Beyond the horror inflicted on Ukraine by Russian forces, the universal blowback from this unprovoked attack has dealt a major blow to Russia’s food-tech business. Between the financial impact of harsh sanctions and public sentiment against anyone or anything associated with Vladimir Putin, established companies and startups in every segment of this emerging space have been hit hard.
Yandex, the company, called by some the “Google of Russia,” is the biggest name on what is becoming a sinking ship. Yandex deployed its delivery robots in many U.S. locations via its partnership with GrubHub, but Yandex has fallen on hard times since the Ukraine invasion. The University of Arizona and The Ohio State University have ceased accepting deliveries from GrubHub via its Yandex partnership. In the meantime, one of the firm’s key executives, Tigran Khudaverdyan, has been hit with personal sanctions and has left the company after his assets were frozen and his personal travel was restricted.
CNN reported that Yandex, which handles about 60% of Russia’s web traffic, along with its media business and ride-sharing divisions, is losing customers to the point where it may not be able to meet its debt payments. The company headquarters is in the Netherlands but primarily serves the Russian market and is listed on the Russian Stock Exchange.
Russian grocery-delivery giant Samokat entered the U.S. market with a bang in September 2021 with a new service called Buyk (pronounced bike), which offered 15-minute delivery using empty storefronts in New York City. In the wake of harsh sanctions which froze capital assets, the company has shut down operations and this week filed for bankruptcy.
As it turns out, Russian consumers have become major consumers of plant-based meats. Fueled by the pandemic, Vegconomist reports that 10% of Russians eat plant-based alternatives while 54% are willing to add such products to their diets. Greenwise and Welldone are two leaders in the plant-based meat industry in Russia, both of which have set their sites on the European Market and beyond. Even if the Russian market is a large one, the country’s citizens are facing economic hardships and will unlikely have money to purchase anything more than basic staples. The future of these companies must be in doubt.
According to industry tracker Traxcn, the Russian food tech scene is booming with 131 food tech startups in areas such as personal meal services, online catering, plant-based meats, restaurant reservations, and cloud-based accounting services specializing in working with restaurants. Companies such as Gettable, Welldone, and Qummy (among others) will face significant challenges attracting investors and reaching consumers beyond Russia during these troubled times.
From the U.S. perspective, major fast-food companies are taking a significant hit by leaving Russia and Ukraine, leaving their operations dark. McDonald’s, for example, gets 9% or $2 billion of its revenue from Russia and Ukraine. Pepsi and Coke are suffering similar losses (Coke 1-2% of annual revenue; Pepsi, 4% of yearly income) by leaving Russia and Ukraine.
