Mondelez Restructures European Division Amid Russian Business Controversies

Mondelez International, the powerhouse behind Oreo cookies, has initiated a significant organizational overhaul within its European sector, specifically targeting its Russian operations. This strategic move comes after enduring boycotts and facing mounting pressures from shareholders and activists advocating for the company’s complete withdrawal from Russia. Despite ceasing advertising efforts within the country, Mondelez has not fully exited the Russian market.

In an effort to navigate the complex landscape, Mondelez has introduced new leadership for its Russian business, aiming to establish it as an independent entity. According to internal memos obtained by Reuters, Vince Gruber, Europe President of Mondelez, has appointed a new general manager to helm the Russia division, which will now function as a “standalone organization”. This restructuring, however, might not suffice to appease critics who have scrutinized the company’s continued presence in Russia through its three factories and the ongoing sale of products like Milka chocolate.

Corporate governance experts have voiced skepticism regarding the effectiveness of this restructuring, questioning the ethical justification of maintaining business operations in Russia for non-essential goods like confectionery.

Mondelez’s response emphasizes the company’s decision to localize its Russian business operations by the end of 2023, aiming for self-sufficiency in production and distribution within Russia, with no cross-border imports or exports of finished goods between Europe and Russia.

The backdrop of international brands like McDonald’s and Starbucks exiting Russia post the 2022 Ukraine invasion puts Mondelez’s actions into perspective. Despite the absence of sanctions on food products, the ongoing conflict poses significant risks to Mondelez’s operations, including potential physical damages and stakeholder scrutiny regarding its Russian activities.

As part of the restructuring, Mondelez plans to divide its European operations into 14 “commercial units,” focusing on more localized management. Alexey Blinov, a Moscow-based finance executive at Mondelez, has been named the new general manager for Russia, indicating a commitment to adapt and possibly mitigate the backlash from its business decisions in the region.

This reorganization reflects Mondelez’s attempt to balance corporate responsibility with business interests amid geopolitical tensions, striving to maintain its position in Europe’s competitive confectionery market while navigating the ethical dilemmas posed by its Russian operations.