A new round of major food companies has been added to the list of U.S. firms that have suspended operations in Russia.
PepsiCo, Coca-Cola, Starbucks and Yum Brands have all announced interruptions to at least some of their operations in Russia, due to its invasion of Ukraine. The actions are taken on principle but are in part reflective of the difficulties that continued operations in Russia will face.
McDonald’s said that it will temporarily close its 847 locations in Russia, while continuing to pay its 62,000 employees. Starbucks is suspending product shipments to Russia, and its licensee there is closing all 130 Russian shops. Yum said that it would close the 70 KFC locations it owns in Russia, but that the approximately 1,000 franchisee-owned restaurants would continue running.
Coca-Cola announced a pullout from Russia, but its major bottler for the region, in which it owns a 21% interest, did not respond to a request for comment from the Wall Street Journal. Coca-Cola imports concentrate into Russia from Ireland.
PepsiCo said it will stop selling soft drinks in Russia but will continue to process salty snacks, milk, cheese and baby formula.
PepsiCo’s ties with Russia are especially deep. It was one of the first major American consumer products to breach the Iron Curtain in the 1950s. Its purchase of a Russian dairy conglomerate in 2011 made it the biggest food & beverage business in the country.
PepsiCo’s Russian business reached $3.4 billion in 2021, making Russia its third-largest market behind the United States and Mexico. However, writing off the Russian business may not have a proportional impact because it doesn’t generate much profit, according to sources quoted by the Journal.
Even if Russian businesses end up generating a profit, it would be in rubles that cannot now be converted into any Western currency, due to war-related sanctions.
