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Not lovin’ it — McDonald’s, Starbucks, Coke and Pepsi halt sales in Russia

All four companies have major operations in the country

09 March 2022 - 08:15 By Hilary Russ and Uday Sampath Kumar
McDonald's is among the major companies to halt operations in Russia. File image.
McDonald's is among the major companies to halt operations in Russia. File image.
Image: Anton Vaganov/Reuters

McDonald’s, PepsiCo, Coca-Cola and Starbucks stopped sales of their best-known products in Russia on Tuesday, offering a united rebuke of the war on Ukraine by companies that define the US for much of the world.

Pepsi and McDonald’s were corporate pioneers whose work with the Soviet Union and post-Soviet Russian state decades ago was seen as improving international relations.

All four companies have major operations in Russia.

McDonald’s said it would continue paying salaries to its 62,000 employees in Russia as it closed 847 restaurants. The first location to open in Russia, in central Moscow’s Pushkin Square in 1990, became a symbol of flourishing US capitalism as the Soviet Union fell.

“I’m glad they came around and made the right decision,” Jeffrey Sonnenfeld, a professor at the Yale School of Management who is tracking major companies’ stances on Russia, said after the move by McDonald’s.

“It’s an important impact , and it is symbolic as much as it is substantive.”

Starbucks is temporarily closing hundreds of stores. PepsiCo will suspend all advertising in Russia and stop the sale of its drinks brands, while continuing to sell essentials such as milk and baby food. Rival Coca-Cola said it will suspend its business there.

Coca-Cola was the official drink of the 1980 Olympic Games in Moscow, despite the US boycotting the event in protest of the Soviet invasion of Afghanistan.

Scores of other companies have rebuked Russia, and Amazon.com said on Tuesday it would stop accepting new customers for its cloud services in Russia and Ukraine. Universal Music suspended all operations in Russia, and online dating service Bumble will remove its apps from stores in Russia and Belarus.

Earlier, Royal Dutch Shell stopped buying oil from Russia and said it would cut links to the country entirely while the US stepped up its campaign to punish Moscow by banning Russian oil and energy imports.

Moscow has termed the attack a “special military operation” aimed not at occupying territory but at destroying Ukraine's military capabilities.

The West’s moves to isolate Russia economically for attacking its neighbour have hit global commodity and energy markets hard, sending prices soaring and threatening to derail the nascent recovery from the Covid-19 pandemic.

Britain has also said it would ban imports of Russian oil but only by gradually phasing them out during 2022 to give businesses time to find alternative sources of supply.

The London Metal Exchange (LME) halted trade in nickel on Tuesday after prices of the metal, a key component in electric vehicle batteries, doubled to more than $100,000 (about R1.5m) a tonne.

Shell’s decision to abandon Russia comes days after it faced a barrage of criticism for buying Russian oil — a transaction that two weeks ago would have been routine.

“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel — despite being made with security of supplies at the forefront of our thinking — was not right, and we are sorry,” said CEO Ben van Beurden.

Shell and rivals BP and ExxonMobil have all announced plans to sell holdings in Russia and exit the country, leaving France’s TotalEnergies relatively isolated in hanging on to its investments there.

HYBRID DELAYS

Mining group BHP warned the surge in commodity prices could spill over into already-skyrocketing inflation and potentially affect global growth.

Nickel prices soared when China’s Tsingshan Holding Group, one of the world’s top nickel and stainless steel producers, bought large amounts of nickel to reduce its bets that prices would fall, three sources familiar with the matter said.

Tsingshan and the LME declined to comment.

Prices of other metals used in car production, from aluminium in bodywork to palladium in catalytic converters, have also soared, and industry supply chains have been broken.

Volkswagen said it would stop taking orders for plug-in hybrid models from Wednesday as supply-chain troubles worsened the production delays caused by chip shortages.

The carmaker had already halted production in Russia and has also suspended production at several factories in Germany as it has struggled to obtain components.

Orders for the plug-in hybrid versions of Volkswagen's Golf, Tiguan, Passat, Arteon and Touareg models would be halted until further notice and delivery of already-placed orders might not happen this year, the company said. 

Reuters


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