Russian President Vladimir Putin issued a decree on Thursday placing the Russian assets of Nestlé (Switzerland) and Auchan (France) under temporary management. This move, announced through an official statement, comes as Russia intensifies control over foreign-owned assets since the onset of the Ukraine war in 2022.
The assets will now be overseen by L.E.V. Management, a company established in Moscow in 2024, with a registered capital of merely 15,000 rubles (approximately $177) and reportedly only one employee. Prior to this decree, L.E.V. Management was largely unknown to the public, according to reports.
Nestlé Continues Operations in Russia
Under existing regulations enacted by Putin in 2023, Moscow is empowered to assume temporary control of assets from countries deemed “hostile.” This mechanism has previously been utilized to exert control over the Russian subsidiaries of firms such as Danone and Carlsberg.
Nestlé has maintained its operations within Russia, arguing that as a food producer, it provides essential goods. According to the Russian newspaper “Kommersant,” the decree is a response to Nestlé’s decision to halt production expansion and suspend exports from its Russian facilities.
In response to the recent developments, Nestlé announced it is exploring all options to protect its rights. The Swiss company, known for products like Nescafé coffee and KitKat chocolates, stated it is committed to taking all necessary measures to ensure business continuity for its stakeholders, especially its employees. Following the decree, Nestlé shares fell by 1.5% at the Zurich stock exchange.
Nestlé operates six factories in Russia, producing coffee, pet food, and infant formulas. The company reported sales of around 2 billion Swiss francs (approximately $2.4 billion) in Russia for 2021, the last year for which figures are available, employing about 7,000 individuals in the country. This revenue represented about 2% of Nestlé’s total sales, though analysts suggest this contribution has diminished as the company reduced its activities in Russia.
Jean-Philippe Bertschy, an analyst at Bank Vontobel, indicated that Nestlé has significantly curtailed most non-essential sales, imports, exports, advertising activities, and capital investments, estimating that Russia currently contributes around 1% to the group’s sales.
Auchan’s Operations in Russia
Similarly, Auchan’s Russian assets are now placed under the temporary management of L.E.V. Management. The French supermarket group operates 230 stores and an online business in Russia, employing approximately 30,000 people. Auchan declined to comment on the situation.
Historically, temporary management has often preceded state expropriation, with assets transferred to individuals or companies with ties to the Kremlin. In light of tightening sanctions, many Western companies have chosen to sell their assets in Russia or entrust local managers to comply with Moscow’s demands. However, several major firms, including PepsiCo Inc., Mondelez International Inc., and Raiffeisen Bank International AG, continue operations in Russia despite increasing restrictions, albeit on a reduced scale.
