International Business 200
January 21, 2007
Case Study Report: Nestle: The Infant Formula Controversy
Beginning in the early 1970’s Nestle Alimentana of Vevey, Switzerland, one of the
world’s largest food-processing companies was at war with the world. Nestle was under fire
from the Pan American Health Organization for allegations of the mass amount of deaths
amongst babies of in many of the third world. As a result, Nestle began to suffer from an
international boycott of its products. Nestle was severely under attack by the world, many of the
charges brought against Nestle were against the issues of their advertising and marketing
campaigns. The charges raised against Nestle dealt with the alleged discouragement of breast
feeding, particularly among third world mothers. The allegations claimed that the advertising and
marketing strategies of Nestle are responsible for mothers of third world countries misuse of
their products, which directly resulted in infant malnutrition and death. The major problem
facing Nestle was that many people believed they were intentionally misrepresenting their
products to the public. This however was very untrue.
Nestle has never advocated bottle feeding instead of breast feeding. Also, it clearly states
on Nestles products that breast feeding is the most effective way to properly deliver the essential
nutrients and vitamins to growing babies. As evidence for their support of breast feeding, Nestle
took a page from their oldest educational booklets on “Infant Feeding and Hygiene” dating from
1913 which encourages breast feeding (Murray). Nestles major problem was how they were
going to show the world that they were in the support of third world mothers and organizations
rather then against them.
Nestles solution was to go along with the resulting World Health Organization (WHO)
code. They began to tone down and almost immediately eliminate all mass media advertising. In
1978 all advertising in third world countries had been eliminated. Being one of the world’s
industry leading food processing companies, it was essential for them to maintain a healthy and
respected public image. In reality their only option was to go along with any of the
recommended solutions and continue to support third world countries by educating the people.
Nestle continued to manufacture, sell and distribute their products but remained bounded to their
support of promoting breast feeding and its sole purpose of servicing mothers and the health of
Nestle was successful in implementing their solutions to this problem. In 1978 the
company had stopped all consumer advertising and direct sampling to mothers. Nestle followed
the rules and regulations under the “WHO” which included no advertising to the general public,
no sampling to mothers, no use of commissions or bonus for sales, no use of infant pictures, no
financial or material inducements for promotion, a statement of superiority of breast feeding on
all labels and materials. Through their continued support of the “WHO” code Nestle was able to
maintain its share of the third world formula market (Murray).
The cause of the case against Nestle was the result of malnutrition and death among third
world country babies. However, the cause of these deaths and malnutrition among babies should
be associated with misuse and disregard to the directions of Nestle products. The issue is
primarily based on whether or not advertising discouraged breast feeding. Based upon the
(directions on the products and the directions of the products) I see no basis for such an issue to
be raised. In cases that were documented there was clearly a misuse of the product. Nestle should not and can not be held responsible for the actions and the neglect of its consumers. There are documented cases of Nestle products being used with contaminated water, water which is used for laundry and toilet use. Formula that was mixed with this highly contaminated water remained contaminated and babies fed through the use of such water were in constant battle with recurring diarrhea and vomiting. Another situation which presented itself throughout the third world was parents diluting the formula in order to stretch the supply. Another similar problem was that parents in the third world even believed that the bottle itself held some sort of nutrient power and many times would just fill the bottle with water, without the use of formula. The result of this is extreme malnutrition. Another problem which contributed to the increased use of formula feeding among third world countries was the contraction of HIV at a mother’s breast. Due to the
chance of HIV contraction, many mothers, including healthy ones turned to bottle feeding. In result to the misuse of Nestle products and the risks associated with breast feeding and contracting HIV, third world countries would suffer from extreme malnutrition and death (Murray).
There are really only two feasible solutions to this third world country epidemic and Nestles so-called negligence. The first solution to this problem would be for Nestle to stop their distribution to third world countries. This would ensure that no more cases would result from the use of their products. However, this decision would leave the third world countries in between a rock and a hard place. Without the use of formula feeding there would be many more malnutrition cases. In third world countries there is a lack of nutrition among mothers. As a result they produce on average only a pint of milk daily (Murray). Mothers in the United States and other leading countries produce around a quart of milk daily. As a result, children in third
world countries are not receiving enough food even from breast feeding and do need to be supplemented with formula feeding as well. The second solution would be for Nestle to do exactly what they did. The plan Nestle carried out was a success. By continuing to educate the people of third world countries on proper nutrition and safe practices they were able to successfully maintain their company image and also maintained their share of the third world formula market. Nestle followed the guidelines depicted by the “WHO” and in doing so were
able to maintain their company image and show their continued support and concern for nutrition and education in third world countries.
The decision that I believe is best goes along hand and hand with the decision made by Nestle. Company image and global awareness are major contributors to the success of a company. When key issues like malnutrition and death are raised from the use of a company’s products, the only thing to do is to set the public strait with their stance on the issue. By doing so, you can assure the public of your concern, and maintain a positive global and company image. Secondly, educating the public on the proper use of its products is essential in showing continued support. It would be easy for Nestle to have looked the other way and to have stopped distribution to third world countries. However, their company’s success can be measured by how they reacted in such allegations. They educated the public and provided proper use and instructions for their products. The last step in implementing this plan is to follow the guidelines of the “WHO” and the governments of these countries. Nestle followed all the guidelines and restrictions associated with their products. In doing so they continued to show their support of the “WHO” cause and their support of their consumers.
To conclude I believe that Nestle was successful in their actions regarding this case. In the case of future developments resulting from this case, Nestle has made it clear that they care