The move follows a decree signed by Russian President Vladimir Putin and published on the country’s official legal portal on Thursday. The order also affects the Russian assets of French retailer Auchan and Lemana Pro, the former Russian business of French do-it-yourself retailer Leroy Merlin.
Nestlé, whose global brands include Nescafé coffee and KitKat chocolate, said it was aware of the decree and was reviewing its implications.
“Nestlé is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees,” the company said in a statement.
Nestlé shares fell 2.2 per cent in Friday trading following news of the development.
The Russian action is being viewed as a potential first step towards transferring the affected assets to investors considered friendly to the Kremlin. It comes amid renewed pressure on Western companies that have maintained operations in Russia despite the economic and political fallout from Moscow’s invasion of Ukraine.
The Russian assets of Auchan and Lemana Pro are expected to be transferred to a newly established entity, L.E.V. Management, under the terms of the decree.
A spokesperson for Auchan was not immediately available for comment, while Lemana Pro declined to comment.
The Kremlin, however, indicated that the latest move did not necessarily mean that ownership of the businesses had already been transferred.
“Right now, we’re talking specifically about introducing external management; no other decisions have been made yet,” Kremlin spokesperson Dmitry Peskov said on Friday, according to Russian news agency RIA Novosti.
The concept of temporary administration has become an important mechanism through which Moscow has intervened in the operations of Western companies since the war in Ukraine intensified.
Putin signed a decree in 2023 giving Russian authorities the power to place property belonging to individuals and companies from countries designated as “unfriendly” under temporary administration.
Since then, Russian authorities have taken control of local operations belonging to a number of major international companies, including Danish brewer Carlsberg, French food producer Danone and Finnish energy company Fortum.
The measures have complicated efforts by multinational companies to withdraw from the Russian market. Some Western businesses have sold their operations, while others have reduced activities or continued to operate under restrictions, facing an increasingly uncertain regulatory environment.
Nestlé has maintained a presence in Russia while scaling back parts of its business following the invasion of Ukraine. The company has previously said it was concentrating its Russian operations on essential food products while suspending or limiting sales of some non-essential products.
The latest development also has implications beyond Nestlé because of Switzerland’s position in relation to Russia.
Although Switzerland is not a member of the European Union, the country has largely aligned itself with EU sanctions imposed on Russia following the full-scale invasion of Ukraine in February 2022.
The policy has generated debate within Switzerland over the country’s traditional position of neutrality. An initiative seeking a stricter interpretation of Swiss neutrality is due to be put before voters later this month.
Russia, meanwhile, has rejected Switzerland’s claim to neutrality, particularly following the country’s adoption of sanctions against Moscow and its support for Ukraine.
Russian officials have also criticised Switzerland for providing humanitarian assistance to Ukraine, further straining relations between the two countries.
For Nestlé, the decree introduces another layer of uncertainty over its Russian operations as the company assesses how best to protect its legal and commercial interests while maintaining continuity for employees and other stakeholders.
The development underscores the growing risks faced by Western companies that continue to hold assets in Russia, where Moscow has increasingly used temporary administration and other measures to assert control over foreign-owned businesses.