Anatoly Kostyrev’s column on attention to foreign business in the Russian Federation

News about well-known foreign companies that continue to do business in Russia does not fall out of the attention of major world media, but such reports are already beginning to be perceived in many ways differently than, say, a year ago.

Thus, The Wall Street Journal reported on August 8 that the Russian business of the large alcohol producer Bacardi, which owns the rum brand of the same name, as well as the brands Martini, Dewar’s, William Lawson’s, Gray Goose, is growing as competitors leave the country. As the newspaper writes, Bacardi hires staff and delivers millions of dollars worth of products to the country, although the company was originally going to suspend business in Russia. Last month, Bloomberg reported on the “stormy growth” in sales of confectionery, beverages and snacks manufacturers Mondelez, Mars and PepsiCo in Russia, noting the existence of a reverse trend – for other Western companies to leave the country under “public pressure”.

Until recently, news about the continuation of work in Russia was clearly perceived as potentially harmful for the mentioned companies, primarily due to a possible boycott of their brands in foreign markets. This summer, for example, the sale of Mondelez products in Scandinavia was stopped by the local retail chain Elkjop, hotels, airlines and other partners of the manufacturer, Reuters reported.

But after the transfer of shares in the Russian structures of Danone and the Carlsberg Group-owned brewery Baltika to the temporary management of the Federal Property Management Agency in July, as well as the recent freezing of Goldman Sachs shares in Detsky Mir, Aeroflot and Sberbank, reports of continued normal operation in the Russian Federation may have for non-residents, an unexpected rebound effect.

Danone, Baltika and Goldman Sachs were united by plans to leave the Russian market, which could explain the measures taken against their local structures. If this version is at least partly true, then media reports about the increase in the turnover of foreign companies in the Russian market can serve as evidence of their intentions to continue working in the country, and therefore reduce the risk of losing control over local business.

The threat of a boycott abroad, of course, has not disappeared, and the prospects for working in Russia in the current conditions of high uncertainty cannot be called absolutely bright. But such signals can make business easier, at least in the short term. In addition, news about new successes in Russia of foreign players that appear from time to time keeps their local competitors in good shape, and also stimulates interest in consumer brands. Moreover, the companies themselves do not even need to enter into communication with customers for this.