IDM ¦ Country Report
Russia may see a slump in dairy products consumption
"Russia's attack on Ukraine made it
impossible to continue our operations in
Russia, both ethically and from a business
perspective. Exiting from Russia has proved
difficult in this situation because of the constantly
changing legislation and reciprocal
sanctions. We have sought out solutions
and a suitable buyer throughout spring.
With the transaction, we will complete this
process and our operations in Russia will
end," said Valio CEO Annikka Hurme.
Exiting from Russia is indeed a tricky
task for Western companies, as the Russian
government threat foreign firms pulling
out of the country to nationalize their
assets.
Disrupted supply chains
The first months of the Ukraine war have
been marked by a sharp rise in production
costs in the Russian dairy industry, primarily
associated with a logistics crunch.
Russian and Belarusian freight road operators
have been banned since April 16
from working in the EU, except for those
transporting essentials such as food, mail,
medicine, and energy. The Belarussian government
has replied by banning the EU
36 · July/August 2022 ¦ international-dairy.com
Most equipment in the Russian
dairy industry is imported
trucks from entering its territory. Besides,
the world's three largest container shipping
lines, Denmark's Maersk, France's CMA
CGM, and Swiss-based MSC have suspended
their bookings to and from Russia.
Coupled with sanctions against the
financial sector, the transport blockade
has disrupted supply chains in the dairy industry.
The first problems emerged in the
packaging segment, as Tetra Pak, Elopak,
Stora Enso, Tetra Laval, and some other
companies have pulled out from the country
or saw their supplies disrupted. In this
background, some dairy companies reportedly
had to even cut production due to a
lack of package.
Deliveries of dairy products to retail
chains in Russia began to fail due to a lack
of package, the Russian newspaper Vedomosti
reported, citing its own sources on
the market. In this regard, the dairy companies
considered alternative packaging
options for milk including big metal cans.
A package similar to the Tetra Pack can
be created in Russia in three to six months,
Mikhail Charny, an expert from the working
group of the National Technology
/international-dairy.com
