On Thursday 17 September, Vladimir Putin signed a decree taking operational control of Nestlé’s Russian business. The next day, Nestlé SA (SWX: NESN) share price closed down 2.6% in Zurich.
It was global news, and no one could have fathomed that Singapore would sneeze from this cold in Russia.
On Monday 21 September, Food Empire Holdings Ltd (SGX: F03), the Singapore-listed coffee company, fell 10%.
The owner of the seized business barely moved, while a company standing next to it lost almost four times as much.
The odd observation is the question for this piece. Food Empire relies on Russia as its key market, and it earns about a third of its profit in Russia. But as of time of writing, Food Empire itself hasn’t been named in any Russian decree.
Is there a mistake, or a fundamental hit?
Is “Seize” the right word?
Russia didn’t really confiscate Nestlé’s business. The two subsidiaries – Nestlé Russia and Nestlé Kuban, are under “temporary administration”. The Swiss food giant still owns them on paper, just that a Moscow company LEV Management runs them.
But “seize” is still a fair word. Back then, Carlsberg had its Baltika brewery put under temporary administration in July 2023. About 16 months later, Russia approved a sale to a buyer led by a Baltika executive for about US$321 million. Carlsberg previously valued its Russian net assets at about US$1.06 billion.
Danone also went through temporary administration and its business was also later sold was later sold at a reported 56% discount to its market value.
Temporary administration seems to be a prelude to takeover based on historical patterns.
So why isn’t Nestlé’s share price tanking?
Nestlé’s Russian business made about CHF 2 billion in sales in 2021, roughly 2% of the group. After Nestlé scaled back following the Ukraine invasion, analysts now put it closer to 1%.
For a company with CHF 43 billion of sales in the first half of 2026 alone, losing Russia is painful but not structural. The shares fell from CHF 78.33 to CHF 76.27 on 18 September and have recovered to CHF 77 as of 28 September.
What happened the to Food Empire?
Food Empire’s correction is an interesting one.
On 17 September, Putin signed the decree. On 18 September, a full trading day, Food Empire’s share price was flat.
The selloff came on Monday 21 September, surprisingly, after a broker’s positive note. CGS kept its Add rating and S$3.33 target, arguing that Food Empire could gain market share if Nestlé’s operations are disrupted. The stock fell 10% to S$1.89 that day, on about 9 million shares, seven times Friday’s volume.
But the note also stress-tested what happens if Russia disappears from Food Empire’s P&L. If something similar were to happen, FY2027 net profit would fall by 29.6%, from US$83.7 million to US$58.9 million.
This was the believed simulation that likely spooked the market. While the Nestlé decree was the news and Nestlé was the victim, the CGS note connected it to Food Empire and attached a number to it. The market saw this as a red flag and risk and acted.
Later that evening, after the market had closed, Food Empire replied to an SGX query saying its Russian operations “continue in the ordinary course of business” and that the developments “have not had any impact”. By then the damage was done. The stock has since recovered to S$1.96.
Could the Swiss-listed Nestlé be falling due to the Malaysia-listed one?
While all of this was going on, Nestlé Malaysia Berhad (KLSE: NESTLE) was having a bad month of its own.
Nestlé Malaysia closed at RM90.04 on 28 September. The stock is down around 10% in September and about 21% year-to-date. But almost all of September’s fall came before the Russia decree.
The stock has had a rough couple of years. Gaza-related boycotts hurt sales in 2024, and the Swiss parent sacked its CEO in September 2025. Neither explains this year’s fall, though.
Fundamentals are still there. The company might not be growing by leaps and bounds, but revenue has recovered from the Gaza boycott dip. After falling 11.7% in 2024, it grew 10.5% in 2025 and another 7.5% in the first half of 2026.
Profit is recovering too. Net profit rose about 32% to RM360 million in the first half of 2026, while revenue grew 7.5%.
So the business isn’t the problem. The valuation is. In January the stock traded at about 50 times forward earnings, above its long-run average of about 42 times. Coming off a stretched valuation like that, it’s reasonable to see the share price falling towards a fairer level. It now trades at about 32 times.
My read
Going back to Food Empire, the risk or fundamentals did not change. The sentiment did.
Everything that matters about Food Empire’s Russian exposure was true on Friday. About a third of profit was at stake, and the decree had just shown how Russia can treat foreign-owned businesses. Friday’s market ignored it. Monday’s market, prompted by a broker note that was actually bullish, priced roughly a one-in-three chance of Food Empire losing the whole Russian business.
Food Empire at S$1.89 was an overreaction to the timing, if not to the risk itself.
Valuation is fair, borderline premium against its own history. There may be more upside if Nestlé Russia’s market share is surrendered to Food Empire. But that assumes that the worst won’t happen.
Although the worst is unlikely, the risk to reward is not favourable, at least for me.
But for Singapore-centric investors, this might be a case that you want to dig deeper into for conviction, whether you land on the bull or bear case!
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