Pepsi and Coke shut two plants
Foreign brewers have been hit hardest, but beverage manufacturers have been bruised too by Russia’s economic woes. On 2 March 2015 it was reported that both PepsiCo and Coca-Cola Hellenic Bottling are closing one plant each in Russia, citing a plunge in the value of the Russian ruble and the country’s slide into recession.
The two have shown greater resilience than the brewers – it’s easier to find a cheaper substitute for beer than for juices and dairy – but recent events have forced them to also cut production in Russia by closing plants. In January this year, Danish brewer Carlsberg said it would be shutting two breweries in Russia, and Danone Russia said it would consider closing some of its dairy plants should the economic situation worsen.
PepsiCo said it would close its juice facility near Moscow in June, leading to about 400 job losses (out of around 23,000 people).
PepsiCo became a leading juice company in Russia in 2009, acquiring Lebedyansky for about USD 2 billion. In 2011 it paid USD 5.2 billion for Wimm-Bill-Dann, a Russian dairy products and fruit-juice maker. PepsiCo had a 40 percent share of Russia’s juice market in 2014 by volume, according to data by Euromonitor.
Moreover, Russia is PepsiCo’s second biggest market by revenue after the U.S., contributing about 7 percent of overall revenue, it was reported.
In February PepsiCo had to disclose that its Russian revenue fell 10 percent to USD 4.41 billion in 2014, hurt by the weaker ruble and a mid-single-digit percentage decline in beverage volumes. Snack volumes also declined slightly.
Nevertheless, PepsiCo said it remains committed to its Russian food and beverage businesses for the long-term, but warned that the weakening ruble had triggered "significant" inflation because the company imports materials from outside Russia.
The company reported USD 4.52 billion of assets in Russia at the end of 2014, down from USD 7.92 billion a year earlier, also dragged down by the ruble’s depreciation, according to the Wall Street Journal.
Coca-Cola Hellenic, which bottles and sells goods under the Coca-Cola brand and is part-owned by Coca-Cola Co., also reported the closure of a plant in Nizhny Novgorod, east of Moscow, with the loss of 100 production jobs (out of 13,000). Coca-Cola Hellenic, formerly of Greece, moved its headquarters to Zug, Switzerland, in 2012. Hellenic’s beverage volumes in Russia, Ukraine and Belarus dropped 1 percent in 2014 after growing 3 percent in 2013.
