Nestle Essay

Nestle – The Infant Formula Incident Summary of Case and Results In response to a pamphlet entitled â€Å"Nestle Kills Babies,† published in 1974 by the Swiss consumer/activist group, Arbeitsgruppe Dritte Welt, Nestle Alimentana filed a four-count libel suit against members of the organization. The pamphlet was a reprint of an earlier one entitled â€Å"Bottled Babies,† published by a similar British group. Both alleged that false advertising had prompted mothers in LDCs to use infant formula instead of breast feeding, and consequently caused the deaths of thousands of children. However, the original pamphlet had not mentioned Nestle or any of the other companies by name, and thus did not raise the issue of libel. Three of the charges, which Nestle subsequently withdrew, related to allegations made in the pamphlet about Nestle’s promotional methods in LDCs. The fourth charge, which led to a judgment against thirteen members of the group in June 1976, focused on the defamatory title â€Å"Nestle Kills Babies. † In his decision, the judge stated that the cause behind the injuries and deaths was not Nestle’s products; rather, it was the unhygienic way they were prepared by end-users. Although Nestle won its case, the firm’s victory was diluted by (1) having to pay one third of the court costs and (2) being told by the judge to change its marketing methods to prevent further misuse of its products. The defendants were ordered to pay $120 each in damages to Nestle and two thirds of court costs. Suggestions Companies selling consumable products (foods, beverages, pharmaceuticals) to LDCs have long recognized the need to adapt their promotional techniques to their consumers who are, by and large, poor and illiterate. In recent years, one particular group of food producers—those firms making infant formula and other milk products—has come under severe attack by various religious, consumer and governmental organizations. Criticism focuses on two issues: (1) that companies allegedly use false advertising to induce mothers to substitute formula for their own milk, and (2) that firms are directly responsible when misuse of their products results in illness or death. The assault was dramatized in the recent Swiss case involving Nestle Alimentana. The responses of milk product manufacturers have ranged from writing corporate policies on LDC marketing to organizing industry councils and holding meetings with pressure groups. But most significantly, companies have altered marketing practices in ways that other firms making consumable items should find instructive. These changes include Tightening up direct selling methods. A common practice is to have â€Å"mother-craft nurses,†Ã¢â‚¬â€local women who may be nurses, dietitians or midwives—visit clinics and homes to encourage doctors and consumers to use infant formula. Critics charge that these women are often unqualified to speak on nutrition and that they distort facts to make formula feeding more attractive than breast feeding. As a result, many firms now forbid representatives from discouraging breast feeding and demand that they go to clinics and homes only if invited or sent by a family doctor. Stressing nutritional training. Firms are improving the nutritional instruction given to representatives. In addition, promoters are providing consumers with educational presentations, including seminars, films and brochures. Such training not only combats misuse of products, but also benefits the manufacturer. For example, one corporation whose sales representatives in Indonesia conducted local demonstration on uses of a condensed-milk product found that the presentations accomplished several aims: (1) alerted the representative to problems people had in preparing and using the product, (2) served as a rough test market for the product and (3) helped to bolster the firm’s image. Controlling distributors’ promotional activities. Manufacturers selling milk products through distributors have often given them free rein over local advertising. Some corporate executives worry about becoming too closely associated with distributors’ advertising, fearing possible liability for erroneous claims made by distributors. However, such liability would be difficult to avoid in any situation involving a company’s trademarks and products. A few firms, recognizing this, are currently monitoring all new promotional campaigns of distributors. Curtailing mass media advertising. Several corporations that formerly advertised infant formula on TV, radio, billboards and newspapers are now relying solely on sales representatives. Improving labeling and directions for use. Developing promotional/instructional materials to help low-literacy users. The International Council of Infant Food Industries, formed in 1975, is studying ways to improve communication methods for use in areas of high illiteracy. Possibilities include cartoons, pictures, radio programs and even sound trucks. (Use of new informational materials would be subject to approval of local authorities. ) Price of Social Responsibility For some firms, the cost of maintaining ethical standards is high. One large food company actually closed down its milk-processing plant in Pakistan because pasteurization laws were not being enforced, and local firms selling unpasteurized milk were gaining a competitive edge. Additionally, the quality of the firm’s product was tarnished by local consumers who frequently diluted the milk with polluted stream water to â€Å"stretch† it for their own use or for resale. In light of these problems, and others—such as the high cost of marketing and training, and the relatively low sales volume—some companies have contemplated withdrawing these products from LDC markets. However, the market potential for milk products in these countries is strong because of increasing populations and rising standards of living. In addition, the growing role of women in the labor force is creating a greater need for infant formulas. Thus, it appears that firms will remain in these markets. Every 30 seconds a baby dies from unsafe bottle feeding, that’s is approximately 1. 5 million babies a year, this is because formula milk companies provide free powder milk to mothers while in hospital in third world countries ensuring that babies are routinely bottle-fed and not breastfed. As a result babies become dependent on artificial milk. Despite the number of deaths formula milk companies continue to promote artificial feeding in ways that undermine breastfeeding. Nestle made a profit of ? 2. 7 billion year 2007 from selling baby formula milk. In third world countries bottle feeding is dangerous due to unsafe water supplies and difficulties with keeping bottles sterile. Cost is also a problem, once out of hospital the milk is no longer free. Costing families up to 50% of their weekly income, due to high costs, milk mixtures are over diluted and mothers buy cheaper, bad quality formula milk instead. This means the baby is inadequately fed leading to malnutrition, diarrhea and often death. Formula milk companies make profit by exploiting vulnerable mothers.