Minister slams Western dairy companies
The business climate in Russia seems to be getting icier. The Russian subsidiary of France’s Groupe Danone has demanded an apology from the country’s agriculture minister after he slammed the company for its reportedly substandard dairy products in the latest Kremlin assault against a Western company.
Russian media reported that on 28 November 2014, Nikolai Fyodorov accused Danone, which runs Unimilk, and PepsiCo, the owner of the Wimm-Bill-Dann’s dairy line, of diluting their dairy products with cheap additives.
“These products contain a maximum of 20 percent real milk; the rest is coconut, palm oil and other additives processed into a dairy mixture,” Mr Fyodorov was quoted as saying.
He also said that Russian regional authorities should “prevent them [Danone and PepsiCo] from pumping out funds from the regions and skimming the ’cream’ off the cheap raw product that our poor peasants produce,” TASS reported.
“Government subsidies are being used to support the dairy industry, they [Danone and PepsiCo] then buy it on the cheap and rake in huge profits,” Mr Fyodorov said.
Danone has been doing business in Russia for two decades. In 2010 it took over Unimilk, a Russian dairy producer. The acquisition resulted in Danone becoming the biggest company in the dairy market. Also in 2010, PepsiCo bought the dairy products and fruit-juice maker Wimm-Bill-Dann for USD 5.4 billion. Reports say that Danone and PepsiCo are the largest buyers of milk from Russian farmers.
In a reaction to the accusations, Danone said it viewed Mr Fyodorov’s statement “as direct slander, which damages our reputation in Russia, as well as in the whole world,” and demanded a public apology.
Danone Russia said it felt “deeply insulted,” adding that its products had repeatedly been inspected by Rospotrebnadzor, Russia’s health and consumer protection watchdog, which had not reported any violations.
There have been no reports to date of an apology by Minister Fyodorov.
In July this year, Russia imposed a one-year food import ban on the U.S. and Europe in retaliation for Western sanctions against Russia for its annexation of Crimea and support for Ukrainian separatists.
The crackdown on Western-affiliated foods has extended to some of Russia’s most well-known foreign food companies under the guise of supposed health concerns. The largest restaurant of McDonald’s in Moscow was shut for three months in 2014 because of alleged disobedience of local sanitation rules, Russian media reported.
