This is far from the first time the fmcg giant has encountered scrutiny over its decision to continue selling products like ice cream and tea in Russia – even though it pledged to only retail “essential” goods – but campaigners have now ramped up protests with the arrival of a new CEO.
Former Heinz exec Hein Schumacher, who officially took over this weekend from outgoing CEO Alan Jope, was met at the company’s headquarters in London on Monday with striking billboards featuring pictures of wounded Ukrainian soldiers and claims Unilever was actively helping to fuel Russia’s invasion of Ukraine.
A doubling of profits
It said Unilever Russia paid about $50m in taxes to the budget of the Russian Federation for 2022 after profits doubled from 4.8bn rubles (€56m) in 2021 to more than 9.2bn rubles (€108m), and that those taxes were inevitably used to fund Putin’s war ambitions.
The company’s silence on the issue – barring a press statement in February that explained it feared “abandoning” the business would likely lead to it being “appropriated and operated” by the Russian state – has since been deafening. At the time, Unilever also said it hadn’t found an appropriate buyer for the business that would be sure to protect staff and not further benefit the government, so it had decided to continue to run things with “strict constraints”. “To be clear, none of these options are desirable,” it maintained.
In its defence, Unilever is absolutely right in saying that pulling out of Russia is incredibly hard, especially for bigger companies with several manufacturing sites and thousands of employees across their local supply chains. The Kremlin has made it particularly difficult for them to fully exit – they face the prospect that Russian bankruptcy law could be used to seize assets, which in turn could be used to fund its war efforts, and even lead to criminal penalties.
However, by remaining operational, Unilever has made itself and staff vulnerable to further attacks from Putin’s government, which is now said to be working on a law that could lead to the conscription of the company’s 3,000 employees across its four factories and head office.
A ‘very complicate’ separation
It also becomes increasingly hard to justify this when so many other food and drink giants have decided that abandoning ship was not only morally important but doable despite the costs. Just last week, Danish brewer Carlsberg announced it was finally selling its Russian business, Baltika. It described the separation of the Russian business – the country’s biggest brewer – from the rest of the Carlsberg Group as “very complicated”.
Others have been vocal about the hefty costs of exiting Russia – Danone said shedding control of its dairy business could lead to a write-off of up to €1bn, while McDonald’s took a non-cash charge of up to $1.4bn related to the sale of its fast food outlets in Russia.
But the repercussions of choosing to stay can potentially affect Unilever on a global scale as it’s clear consumers and industry alike are watching. And they care. French drinks giant Pernod Ricard learned it the hard way, when a decision to resume exports of its Sweden-made Absolut Vodka led to a massive revolt among hospitality businesses in the Nordic countries, which refused to sell the company’s alcoholic beverages until it was forced to fully stop exports to Russia.
Above all, there is one person for whom the billboards and accusations will be hard to ignore. All eyes are now on Schumacher, who has been urged by campaigners to “use his new position to do the moral thing”. Whatever he ends up doing could be defining, for himself and the company.