Finance: Procter & Gamble Invests in Russia

FINANCE – Procter & Gamble is planning to pour 2.4 billion rubles, or $37 million, worth of investments in its Russian operations this year. The goal is to expand its distribution center, modernize some manufacturing, and localize more product production.

P&G has invested almost $900 million in Russia since 1991.  The investments in the pipeline indicate that the company remains committed to the Russian market even in the wake of tough relations between Russia and the United States.

Such conflicts arise from Russia’s annexation of Crimea and the alleged Russian meddling in the 2016 US elections.

“Russia was, is, and will always be a key market,” said Sotirios Marinidis, who is P&G’s head for Eastern Europe and Central Asia. “We’re here to stay; we’re here to keep investing.”

Last year, there have been threats to Russia of tougher US sanctions, which could have negatively affected P&G’s operations, but didn’t materialize.

“At the moment, you have what I would call a relatively stable environment,” said Marinidis.

According to him, P&G had invested 9 billion rubles between 2016 and 2018 to expand and modernize its two plants in Russia.

The most recent investment will improve the capacity of P&G’s Russian distribution center.  It’s also slated to modernize its Tide and baby care manufacturing and localize feminine care product productions.

Marinidis said that four of five categories’ production was already localized in Russia. Hair care, which is the remaining category, could also be localized in the future, though he didn’t provide any possible timeline.

“It’s not a race about how much (we can localize),” he said. “We need to look at a lot of things, including raw materials, sustainability, quality, cost.”

P&G has 10 focus markets, in which Russia belongs. Other focus markets include the United States, the United Kingdom, China, and Japan.

Around 80% of the company’s sales and 90% of profit after taxes come from these 10 focus markets.