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McDonald's, Coca-Cola, and Starbucks signs in Moscow, Russia. Photojoiner/Alamy

Coca-Cola, Pepsi and Starbucks join McDonald's in halting business in Russia after public pressure

The company’s CEO said it “cannot ignore the needless human suffering unfolding in Ukraine”.

LAST UPDATE | 8 Mar 2022

STARBUCKS, COCA-COLA AND PepsiCo have joined McDonald’s today in suspending business in Russia, after public pressure increased on multinationals to penalize Moscow for its invasion of Ukraine.

Russia’s attack on its neighbor has drawn unprecedented sanctions and international condemnation that has piled up as the military offensive has taken a growing toll on Ukraine.

“Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine,” Coca-Cola said in a statement announcing that it was “suspending its business in Russia.”

Companies from Apple to Visa have already announced curtailed or suspended operations in Russia since the attack began last month.

“Given the horrific events occurring in Ukraine we are announcing the suspension of the sale of Pepsi-Cola, and our global beverage brands in Russia, including 7Up and Mirinda,” PepsiCo said in a statement.

Earlier today, fast-food giant McDonald’s has announced that it will temporarily close all 850 of its restaurants in Russia, becoming the latest Western company to halt operations in the country following the invasion of Ukraine.

However, the company said it will continue to pay its 62,000 employees in Russia “who have poured their heart and soul into our McDonald’s brand to serve their communities”. 

In a letter to employees, the company’s CEO Chris Kempczinski said: “In the thirty-plus years that McDonald’s has operated in Russia, we’ve become an essential part of the 850 communities in which we operate.”

“At the same time, our values mean we cannot ignore the needless human suffering unfolding in Ukraine,” he said.

Kempczinski said McDonald’s will continue to assess the situation and determine if any additional measures are required going forward.

“At this juncture, it’s impossible to predict when we might be able to reopen our restaurants in Russia. We are experiencing disruptions to our supply chain along with other operational impacts. We will also closely monitor the humanitarian situation,” he said.

The company, along with several other global brands, has been facing threats of boycotts for continuing to operate in Russia following the invasion of Ukraine.

Public pressure to end operations

Coca-Cola, Starbucks and Pepsi are among some of the companies who had been criticised on social media for remaining silent on the subject, with many users urging them to pull their businesses from the country.

Starbucks had previously said that its 130 coffee shops in Russia are owned by a Kuwaiti conglomerate and Yum Brands said its approximately 1,000 KFC and 50 Pizza Hut restaurants are nearly all operated by independent owners.

After public pressure, the company released an update today.

“We have decided to suspend all business activity in Russia, including shipment of all Starbucks products,” noted the firm. Starbucks CEO Kevin Johnson said its licensed partner “has agreed to immediately pause store operations and will provide support to the nearly 2,000 partners in Russia who depend on Starbucks for their livelihood.”

Late last night, Yum Brands announced it “has suspended all investment and restaurant development in Russia” and Estee Lauder “decided to suspend all commercial activity in Russia.”

Some businesses may have legitimate reasons to stay, several experts in ethics and communications strategy told AFP.

Companies may be hesitant to leave because they think they can mediate or because they make essential products such as pharmaceutical ingredients, said Tim Fort, a professor of business ethics at Indiana University.

But he said they have to pick a side “and it doesn’t strike me as this being very difficult to pick” given Russia’s human rights and conflict law violations.

“Any one company leaving the country isn’t going to tip the balance… but there’s a cumulative effect,” Fort noted.

‘What’s going on?’

He said a company as well-known as McDonald’s can have influence in Russia at a time when the general population has almost no access to sources of information other than the official messaging on the invasion.

Russians can “survive without the Big Mac,” but they may ask “why is McDonald’s closed? What’s going on? It’s a more powerful signal in that sense,” Fort said.

Richard Painter, a professor at the University of Minnesota, said the companies “should think about the message that needs to be emphasized: that Russia cannot do this to Ukraine… while at the same time participating in the international economy.”

The economic sanctions imposed on Russia with broad consensus among Western governments along with the voluntary withdrawal of multinationals “is really the best way to deal with Russia,” said Painter, a former White House ethics lawyer.

Brian Berkey, who specializes in corporate ethics at the University of Pennsylvania, said some companies may be betting the criticism will ultimately subside.

Other crisis situations, such as the Israeli-Palestinian conflict, led to calls for boycotts against certain companies but without much effect.

Support for such initiatives is not always unanimous even though most people “in the United States and in Europe are unified in thinking that what Russia is doing is clearly unacceptable,” he said.

Mark Hass, a communications specialist at Arizona State University, said the economic interest of companies that have chosen to stay in Russia “outweighs the reputational one.”

But “if social media starts identifying you as a company that’s willing to do business with an autocratic aggressor, who’s slaughtering thousands of people in the Ukraine, you’re in big trouble,” Hass said.

“And it will hurt business more broadly than just in Russia.”

With reporting from © AFP 2022

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