Coffee giant reorganizes business to stay in Russia
Amsterdam-based JDE Peet’s will continue to work in Russia despite the sanctions and criticism, CEO Fabien Simon said in an interview with the Wall Street Journal published on Friday.
The world’s second-largest packaged coffee maker, JDE Peet’s has continued to operate in Russia and has repeatedly defended its stance, unlike a number of other international companies that left the country due to Ukraine-related Western sanctions.
“It’s most likely going to be an enduring war, which means we have to take a more enduring solution,” Simon told the WSJ. He outlined several reasons for the decision to stay in Russia. First, he said that coffee and tea are essential products and therefore are not subject to sanctions. Second, the company does not want to abandon the 900 employees it has in Russia, and third, JDE Peet’s does not want its brands and intellectual property to be seized and given to a third party, which could happen if it leaves.
“We might not have said what people wanted to hear at the beginning, but we are taking a very authentic and honest approach,” Simon said, adding, however, that in an effort to protect its global reputation, the company will be making several changes to its business in Russia.
JDE Peet’s will stop supplying a number of international coffee brands to the country, including Tassimo and Moccona, as well as new products for its Jacobs coffee brand. Jacobs coffee, which is produced at a JDE Peet’s plant in St. Petersburg, will continue to be sold in Russia, but under a new name, Monarch. The brand will use similar colors and fonts to make it easier for consumers to recognize the product.
JDE Peet’s decision to stay in Russia has drawn criticism from some of its own employees, as well as Dutch lawmakers. Earlier this year, the authorities in Amsterdam inquired why the company has not left Russia like US coffee-shop chain Starbucks. Simon said at the time that Starbucks coffee was more of a luxury item, unlike JDE Peet’s everyday products.
Russia generated 5% of JDE Peet’s revenue prior to the start of the conflict in Ukraine. However, earlier this month, the company said that revenue contributions from Russia were falling in the first half of 2023 and are expected to be “meaningfully lower” in the second half due to the reorganization of the Russian business.
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