Russia Bids Farewell to Western Brands but Creates Its Own Versions

After most Western brands exited the Russian market, it didn’t take long for Russians to decide that the war with Ukraine was the ideal moment to strengthen their own market and turn to domestic alternatives. Putin’s iron fist at the state top, isolation from the West, and self-sufficiency – all this reminds us of Russia’s not-so-distant past, but that of the Soviet Union.

The Soviet Moskvitch Returns to the Streets

Due to the departure of major companies such as Coca-Cola, Renault, McDonald’s, and many others, Russia has decided to create its own versions of these brands. Additionally, they have decided to return to the production of cars that once roamed the streets of Moscow in times we recently felt were just part of history. The Soviet Moskvitch, produced since 1946, is set to return to the streets, as reported by Reuters.

Despite the fact that Moskvitch went bankrupt in 2006, after which the factory was taken over by Renault, last week the French car manufacturer announced its exit from Russia in an agreement with the Russian government. According to the agreement, Renault will sell its 68% stake in AvtoVAZ, the largest Russian car manufacturer, which will be acquired by NAMI, the Moscow research institute for automobiles and automotive engines.

Their plan is reportedly to create a car that will have all the basic functions, including an engine that they will produce themselves. Everything else is currently difficult to procure, so they stated that there will be no ABS, airbags, ESP, and similar additions that make the driving experience more modern and safer.

Renault has not yet disclosed the details of the acquisition, but anonymous sources told the New York Times that Renault was reportedly paid a symbolic amount of one ruble, with an alleged option to return to the Russian market within six years.

– Today we made a difficult but necessary decision and are making a responsible choice for our 45,000 employees in Russia – said Renault’s CEO, Luca de Meo, last week.

Although the company did not immediately reveal how much funding they are receiving from the sale, they indicated that they will suffer a financial hit of 2.2 billion euros in the first half of this year, which has inevitably reduced their financial outlook for the end of this year.

The agreement between Russia and Renault could not be clearer evidence that the Kremlin, despite the current situation, is very much interested in keeping the space for Western companies in Russia open when the dust settles and the war ends.

What the West Creates, Russia Copies

Along with Moskvitch, a new range of non-alcoholic beverages will soon emerge in Russia as substitutes for brands such as Coca-Cola, Fanta, and Sprite. They will be replaced by the not-so-original CoolCola, Fancy, and Street, and you can guess whose imitation they are based on the names and timing.

These products are being launched by the Russian beverage manufacturer, Ochakovo, which has been present in the market since the Soviet era or 1978, all due to the absence of the aforementioned non-alcoholic drinks on Russian shelves ever since Coca-Cola suspended its operations in Russia in March.

Although Coca-Cola products can still be found in stores, prices have jumped by approximately 200% since the suspension, making Ochakovo appear as a budget version of popular Western non-alcoholic beverages.

Interestingly, this is not the only company that has tried to capitalize on Coca-Cola’s exit from Russia. In April, the Russian Slavda Group launched the production of Grink Cole, and in early May, the Syktykarpivo factory also began producing Komi Cole.

McDonald’s Sells Restaurants to Alexander Govor

Along with Coca-Cola, McDonald’s is also leaving Russia, having decided to sell all its restaurants there to one of the license holders in the country, entrepreneur Alexander Govor, who will operate the restaurants under a new name.

Recall that McDonald’s temporarily closed hundreds of its outlets in March, and they paid dearly for that decision – about 55 million dollars per month.

Govor, who currently manages 25 restaurants in Siberia, has agreed to purchase another 850 of their restaurants, McDonald’s recently announced. There is currently no information on the price at which the restaurants were purchased, but it is known that its Russian operations accounted for about nine percent of the total annual revenue for the American company, amounting to two billion dollars annually.

The Russian entrepreneur has also agreed to retain 62,000 Russian employees for at least two years under the same conditions, as well as to finance existing obligations to suppliers, landlords, and utility services.

What the new restaurants will be called and which other Western brands Russians will replace with their own remains to be seen.