Food and beverage companies suspend operations in Ukraine

By Mary Ellen Shoup contact

- Last updated on GMT

Photo Credit: GettyImages /  Istimages
Photo Credit: GettyImages / Istimages

Related tags: Ukraine, commodities

Several international food and beverage companies have temporarily shut down operations in Ukraine following Russia's invasion to ensure the safety of employees while bracing for the long-term economic impact that skyrocketing commodity prices and potential sanctions will have on their businesses.

Finished products companies including Coca-Cola, Grupo Bimbo, Mondelēz International and international ingredient suppliers including ADM and Bunge have sprung to action as the conflict between Ukraine and Russia escalated last week with Russian troops invading Ukraine's capitol Kyiv and its second largest city Kharkiv over the weekend.

Mexican breadmaker Grupo Bimbo announced on Sunday that it suspended operations at its Dnipro plant in Ukraine, where it supplies bread products to foodservice outlets in the country, citing the ongoing crisis with Russia and to ensure the safety of its employees.

One of Coca-Cola's bottling partners also closed its plant in Ukraine late last week and asked staff to stay home, a company spokesperson said in a statement to Reuters news outlet. 

Dirk Van de Put, CEO of Mondelēz, which has an office in Kyiv and a chocolate manufacturing plant in Trostyanets, Ukraine, told Reuters that the company would shut down operations in Ukraine and Russia if the crisis became too dangerous. 

He added that Mondelēz would keep supplying the market to make sure store shelves are stocked for Ukrainian consumers.

Van de Put added that in addition to ensuring the safety of its employees, the company is protecting itself against cyberattacks from Russia as well and that it immediately took steps to safeguard its IT network against such attacks.

Other companies with a presence in Ukraine are just coming to terms with how they will react to the evolving and tense situation in Eastern Europe.

On an earnings call last week, Monster Beverage Company Co-CEO Hilton Schlosberg said: "We have a nice business in Russia, which -- we have to see what happens there, and we have a reasonable business in Ukraine. We have staff and we have people in those countries.  We don't know what will happen, and it's really concerning, frankly,"​ adding how combined with Belarus and Kazakhstan, the four countries account for 10% of the company's EMEA sales.

'ADM will use the full breadth of our global and integrated supply chain'

An ocean vessel chartered by Cargill, which has a majority stake in a deep water grain terminal located in the port of Pivdenny in the Black Sea, was hit by a projectile missile last week but Cargill confirmed that all crew members were safe and accounted for, a Cargill spokesperson told the Associated Press. 

Global ingredients company ADM, which operates an oilseed crushing plant and grain terminal in the port of Odessa in Ukraine, shut down both sites of operation following the invasion by Russian troops. 

“Currently our facilities in Ukraine are not operating, following security protocols and government guidelines. ADM will use the full breadth of our global and integrated supply chain to support the needs of our customers around the world as we manage through this difficult situation,”​ ADM said in statement to the media. 

According to another news report, US-based Bunge has also temporarily suspended its operations at its processing plants in two Ukrainian cities and grain export terminal in the Nikolaev commercial seaport. 

Vilsack: 'Something we’re going to keep an eye on'

While many European countries will be directly and immediately impacted by the crisis in Ukraine when it comes to key commodity trading, what will the impact be on a broader global scale for markets like the US?

At the USDA Annual Agriculture Outlook Forum, USDA Secretary Tom Vilsack, said that US food prices would be largely insulated from the conflict, despite US commodity markets spiking this past week. 

“From the US perspective ... I don’t foresee a circumstance where American consumers on the food side are necessarily going to impact and see the kind of impact and effect that the European consumers will see,” ​said Vilsack.

“It’s ​[Ukraine] the fourth largest exporter of agricultural products in the world, so obviously there are some serious issues. And in exports, interestingly, in a lot of different areas, it exports quite a bit to China, it exports quite a bit to the Middle East, and Africa, North Africa, and also to Europe as well. And so, it does, and will have an impact, so it is something we’re going to keep an eye on.”

 

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