Russia has seized control of the local businesses and assets of Nestlé and three French groups, escalating Moscow’s intervention in foreign-owned companies as tensions with Western countries persist over the war in Ukraine.
A decree signed by President Vladimir Putin placed the Russian operations of Swiss food giant Nestlé, French retailer Auchan, home-improvement chain Lemana Pro and logistics group FM Logistic under the temporary administration of L.E.V. Management.
Under Russia’s temporary administration mechanism, legal ownership is not immediately transferred, but a state-appointed administrator takes control of the businesses. Previous cases involving Western companies have ultimately led to sales to Russian buyers.
The Kremlin defended the move by pointing to the companies’ links to countries it considers “unfriendly”, as Moscow continues to tighten control over foreign corporate assets.
Nestlé said it was assessing the situation and would take necessary steps to protect its rights while maintaining business continuity, particularly for employees.
The group operates six factories in Russia and employs about 7,000 people, although the country now accounts for only about 1% of group sales after Nestlé scaled back its activities following Russia’s 2022 invasion of Ukraine.
Analysts therefore expect the direct financial impact on Nestlé to be relatively limited, although the move raises the risk of an eventual asset impairment or forced disposal.
Auchan, meanwhile, remains one of Russia’s largest foreign retailers, operating more than 200 stores in the country.
Russia introduced the temporary administration mechanism in 2023 and has previously used it against foreign businesses including Danone and Carlsberg as Western sanctions and corporate exits reshaped the country’s business landscape.
