McDonald's, Coca-Cola still see risks, stay cautious on operating in Russia

By Daniela Sirtori

 

McDonald’s Corp. and Coca-Cola Co. said they continue to see risks to operating in Russia, a signal that major US firms remain cautious about business investments in the country.  

The companies outlined their positions in letters to the Ukrainian advocacy group B4UKraine Coalition that were seen by Bloomberg News. In its letter, McDonald’s said the company is sticking to the framework of five questions it used to decide to exit Russia in 2022 after the country’s invasion of Ukraine. 

 

“The principles behind these questions, which guided our decision to ‘de-Arch’ a major market and sell our portfolio of McDonald’s restaurants, still apply today,” said the letter signed by Jon Banner, McDonald’s global chief impact officer. 

 

Meanwhile, Coca-Cola said in its letter that “sanction regimes and other legal hurdles remain in place, impacting any considerations about returning to the Russian market.” 

 

B4UKraine reached out to companies in response to speculation on social media and in the Russian press about them readying a return to the country, according to the group. The organization said it has also contacted companies such as Apple Inc., Nike Inc., Boeing Co., Visa Inc. and Mastercard Inc. but hasn’t heard back.

 

For McDonald’s, criteria for such a decision included whether it’s legal to operate in Russia, if the company has freedom to run its business, whether being there is helpful to its brand, if it aligns with its values and whether it makes “good business sense,” according to the company’s letter. 

 

In 2022, “the answer to each of those questions was no,” McDonald’s Banner said. He also emphasized the company’s continued Ukraine business and community commitments.

 

B4UKraine cheered the response, saying in a LinkedIn post that it saw the letter as a reaffirmation of McDonald’s commitment to staying out of Russia.  

 

McDonald’s and Coca-Cola declined to comment beyond the letters. Mastercard said in an email that “there is no change in our status in the country today.” Apple, Nike, Boeing and Visa didn’t immediately return a request for comment. 

 

Coca-Cola pledged to exit Russia after the invasion, though in many cases locals can still buy the company’s signature drink because the government authorized parallel imports — genuine stock, but not distributed by the brand owner. 

 

In addition, Multon Partners, the Coca-Cola bottler in Russia, is owned by a London-listed firm called Coca-Cola HBC in which the US-based parent company has a stake. Multon stopped making Coke after the invasion, but it introduced a similar beverage called Dobry Cola.

 

Dobry currently controls 13 per cent of the Russian soft drinks market, making it the market leader, according to researcher Prodazhi.rf. Original Coca-Cola still has a 5 per cent market share.

 

McDonald’s assets in Russia, meanwhile, have a new owner: the mining oligarch and onetime franchisee Alexander Govor. And Vladimir Putin has sought to put conditions on the return of foreign companies that left Russia, which experts say has changed the risk-reward equation for firms.