Global Majors like Coca-Cola, McDonalds, Starbucks and PepsiCo Suspend Business Operations in Russia

  • Published | 09 March 2022

Coca-Cola, McDonalds, Starbucks and PepsiCo Suspend BusinessPepsiCo, McDonald’s, Coca-Cola, and Starbucks are looking forward to suspend their business operations across Russia after the country’s invasion of Ukraine. These brands happen to be some of the most recognized US brands across the world and various others are expected to follow the suit. Pepsi has been selling its products across Russia for over 60 years; and McDonald’s started operations by opening their first location in Moscow after a few months of the collapse of the Soviet Union. In the present day, Pepsi, McDonald’s, Coke, and Starbucks had been witnessing some criticism on account of these brands continuing their operations in Russia.

One of the Professors from Yale University Jeffrey Sonnenfeld had compiled and created a list of U.S. companies to be made available to the general public that had withdrawn their operations / businesses from Russia, followed by President Putin’s invasion and those companies as well that haven’t taken any actions. Till Tuesday afternoon, Coke was found to be one of the most recognized names on the professor's list. Russia happens to be one of the few regions across the world where Coke’s rival company PepsiCo has been catering to a larger audience. In regulatory filings as well, Coke stated that its business across Ukraine, as well as Russia, only contributed around 1-2% of their consolidated net operating revenue as well as operating income for the year 2021.

On the other hand, Pepsi was found to be generating over 4% of its annual revenue from Russia alone, and the company has stated not to halt all of its businesses across the country. The company is anticipated to continue selling some of its essential commodities, including baby formula, baby food, and milk. It stated that it is expecting to suspend Russian sales for its beverage product line including Pepsi-Cola, Mirinda, and 7UP brands, along with other investments, comprising advertising as well as promotional activities. The company also stated that as a food and beverage company, they must remain loyal to the humanitarian aspects of the business. The Wall Street Journal also stated in a report released earlier that Pepsi has been weighing alternative options for the Russian operations, which might include writing off its value as the economic sanctions levied on Russia have made it more complicated in offloading the Russian assets.

Ever since Russia annexed Crimea into its territory back in 2014, many U.S. companies have been looking forward to reducing their operations across Russia as well as Ukraine. Some of the restaurant chains, including McDonald’s, have also been selling off their company-owned locations to various local businesses. McDonald’s had also announced that over 850 of its restaurants based in Russia would be temporarily closed. The company has been drawing some stronger criticism than the other restaurant companies that had already condemned the Russian invasion, however, they had kept their locations open. Around 84% of the McDonald’s locations based in Russia happen to be owned by the company, whereas the rest of them have been run and operated by local franchisees.

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