Unilever has completed the sale of its Russian business to Arnest Group, a local manufacturer of perfume, cosmetics, and household products. The British consumer goods company sold all of its business and four factories in Russia, as well as its business in Belarus. The terms of the transaction were not disclosed. Unilever CEO Hein Schumacher has overseen the sale of its Russian business, as well as plans to spin off the ice cream business, lay off staff, and focus on key brands to improve performance.
Unilever faced criticism for maintaining a presence in Russia following Moscow’s invasion of Ukraine in February 2022. However, in March 2022, it was the first major European food company to halt imports and exports to Russia. Schumacher stated that the preparation for the sale of the Russian business involved a complex process of separating IT platforms, supply chains, and migrating brands to Cyrillic. B4Ukraine, a coalition of civil society groups, welcomed Unilever’s decision to sell its assets and urged other global companies to do the same.
The Kremlin mandates a discount of at least 50% on exit deals with firms from “unfriendly” countries, those that have imposed sanctions against Russia. Arnest Group, the buyer of Unilever’s Russian assets, did not respond to requests for comment. The departure of foreign firms from Russia has resulted in more than $107 billion in writedowns and lost revenues, according to a Reuters analysis in March. Danone, another foreign company, took a loss of $1.3 billion when it received regulatory approvals to dispose of its Russian assets earlier this year.
Unilever’s sale of its Russian business is part of its efforts to align with global pressure to sever ties with Russia. By selling its assets in Russia and focusing on key brands, Unilever aims to improve its overall performance. The decision to exit the Russian market has been met with approval from various groups seeking to hold companies accountable for their business dealings in Russia. The discount demanded by the Kremlin on exit deals adds another layer of complexity to the process of divesting from Russia.
The implications of Unilever’s exit from Russia, along with other foreign companies, are significant in terms of financial losses and regulatory hurdles. The exodus of firms from Russia has highlighted the risks associated with doing business in geopolitically volatile regions. As more companies face pressure to disengage from Russia, the economic and political impact of these decisions continues to unfold. Unilever’s sale of its Russian business represents a strategic shift in response to global events and evolving consumer demands, demonstrating the importance of adapting to changing market conditions.
