PepsiCo, Russia's Coca Cola Hellenic to Close Plants in Russia

By Olga Razumovskaya

MOSCOW--PepsiCo Inc. (PEP) and Russia's Coca-Cola Hellenic on Monday said they are closing one plant each in Russia, citing the fall in the value of the Russian ruble and unfavorable economic situation.

The two companies are the latest food and drinks firms to cut production in Russia as the country slides into recession. In January, Danish brewer Carlsberg A/S (CABGY) said it would be closing two plants in Russia, and Danone Russia said it would consider closing some of its dairy plants if the economic situation deteriorates further.

PepsiCo said in a statement that it would will be closing its Ramenskoe juice-production facility near Moscow in June. The company said part of its assembly lines will be transferred to its Lebedyansky plant, one of the largest juice factories in Europe, which is situated southeast of Moscow.

In its quarterly results published in February, PepsiCo said its revenue was hit by the economic downturn in Russia, its second biggest market by revenue after the U.S. The company said then that its revenue in Russia was still increasing in ruble terms because juice and dairy were in demand among Russian customers.

Coca-Cola Hellenik, which bottles and sells good under the Coca-Cola brand and is part-owned by Coca Cola Co. (KO), said Monday it was shutting down its plant in Nizhny Novgorod, east of Moscow, partially due to the economic conditions and the weakness of the ruble.

Spokeswoman Evgenia Mogilyova said the company is in the process of optimizing its production facilities and transferring those to the more modern plants in Samara, Oryol, Moscow and Istra. The plant in Nizhny Novgorod will still function as a distribution and logistics center, she added.

Workers in both PepsiCo and Coca-Cola were offered severance packages or a transfer to different production facilities. PepsiCo said it would be firing about 400 staff members out of around 23,000 people in Russia. Coca Cola said the company would cut 100 production jobs out of 13,000 existing in Russia.

Write to Olga Razumovskaya at [e-mail]

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