Mondelez Implements Management Changes in Russian Business

Oreo cookie-maker Mondelez put new management in place at its profitable Russian business this week, according to two internal company memos seen by Reuters that reveal fresh details of a corporate overhaul in Europe.

After months of boycotts and pressure from shareholders and activists to leave Russia, Chicago-based Mondelez stopped advertising in the country but has failed to exit Russia entirely.

Appointment of New General Manager in Russia:

In one of the internal memos seen by Reuters, Europe president Vince Gruber informed staff that it appointed a new general manager to lead its Russia business, which Gruber described as a “standalone organization.”

But in his new role, the Russia general manager reports to another executive who reports to Gruber. The arrangement may not placate Mondelez critics.

Response to Criticisms and Scrutiny:

“In the law, we use the expression ‘a distinction without a difference.’ This is an attempted workaround that is not very meaningful,” said Nell Minow, a corporate governance expert and vice chair of ValueEdge Advisors.

Company’s Statement and Changes in Operations:

In response to Reuters’ questions, Mondelez said on Friday, “Effective at year-end 2023, we have set up our local business to operate more independently.” 

It added: “Products sold in Russia are now produced and distributed locally, with no imports of finished goods from Europe into Russia or exports from Russia into Europe.”

Mondelez is scheduled to present at Tuesday’s Consumer Analyst Group of New York conference in Boca Raton, Florida.

Actions in Response to the Ukraine Crisis:

McDonald’s, Starbucks, and many other global brands left Russia following its invasion of neighboring Ukraine in 2022, writing off billions in assets.

The company said in its annual report released in February that the war in Ukraine is a risk to its business that could lead to loss of life and physical damage and destruction of its property.

Challenges in Implementing Changes:

Mondelez executive Gruber told staff in one memo on Jan. 31 that the company would reorganize the European region into 14 “commercial units” with responsibility for smaller areas and individual countries.

Mondelez said last June it would make its Russian operations “standalone, with a self-sufficient supply chain before the end of the year” but did not provide additional details. 

Its Russia business is more profitable than it has been historically, the company said in its annual report released earlier this month.