Sanctions, Sales, and Stigma: A Tale on the Performance of International Brands in Russia

The full-scale Russian invasion of Ukraine in February 2022 posed a dilemma for many international brands: withdraw from the Russian market for reputational concerns or stay to make profits. We study this trade-off using novel, detailed in- formation on customer transactions of 95 global brands from 1,774 webshops that act as intermediaries. Using DiD specifications, we compare the weekly performance of brand-specific purchases of Russian and non-Russian customers before and after February 24, 2022. We document an immediate drop in sales of global brands to Russian customers by about 19%, accompanied by increases in the average price of these products by about 29%, resulting in stable revenues from the Russian market. Given that none of the scrutinized brands faced direct sanctions, the e-commerce decline likely results from reputation concerns. Our results support this interpreta- tion as especially brands under less public scrutiny see revenue increases in Russia. This provides immediate policy insights for the effective design of sanctions.