Nestle's Social Irresponsibility in Developing Nations
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Case Details:
Case Code : BECG032
Case Length : 12 Pages
Period : 1998 - 2003
Pub. Date : 2003
Teaching Note : Available
Organization : Nestle
Industry : Confectionaries
Countries : South Africa
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Ethiopian Controversy Contd...
However, many observers felt that this statement by Brabeck was just an eyewash, and that the company's behavior was inexcusable. This was not the first time that Nestlé had been embroiled in controversy. The company had been castigated several times for using unethical marketing practices to promote its products in developing countries, for selling genetically modified foods without appropriate labeling, and for supporting the use of child labor in some places. Most of these offences by Nestlé had been committed in developing countries.
Background
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Henri Nestlé, the founder of Nestlé, was born in 1814 in Frankfurt, Germany. A merchant, chemist and innovator, he developed a formula for infant nutrition by experimentally combining cow's milk, wheat flour and sugar in different proportions. He called this concoction "Farine Lactee".
The formula was meant to provide nutrition to infants whose mothers were unable to nurse them. In 1867, he fed the formula to a prematurely born infant whose mother was seriously ill. He was able to save the life of the infant, and subsequently, Nestlé's popularity soared. Later in 1867, Nestlé set up a facility in Vevey, Switzerland, to produce and market the formula commercially. This was called the Nestlé Company.
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For the new company, Henri Nestlé adopted the logo of a nest with a mother bird protecting her young ones. This was in fact a graphic translation of his name, which meant 'little nest'. It was meant to convey values like security, protection, maternity and nourishment. (This symbol was later adopted as the corporate logo of Nestlé).
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Nestlé's infant formula became very popular and in 1868, he opened an office in London to match the increasing demand. By the early 1870s, he began exporting to South America and Australia, and Nestlé Milk soon became popular as a food for infants, the old and the infirm. The company also diversified into related products like condensed milk and milk chocolate. In 1875, Henri Nestlé sold the company for one million Francs, but company's name was retained. In 1905, Nestlé bought out its main rival, Anglo-Swiss Condensed Milk and thwarted a major threat. (This company was set up in 1866. It had launched an infant formula in 1878 which competed with the one made by Nestlé). Nestlé grew rapidly during the First World War (1914-1918), mainly because of government contracts... |
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