Over the course of the last 40-50 years, Nestlé has been somewhat of a controversial company. Consistently making headlines (often not in a good way) Nestle has obviously garnered much attention as the largest food services company in the world. By investigating some of their social and environmental policies, it is possible to understand how their relationship with the media and the public has affected profitability.
Some of Nestlé’s biggest controversies date back to over 20 years ago. While the second half of the 20th century was not to kind to any company centered around processed foods, Nestlé had quite a few big stumbles. The baby formula which Nestlé was founded around created controversy and negative press in 1977. Nestlé began aggressively pushing their baby formula in developing nations by offering some free at first. When mothers couldn’t afford to keep buying the expensive formulae and babies started refusing to breast feed after eating it, many young children starved to death. A boycott was formed in response, which technically is still in place by many organizations. Nestlé has also upset many people with their water usage practices. Water usage became a big focus for Nestlé and their competitors in the 19990’s. As all these companies, including Coca-cola and Pepsi co, rushed to decrease water consumption and gain public favor, Nestlé had even more to lose. As early as 2000, Nestlé had been pushing policy makers on an international scale to shift drinkable water from a ‘right’ to a ‘need’. The difference may seem like simple semantics, but in reality this is quite problematic. Nestlé’s aim is to enable sales of their bottled water to drought stricken places at a high premium. These scandalous moments are only a select few of the many in Nestlé’s company history. This has garnered change within the company at the hands of Peter Brabeck.
Brabeck has refocused and altered the company structure in several significant moves in his history as CEO. While Nestle is currently focused on their mantra of ‘creating value for society’, Brabeck’s changes are far more numerous than this. Brabeck started in the 90s by recognizing the market trend away form prepackaged, processed foods. He transitioned Nestlé into a health and wellness company, instead focusing on a sort of ‘quality over quantity’ policy. In addition, Nestlé Health Sciences, or NHS, has been created to head up the research and development department of Nestlé’s operation. Coupling this with Nestlé’s expansion into skin healthcare and vastly improved water sourcing, it’s understandable how Nestlé survived the controversies it has generated. Brabeck seems to deserve much credit for the company’s continued success as he has pushed his ‘Creating Value for Society’ to every edge of the company, and successfully rebranding Nestlé as a health company.
Whether or not the change is wholly genuine remains to be seen, but the public image of Nestlé has survived where it perhaps would not have otherwise. Perhaps we should be cautious when granting Nestlé the label of success, as it is a continuous struggle with public image, but for the mean time, it is impossible to deny how Brabeck has piloted Nestlé through tumultuous market shifts into favorable positioning among the health companies of the world. Although it is impossible to ignore their success in the markets accompanied by their rebranding and restructuring, Nestlé is a failure of capitalistic greed and poor environmental practice. They continue to bend rules surrounding water usage, and lead the charge in deforestation. The critical failure of the largest companies in the world to recognize the true damage their practices have is frightening for us all.
Harvard Case Study: Nestle
Michael O’Malley is a Business Administration/Theatre Double major sophomore at USC. He enjoys long walks on the beach, screaming into the abyss, and dancing with friends. He grew up in Birmingham, Alabama and does know how to read.