Russia’s invasion of Ukraine last February has had widespread influence on the global agricultural community, stretching from fertilizer shortages and export restrictions that caused higher food prices to impacts on individual farm businesses. Food processors and restaurants have also faced pressure to cease or limit their business operations in Russia; companies including McDonald’s, Papa John’s, Dunkin’ Donuts, and more have since closed stores, stopped supporting franchise locations, or sold assets entirely.

The French-owned dairy processor Danone began the process to follow that trend and sell its Russian business October 14, 2022. Though they say the deal was progressing forward, it had not yet been completed, and last week, foreign-owned stakes in the company’s Russian subsidiaries were seized and put in “temporary management” of the Russian state.

That’s possible because of a rule signed into Russian law in April that allows the country to take temporary control of foreign assets from countries considered “unfriendly.” Now, the agriculture minister of one of Russia’s republics has been named general director of Danone Russia.

A story from the BBC describes that Danone’s Russian operations are the largest of any dairy processor in the country, with about 8,000 employees across 13 facilities. The sale was projected to create a $1.1 billion hit on the asset. The international company has a robust U.S. presence, too. The most recent Dairy 100 list published by Dairy Foods magazine lists Danone North America as the sixth-largest dairy processor on the continent. They have headquarters in New York and Colorado and mainly produce yogurt.

On the same day it took control of Danone, the Russian state also took over the rights to a Danish beer company. That organization said the prospects of the sale have become highly uncertain following the Russian decree.

In a statement, Danone said it is “preparing to take all necessary measures to protect its rights as shareholder of Danone Russia, and the continuity of the operations of the business in the interest of all stakeholders, in particular its employees.”

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(c) Hoard's Dairyman Intel 2023
July 24, 2023

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