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28 Sep. 2023

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Despite the blow to reputation: why some Western brands remain on the russian market

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Despite the blow to reputation: why some Western brands remain on the russian market

Several hundred Western companies, some of them world-renowned, continue to operate in russia despite its invasion of Ukraine. Find out why some companies are still sponsoring russia's aggression and are in no hurry to leave the country

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After the start of russia's full-scale war against Ukraine, many well-known companies left the russian market. However, some equally famous brands continue to operate in the terrorist country. We will analyze why this is so below.


According to the BBC, russia remains a large market with a population of 145 million, and its GDP in 2022 amounted to $2.24 trillion. Therefore, the abandonment of russian consumers has cost some foreign companies very much.


According to the Kyiv School of Economics (KSE) Institute, about 300 companies have severed business ties with russia. However, many foreign organizations continue to operate in russia or sell their goods in this country. The KSE estimates the number of such companies at 1400, which continue to do business in various fields within the country, while according to CELI, about 500 companies continue to operate in the russian market.


Which global brands continue to operate in russia?


For example, in 2022, PepsiCo announced that it would cease advertising and beverage production in russia due to the beginning of russia's invasion of Ukraine. However, in August 2022, the company resumed production of 7Up and Mirinda beverages under the Evervess and Frustyle brands.


PepsiCo continues to operate in russia with an increase in revenues in 2022 compared to 2021, in particular, the revenue of PepsiCo Holdings LLC in 2022 increased to $2.59 billion (or 176.5 billion rubles), taxes paid to the russian budget amounted to more than $115 million (or 8.29 billion rubles).


Bacardi is also a well-known brand in russia. The company's portfolio includes more than 200 trademarks, including the rum of the same name as the company's brand name, which is the best-selling rum brand in the world. According to the website of the Federal Tax Service of the russian federation, Bacardi Rus' revenue in 2022 increased by 8.5% to RUB 32.6 billion. Income tax was paid to the aggressor's budget in the amount of more than 1.2 billion rubles (more than $12 million).


Another well-known company that continues to do business in russia is Yves Rocher, one of the most famous Western companies that refused to boycott the aggressor country and cease its operations there during the full-scale invasion of Ukraine by russian troops. The annual turnover of Groupe Rocher is about 3 billion euros. In 2022, Yves Rocher Vostok paid taxes to the russian budget in the amount of about $6 million.


A full list of such companies is available on the website of the National Agency for the Prevention of Corruption.




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Why do global brands stay in russia?


According to a BBC analysis, companies decide to continue doing business in russia for various reasons. One of the main and simplest reasons is solvency. Growing revenues and maintaining market share are critical for any firm.


Since before the russian invasion of Ukraine, some companies built their business mainly on russian consumers, it is very difficult to abandon it now, when companies have virtually no other market.


According to experts, small and little-known companies, as well as those whose business interests are too significant, do not feel afraid of reputational risks associated with operating in russia.


In addition, as the publication notes, often the management can and does want to leave russia, but is not interested in selling factories, warehouses and other assets in the country. This is especially true given the russian legislation that makes it difficult for foreign companies to withdraw funds.


Sooner or later, according to analysts, companies that decide to stay in russia will face a sharp negative public attitude.


Earlier, we told you how continuing to operate in russia affects the reputation of a business and how to pay off the list of war sponsors. Read more about this here.




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Visit Ukraine News - get the latest news and updates in our Telegram channel;

Cooperation - cooperation and advertising integrations with Visit Ukraine and Visit World projects.




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