Danone also PepsiCo are caught in the crossfire of Moscow. The attack is all the more violent as it seems unexpected. It was launched on Friday, November 28 by the Russian minister of agriculture Nikolai Fedorov. On a visit to a dairy in the city of Omsk in Siberia, he took aim at the quality of dairy products made by “multinationals”. They “buy cheap milk, add palm oil and convert them into dairy products, deceiving us all,” he said. He also asked regional governors to monitor these industrials and “do not let them skim cheap raw material produced by our poor farmers.”
Without naming them, the Minister pointed the finger at the two major foreign players on the Russian dairy market, Danone and PepsiCo. The American bought in 2010 for $5.4 billion the Russian company Wimm Bill Dann dealing with dairy products, fruit juice and infant feeding. For its part, Danone took control of the Russian Unimilk for €1.5 billion, also in 2010. Russia has become the largest market for the French group.
McDonald’s also affected
The challenge is therefore important for Danone. Its Russian subsidiary immediately responded by issuing a statement on its website on Saturday, November 29, saying to be “offended” by the statements of the minister. The company asked for “a public retraction of his false information that slanders [it].” Danone said it had only produced with vegetable oils, manufactured by a third party and which accounted for only 0.4% of its sales.
For its part, PepsiCo said in a statement that it “produced a wide range of quality dairy products in Russia, using milk from farmers across the country” and that its “products and practices complied with legislation Russian “.
This is not the first time that Moscow condemns multinationals. The American McDonald’s had to close this year its main restaurant in the Russian capital for nearly three months. Officially, for health inspections following rule violations suspicions.
The attacks of the Russian authorities and the promotion of “Made in Russia” are involved in full showdown between Europe, the United States and Moscow. The former, who accuse Russia of supporting the Ukrainian separatists, pronounced economic sanctions against Russia. In response, early in August, Moscow decided on an embargo on food products, including dairy products.
The doors of McDonald’s on Pushkin Square in Moscow remained closed on Thursday, August 21. A symbol for Fast food, opened in 1990 just after the end of the Cold War. Beyond this particular restaurant owned by the flagship American chain, the brand is clearly in the sights of the Russian authorities.
Three other McDonald’s in Moscow were closed on the same day, officially for “numerous” breaches of health regulations. On Thursday, the Russian control service, Rospotrebnadzor, continued controls in other restaurants in the chain.
Several unannounced inspections started in the Sverdlovsk region, in central Russia, “because of complaints” of consumers, according to a local official.
“Russia is ready to strike down companies directly”
Inspections were scheduled for the next week in the Krasnodar region in the south of the country. Restaurants located in Tatarstan (Volga basin) were also inspected and those established in Bashkortostan (between the Volga and the Urals) had been reassessed by the end of August.
The channel, which was recently the subject of a health scandal in China, responded in a statement that it would take the necessary steps “to reopen the cafes for customers as soon as possible.” The American group has 438 restaurants in Russia and the country is among the seven major markets.
Officially, the Russian authorities speak of “consumer complaints” to justify the increase of controls. But according to the newspaper Kommersant, the checks are carried out by order of the government.
Checks are made indeed in a context of heightened tensions between Russia and Western countries linked to the crisis in Ukraine. This is not the first time McDonald’s is involved in the conflict, as the company had closed all its restaurants in the Crimea after connecting the peninsula to Russia. “It’s a signal that says Russia is ready to strike directly on a business, especially as the chosen targets are symbolic,” said Andrei Petrakov, director of consulting firm Restcon, to AFP.
The health arguments have been used many times in the Ukrainian crisis. In August 2013, when Ukraine refused to join the Eurasian Customs Union, Russian sanitary services had banned the import of chocolates Roshen, deemed “carcinogenic”. Since health restrictions had been taken against the European pork or Polish fruit before Moscow decreed a year’s embargo on August 7 on agricultural products from Europe and the United States.
Russian Prime Minister Dmitry Medvedev has declared a “total embargo” for a year on cattle, pigs, poultry, fish, cheese, milk, fruits and vegetables from the European Union, the USA, Australia, Canada and Norway. A formal response to Western sanctions against Moscow accused of giving military support to the pro-Russian separatists in eastern Ukraine.
This is not the first time that Moscow uses trade restrictions as a diplomatic pressure gun. Some decisions of the Russian health services seem to be directly dictated by the Kremlin’s foreign policy.
Products banned by dozens in recent days
Since strengthening Western sanctions, Russia banned almost daily entry of new food products on its territory, under the guise of health concerns often jargonnantes.
On 4 August, veterinary supervision and Russian phytosanitary services, Rosselkhonazdor, threatened to suspend the import of bourbon from the US on the grounds that it contained “phthalates can cause functional and organic upheaval in the central and peripheral nervous system, the endocrine system, as well as cancer and infertility in men and women.”
Three days earlier, they forbade fruits and vegetables from entering from the Polish territory for “multiple violations of the import process.” On July 25, the Ukrainian dairy products were banned because of “repeated detections of suspicious or banned substances residues.”
Ukrainian food in the viewfinder
Since the beginning of the Ukrainian crisis, Rosselkhonazdor multiplies lasting or occasional import bans Kiev. Even before the protests began on the Maidan square – where Ukraine expressed its willingness to move closer to the European Union, thwarting the Russian Eurasian Union – the Ukrainian chocolate had become “carcinogenic” and blockages of Ukrainian products had multiplied to Russian customs.
Things are not arranged in recent weeks. Pleading always “consumer protection”, Russia repressed fish shipments to the Crimea for “failure to present veterinary papers” but also “suspicious” cheese or plants arriving from Ukraine.
“Artificial barriers to trade” denounced by the European Commission
In 2013, the country had imposed an embargo – still in effect – on Moldovan wines and fruits. Again, the reason was officially health. Unofficially, Russia was against the discussions initiated by Moldova on an Association Agreement with the EU.
Europe, which “did not detect any safety concern on products of Moldovan agriculture,” had then warned Moscow by the voice of the European Commissioner Stefan Füle: “Threats from Russia about the possible signing agreement with the EU are absolutely unacceptable. And this applies to all kinds of pressures (…) including artificial barriers to trade.”
In 2006, Moldova and Georgia in the viewfinder
Since 2006, right in disagreement with Moldova on the status of Transnistria, Moscow had decreed a first embargo on wine country. At the time, the Moldovans flowed 80% of their production in Russia. Enough to toe the line to the small old Soviet state’s largest producer of wine.
The same year, the Kremlin also banned imports of wine and mineral water from Georgia, involving “low quality products.” Relations between the two countries were extremely degraded. Two years later, recognition by Russia of the independence of two Georgian provinces, South Ossetia and Abkhazia, had started a war.