Mondelez CEO explains why the snacking giant still does business in Russia

In response to the invasion of Ukraine in February, major food and beverage companies such as Heineken and Starbucks (SBUX) have cut all ties with Russia.

But at least one major snack company continues to do business in the country. On a recent episode of “Influencers with Andy Serwer,” Mondelez International CEO Dirk Van de Put said that the company retains 3,000 employees in Russia and works with 30,000 suppliers there.

“We found that it would be a bit of a harsh decision to leave all that overnight,” Van de Put told Yahoo Finance’s editor-in-chief. “And we decided that it would probably be better to see what happens and not support the war in any way possible.”

When the invasion began earlier this year, corporations from around the globe either ceased or curtailed all operations in Russia to show solidarity with Ukraine. To date, over 1,000 companies have either stopped or scaled back operations in Russia, according to the Yale School of Management. They include major firms such as consulting giant McKinsey, Salesforce (CRM), and Reebok.

For its part, Mondelez released a statement earlier this year asserting that it was scaling back non-essential operations in Russia. But the company also said it would continue to deliver food supplies to the country.

BEVERLY HILLS, CA - APRIL 29:  Dirk Van de Put, Chairman and CEO, Mondel•z International, participates in a panel discussion during the annual Milken Institute Global Conference at The Beverly Hilton Hotel on April 29, 2019 in Beverly Hills, California.  (Photo by Michael Kovac/Getty Images)

BEVERLY HILLS, CA – APRIL 29: Dirk Van de Put, Chairman and CEO, Mondel•z International, participates in a panel discussion during the annual Milken Institute Global Conference at The Beverly Hilton Hotel on April 29, 2019 in Beverly Hills, California. (Photo by Michael Kovac/Getty Images)

“We sell chocolate and biscuits. In some countries, the biscuits are considered as part of a normal diet,” Van de Put explained. “[In] many countries, biscuits are a breakfast item. And so, we do feel that we supply products to the normal consumer in Russia.”

Since Russia invaded Ukraine, Mondelez has taken fire from activists in Eastern Europe who argue that the company should completely sever its connection to Russia. Earlier this year, some of the company’s employees criticized it for promoting “The Batman” Oreo cookies in the country, according to internal communications reviewed and reported on by Reuters.

But Van de Put says that Mondelez’s operations in Russia are minimal.

“We’ve stopped doing any investments in the country, no more capital investment. We don’t do any advertising,” Van de Put said. “We’re making the country completely standalone from a supply chain standpoint. And we if the situation gets worse, we might have to take other decisions.”

So far, Russia’s invasion of Ukraine has taken somewhat of a toll Mondelez’s business. Last quarter, the company reported that the war cost the company $145 million in damaged property among other expenses.

Still, Van de Put insisted the company was persevering despite such setbacks. For instance, the firm re-opened one of its damaged potato-chip plants outside Kyiv during the summer.

“In the particular case of Russia, we also had a significant business in … Ukraine,” Van de Put said. “So, our two plants there were hit and partially destroyed, we’re rebuilding those plants; our people have returned back to work in Ukraine.”

Despite the damage inflicted on its food plants, Van de Put stated that Mondelez had not suffered any casualties or deaths due to the conflict.

He also said the company has aided Ukrainian refugees fleeing the war.

“What happened also is that a lot of people fled the country, and what was incredible to see was that our people in Poland and so welcomed our employees in their houses,” Van de Put said. “So, I’ve been touched by how much our employees in other countries have helped our Ukrainian employees.”

Headquartered in Chicago, Mondelez International is a multinational food and snack company that operates in over 80 countries. Its global net revenues totaled $28.7 billion in 2021 and some of its subsidiaries include Oreo, Sour Patch Kids candy, Clif Bar & Company, and Toblerone.

Dirk Van de Put became CEO of Mondelez International in 2017 and Chairman in 2018. Previously, he was CEO of McCain Foods, a frozen food company and worked for Coca-Cola and Mars. Inc. He is a Belgium native.

Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.

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Source: https://finance.yahoo.com/news/mondelez-ceo-why-were-still-doing-business-in-russia-204049695.html