War in Ukraine: More Scots firms halt sales to Russia

A growing number of high-profile Scotland-based food and drink firms have halted exports to Russia following the invasion of Ukraine.

Whisky makers such as Edrington, Diageo and Chivas Brothers have all confirmed they have suspended Russian sales.

Others that have severed ties include Walker's Shortbread, Caramel Log maker Tunnock's and Irn-Bru producer AG Barr.

Last week, Scottish ministers urged businesses to stop all trading with Russia.

Many major Western brands, such as Apple, Netflix, Levi's and Jaguar Land Rover, have announced they are pausing activities in Russia.

After coming under pressure, McDonald's has now said it will temporarily close its restaurants in Russia - thought to be about 850 and employing about 62,000 people. It said it would continue to pay its staff.

The Coca-Cola Company and Starbucks have also now suspended operations in Russia.

Scotch whisky producers are among major companies based north of the border to have pulled the plug on the Russian market since the start of the war in Ukraine.

According to the latest industry data, direct whisky exports to Russia amount to £28m a year, while the figure for Ukraine is £3.3m.

Diageo, whose whisky brands include Johnnie Walker and J&B, said last week it had "paused" exports to Russia.

Diageo's business in Russia contributed less than 1% to sales and operating profit in the first half of the current financial year.

The spirits giant has just under 300 employees in Russia but only a handful in Ukraine.

Its employees in Russia - who are mainly in sales roles - remain in employment.

A spokesman said: "Our priority is the safety of our people in Ukraine and the wider region.

"We have paused the export of our products to Ukraine and Russia while we focus on supporting our employees."

Edrington, which produces The Famous Grouse, The Macallan and Highland Park, confirmed they too had suspended shipments to Russia but provided no further details.

Pernod Ricard, owner of Chivas Brothers, also confirmed that it closed its offices in Ukraine "very early" after the invasion and suspended sales last week.

In a statement, the company said: "Our utmost priority is the safety of our colleagues and their families. This has been our focus from the very beginning."

The Scotch Whisky Association said it continued to pass "all relevant guidance" on exports from the Scottish and UK governments to member companies so they could make individual business decisions.

It is estimated that about 2,000 people work directly for the industry in Ukraine and Russia.

A spokesman for the SWA said: "Our thoughts are with all those affected and displaced by the conflict. The welfare of industry employees working in Ukraine and Russia is paramount."

Meanwhile, Uddingston-based bakery firm Tunnock's reported that it had stopped exporting Caramel Logs, Caramel Wafers and Wafer Creams to Russia.

The Russian market represents less than 1% of the company's annual turnover, which amounted to £56.5m in the year to February 2021.

The company said: "In view of what has happened we will no longer be supplying our distributor (in Russia)."

Walker's Shortbread, which is based in Speyside, said it took the decision to stop exporting to Russia at the time of the invasion nearly two weeks ago.

A spokesman said: "The board decided to cancel all future orders to Russia."

Walker's, which said exports to Russia were a "pretty small" part of its overall revenues (£132.4m in 2020), has also written off £2,000 owed to them from a previous order by its Russian distributor.

"The company will not have any future dealings with them," the spokesman added.

Last week, Irn-Bru maker AG Barr said it had cut ties with the Russian market as a result of the invasion.

Meanwhile, Scottish engineering company Weir Group has said it is "actively assessing the situation closely" in Ukraine and Russia.

In its 2021 annual results, released last week, it stated that "the rapid escalation of events in Ukraine and Russia has created significant uncertainty about our operations and trading in those countries".

It added: "Our overall exposure is small, with combined Ukraine and Russia net assets of around 2% of the group total and combined revenue and operating profit being less than 5%."

The Glasgow-based mining and aggregates specialist said it would "update further as required".

Last week, temporary power giant Aggreko announced it was selling its significant operations in Russia, but did not give a reason for the move.

The Glasgow-based firm, which supplies generators worldwide, has 500 people working in its Eurasia division, which is mainly Russian.

Its parent company, which bought Aggreko for £2.3bn last year, said the division would continue operations while a buyer was found.