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Nestke.jpg
Nestlé S.A. or Société des Produits Nestlé S.A. (SWX:NESN (http://www.ir.nestle.com/Stock_Financials/Shares_ADRs/Stock_Quote/Stock+Quote.htm)), headquartered in Vevey, Switzerland, is the world's biggest food and beverage company. Nestlé's existing products extend from mineral waters to baby food to coffee and dairy products.
History
Nestlé was founded in 1866.
In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his own mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestlé's 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.
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, the most important being American food giant Carnation.
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 July, Nestlé merged its U.S. ice cream business into Dreyer's, and in August, a $2.6 bn acquisition was announced of Chef America, Inc.
Business
Management
The executive board includes:
- Peter Brabeck-Letmathe, CEO
- Frits Van Dijk, EVP, Chairman, and CEO of Nestlé Waters
- Michael W. O. Garrett, EVP of Asia, Oceania, Africa, Middle East divisions
- Ed Marra, 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
- Wolfgang H. Reichenberger, EVP of Finance
- Chris Johnson, Deputy EVP of Information System and Logistics
- Lars Olofsson, EVP of Europe divisions
- Luis Cantarell, Deputy EVP of Nutrition Strategic Business units
- Werner J. Bauer, EVP of Research and Development
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, Beverage Partners Worldwide (formerly CCNR), and Dairy Partners Americas.
Main Brands
Brands are categorized by their targeted markets.
Coffee
- Nescafé
- Tasters Choice
- Ricoré
- Ricoffy
- Nespresso
- Bonka
- Zoégas
- Loumidis
Water
- Nestlé Pure Life
- Nestlé Aquarel
- Perrier
- Vittel
- Contrex
- San Pellegrino
- Acqua Panna
- Levissima
- Vera
- Arrowhead
- Poland Spring
- Deer Park
- Al Manhal
- Ozarka
- Hépar
- Ice Mountain
- Zephyrhills
- San Bernardo
- Quézac
Other Beverages
- Nestea
- Nesquik
- Nescau
- Milo
- Carnation
- Libbys
- Caro
Shelf Stable
- Nestlé
- Nido
- Nespray
- Ninho
- Carnation
- Milkmaid
- La Lechera
- Moça
- Klim
- Gloria
- Svelty
- Molico
- Nestlé Omega Plus
- Bear Brand
- Coffee-Mate
Chilled
- Nestlé
- Sveltesse
- La Laitière
- La Lechera
- Ski
- Yoco
- Svelty
- Molico
- LC1
- Chiquitin
Ice Cream
- Nestlé
- Frisco
- Motta
- Camy
- Savory
- Peters
- Häagen Dasz
- Mövenpick
- Schöller
- Dreyer's
Infant Foods
- Nestlé
- Nan
- Lactogen
- Beba
- Nestogen
- Cérélac
- Neslac
- Nestum
- Guigoz
- Good Start
Performance Nutrition
Healthcare Nutrition
Seasonings
- Maggi
- Buitoni
- Thomy
- Winiary
Frozen Foods
- Maggi
- Buitoni
- Stouffers
- Lean Cuisine
- Hot Pockets
Refrigerated Products
- Nestlé
- Buitoni
- Herta
- Toll House
Chocolate Confectionery
Professional Products
- Chef
- Davigel
- Minor's
- Santa Rica
Petcare
- Friskies
- Fancy Feast
- Alpo
- Mighty Dog
- Gourmet
- Mon Petit
- Felix
- Purina
- Dog Chow
- Pro Plan
- ONE
- Beneful
- Tidy Cats
Criticisms
Alleged Business Practices
Like many multinational companies, since the 1980s, it has attracted criticism, for example by the World Health Organization and UNICEF, for its business and marketing practices in third world countries. In Nestlé's case, 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. Nestlé allegedly has violated and regularly continued to violate the widely consensed on International Code of Marketing Breast-milk Substitutes. This has led to what is sometimes referred to as the Nestlé boycott coordinated by the International Nestlé Boycott Committee, informed by monitoring conducted by the International Baby Food Action Network [1] (http://www.ibfan.org).
In 2002 the company was criticized for its intention to seek £2m compensation from the Ethiopian government, for a company that had been nationalized in 1975 by the Marxist Mengistu regime. To put that in context, compare that figure with the turnover of Nestle (http://www.ir.nestle.com/Stock_Financials/Financial_Statements/Full_Year/2003_FullYear/2003+Full+Year+Financials.htm) and then the GDP of Ethiopia, the 159th country of 164 [2] (http://www.nationmaster.com/red/graph-T/eco_hum_dev_ind&int=-1) by the UN's Human Development Index.
Boycott
The Nestlé boycott was launched on July 4, 1977 in the United States, from where it has spread rapidly. It was prompted by concern about the company's marketing of breastmilk substitutes, which campaigners claim contributes to the unnecessary death and suffering of babies, especially in developing countries.
Nestlé's perceived marketing strategy was first written about in New Internationalist magazine in 1973 and in a booklet called The Baby Killer published by the British non-governmental organisation War on Want in 1974. Nestlé attempted to sue the publisher. After a two-year trial, the court found in favour of Nestlé and fined the group 300 Swiss francs because Nestlé could not be held responsible for the infant deaths 'in terms of criminal law'.
The widespread publicity led to the launch of the boycott in Minneapolis, USA. In May 1978, the US Senate held a public hearing into the promotion of breastmilk substitutes in developing countries and joined calls for a Marketing Code. This was developed under the auspices of the World Health Organisation and UNICEF and adopted by the World Health Assembly in 1981 as the International Code of Marketing of Breastmilk Substitutes. The Code covers infant formula and other milk products, foods and beverages, when marketed or otherwise represented to be suitable as a partial or total replacement of breastmilk. It bans the promotion of breastmilk substitutes and gives health workers the responsibility of advising parents. It limits manufacturing companies to the provision of scientific and factual information to health workers and sets out labelling requirements.
In 1984, boycott coordinators met with Nestlé and accepted the company's undertaking that it would abide by the Code, but the coordinators were not satisfied with Nestlé's subsequent action and the boycott was relaunched in 1988.
The boycott is now coordinated by the International Nestlé Boycott Committee, the secretariat for which is the UK group Baby Milk Action (http://www.babymilkaction.org/). Company practices are monitored by the International Baby Food Action Network (IBFAN), which consists of more than 200 groups in over 100 countries.
In July 1999, the UK Advertising Standards Authority upheld complaints against the company brought by Baby Milk Action and published a ruling against a Nestlé anti-boycott advertisement in which the company claimed to market infant formula 'ethically and responsibly'.
In November 2000 the European Parliament invited IBFAN, UNICEF and Nestlé to present evidence to a Public Hearing before the Development and Cooperation Committee. Evidence was presented by the IBFAN group from Pakistan and UNICEF's legal officer commented on Nestlé's failure to bring its policies into line with the World Health Assembly Resolutions. Nestlé declined an invitation to attend, though it sent a representative of the auditing company it had commissioned to produce a report on its Pakistan operation.
In parallel with the boycott, campaigners work for implementation of the Code and Resolutions in legislation and claim that 60 countries have now introduced laws implementing most or all of the provisions.
Nestlé is sometimes targeted for other aspects of its operations. A Brazilian group called Citizens for Water (Cidadania pelas Aguas) has called a boycott of Nestlé in Brazil over the company's extraction of water from an aquifer in São Lourenço. Some also boycott Nestlé coffee and chocolate products in favour of Fair Trade alternatives.
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