Amsterdam-based JDE Peet’s, the world’s second-largest packaged coffee maker, has reaffirmed its commitment to remain in the Russian market despite facing sanctions and criticism. In an interview with the Wall Street Journal, CEO Fabien Simon explains the reasons behind the company’s decision to stay in Russia.
Simon acknowledges that the ongoing conflict between Russia and Ukraine is likely to be an enduring war, and JDE Peet’s is prepared to find a lasting solution. He points out that coffee and tea, the company’s essential products, are not subject to sanctions. Furthermore, JDE Peet’s aims to protect the 900 employees it has in Russia by staying in the market. Leaving the country could result in its brands and intellectual property being seized and given to a third party.
While JDE Peet’s acknowledges that its initial statements may not have satisfied everyone’s expectations, CEO Simon emphasizes the company’s authentic and honest approach. However, he also states that changes will be made to protect its global reputation.
One significant change is that JDE Peet’s will stop supplying several international coffee brands to Russia. This includes Tassimo and Moccona, as well as new products for its Jacobs coffee brand. However, Jacobs coffee, which is produced at a JDE Peet’s plant in St. Petersburg, will continue to be available in the market under a new name, Monarch. The brand will use similar colors and fonts to ensure consumers can still recognize the product.
JDE Peet’s decision to continue operating in Russia has received criticism, even from its own employees and Dutch lawmakers. Earlier this year, Amsterdam authorities questioned why the company had not followed in the footsteps of Starbucks, which exited the Russian market. Simon responded that Starbucks coffee is considered more of a luxury item compared to JDE Peet’s everyday coffee and tea products.
Prior to the Ukraine conflict, Russia accounted for 5% of JDE Peet’s revenue. However, the company recently reported a decline in revenue contributions from Russia in the first half of 2023, and they anticipate it will be significantly lower in the second half due to reorganization efforts in the Russian business.
Despite these challenges, JDE Peet’s remains committed to the Russian market and believes in finding enduring solutions to navigate the ongoing geopolitical tensions. The company’s decision to stay not only demonstrates its dedication to its employees but also ensures the protection of its brands and intellectual property. JDE Peet’s understands the importance of adapting its business practices while maintaining its authenticity and global reputation.
As the conflict between Russia and Ukraine continues, JDE Peet’s will monitor the situation closely and make appropriate adjustments to remain resilient in the market. The company’s decision to stay is a testament to its long-term vision and commitment to providing essential products to consumers in Russia.