Danone said it thought this was the best way to keep its employees, customers, and business partners happy in the long run.
During the first nine months of 2022, the EDP Russia business made up about 5% of Danone’s net sales and hurt the company’s like-for-like sales growth and operating margin. Up to €1 billion could be written off because of the deal.
Once the deal is done, which will depend on regulatory approvals, Danone’s EDP Russia business will no longer be a part of EDP. Danone’s top priority is still to treat its local employees, customers, and business partners with care and respect, the company said.
Soyuzmoloko’s general director, Artem Belov, said that Danone put out this statement because it is a public company and has to let investors know what it plans to do.
There are no plans yet.
“Right now, it’s not clear how or when this plan [to leave Russia] will be carried out, whether it’s the transfer of management or the search for a strategic investor,” he said.
Soyuzmoloko says that Danone was the largest milk processor in Russia in terms of money last year. It made a net profit of 122.7 billion rubles, which is about $1.97 billion. The company has 13 dairy factories in Russia. They make a wide range of dairy products under the names Prostokvashino, Activia, Actimel, Rastishka, Danissimo, Danone, BioBalance, Tyoma, and Alpro.
According to the Russian newspaper Kommersant’s sources, Danone’s decision to leave Russia was related to increased pressure on the company’s global office to cut ties with the country because of the ongoing war in Ukraine.
It will change the range of products
Soyuzmoloko said that the decision won’t affect customers in Russia because Danone’s factories there will keep running as usual.
On the other hand, Kommersant warned that the EDP’s range of products might get smaller after the business was given to new management. One example is that Actimel is in danger. This product was made by Danone’s R&D department, which also got a patent for it. It is also not clear if Danone will let some international brands like Activia, Danone, and Alpro be sold in Russia, Kommersant said.
Belov said that when the Finnish dairy company Valio left Russia in 2022, it gave the rights to the Viola brand to the person who bought its business there.
