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this post was submitted on 07 Sep 2023
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Because Pepsi doesn't just manifest out of nowhere in Russia. They are brining need for supplies, transportation, repair, maintenance etc.
In other words economic movement and income for the country.
Could some other fully Russian company take over the same thing? Maybe, but not without startup investment and knowledge. All of that isn't free, and if an economy is unstable, no-one is going to commit money into it.
That's how Fanta became a thing after Coca Cola withdrew from Germany in WWII.
Using that example, yeah there's an economic cost to doing that. They may not be able to get the ingredients they could get before and would have to do some work in coming up with a new recipe with the ingredients they have available. Figure out supply chains for the new ingredients, all that kind of thing.
Also consider what happened with Fanta after the war. Coca Cola returned to Germany and resumed ownership of their bottling plants. "Oh people actually like this Fanta thing you came up with while we were gone? Yeah that's cool... we own that now."
How much is someone going to invest in a company that is operating in a bottling plant owned by Pepsi, who may return and take it all over again after Putin is gone?
At least the knowledge is already there. Pepsi is not going to take the workers in Russia away with them. And as far as I know the investment is mostly the cost of buying the assets from the western company. For example the russian McDonalds branch just reopened with a new name at the same locations.
Not all the knowledge is there. Some ingredients are imported, in order to protect trade secrets and ensure global consistency.
After Russia took over McDonald's, customers did notice a change in how the food tasted.
If they imported some ingredients before and then had to switch to local suppliers after the pullout ... doesn't this also benefit Russia, since now all of the production is national and they require less imports?
It is not like making food or soft drinks is really high tech. At worst, it is just going to taste a bit different if the ingredients are different. Or other, already local companies might gain market share.
That depends on if they can keep their customer base.
If your local McDonald's left town and a place named Burgers-R-Us took its place, would the new restaurant sell as many burgers as the McDonalds did? I doubt it. McDonald's devotes vast resources to build its brand and get customers into their restaurants. Smaller companies don't have those resources.
Good point. Thanks for your insights.
Despite what people say, imports aren't necessarily a bad thing. I mean it's literally stuff that's coming into a country that the people of that country now have. Having more stuff is good. Having less stuff is bad.
Trade means the people that can most efficiently produce a certain good in a country most efficiently do that while the people in your country who can most efficiently produce another kind of good do that. Russia having to produce all their goods locally is an economic inefficiency.
And yes, that economic inefficiency means more jobs for Russians. And that's great! I want Russians to be working in jobs to supply their McDonald's substitute instead of working on a factory line making tanks.
Yeah but how does that meaningfully impact their lives? If McDonalds ceased to exist here today, I might grumble a bit and then move on to some other fast food joint. And in Russia where people are already resigned to not having any say in the matter?
Not saying these companies shouldn't pull out, they should. But unless it's something fundamental (chip fabs, steel production, etc.) it won't have that much impact. These luxury goods aren't going to make any difference.
Let's put it this way. There are about 250 McDonald's in NYC. If they were all replaced by an Arby's, there is no way they would be as profitable as the McDonalds were. Arby's cannot match the brand or advertising power of McDonald's.
NYC does not want 250 Arby's, and consequently some - probably most - of the Arby's would close. That certainly would change the lives of those employees.
So, do Russians want Tasty-and-that's-all as much as they wanted McDonald's? I doubt it.