1. Bruce Cannady
Case #2: Nestlé
Executive Summary
Nestlé has gone from being embroiled in a twenty-four year boycott against it – to now seemingly
being merely inconvenienced. Sure, for those organizations and individuals that have kept the “Nestlé-
Free Zone” fire alive, there remains a passion for continuing to expose what they see as Nestlé’s repeated
violations of the World Health Organization codes which essentially ban the promotion and advertising of
infant formula. Nestlé’s complicity in the practices leading up to these 1981 codes was clear. The
company though, has vehemently asserted their ongoing compliance to the WHO codes. Nestlé, in
keeping with its stated long time position, also has gone front and center, proclaiming breast feeding as
the superior preference on all its infant formula labels and materials.
Background
Nestlé is the largest food company in the world, revenue wise, and in 2011 was listed by Forbes as
the world's most profitable corporation. The Swiss-based company has become a generational symbol in
certain quarters though, for corporate greed, unethical marketing, and the exploitation of poor Third
World people. This indictment is from noted international groups such as the WHO and UNICEF, among
others.
In spite of an international boycott which began in 1977, lasted for seven years, and then resumed
in 1989 – precipitated by charges and evidence of aggressive marketing of its infant formula over the
merits of breastfeeding, Nestlé has been able to maintain its global dominance in the baby formula
industry. But the breadth and duration of this boycott, which still exists today, continues to point to the
dilemma Nestlé, and other multinational corporations face when their activities result in or significantly
contribute to changes in culture, particularly pertaining to populations in developing nations.
Problems
As a response to the developing world's increased access to mass media advertising, Nestlé, as
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2. early as 1974, publicly acknowledged issues and potential problems with the marketing and advertising of
their infant formula to regions in these parts of the world. Many of the societies in these less
economically developed countries (LEDCs) were experiencing cultural transitions that, among other
things, adversely affected traditions such as the prevalence of breastfeeding and the general benefits
associated with such. To the extent that Nestlé was viewed as a chief purveyor of this behavior, this of
course, would connect the company's complicity to the resulting consequences associated with the
preference of formula over breast milk.
Not coincidentally, that same year, a report was published in Britain suggesting the powdered-
formula industry (notably, Nestlé) hard sells their products to poor/uneducated people who lack the means
to use them properly. The industry, especially Nestlé, also was accused in this report of encouraging
mothers to abstain from breastfeeding infants in favor of using formula.
Scenarios endemic to less economically developed countries many times include infant formula
being diluted to stretch it, sometimes to accommodate multiple babies. This results in severe
malnutrition. Also, there are numerous instances of contaminated water sources mixing with formula to
make infants sick with diarrhea and vomiting. Compounding the plight, due to educational inadequacies,
many mothers in the developing world aren’t aware of the proper sanitation methods necessary for bottles.
Even for those that are literate, often times the use/preparation instructions on the formula
packaging is not in their native language. Many lack access to fuel, electricity, and by extension, light
needed to sanitize and/or maintain sterilization of the formula preparation.
Seemingly conflicting, Nestlé asserts that infant formula plays a vital role in supplementing breast
fed children, while the World Health Organization (WHO) states that in the majority of cases, infants
should be exclusively breast fed for the first six months.
There is indisputable evidence of breast milk's superiority vs. infant formula in nutrients,
antibodies, protection of babies from various illnesses and infections, brain/nerve development properties,
and in the bonding between baby and mother. Additionally, breastfeeding can delay the return to fertility,
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3. resulting in more space between births and lower birth rates.
Nestlé is accused of creating new markets by flooding free formula to hospital maternity wards,
and offering incentives in the form of money, gifts, and sponsorships to get health-care workers to
promote its products – after mother/baby are discharged, the formula is no longer free. As a result,
though, of the mother using formula rather than breast milk, her lactation is interfered with, and thus, she
is locked into continuing with formula.
The boycott was launched against Nestlé in 1977 in the US by the Infant Formula Action Coalition
(INFACT). The action soon spread to various countries, including in Europe. The next year, Nestlé
finally completed a process begun in 1974, and ceased mass media advertising worldwide of their infant
formula. How though, to maintain their large share of the market?
As the process ensued during subsequent years to work out appropriate international codes that
would govern the marketing and advertising of infant formula in LEDCs, and allow the lifting of the
boycott against Nestlé, the company was faced with responding and navigating through various renditions
set forth by the WHO code of 1981, as well as their established commission, the Nestlé Infant Formula
Audit Commission (NIFAC) 1982 interpretations, and finally, the UNICEF consultations of 1984. Also,
the non uniform applications of the code by the respective WHO member nations represented a hindrance.
Despite the boycott being lifted in 1984 by the International Nestlé Boycott Committee (INBC),
because of claims of Nestlé (and other manufactures) “dumping” free formula in developing world
hospitals, undermining breastfeeding, and systematically violating the 1981 WHO code (which essentially
places a worldwide ban on advertising of formula, and a stoppage of distribution of samples or gifts to
doctors who promote formula as a substitute for breast milk), the boycott was resumed in 1989.
In 1999, Nestlé was ruled against by Britain's Advertising Standards Authority (ASA), which
stated that Nestlé could not claim in an ad that they marketed infant formula “ethically and responsibly”
in light of evidence provided by the group Baby Milk Action.
A year later, the European Parliament held a hearing on Nestlé infant formula policies. The
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4. International Baby Food Action Network (IBFAN) and UNICEF presented further incriminating evidence
against Nestlé’s policies. Nestlé declined an invitation to appear, sending instead a representative from its
auditing commission, NIFAC.
Today, the boycott is still in effect, coordinated by the INBC. Many European universities have
banned Nestlé products. In Britain, many unions, businesses, and groups support the Nestlé boycott.
Courses of Action
Nestlé has chosen to take the proactive course by responding to charges of encouraging bottle
feeding over breast. The company has been forceful in its assertion that as early as pre World War I years,
they have produced documents that extol the virtues of breastfeeding. With the cessation of all mass
media advertising of infant formula by 1978, Nestlé has demonstrably committed itself to the vital tenets
of the ensuing WHO code.
Nestlé has also been active in the administration of increased nutrition and health education
initiatives in Third World countries so mothers better understand the proper use of their products and to
protect against the dangers of contamination – water and otherwise.
As of 1982, Nestlé has publicly affirmed that its infant formula products will be labeled
appropriately and in accordance with local languages. This labeling will also address the dangers
associated with incorrect usage and are in conformance with WHO/UNICEF.
The issues of sanitation and sterilization are prevailing ones regardless of whether the preparation
is the native “gruel” or infant formula. Studies have shown each to have roughly the same propensity to
contamination if subjected to the same conditions. So again, the emphasis should be on education.
It continues to be Nestlé’s position that there are a number of instances where infant formula
feeding supplemental to breast milk is called for and necessary. If mothers are economically and dietarily
deprived, then not enough breast milk is produced to sustain the baby nutritionally. Feedings alternative
to formula are often insufficient, harmful, and subject to spoilage. If a mother cannot (due to work
schedule, for example), chooses not to, or decides to stop breastfeeding after 5 to 6 months, the native
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5. weaning foods again, run the danger of being either low in nutritional quality or open to contamination.
Notwithstanding the previously stated extenuating circumstances, Nestlé has and will continue to
state unequivocally the benefits and superiority of breastfeeding on all its labels and materials.
As part of its compliance with the WHO code, Nestlé has discontinued providing free formula
samples to mothers, no samples to doctors except in cases of new product, formulation, or doctor, no
incentives to promote, and no commissions for sales.
Although the brand has endured sustained ostracization in certain quarters during the course of the
boycott, Nestlé has regularly responded to charges in various regions of WHO code infractions throughout
the years, and claims to sufficiently investigate allegations when deemed substantive. Nestlé has also
labeled the group IBFAN as akin to a guerrilla anti-infant formula organization, that lacks the credibility
and standing of the WHO.
As such, Nestlé has been able to actually maintain their dominant position regarding market share
in the infant formula industry – a testament as much to the cultural eccentricities of LEDCs, as it is to
entrenched product loyalties.
In achieving the 1984 lifting of the boycott, Nestlé was able to chart a circuitous path through
differing code translations, starting with the World Health Organization 1981 code, and culminating with
UNICEF's clarifying code requirement definitions in 1984.
Twenty-four years after the 1989 resumption of the boycott, Nestlé has clearly dug in and is
adamant in its insistence of compliance to the WHO code, while proclaiming annual audits, investigations
of substantiated claims of violations, and dismissals of IBFAN's code interpretations as non applicable.
Nestlé must remain unflinchingly indignant in their stance of defiance against the IBFAN and
other boycott supporters – if they truly are justified in their innocence. To kowtow when it comes to
brandishing the brand's image, at this stage, would be counterproductive.
Recommendations
Nestlé will continue, as it has done for one hundred years; insist on the disclaimer that a mother's
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6. milk – all things being equal – is best for baby. But in these days and times, there is little that matches up
as identical. Coupled with the investment to produce infant formula that is supremely nutritious in and of
itself, is the likewise commitment to an all out investment in your Third World customer base – with
information, education, and technology acquisition that is, in fact, long range based – rooted in a multi-
generational social and cultural responsibility.
While efforts to further marginalize the IBFAN and its influence on the ongoing boycott may or
may not be successful, Nestlé must continue to be aggressive in maintaining and increasing their infant
formula market share. Their 2012 purchase of Pfizer's infant nutrition line which includes baby formula
brand Wyeth will certainly increase share, particularly in China, where Nestlé has lagged.
With the high incidence of HIV infection in Africa, and its contraction through breast milk, the
resulting challenges of adequately meeting infant formula demand combined with proper social and
public relations outreach represents a unique dual opportunity for Nestlé’s perceived rehabilitation.
Keeping with the above stated theme, there will undoubtedly be additional opportunities going
forward for Nestlé to step up, as they have philanthropically, putting its best corporate foot forward at
garnering good will on a humanitarian global scale. The company has the unparalleled resources to take
full advantage of these occasions, when they occur.
Conclusion
In spite of a boycott that has lasted a generation and now encompasses twenty countries, Nestlé is
as successful a corporation as there is worldwide. The company has prospered through numerous
acquisitions and partnerships. It is as diverse a corporation as any, with over 8,000 brands across a wide
variety of markets. The company's infant nutrition business saw a double digit increase in emerging
market sales for 2012. For all intents and purposes, it appears that any lingering effects of the boycott are
negligible at best.
Nestlé seems well poised to continue their success as the world's markets stabilize and the world
gets yet flatter.
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7. References/Sources
Murray, J., Gazda, G., & Molenaar, M. (2009). Nestlé: The Infant Formula Controversy. Nestlé in LDCs.
Retrieved March 2013 from Global Marketing Management, University Readers, 109-112
Nestlé – Investigation of Complaints Regarding Compliance with the WHO Code of Marketing of Breast-
milk Substitutes. (December 2004). Retrieved March 2013 from http://www.nestle.com/asset-
library/Documents/R_and_D/Compliance/Responses_to_IBFAN_report_2004.pdf
Nestlé – Full Year Report 2012. Retrieved from http://www.nestle.com/asset-
library/Documents/Library/Events/2011-full-year-results/Press_Release_EN.pdf
Baby Milk Action (2013). The Nestlé Boycott. Retrieved March 2013 from
http://info.babymilkaction.org/nestlefree
IRIN Asia (2011). LAOS: NGOs flay Nestlé’s infant formula strategy. Retrieved March 2013 from
http://www.irinnews.org/Report/93040/LAOS-NGOs-flay-Nestl%C3%A9-s-infant-formula-strategy
Want China Times (2012). Nestlé’s Pfizer deal to reshuffle baby formula market. Retrieved March 2013
from http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20120503000112&cid=1102
Wikipedia (2013). Nestlé. Retrieved March 2013 from http://en.wikipedia.org/wiki/Nestl%C3%A9
Wikipedia (2013). Nestlé boycott. Retrieved March 2013 from http://en.wikipedia.org/wiki/Nestl
%C3%A9_boycott
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