Kremlin Seizes Control of Nestle's Russian Business, Company Weighs Options

Nestle said it is weighing all options to protect its rights after the Kremlin issued a presidential decree on Thursday to seize control of the Swiss food giant's Russian business. The company, which makes Nescafe coffee and KitKat chocolates, stated Friday it was assessing the situation and is committed to ensuring business continuity for its employees and stakeholders.

Kremlin Tightens Grip on Foreign Assets

The move places Nestle's Russian assets under "temporary administration," a mechanism established by a 2023 decree signed by President Vladimir Putin. This law grants Moscow the power to take control of assets owned by companies from countries it deems "unfriendly." The decree on Thursday also targeted the Russian operations of French supermarket group Auchan.

This action follows a pattern of asset seizures since 2022, which have often preceded state expropriation and the transfer of businesses to Kremlin-linked individuals or entities. According to the Kommersant newspaper, a company named KS Logistika had formally requested that Putin place Nestle's assets under state management.

Impact on Nestle

Nestle's operations in Russia are significant, representing a key market where it has operated for decades. The company's presence includes:

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• Six factories producing coffee, petcare, and infant formula.
• Approximately 7,000 employees.
• Sales of about 2 billion Swiss francs ($2.4 billion) in 2021, the last year for which figures were disclosed.

In a statement, Nestle said it would take "all necessary steps to protect its rights." The company has previously justified its continued presence in Russia by arguing that, as a food producer, it provides essential goods to the local population.

A Pattern of Seizures

Analysts view the Kremlin's move as a significant risk for the company, following similar actions against other major Western firms. In 2023, Russia took control of French dairy company Danone's local business and brewer Carlsberg's stake in a Russian subsidiary. Danone's assets were removed from state management in March 2024 amid reports of a sale to a pro-war Russian businessman, while Carlsberg sold its shares in a management buyout in December 2024.

This precedent suggests a challenging path forward for Nestle. "Ultimately, Nestle may end up losing those assets — around 2% of its sales and cash tied up in Russia — for the foreseeable future and any compensation is unlikely to be an offset," said Kepler Cheuvreux analyst Jon Cox.