- Procter & Gamble will keep investing in Russian plants in 2018 and beyond.
- The U.S. consumer goods group reaffirmed its commitment despite political risks.
- The maker of Tide detergent and Gillette razors plans to invest around $50 million in its two plants in 2018.
The maker of Tide detergent and Gillette razors plans to invest around $50 million in its two plants in 2018, Sotirios Marinidis, P&G's head for Eastern Europe and Central Asia, said.
"We are committed to the market, we are committed to the Russian consumers. Until today we have invested roughly $800 million and counting," Marinidis told Reuters.
"I think that's in the interest of both the U.S. and Russia to continue to have good business relationships going forward. That's all I can hope for and if something different happens, we need to deal with it," he said in an interview.
Russia's lower house of parliament this week approved a bill that would give the government authority to ban trade in certain items with countries deemed to be unfriendly to Moscow, in response to a new round of U.S. sanctions.
Lawmakers are also debating legislation that would make it a crime for a Russian citizen to comply with the U.S. measures.
Marinidis said he hoped the situation would not deteriorate to the point where P&G cannot serve consumers.
The environment has worsened since 2014 when the rouble tumbled due to sanctions and a drop in oil prices, raising the cost of imported goods and turning Russian consumers into bargain hunters.
"It's a very challenging market... 60 to 80 percent of everything sold is sold on promotion and up to 40 percent discounts," Marinidis said.
As a result, P&G has increased local production and has been exploring savings elsewhere to avoid passing higher raw material costs onto consumers.
The lion's share of the new, 3 billion roubles ($50 million) investment would be in a new distribution center at the Novomoskovsk plant, south of Moscow, to improve supply chain efficiency, Marinidis said.
P&G also plans to modernize production lines at its Gillette plant in St Petersburg and expand its capacity by 25 percent.
In 2016-2017, it invested a combined 6 billion roubles in the two plants and Marinidis said half of everything P&G was selling in Russia was now produced locally.
"What is hurting structurally our business is the rouble volatility," he said.