Withdrawal of Business in Protest of 2022 Ukraine Invasion
'Dobri' with Similar Design and Taste Fills the Gap
Russia Also Imports Original Coca-Cola from Neighboring Country
Since Russia's invasion of Ukraine, products from global companies such as Coca-Cola, which declared a 'de-Russianization,' are still being sold and distributed locally.
According to financial data firm Prodazhi, cited by Bloomberg on the 18th (local time), Coca-Cola recorded a 6% market share in the Russian carbonated beverage market as of May this year, ranking third among the best-selling carbonated drinks in Russia. The top spot was held by Milton Partners' 'Dobri Cola' (13%). Milton Partners is the Russian division of Coca-Cola HBC, responsible for the production and distribution of finished Coca-Cola products in Europe. After Coca-Cola announced its withdrawal from the Russian market, Dobri Cola, a local brand that closely replicates Coca-Cola's design and taste, was launched.
Bloomberg stated, "Even though it has been two years since Coca-Cola withdrew from Russia, Coca-Cola's distinctive red logo can still be easily found in supermarkets and restaurants across Russia," adding, "Considering that the newly launched Dobri Cola's taste is almost indistinguishable from the original, Coca-Cola remains the top carbonated beverage manufacturer in Russia." Garrett Nelson, an analyst at CFRA Research, also diagnosed, "The profits Coca-Cola used to earn in Russia have simply been transferred intact to Coca-Cola HBC through Dobri's success."
Coca-Cola announced its withdrawal from the Russian market in February 2022 as a protest against Russia's invasion of Ukraine. In response, Russia passed legislation allowing brand products to be sold without the trademark owner's consent and imported Coca-Cola from neighboring countries Georgia and Kazakhstan. Coca-Cola HBC explained that Coca-Cola's sales volume in Russia increased by 12% last year but is still only about one-third of the peak level in 2021. At that time, Coca-Cola's market share in the Russian carbonated beverage market reached 26%.
Coca-Cola is not the only company unable to completely leave Russia. According to research from Yale School of Management, over 1,000 multinational companies announced plans to scale back their Russian operations since 2022 but remain stuck in Russia due to financial reasons. Global food and consumer goods companies Nestl? and Unilever abandoned plans to exit Russia after the Kremlin demanded they sell their large local factories at a low price as an exit tax. Similarly, brewing company Carlsberg and yogurt giant Danone, which were preparing to leave Russia, had their company assets seized.
Bloomberg noted, "For companies still remaining in Russia, it is difficult to obtain regulatory approval to transfer money out," adding, "While it is challenging to repatriate profits earned in Russia, continuing business operations there is not bad from a profit perspective." In fact, PepsiCo, Coca-Cola's rival, stopped production and sales of Pepsi-Cola and Mountain Dew in Russia in September 2022, yet existing Russian brand products performed well, with the Russian division's beverage sales increasing by 12% last year to $2.3 billion (approximately 3 trillion won).
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