"Factories work": Danone will give up control of the business for the production of dairy products in Russia

The French company Danone has decided to abandon the management of the business for the production of dairy and vegetable products in Russia.

This was reported on Friday, October 14, in the press service of the organization.

“Danone announces its decision to begin the process of transferring operational control of the fresh dairy and plant-based products business in Russia… This is the best option to ensure the continuity of the local business in the long term for the benefit of employees, consumers and partners,” the message says.

It is noted that the agreement on the transfer of business will first have to approve the regulatory authorities.

The company did not specify to whom exactly control over the production of products could pass, but noted that the deal would lead to Danone losses of up to € 1 billion.

“After the closing of the deal… there will be a deconsolidation of the fresh dairy and plant-based business in Russia.

Danone's priority remains a responsible and respectful attitude towards its employees, consumers and partners throughout the entire process (business transfer. -

),” the company added.

Recall that Danone began working in Russia in 1992.

According to the Association of European Businesses (AEB), the company currently owns 18 enterprises in the country and employs more than 10,000 employees.

In addition to dairy products, Danone produces bottled water, as well as baby and specialized food.

In particular, the organization produces goods under such brands as Prostokvashino, Activia, Actimel, Rastishka, Danissimo, Danone, BioBalance, Aktual, Smeshariki and Tyoma.

It is noteworthy that back in March 2022, against the backdrop of large-scale Western sanctions against Moscow and the withdrawal of a number of foreign companies from the Russian Federation, Danone announced that there were no plans to leave the Russian market, RIA Novosti writes.

Meanwhile, already in April, the organization stopped importing Evian and Alpro products, and also announced the termination of investments in Russia and the curtailment of its advertising campaigns in the country.

The current decision of the company to refuse to work in Russia may be largely due to external political pressure.

This point of view in an interview with RT was expressed by the head of the analytical department of AMarkets Artyom Deev.

“Back in the spring of this year, the company came under severe pressure, which, in general, is now being exerted on Western business in connection with sanctions against Russia.

Now, apparently, a final decision has been made to leave after a long period of calculations of all the consequences of such a decision, ”said Deev.

At the moment, it is not clear how and when exactly Danone will transfer control of its business to a new owner.

Nevertheless, the company's initiative will not affect ordinary customers, Artyom Belov, general director of the National Union of Milk Producers Soyuzmoloko, is sure.

“This statement does not affect the consumer in any way: the company continues its operations, the factories are operating, jobs have been saved, uninterrupted supplies of products continue, so the buyer will not notice any changes,” Belov emphasized.

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It is curious that after the announcement of the transfer of business, Danone shares rose in price on the stock market and added about 2.3% in the middle of the day.

Such dynamics may indicate that investors welcomed the company's decision.

“Business management under conditions of massive restrictions was quite difficult and distracted management from the global development of the company.

The segment in Russia was low-margin and showed weak growth.

According to Western experts, now Danone can consider development options in Brazil, Argentina, Mexico and Morocco, as well as in the United States,” Vavilov added.

discount business

In total, about 130 largest foreign companies have already announced their intention to leave the Russian market, but in fact no more than 5% of them have ceased their activities so far.

This is stated in a study by the Center for Strategic Research (CSR).

According to the organization's calculations, in 69% of cases, when leaving the Russian market, a foreign business sells a local division to a new owner.

At the same time, at least 30% of such transactions provide for the possibility of returning assets to the original owner.

“For example, Renault sold its stake in the automaker AvtoVAZ to the Russian Central Research Automobile and Engine Building Institute with a buyout option in six years,” recalled Nikolai Vavilov.

In turn, the new owners of the former divisions of foreign companies, as a rule, act promptly, the CSR notes.

So, to date, 90% of such enterprises have already officially resumed their activities, which made it possible to save about 150 thousand jobs.

“The latest data on the state of the Russian economy suggests that on a national scale, statements about the withdrawal of foreign business from Russia do not have a devastating effect on the country's economy,” the organization emphasized.

At the same time, foreign companies that have left Russia have already lost about $200-240 billion. According to the CSR, foreigners are forced to sell their businesses at a discount of about 70%.

In this case, the largest losses are incurred by enterprises in the oil and gas industry, the banking sector, as well as the automotive and food industries.