Nestlé under Fire over Unhealthy Product Portfolio: Will the Company Emerge Unscathed?
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Case Code: BSTR628 Case Length: 20 Pages Period: 1929 - 2021 Pub Date: 2021 Teaching Note: Available |
Price: Rs.400 Organization : Nestle Industry : Food & Beverage Countries : Australia, United States, India, United Kingdom Themes: Branding Strategy, Brand Revival, Crisis Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Controversies
Nestlé, which had been in the food and beverages industry for over 150 years, was no stranger to controversy. The company's all-out efforts to market its baby food in developing countries in the 1970s sparked a boycott against all Nestlé products in the US in 1977. Activists claimed that Nestlé's aggressive baby food promotions made mothers in developing countries so eager to use its formula that they used it any way they could. The poverty-stricken areas had high rates of illiteracy, and mothers, unable to read and follow the directions, often mixed the product with local polluted water or used an insufficient amount of the expensive formula, unwittingly starving their infants. Estimates of Nestlé's losses as a result of the boycott which lasted until the early 1980s, were as high as $40 million...
Nestlé's Response
Nestlé had been the target of the world's longest running boycott for over four decades. The first outrage against Nestlé started during the 1970s, when the company was accused of aggressively promoting breast milk formula to mothers in less developed countries, which resulted in infant illness and death. Nestlé's response at that time to the allegation was that its critics should focus on doing something to improve unsafe water supplies, which contributed to the health problems associated with bottle feeding. This allegation led to hearings in the US Senate and the World Health Organization (WHO). In 1978, Senator Edward Kennedy held a series of US Senate Hearings on the FMCG industry's unethical marketing practices...
Nestlé's 2021 Controversy over Unhealthy Product Portfolio
Six years after its popular noodle brand Maggi was banned in India, Nestlé found itself at the center of yet another unhealthy food controversy. On May 31, 2021, a report in the Financial Times stated that over 60% of Nestlé's mainstream food and drinks portfolio failed to meet recognized standards of health and nutrition, bringing Nestlé, the world's largest packaged foods company, under fire. The newspaper, privy to a presentation that was circulated among Nestlé's top employees, reported that ...
Nestlé in Damage Control Mode: Will it be Able to Rebuild its Image?
Nestlé announced that it was working on updating its nutrition and health strategy following the controversy. It said in a statement it was working on a “company-wide project” to update its nutrition and health strategy and was looking at its entire portfolio to make sure its products helped meet people's nutritional needs. It noted that it had reduced sugars and sodium in its products by about 14-15% since 2015 and planned to continue to make its products healthier...
Future Outlook
Speaking about the impact of the controversy, Harish Bijoor (Harish), Brand Guru & Founder, Harish Bijoor Consults Inc., stated "I don't believe this news does any damage to Nestlé at all. The fact that this is an internal report makes all the difference." He added, "A company that is forever seeking to offer healthier and healthier offerings. If that means existing rejigging products, so be it!" ...
Exhibits
Exhibit I: Nestlé's Strategy
Exhibit II: Nestlé's Acquisitions and Major Developments over the Years
Exhibit III: Nestlé's Global Product Portfolio
Exhibit IV: Nestlé's Global Annual Revenue 2008-2020
Exhibit V: Nestlé's Leading Competitors Worldwide
Exhibit VI: Nestlé's Business Segments
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