Company Without a Heart?

GeoCache November 19, 2014 B2B, Uncategorized 1,241 Views

Nestlé recently announced the opening of a dairy farming institute in Shuangchen (Heilongjiang Province) China¹. At a value of $31 million, the institute will be one of Nestlé’s largest dairy investments in China. Nestlé’s stated intention was to modernize dairy farming practices in China and encourage the responsible production of safe, quality-assured dairy products. The company, pointing to growing demand for dairy products, is operating milk districts in Laixi, Hulunbeier and Shuangchen and building the dairy institute, all designed to secure China’s future supply of raw milk.

What is ostensibly driving growing demand? That’s an interesting question in a nation with a high degree of adult lactose intolerance. According to Genetics Home Reference, the US National Library of Medicine’s consumer site, lactose intolerance in adulthood is most prevalent among people of East Asian descent, affecting more than 90% of adults in some communities². Fresh milk consumption causes abdominal pain, bloating, flatulence, nausea and diarrhea. Some adults with lactose intolerance can consume cheese or yogurt because fermentation breaks down lactose, but many cannot.

The pushing of inappropriate products on a population is reminiscent of Nestlé’s aggressive marketing of baby formula in undeveloped countries beginning in the 70’s. Mothers received free samples and believed ads that Nestlé’s formula was better for their infants and switched from breastfeeding to formula feeding. Local water sources, many of them contaminated, were used to mix formula which was then fed to infants. According to UNICEF, a non-breastfed child is 14 times more likely to die in the first six months of life³. In the case of formula use in undeveloped countries, this is not necessarily because the formula itself is not nutritious but because clean water, refrigeration, adequate sanitation, and directions clear enough to prepare and store formula properly are lacking. Infant deaths from the practice led to a boycott of Nestlé products, but the company didn’t stop. The company routinely violates the World Health Organization’s International Code of Marketing of Breast-milk Substitutes (1981)⁴. Nestlé has even pushed the boundaries of appropriate behavior in developed countries. In October 2014, the US Federal Trade Commission sued Nestlé’s Gerber subsidiary, alleging it advertised its Good Start Gentle formula would reduce the risk of development of allergies despite no proof for the claim. Gerber further said the FDA had approved the health claim although the FDA had not.

Then, in November 2014, Nestlé’s Mexican subsidiary tweeted a joke about the 43 students missing in Mexico (“they crunched”).

Bad taste or a pattern of reckless disregard? Unknown… but the question of whether Nestlé is a company without a heart or at least a conscience hangs in the air.

Nancy Musselwhite is a Senior Consultant at Geo Strategy Partners, a B2B/Industrial focused market research and strategy consulting firm.