Nestlé
| File:Nestle logo.png | |
| Company type | Public (SWX:NESN) |
|---|---|
| Industry | Food processing |
| Predecessor | Hollandia  |
| Founded | Vevey, Switzerland (1866) |
| Headquarters | Vevey, Switzerland |
Key people | Henri Nestlé, Founder Peter Brabeck-Letmathe, Chairman & CEO |
| Products | Baby food, Dairy products, Breakfast cereals, Confectionery, Bottled water, more... |
| Revenue |  91 billion CHF (2005) |
| 12,326,000,000 Swiss franc (2022) | |
| 7.9 billion CHF (2005) 8.8% profit margin | |
| Total assets | 135,182,000,000 Swiss franc (2022) |
Number of employees | 253,000 (2003) |
| Website | www.nestle.com |
Nestlé is a multinational packaged food company, founded and headquartered in Switzerland. It was set up in 1866 by Henri Nestlé to provide an infant food product. Several of Nestlé's brands are globally renowned[1], which made the company a global market leader in many product lines, including milk, chocolate, confectionery, bottled water, coffee, creamer, nutritious foods, food seasoning, pet foods, etc. Nestlé's corporate reputation is one of the highest among Switzerland's largest companies[2], and it is one of the top five world's most respected food and beverages companies[3]. A world's leading food company, it is also a world leader in food and nutrition research and development[4]. The company stock is listed on the SWX Swiss Exchange. The principal shareholder of Nestlé is Liliane Bettencourt, the world's wealthiest woman.
Pronunciation
Some people in the English-speaking countries pronounce Nestlé's [ˈnɛsəłz], matching the English verb nestle. This was the pronunciation used in company merchandising for much of the 20th century (for example, in Nestlé's Milkybar). Other common pronunciations of Nestlé among English-speakers are [ˈnɛsli] and [ˈnɛstli], or [ˈneslæɪ] in Australia.
History
 |
Nestlé was founded in 1866.
In the 1860s Henri Nestlé, a pharmacist, developed a food for babies whose mothers were unable to breastfeed. His first success was a premature infant who could not tolerate his own mother's milk nor any of the usual substitutes. The value of the new product was quickly recognized when his new formula saved the child's life, and soon, Farine Lactée Henri Nestlé was being sold in much of Europe.
In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. 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 had more than doubled.
The first Nestlé factory to begin production in the United States was opened in Fulton, Oswego County, New York. The factory however was closed in 2001, after the company decided that the cost of restoring, and updating the factory was not worth the effort. Employees of the factory were furious, and raised the company flag upside down the day the closing was announced.
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 $20 million in 1938 to $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.
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.
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 confectionary company Rowntree Macintosh in 1988.
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 [1], and in August a $2.6 billion acquisition was announced of Chef America, Inc. In the same time frame, Nestlé came close to purchasing the iconic American company Hershey's, though the deal fell through. Another recent purchase include the Jenny Craig fitness firm for $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. [2]
Main 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.
Business
Management
The executive board, a distinct entity from the board of directors, includes:
- Peter Brabeck-Letmathe, Chairman & CEO
- Carlo Donati, 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
- Paul Bulcke, EVP of Americas divisions
- Paul Polman, EVP of Finance, Control, Legal, Tax, Purchasing, Export
- Chris Johnson, Deputy EVP of Information System, Logistics & GLOBE
- 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, Andre Kudelski, Jean Pierre Meyers, Carolina Müller-Möhl, Kaspar Villiger. Secretary to the Board Bernard Daniel.
Earnings
In 2003, consolidated sales was CHF 87.979 bn and net profit was CHF 6.213 bn. Research and development investment was CHF 1.205 bn.
- Sales by activity breakdown: 27% from drinks, 26% from milk and food products, 18% from ready-prepared dishes and ready-cooked dishes, 12% from chocolate, 11% from pet products, 6% from pharmaceutical products.
- Sales by geographic area breakdown: 32% from Europe, 31% from Americas (26% from US), 16% from Asia, 21% from rest of the world.
Joint ventures and minority interests
Nestlé holds 26.4% of the shares of L'Oréal, the world's leading company in cosmetics and beauty. The Laboratoires Inneov is a joint venture in nutritional cosmetics between Nestlé and L'Oréal . Galderma is another joint veture in dermatology between Nestlé and L'Oréal. Others include Cereal Partners Worldwide (with General Mills), Beverage Partners Worldwide (with Coca-Cola), and Dairy Partners Americas (with Fonterra).
Criticisms of Nestlé's business practices
Template:Totally-disputed-section Like several other large multinational companies with business operations all around the world, some of Nestlé's business practices have been considered controversial, especially the manner in which baby milk has been marketed in developing countries, which led to the Nestlé boycott, started in 1977.
Baby milk marketing
Since the late 1970s, Nestlé has attracted much criticism for its baby milk marketing policies in developing countries. This has centered on its apparent recommendations for nursing mothers to switch to its infant formula milk products, leading to the alleged deaths of about 1.5 million babies each year as a result of formula being mixed with contaminated water[citation needed]. Nestlé allegedly has violated the widely agreed-upon International Code of Marketing of Breast-milk Substitutes[3]. This has 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 implemented the WHO Code of Marketing of Breast-Milk Substitutes in developing countries. The instructions were reviewed and refined in 1984 in consultation with the WHO, UNICEF and the International Nestlé Boycott Committee.
Nestlé itself still advertised breast milk replacements and used pictures of babies in its advertising in 2004[4]. Nestlé has issued instructions to all its offices to ensure strict compliance with the International Code.
Legal action against Ethiopian government
In December 2002, international aid agency Oxfam revealed that Nestlé was demanding millions of dollars in compensation from Ethiopia. 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 had acquired ELIDCO’s parent company, the Schweisfurth Group, ten years later. Nestlé refused the embattled Ethiopian government’s offer of a settlement worth around $1.5m; however, in the face of much public criticism, a statement was issued by Nestlé on December 23, 2002 stating that any money received in settlement would be made available for famine relief projects in the region in consultation with the International Federation of Red Cross / Red Crescent Societies.
Nestlé Purina in Venezuela
In early 2005, Nestlé Purina sold thousands of tons of contaminated animal feed in Venezuela. The local brands included Dog Chow, Cat Chow, Puppy Chow, Fiel, Friskies, Gatsy, K-Nina, Nutriperro, Perrarina and Pajarina. Over 500 dogs, cats, birds and cattle died. It was reported that it 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.
Nestlé water
In Mecosta County, Michigan, United States, a determined citizen coalition has opposed the efforts of a bottled water subsidiary of Nestlé to gain private control of important groundwater supplies. In 2001, the county licensed the company (then a Perrier subsidiary) to open a bottling plant in Stanwood, Michigan, for a fee of less than $100 a year[5]. Operating requirements of the factory meant pumping half a million gallons of water a day from an aquifer beneath a hunting reserve. After learning about the plan, Michigan Citizens for Water Conservation launched a direct action campaign against Nestlé and sought a temporary injunction to stop the pumps while the court decided on the legality of Nestlé's use of the water. However, this injunction has not been granted. Nestle purchased the Calistoga Water Company in 1980.
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. [6] In November 2005 Nestlé opposed a Swiss ban on GMOs. [7]
Use of Slave Labour
In April 2004, Forbes wrote an article on Nestle's use of forced labour in producing their chocolate. The International Labor 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 Labor Rights Fund are taking Nestle, commodities trader Archer Daniels Midland and Cargill to court in the US under the Torture Victim Protection Act and Alien Tort Claims ActPress ReleaseCourt Docs. Nestle 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 labour. Nestle has requested that all the coerced child labourers involved in the International Labor Rights Fund lawsuit reveal their names, which could lead to them being punished [8]
Footnotes
- ^ Nestlé: Following the Customers' Tracks with Google Analytics, "The globally renowned Nestlé brands include, among others...", Google Analytics, 2006, accessed January 2007
- ^ The Reputations of Switzerland's Largest Companies: Migros tops, whereas financial services firms do poorly, "Nestlé owes its good reputation in part to its large size, but also to strong profitability and market capitalization that place it ahead of other Swiss companies.", Reputation Institute, 5th April 2006, accessed January 2007
- ^ World's Most Respected Companies: Diverse Qualities Vie for Attention, (Copyright: The Financial Times Limited), "...the world's most respected food and beverages companies, as ranked by chief executives from the industry. The top five are PepsiCo, Nestle, Procter & Gamble, Coca-Cola and Danone.", CSR Europe, 15th December 2000, accessed January 2007
- ^ Nestlé's Case Study, thetimes100.co.uk - Students and Teacher business studies resource centre, accessed January 2007
See also
External links
- Official website of Nestlé
- Official Website of Nestlé Waters
- Official Nestlé Waters North America Website
- Article on ownership structure of Nestlé and L'Oréal
- Learn more about Nestlé and child labor in the cocoa industry
- Nestlé Baby Milk Issue Facts - Nestlé's point-of-view of the "Baby Milk" controversy
- Pamphlet "The Baby Killer" 1974
- Blog dedicated to the Venezuelan Nestlé Purina incident (Spanish)
- Baby Milk Action, secretariat of the International Nestle Boycott Committe
- Official Nestlé Water Brands Delivery Site
- Nestle India Unofficial Blog
- Nestlé S.A. concentrates trading of its shares on SWX Swiss Exchange
- History of Hills Bros. Coffee, est. purchased by Nestle Beverage Company