From Levi’s to Danone, Brands Face High Stakes Decision on Russian Response

Since the fall of the Berlin Wall in 1989 and subsequent collapse of the former Soviet Union, Levi’s blue jeans have held a unique role in this part of the world, not only as a symbol of Western style and values, but as a garment that stood for freedom, independence and defiance of government control.

But that run as a fashion ambassador, of sorts, ended this week, as Levi Strauss & Co. joined a growing list of other American companies and brands to renounce Russia’s attack on the Ukraine, and the company announced it was effectively lowering its denim flag of freedom for the first time in 32 years.

“Given the enormous disruption occurring in the region, which makes normal business untenable, LS&Co. is temporarily suspending commercial operations in Russia, including any new investments,” the company announced, noting that about 4% of its worldwide sales come from that region.

While the San Francisco-based retailer said it was committed to supporting its employees, partners and their families affected by its decision in the months ahead, it was also initiating a humanitarian aid program and company matching gift plan to support regional refugee relief efforts.

Everybody’s Watching

Levi’s decision, of course, did not occur in a vacuum and comes at a time when 24-hour news coverage and social media commentary are almost singularly focused on a topic that has garnered overwhelming U.S. and worldwide condemnation of an unprovoked military attack on a sovereign nation.

In light of that, with the world watching and the so-called court of public opinion on guard for any signs of dissent, the pressure on retailers and brands to take prompt action, or risk being on the wrong side of history is immense.

At a time when the punishments of so-called “Cancel Culture” are rampant, and boycott campaigns are as easy to launch as posting a Tweet, the stakes involved in not only getting it right, but doing so proactively — before being called out — are sky high.

“McDonald’s, quiet on the Ukraine war, has more exposure to Russia than other U.S. fast-food chains” a recent CNBC report declared. As a measure of what is at stake, the 900 stores the fast-food giant has built in the country over the past three decades now account for about 9% of its $23 billion in annual revenue.

And McDonald’s is far from alone in the “no comment/no action” camp for the moment, as numerous other brands and retailers have also not taken a stance.

*(Editor’s note: After this article published, McDonald’s announced that it was temporarily closing all 850 of its Russian locations, affecting 62,000 employees, dozens of local suppliers and millions of daily customers.) 

While the majority of the uncommitted companies have simply not commented, in some cases, such as with Fast Retailing, the Japanese parent of the Uniqlo apparel chain, companies have defied public opinion polling and announced that they’re staying open in Russia.

Others, such as French food giant Danone, have taken a more nuanced approach to the crisis, and tried to shed light on the complexity of their decision making.

“We have a responsibility to the people we feed, the [Russian] farmers who provide us with milk, and the tens of thousands of people who depend on us,” Danone CEO Antoine de Saint-Affrique told the Financial Times on the sidelines of an investor conference in Evian, France Tuesday (March 8), noting the company’s 8,000 local employees and more than a dozen yogurt and dairy production plants.

“It is very easy to get drawn into black-and-white thinking and demagogic positions, but in the end our reputation is about our behavior,” Saint-Affrique, who has run the company since September, added, while pledging to closely watch a situation that is still developing.

Just Say Nyet

On the flip side, the list of American powerhouse brands and industries that have already moved to sever ties with Russia is long and growing, including Apple, Google and Facebook on the tech front, and Nike, Under Armour, H&M, and Ikea on the retail side of things, and dozens of global financial institutions that have moved to freeze out Russian finances.

Even so, the corporate contrasts are many as every new company that takes a stance provokes questions as to why its competitors have not. For example, Royal Dutch Shell’s withdrawal announcement Tuesday, which followed similar statements from BP and Exxon last week, has undoubtedly put pressure on rivals who have yet to publicly take a stand.

As the military attack on Ukraine approaches the two-week mark, and public interest in the conflict shows no signs of abating, a growing number of “score keeping” sites have emerged that are tallying up the “In” or “Out” votes, to make it easy for consumers to check up on the retailers and brands they like, and act accordingly.