Viewpoint: CPG companies should not suspend sales in Russia

In a letter to associates, PepsiCo CEO Ramon Laguarta said, “As a food and beverage company, now more than ever we must stay true to the humanitarian aspect of our business. That means we have a responsibility to continue to offer our other products in Russia, including daily essentials such as milk and other dairy offerings, baby formula and baby food.” 

He continued, “By continuing to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and uncertainty ahead.”

That statement came after PepsiCo announced the suspension of the sales of Pepsi-Cola and other global beverage brands, including 7UP and orange soft drink Mirinda, in Russia. Those comments to explain why Pepsi was not shutting down all operations reflects a nuanced and balanced approach that is often being lost as many companies rush to signal their virtue by announcing shutdowns in Russia. 

New York State Comptroller Thomas DiNapoli called for CPG companies including Pepsi, Mondelez (the snack giant best known for Oreo cookies), and Kimberly-Clark (personal care products such as Huggies diapers) to exit or suspend operations in Russia. In recent days, a Yale professor published a naughty/nice list of which public companies have shut down Russian operations. Are we supposed to boycott and dump the shares of all companies that continue to operate in Russia no matter what business they are in?  

A list, such as the one from the Yale professor, lacks nuance. CPG is different from most other sectors by its very nature — CPG items allow individuals to subsist and/or do so with dignity. It is one thing to expect LVMH to stop selling luxury handbags to wealthy Russians and it is quite another to expect consumer goods companies to stop selling packaged food and personal care products to ordinary Russians. Mondelez should not stop selling snacks in Russia. With the lack of visibility into the lives of ordinary Russians and the coming economic fallout, who’s to say that there won’t be people who survive on Oreos and Ritz crackers?

It seems some have forgotten that there are over 100 million Russians who had nothing to do with the decision to invade Ukraine. Presumably, a large portion of that population is against the invasion — if only they were allowed to protest and granted access to accurate information. My understanding of sanctions, whether they come from governments or private companies, is to make life so miserable for Russians that the government falls out of favor. The Russian civilians will already be miserable given the trajectory of the Russian economy — some analysts expect Russian GDP to shrink by 12%, and that could prove to be a massive underestimate. 

We don’t want ordinary Russians to starve. And does anyone really think a lack of Doritos is going to cause Putin to turn the tanks around?  

Source: https://www.freightwaves.com/news
Editor: Michael Baudendistel