Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

The Bad Boys of Business: Nestle


The delicious taste of controversy.

If there's a fine line between predator and capitalist, Swiss food maker Nestle toes it. Manufacturer of everything from chocolate to coffee to dog food, the only thing vaster than its product line is its string of public transgressions.

Let's start with the biggest: Baby formula.

When the Baby Boom ushered in its widespread use as an alternative to breast milk, Nestle was both pioneer and world leader.

Although imperfect, if mixed hygienically and administered properly, it could be remarkably effective. But in the Third World, where Nestle rolled out aggressive -- some might say unsavory -- marketing initiatives, those two characteristics were generally missing.

One of the company's more sinister campaigns involved the distribution of baby formula to poor mothers by uniformed nurses whose chief responsibility was to the company, not the well-being of the child.

Some breastfeeding-advocacy groups alleged the formula was given out in the form of free samples at first -- just long enough for a lactating mother's milk to dry up. It sounds cynical, but, for a time, even Third World hospitals fed babies formula from birth, then gave mothers a starter package when they checked out.

The problem: Mother and child often had no access to clean water, which slimmed the odds of the formula being meted out properly. But beyond the obvious issue of contamination, in many instances, families in these have-not places couldn't afford adequate supplies of the formula and used insufficient amounts at feeding time.

According to a December 1981 story in the New York Times, a World Heath Organization (WHO) study found that Third-World babies who knew only formula had a mortality rate between five and 10 times greater "in the second six months of life than those breast-fed 6 months or more.''

When the West got wise to Nestle's underhanded marketing tactics and the associated problems with infant formula, the indignation and boycotts began to mount.

It wasn't long before the WHO drafted the International Code of Marketing of Breastmilk Substitutes, which recognized that "inappropriate feeding practices lead to infant malnutrition, morbidity, and mortality in all countries, and that improper practices in the marketing of breast-milk substitutes and related products can contribute to these major public health problems."

Nestle says it actively markets "complementary foods" in the developing world such as cereal, milk, pureed vegetables, and meat, which are critical to a child's health after six months of age. The company stresses the importance of breast feeding, but notes not all mothers breastfeed and infant formula is the only product recognized by the World Health
Organization as an acceptable substitute.

"On the pack, we inform consumers and health professionals of the benefits and superiority of breast milk," Nestle said in a prepared statement. "Product labels and educational materials also carry preparation instructions as well as warnings about inappropriate use."
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos