Unilever has reportedly secured the Kremlin’s approval to divest its assets in Russia, marking a significant strategic shift for the company. According to the local Russian news outlet, RBC, this decision allows Unilever to exit the Russian market altogether.
The report, released on September 4, indicates that a government subcommittee approved the sale at the end of August. Unnamed sources informed RBC that the valuation of Unilever’s Russian assets, which include its well-known ice cream brands, is estimated to fall between Rbs35bn and Rbs40bn (approximately $394 million to $449 million). Furthermore, the buyer has been identified but not publicly disclosed.
Last month, it was also reported that the Federal Antimonopoly Service sanctioned the agreement, underscoring the deal’s progression towards completion.
At this moment, Unilever has not provided a comment on the situation.
In July, when Unilever reported its first-half financial results, the company indicated that its Russian operations had net assets valued at around €600 million ($665 million) as of June 30, which included four manufacturing facilities.
Concurrently, Unilever had announced plans to separate its ice cream business from its other operations, intending to create a more focused and flexible entity. Despite this, news emerged in May suggesting Unilever would continue producing ice cream in Russia even after the demerger.
Consumer goods companies have faced immense pressure to withdraw operations from Russia due to its ongoing invasion of Ukraine. Unilever has come under scrutiny, featured on a list labeled “sponsors of war” by Ukraine’s National Security and Defense Council, following reports that the company’s profits in Russia increased notably from 2021 to 2022.
In July of the previous year, Reginaldo Ecclissato, Unilever’s chief business operations and supply chain officer, stated that the company felt it was crucial to support its employees in Russia amid the conflict. Regarding the potential sale of the business, he emphasized the difficulty in finding solutions that would not inadvertently benefit the Russian state while also ensuring the welfare of Unilever’s personnel.
Since the war began, Unilever has implemented stringent restrictions on its operations in Russia, ceasing all capital flows into and out of the country and halting the import and export of its products.
As developments unfold in the food and beverage industry, including the potential impact of these moves on global food and drink business strategies, staying attuned to shifts in consumer trends will be vital for stakeholders in the sector.
