Since Russia invaded Ukraine one year ago, more than 1,000 companies have said they’re voluntarily curtailing operations in Russia above and beyond what’s mandated by international sanctions.
Researchers at the Yale School of Management tracked corporate responses to the war and graded companies from A to F. Companies that postponed future investments and development while continuing business in Russia got a D, while those that temporarily curtailed most or nearly all operations while keeping return options open got a B. Failing companies, like the Chinese e-retail giant Alibaba and China Air, continue to operate in Russia today.
To get an A, companies had to exit Russia completely, like McDonald’s and Starbucks, which both announced they would leave the Russian market last May. As these companies pulled out, new Russian owners bought the abandoned assets and reopened under new names. Starbucks became Stars Coffee, Pizza Hut became Pizza N, and McDonald’s became “Vkusno & tochka,” or Tasty and That’s It.
Old vs. new rebranded Russian logos:
Some of the rebranded logos barely hide their Western origins. Krispy Kreme's former franchisee in Russia reopened as Krunchy Dream with a cursive wordmark logo that recalls the doughnut shop’s past identity, and Stars Coffee Russified the Starbucks Siren and replaced the former owner’s Starbucks Green with mint and brown.
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"The common element is indeed the circle logo,” Stars Coffee co-owner and pro-Putin Russian rapper Timati told France 24, a French state-owned network, after buying the rights to 130 former Starbucks locations in Russia with a partner. “It’s the Swan Princess, a Russian beauty in a traditional Russian kokoshnik.”
The replacement brands for Sprite, Fanta, and Coca-Cola are Street, Fancy, and CoolCola, with new branding that gives supermarket generic. Though the Coca-Cola Company still operates a coffee chain in Russia, it’s suspended other operations, and its former Russia-based franchisee now sells the new soda brands. Top consulting and accounting firms PricewaterhouseCoopers and Deloitte have new Russian owners who’ve rebranded the companies as Technologies of Trust and Business Solutions and Technologies, respectively.
These rebrands are some of the most visible evidence of the wide-ranging sanctions campaign waged by the West since the invasion. About $300 billion worth of Russian Central Bank assets have been frozen by Western sanctions, according to the U.S. State Department, and there have been more than 2,700 U.S. sanctions against Russia, according to the Atlantic Council, a think tank. More than half a dozen Putin-aligned oligarchs’ superyachts have been seized as of last year.
The sanctions haven’t been as devastating as initially expected, however. Russia is the most sanctioned nation on Earth, but there are holes. China, Russia’s biggest trading partner, is among the countries that haven’t followed along with Western sanctions, and despite pressure, many companies still haven’t left. While Yale researchers count 517 companies that have completely withdrawn from Russia, 573 companies received a C, D, or F grade for scaling back, buying time, or digging in.
These Russian rebrands speak volumes about the role consumer brands play in diplomacy. McDonald’s and Pizza Hut arrived in Moscow the year before the Soviet Union collapsed in 1991, giving Muscovites a taste of the West. Mikhail Gorbachev starred in a 1998 commercial set in a Moscow Pizza Hut that showed a father and son arguing about the final Soviet leader’s legacy. The father blames Gorbachev for political instability and the son credits him for bringing freedom. The mother steps in to settle the argument: “Because of him we have many things, like Pizza Hut,” which everyone agrees on. The ad did not air in Russia.
Perestroika and glasnost brought American logos to Russian cities, but in a new era of Russian aggression, the knockoffs are growing their market share. Ochakovo, the Russian drink producer that bottles CoolCola, said it’s increasing its bottling capacity by 2.5 times to fill the vacuum left by fewer Western brands. Tasty and That’s It is expanding, reaching a deal last year to take over 25 McDonald’s locations in Belarus.
Russia’s war has resulted in the deaths of thousands of Ukrainian civilians and the deaths and injuries of hundreds of thousands of Russian and Ukrainian soldiers, and it’s shattered Thomas Friedman’s 1996 theory that countries with McDonald’s don’t go to war with each other. The so called “Golden Arches Theory of Conflict Prevention” reasoned that the fast food burger chain’s presence in a country signaled a robust middle class and global integration, factors that discouraged war.
Russia’s invasion of former Soviet republics, though — first Georgia in 2008 and Ukraine today — are proof of a new era of international relations. The Russian successors of Western consumer brands are signs of a global realignment, and authoritarians now disregard the peace McDonald’s once promised.
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