries it considers "unfriendly".

A decree signed by Putin in 2023 gave Moscow the mechanism to place such assets under temporary management.The measure has previously been used against Western companies including French food group Danone and Danish brewer Carlsberg, whose Russian operations were subsequently sold.The latest move comes after reports that a Russian company, KS Logistika, had asked Putin to place Nestle's Russian assets under temporary administration. The request reportedly cited Nestle's decision not to expand production capacity in Russia and to halt exports from its Russian factories. Reuters said it could not independently verify the information.Nestle generated about 2% of its global sales in Russia before the war, while the company currently employs thousands of people there. The company said it is now evaluating its options following the Kremlin's decision.