As the Halloween season begins, along with the eighth month of Russia’s war against Ukraine, new attention is drawn to the billion-dollar confectionery industry. Despite the unprecedented corporate exodus from Russiaa significant share of confectionery and chocolate production in North America and Europe continues to be carried out in Russia, with foreign companies playing a key role.
Multinationals operating in Russia are indirectly involved in the Kremlin’s devastating war against Ukraine by paying taxes to the Russian state and supporting the Russian economy, but now they are also directly involved in Putin’s war by participating in the conscription of soldiers for the Russian army, in accordance with a new mobilization law announced in September.
When it comes to confectionery, many household names are complicit, according to a new report from B4Ukraine. Halloween is all about fun and games, but this grim truth will scare consumers concerned about where their favorite chocolates and sweets come from.
Focus on Mondelēz (Oreo and Milka)
Mondelēz, one of the largest candy manufacturers in the world, has been operating in Russia since 1994 and is among the top 50 foreign companies in the country. The American company has three factories in Russia, producing some of the world’s best-known snacks: Oreo cookies, Barni Bear cookies, TUC crackers, Alpen Gold, Milka chocolate, Dirol chewing gum and Halls lollipops.
Despite Russia’s invasion of Ukraine, Mondelēz continues to produce and sell sweets in the aggressor country. Last year, the company’s annual revenue in Russia reached $1.3 billion, with Mondelēz paying about $170 million in taxes in the Russian Federation, according to the KSE Institute. With this amount of money, the Kremlin could have obtained 26 Kalibr cruise missiles that have been used to terrorize Ukrainian civilians, says B4Ukraine.
Moreover, the company continues to employ 3,000 people in the country, which means there is a good chance that the company was forced to help enlist its employees according to Russian law.
Even if the risk of complicity in the war is higher than ever for the multinationals, the company still sees no reason to leave it. In fact, he defended himself by arguing that he is provide essential food to Russians. “If the situation gets worse, we may have to make other decisions,” said Dirk Van de Put, CEO of Mondelēz International.
Zoom on Mars (Snickers and Skittles)
Mars, another confectionery giant with a few $20 billion in global net sales, has been working in Russia for 30 years. It employs nearly 6,000 people in the country, many of whom produce some of the world’s best-known snacks: Snickers, M&M’s, Skittles, Twix and Maltesers.
After the invasion of Ukraine, the American company has announced that it will reduce its activities in Russia and focus on its affordable pet care products and meals, not the candy.
“But is that really the case? If you visit the website of Russian local food supermarket Utkonos, you will see not only pet food, but also M&M’s, Bounty bars, Twix, Snickers, and other ‘non-essential’ brands,” the B4Ukraine report said. “Furthermore, according to one of the most popular recruiting sites in Russia, HeadHunter.ru, the company that claimed to be reducing its activities in Russia is actively hiring new people. Currently, there are 58 vacancies at Mars Russia and one more even in Crimea, a Ukrainian region illegally occupied by Russia since 2014.”
Investment Monitor reached out to Mars, but received no comment.
Close-up on Nestlé and Ferrero
Swiss-based Nestlé, with net sales of over $93 billion (92.87 billion Swiss francs), is the world’s largest food and beverage company. Among its gargantuan range of products are household names such as KitKat, Nuts, Aero, After Eights, Smarties and Rolo.
Nestlé worked in Russia for 150 years. It has seven factories in the country employing 8,000 people. At the beginning of the war against Ukraine, Nestlé promised focus on providing essential goods, such as infant food and medical/hospital nutrition. Additionally, the company announced that it will suspend renowned Nestlé brands such as KitKat and Nesquik, among others, as well as halt non-essential imports and exports to and from Russia, halt all advertising and suspend all capital investments in the country.
“However, according to HeadHunter.ru, Nestlé Russia is actively recruiting in the country,” notes B4Ukraine. “Currently, it is looking for 165 new employees, including two marketing specialists, even though the company says it has ceased its advertising activities. Also, some Nestlé brands, such as KitKat and Nesquik, are still available in some Russian supermarkets, i.e. spar and Azbuka vkusaindicating that this is another company that does not deliver on its promises. »
A very similar story can be told for Ferrero, which is one of the largest chocolate manufacturers in the world and sells products in 170 countries. Last year, the Italian company’s net sales reached 13 billion dollars (13.07 billion euros).
The company entered the Russian market in 1995 and to this day has a plant in the Vladimir region. After the Kremlin invaded Ukraine, Ferrero announced that it would reduce all non-essential operations such as advertising and promotions. However, the Russian factory keep running as usual, as the company continues to hire people in russia and stores continue to sell Ferrero products in the country. Investment Monitor contacted Nestlé and Ferrero, but received no comment.
While the aforementioned brands have shown limited leadership, many manufacturers in the industry have. In August, for example, the Swiss chocolatier Lindt & Sprüngli Group Lindt announced that he “made the difficult decision to leave the Russian market”. In the same way, Manufacturers based in Scotland Walkers Shortbread, a cookie and biscuit maker, and Tunnock’s, famous for its cakes and toffee, have also severed ties.
By leaving the Russian market, these companies expose the hypocrisy and self-interest of those who did not. Consumers this Halloween can very well distinguish between the two.