Nestlé is a multinational packaged food company founded and headquartered in Vevey, Switzerland. It resulted from a merger in 1905 between the Anglo-Swiss Milk Company for milk products established in 1866 by the Page Brothers in Cham, Switzerland and the Farine Lactée Henri Nestlé Company set up in 1866 by Henri Nestlé to provide an infant food product. Several of Nestlé's brands are globally renowned, which made the company a global market leader in many product lines, including milk, chocolate, confectionery, bottled water, coffee, ice cream, food seasoning and pet foods.[1] The company stock is listed on the SWX Swiss Exchange.
Pronunciation
Some people in the English-speaking countries pronounce Nestlé's IPA: //ˈnɛsəlz//, as in the English verb nestle. This was the pronunciation used in company merchandising in Australia and the UK for much of the 20th century, e.g. Nestlé's Milkybar, and is still used today in some regions such as the Black Country.
In TV ads in the United States, Nestlé's is pronounced /ˈnɛstliːz/ or /ˈnɛsliːz/. The common pronunciation of Nestlé in Australia is now [ˈneslæɪ], due to the alteration of its pronunciation in advertising over recent years. However, the brand is derived from the founder's family name from the French-speaking part of Switzerland, where Nestlé is pronounced [nɛstle] or [nɛsle] (this pronunciation used in Vietnam also). In China, Nestlé is literally translated into 雀巢 (què cháo in pinyin, birds' nest). In Thailand, it is เนสเล่.
Nestle HQ, Vevey, Switzerland.
[edit] History
The company dates to 1867, when two separate Swiss enterprises were founded that would later form the core of Nestlé. In August of that year, Charles A. and George Page, brothers from the United States, established the Anglo-Swiss Condensed Milk Company in Cham, Switzerland. In September, in nearby Vevey, Henri Nestlé developed a milk-based baby food and soon began marketing it. In the succeeding decades both enterprises aggressively expanded their businesses throughout Europe and the United States. (Henri Nestlé retired in 1875, but the company, under new ownership, retained his name as Farine Lactée Henri Nestlé.) In 1877 Anglo-Swiss added milk-based baby foods to its products, and in the following year the Nestlé company added condensed milk, so that the firms became direct and fierce rivals.
In 1905, however, the companies merged to become the Nestlé and Anglo-Swiss Condensed Milk Company, retaining that name until 1947, when the name Nestlé Alimentana SA was taken as a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company, Alimentana SA of Kempttal, Switzerland. Maggi was a major manufacturer of soup mixes and related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company was operating factories in the United States, United Kingdom, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestlé's production more than doubled.
After the war, government contracts dried up and consumers switched back to fresh milk. However, Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the company's second most important activity.
Nestlé felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to US$6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the company's newest product, Nescafé, which was a staple drink of the US military. Nestlé's production and sales rose in the wartime economy.
Nestlé's logo used until 1970s
The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in L'Oréal in 1974. In 1977, Nestlé made its second venture outside the food industry by acquiring Alcon Laboratories Inc.
The Brazilian president, Lula da Silva, inaugurates a factory in Feira de Santana (Bahia), February, 2007.
In 1984, Nestlé's improved bottom line allowed the company to launch a new round of acquisitions, notably American food giant Carnation and the British confectionery company Rowntree Mackintosh in 1988, which brought the Willy Wonka Brand to Nestlé.
The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998), and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in June, Nestlé merged its U.S. ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America, the creator of Hot Pockets. In the same time frame, Nestlé came close to purchasing the iconic American company Hershey's, though the deal fell through.[2] Another recent purchase includes the Jenny Craig fitness firm for US$600 million.
In December 2005 Nestlé bought the Greek company Delta Ice Cream for €240 million. In January 2006 it took full ownership of Dreyer's, thus becoming the world's biggest ice cream maker with a 17.5% market share.[3]
In August 2008 Nestle Greece was accused of inappropriate advertising to children for their Cheerio cereal co promotion with Warner Brothers' Batman film, 'Dark Knight', whose controversial glorification of knife violence was highlighted by mainstream media across Europe and the US. Though the film was certified as a 16 in some European countries, Nestle packaging described their promotion as suitable for children over 18 months.
In November 2006, Nestle purchased the Medical Nutrition division of Novartis Pharmaceutical for $2.5B, also acquiring in 2007 the milk flavoring product known as Ovaltine. In April 2007 Nestlé bought baby food manufacturer Gerber for $5.5 billion.[4] [5] [6]
[edit] Acquisitions
See also: List of acquisitions by Nestlé
[edit] Products
Nestlé has a wide range of products across a number of markets including coffee (Nescafé), water, other beverages, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food. For a list of some of these brands, see List of Nestlé brands.
[edit] Business
The Nestlé Tower in Croydon. This serves as their headquarters in the United Kingdom
[edit] Management
The executive board, a distinct entity from the board of directors, includes:
* Paul Bulcke, Nestlé CEO
* John J. Harris, EVP, Chairman, and CEO of Nestlé Waters
* Frits van Dijk, EVP of Asia, Oceania, Africa, Middle East divisions
* Lars Olofsson, EVP of Strategic Business Units and Marketing
* Francisco Castañer, EVP of Pharmaceutical and Cosmetic Products, Liaison with L'Oréal, Human Resources
* Michael Powell, EVP of United Kingdoms Division
* James Singh, EVP of Finance, Control, Legal, Tax, Purchasing, Export
* Luis Cantarell, EVP of Europe divisions
* Richard T. Laube, Deputy EVP of Nutrition Strategic Business units
* Werner J. Bauer, EVP of Research and Development, Technical, Production, Environment.
Current members of the board of directors of Nestlé are: Günter Blobel, Peter Böckli, Daniel Borel, Peter Brabeck-Letmathe, Edward George, Rolf Hänggi, Nobuyuki Idei, Andreas Koopmann, André Kudelski, Jean Pierre Meyers, Carolina Müller-Möhl, Kaspar Villiger. Secretary to the Board Bernard Daniel.
In the UK
[email protected] is the PR executive.
Nestlé has a good business reputation among Switzerland's largest companies.[7][8][9]
[edit] Earnings
In 2003, consolidated sales were CHF87.979 billion and net profit was CHF6.213 billion. Research and development investment was CHF1.205 billion.
* Sales by activity breakdown: 27% from drinks, 26% from dairy and food products, 18% from ready-prepared dishes and ready-cooked dishes, 12% from chocolate, 11% from pet products, 6% from pharmaceutical products and 2% from baby milks.
* Sales by geographic area breakdown: 32% from Europe, 31% from Americas (26% from US), 16% from Asia, 21% from rest of the world.
[edit] Joint ventures
Nestlé holds 26.4% of the shares of L'Oréal, the world's largest company in cosmetics and beauty. The Laboratoires Inneov is a joint venture in nutritional cosmetics between Nestlé and L'Oréal, and Galderma a joint venture in dermatology with L'Oréal. Others include Cereal Partners Worldwide with General Mills, Beverage Partners Worldwide with Coca-Cola, and Dairy Partners Americas with Fonterra.
[edit] Controversy regarding Nestlé
Some of Nestlé's business practices have been and are controversial, especially the manner in which baby formula has been marketed in developing countries. The controversy ultimately led to the widespread Nestlé boycott, starting in 1977. Nestlé has made efforts to improve its image and has since launched several Fairtrade products across the world, including Partners Blend in the UK[10] and several grind-at-home Fairtrade coffees in Sweden, which led to a new round of criticism. In December 2007 Nestlé was found guilty of colluding with other milk producers to fix prices in Greece [1].
[edit] Baby milk marketing
See also: Nestlé boycott and International Code of Marketing of Breast-milk Substitutes
In the late 1970s, Nestlé attracted much criticism for its baby milk marketing policies especially in developing countries. This centered on its promotional strategies which present Nestlé milk products as a risk free, healthful or more healthful option than breastmilk. As a result, mothers who might otherwise have breastfed or nursed started using or switched to its infant formula or follow-on formula milk products. Their babies were then exposed to the widespread health problems caused by incorrect use such as mixing formula with contaminated water,[11] and too dilute or concentrated mixes, the risk of contamination in the milk (bacteria such as E sakazakii and chemicals such as melamine), and the intrinsic risks of formula itself as a foreign protein lacking many of the constituents of breastmilk such as growth factors and antibodies. UNICEF has estimated that a non-breastfed child living in disease-ridden and unhygienic conditions is between six and 25 times more likely to die of diarrhea and four times more likely to die of pneumonia than a breastfed child.[12]. Even in the developed world babies who are formula-fed are more at risk. Premature babies fed formula are more likely to suffer necrotising enterocolitis which is often fatal.
Nestlé violated the widely agreed-upon International Code of Marketing of Breast-milk Substitutes ("International Code").[13] This led to a boycott coordinated by the International Nestlé Boycott Committee, informed by monitoring conducted by the International Baby Food Action Network. In 1982, Nestlé claimed to have implemented the International Code in developing countries. Nestlé claims it has issued instructions to all its offices to ensure strict compliance with the International Code. However its interpretation of the Code is not that of UNICEF or other reputable bodies. It also claims to comply with legislation where that is in force. As most countries have legislation weaker than the Code, Nestle therefore does not comply. The Phillipines is a clear example of non compliance (
http://www.babymilkaction.org/shop/videos.html#philippines)
Nestlé itself still advertised breast milk replacements and used pictures of babies in its advertising in 2004.[14]
Nestle is also a member of organisations such as IDFA which campaign against stronger legislation in the UK where legislation is far weaker than that called for by the Code.
Post-2004 examples of breaches of the International Code continue to be identified by campaign organisations, such as IBFAN and the Save the Children Fund (May 2007) and The Guardian newspaper.[15][16] The most recent evidence of malpractice was published in the BMJ.[17]
[edit] Ethiopian government
In December 2002, international aid agency Oxfam revealed that Nestlé was demanding millions of dollars in compensation from Ethiopia. [18]The US$6 million demand was issued for shares in an Ethiopian agricultural firm, which was nationalised by the Marxist Mengistu regime in 1975. Nestlé acquired ELIDCO’s parent company, the Schweisfurth Group, ten years later. Nestlé initially refused the Ethiopian government’s offer of a settlement worth around US$1.5 million (a figure based on the 2002 exchange rate between the dollar and the Ethiopian birr) but insisted on $6m (based on the exchange rate at the time of the nationalization). [19] However, in the face of much public criticism, a statement was issued by Nestlé on December 23, 2002 stating that that they would accept the US$1.5 million and that this money would be made available for famine relief projects in the region in consultation with the International Red Cross and Red Crescent Federation. [20]
[edit] Nestlé Purina in Venezuela
In early 2005, Nestlé Purina sold thousands of tons of contaminated animal feed in Venezuela[21]. The local brands included Dog Chow, Cat Chow, Puppy Chow, Fiel, Friskies, Gatsy, K-Nina, Nutriperro, Perrarina and Pajarina.It was reported that the contamination was caused by a supplier that had stored corn used in animal food production incorrectly, which led to a proliferation of a fungus with a high quantity of aflatoxin causing hepatic problems in the animals that ate the food. On March 3, 2005, the National Assembly (Venezuela's federal legislature) stated that the company Nestlé Purina was responsible for the quality standards and that compensation must be paid to the owners of the affected animals.[citation needed]
[edit] Nestlé water
In 2001, Mecosta County, Michigan licensed the company, then a subsidiary of Perrier, to open a bottling plant in Stanwood for a fee of less than US$100 a year.[22] Operating requirements of the factory called for pumping 500,000 gallons (1.9 million litres) of water a day from an aquifer. After learning about the plan, Michigan Citizens for Water Conservation launched a direct action campaign against Nestlé and sought a temporary injunction to halt pumping while the court heard arguments on the legality of Nestlé's use of the water. However, this injunction has not been granted. Nestlé purchased the Calistoga Water Company in 1980.
Nestlé Canada applied for a five year extension and increase in volume with respect to water bottling activities at Aberfoyle, Ontario near Guelph Ontario. In April 2008 they were granted only a two year extension and no increase in volume after a prolonged decision period and considerable opposition from area residents.[23] led by the Wellington Water Watchers.[24]
In 2006 Nestle began a negotiations process with the town of McCloud, CA to build one of the nation's largest bottled water plants in the US and extract water from the springs of Mt. Shasta. The contract process has been protested by local groups like Protect our Waters and California Trout, who claim that Nestle neglected to study the impact on the region's ground water and have grossly overstated the potential economic benefits of the proposed plant.[25] The plan was canceled in August 2008. [26]
[edit] Genetically-modified organisms
In August 2004 a Greenpeace test found genetically modified organisms in Chinese Nesquik. A Chinese woman sued Nestlé since the use of GMOs in that kind of product was prohibited by local law. In December a second test was negative.[27] In November 2005 Nestlé opposed a Swiss ban on GMOs.[28]
[edit] Use of slave labour
In April 2006, a Forbes article reported on Nestlé's use of slave labour in the production of their chocolate.[29] According to the article, the International Labour Organisation, part of the UN, estimates that 284,000 child labourers work on cocoa farms in West Africa, mainly in the Ivory Coast. Mars and Hershey's are also being investigated. Global Exchange and the International Labour Rights Fund are taking Nestlé, commodities trader Archer Daniels Midland and Cargill to court in the US under the Torture Victim Protection Act and Alien Tort Claims Act.[30][31] Nestlé signed an agreement called the Cocoa Protocol to say that it would find a way by July 2005 to certify that chocolate had not been produced by underage, indentured, trafficked or coerced labor. [32]
[edit] Trade unions
Unions representing Nestle employees around the world, united in the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) [33] have expressed concern over a number of workplace issues including Nestle's move toward outsourcing much of its manufacturing. In October 2008, the IUF launched NestleWatch [34], a new web-based initiative to address these issues.
[edit] Partners Blend
In 2006 Nestlé launched its Fairtrade-certified Partners Blend in the UK. The company was accused of greenwashing. Anti-Nestlé campaigners have pointed out that the company has only one Fairtrade product among its range of 8,500 and would do better to alter its business practices in the rest of the coffee market (where its Nescafé brand is dominant) than launch a small Fairtrade certified product with limited volume[35]. The Fairtrade foundation countered that this was a turning point for the Fairtrade movement with a major company listening to consumers.
[edit] Melamine in Chinese milk
Main article: 2008 Chinese milk scandal
See also: International Reaction to the 2008 Dairy Scandal
In late September 2008, the Hong Kong government claimed to have found melamine in a Chinese-made Nestlé milk product. The Dairy Farm milk was made by Nestlé's division in the Chinese coastal city Qingdao.[36] Nestlé affirmed that all its products were safe and were not made from milk adulterated with melamine. On 2 October, 2008 the Taiwan Health ministry announced that six types of milk powders produced in China by Nestlé contained traces of melamine. Nestlé has announced that it will begin a recall of milk products produced in China. [37] [38]
[edit] Misleading advertising claims about Maggi noodles
Main article: Maggi noodles#Health Claims Controversy