Dove maker’s deal with local manufacturer Arnest Group includes four factories
Sarah ButlerThu 10 Oct 2024 07.15 EDTLast modified on Fri 11 Oct 2024 05.08 EDTShareUnilever has sold off its Russian operations to a local manufacturing group after pressure from campaigners who claimed that the presence of the Dove and Ben & Jerry’s owner in the country was supporting the war in Ukraine.
Arnest Group, a Russian manufacturer of perfume, cosmetics and household products will take control of Unilever Rus, which includes four factories, as well as the group’s interests in Belarus. Arnest is owned by the businessman Alexey Sagal and bought the brewer Heineken’s business in the country last summer.
Unilever Rus, which employs about 3,000 people, owns the local rights to brands including Knorr stock cubes, Dove washing and beauty products, Domestos cleaning fluids and Axe – which is known as Lynx in the UK.
Unilever has faced sustained pressure to sell the subsidiary since Russia’s full-scale invasion of Ukraine in February 2022, after it failed to follow an initial stampede of British multinationals out of the country.
The terms of the deal, which must be approved by the Russian government, were not disclosed. However, it has been reported that the sale could be worth more than €500m (£418m) to Unilever.
Hein Schumacher, the chief executive of Unilever, said: “Over the past year, we have been carefully preparing the Unilever Russia business for a potential sale. This work has been very complex, and has involved separating IT platforms and supply chains, as well as migrating brands to Cyrillic.
“The completion of the sale ends Unilever Russia’s presence in the country.”
Unilever ceased all imports and exports of its products into and out of Russia in March 2022 and has said it stopped all media and advertising spend and capital flows. It said last summer it had been unable to find a way to sell the business that “avoids the Russian state potentially gaining further benefit, and which safeguards our people”.
However, the group has come under consistent pressure to exit Russia, where it continues to make and sell “essential” products from shampoo to ice-cream, after evidence emerged that it paid Moscow $331m (£253m) in taxes in 2022.
In July last year, the Marmite maker was labelled “an international sponsor of war” by the Ukrainian government after it became subject to a law in Russia obliging all large companies operating in the country to contribute directly to its war effort.
A group of activists, the Ukraine Solidarity Project (USP), erected a billboard outside the Anglo-Dutch consumer group’s London headquarters featuring pictures of wounded Ukrainian soldiers – posing in the style of the Dove beauty brand’s advertisements – and the slogan: “Helping to fund Russia’s war in Ukraine.”
On Thursday Valeriia Voshchevska of the USP said: “It’s about time Unilever chose to stand on the right side of history, but let’s not forget it took them more than two years – and millions in Russian taxes paid into Putin’s war machine. Closing operations now doesn’t erase the past.
“To show genuine accountability, we’re calling on Unilever to donate their Russian profits to aid Ukraine’s rebuild and recovery. Actions, not headlines, will tell us if they’re serious.”
skip past newsletter promotionSign up to Business Today
Free daily newsletterGet set for the working day – we’ll point you to all the business news and analysis you need every morning
Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.after newsletter promotion
Many western brand owners, including Levi’s, have paused exports to Russia since the invasion of Ukraine, and some, including McDonald’s, Heineken and the beauty brand Lush, have sold their operations in Russia to local operators. The brewer Carlsberg was in the process of selling its Baltika Breweries subsidiary there when it was taken over by the state last year.
Schumacher promised to look at Unilever’s presence in Russia with “fresh eyes” when he took over as chief executive last year.
A year ago, Unilever said it “continued to look at out options” after “recent regulatory developments in Russia”.
Schumacher said this summer that Unilever’s goal was to “minimise economic contribution” to the Russian state, adding that it continued to monitor operations in the country “very closely. This is a very tough situation and very much on my mind.”
This article was amended on 11 October 2024. A previous version said that Diageo had paused exports to Russia since the latter’s invasion of Ukraine; in fact, Diageo has exited the country entirely.
