Ethical Issues of Nestl

Introduction of Nestl
Nestl is the worlds leading nutrition, health and wellness company. Their mission of Good
Food, Good Life is to provide consumers with the best tasting, most nutritious choices in a wide
range of food and beverage categories and eating occasions, from morning to
night.theirtheyCreating Shared Value is a fundamental part of the way that they do business. They
believe that to enhance and protect their business they must go beyond compliance and
sustainability and create new and greater value for their people, their shareholders and society as a
whole (Nestl, 2015).
Nestls products include baby food, bottled water, breakfast cereals, coffee and tea,
confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Twenty-nine of
Nestls brands have annual sales of over US $1.1 billion, including Nespresso, Nescaf, Kit
Kat, Smarties, Nesquik, Stouffers, Vittel, and Maggi (Fortune, 2011). Nestl has 449 factories,
operates in 194 countries, and employs around 278,000 people. It is one of the main shareholders
of LOreal, the worlds largest cosmetics company. (Nestl, 2015)

Ethical Issues
The controversy between breast feeding and formula feeding gained high attention over the past
30 years, especially when it comes down to Nestl. In 1977, campaigners first called for a boycott
of Nestl according to its aggressive and deceptive marketing of infant formula to Third World
countries. Thisand i, which consists of more than 200 groups in over 100 countries. edinfant
formula
Nevertheless, regardless of the boycott, it is said that Nestl produces a very high quality infant
formula, healthier than any other alternatives, which the firm successfully marketed in North
America, Europe, and some parts of Asia. Consequently, it seemed to make sense for the company
to market formula in Africa using the same communication strategies that had worked elsewhere.
However, Nestl officials failed to take into account important cultural and economical differences
(Sage Publication, 2006). threehavened (Longhurst, 2015):
1) Formula must normally be mixed with water, which is often polluted in poor countries, leading
to disease in vulnerable infants. Because of the low literacy rates in developing nations, many
mothers are not aware of the sanitation methods needed in the preparation of bottles. Even
mothers able to read in their native language may be unable to read the language in which

sterilization directions are written.

2) Although some mothers can understand the sanitation standards required, they often do not
have the means to perform them: fuel to boil water, electric (or other reliable) light to enable
sterilization at night. (UNICEF) estimates that a formula-fed child living in disease-ridden and
unhygienic conditions is between 6 and 25 times more likely to die of diarrhea and four times
more likely to die of pneumonia than a breastfed child.
3) Many poor mothers use less formula powder than is necessary, in order to make a container of
formula last longer. As a result, some infants receive inadequate nutrition from weak solutions of
formula.

Resolutions of the Case

The boycott focuses considerably on when and how Nestl comply with the World Health
Organizations (WHO) Code. While focusing on external codes can create discipline, clear
guidelines, measurable results, etc. However, this type of focus can also distract people from the
broader questions of whether the actions themselves are ethical or not. In the specific case of the
WHO Codes, there are elements such as no infant pictures on labels, no sampling to mothers, no
point-of-sale advertising etc. which seem to focus more on limiting Nestls sales than on
safeguarding the health of vulnerable children (Longhurst, 2015). In this regards, while Nestls
focus on the WHO code is politically viable, it does not quite get to the root of the issue. From a
deontological point of view (D, first, , s (Waller, 2005) ), it could be argued that since Nestls
baby formula is healthier than other alternatives that selling the baby formula is ethical. Besides,
Nestl infant formula could save the lives of babies whose mother are positively AID/HIV
infected. However, this case highlights the difficulties of a legalistic and deontological approach in
that different customers are reacting quite differently to the same marketing (Longhurst, 2015).
Consequently, it would sound fair for Nestl to utilize their own codes of ethics and conducts for
the operation in poor countries while keeping WHO codes as a top guideline.
From a consequentialist point of view (Mizzoni, 2010), which, while the baby formula itself
is healthy, if customers misuse the product, the net consequences of the marketing could be
negative. In other words, there is an ethical and moral responsibility to educate customers in how
best to use the product. In this sense, what is more important is actually education and training
rather than items in the WHO code such as removing pictures of babies from labels. From a
utilitarian point of view ( (Crane and Matten, 2010) , the sacrifice required to improve the
education of customers and the training of sales people does indeed increase happiness or at least
reduce suffering and unnecessary deaths, thus it would be morally and ethically justified and even
required for Nestl to do a better job at informing customers as to the benefits of natural breast
milk, the dangers of contaminated water (and the fact that their formula will not fix that), the
importance of providing proper nutrition (for customers who use too little nutrition), and
constantly monitoring the way customers use and misuse the product in order to help all their
stakeholders derive the maximum benefit from their product. This also makes business sense as
well informed stakeholders would derive more value and utility from using their product.

Other methods which could be applied by Nestl to improve their damaged reputation from the
boycott under the understanding of theories of utilitarianism include giving support (i.e. funds and
knowledge) to local governments in terms of providing available clean water (i.e., building
hygienic wells, offering tools to boil the water and tools to keep boiled water clean), following
different codes in different countries while keeping WHO Codes and Nestls own ethical codes as
top guidelines, reporting code violation discovered either in Nestle's audits, or in African countries
or from any other organizations directly to HQ so that appropriate disciplinary actions could be
taken on time.

Conclusion
The key question for this case is whether or not Nestl was guilty of an ethical violation in the
marketing of their product. While the company claims that their baby formula has been
scientifically proven to be healthier than many alternatives, there are still many vulnerable
children who were dying unnecessarily due to their parents misuse of the product. While it would
be easy (and partially justified) to lay the blame on the parents who are misusing the product,
Nestl has the obligation to seek ways to avoid ways for these clients to be damaged by the misuse
of the produce. From the point of view of virtue ethics, courage, justice, charity and prudence
seem to suggest that if Nestl can solve unnecessary suffering, they should. From the point of
view of deontology, solving unnecessary suffering could be made into a universal maxim and from
a consequentialist/utilitarian point of view the increased happiness and reduced suffering would
justify the effort to educate customers in the proper use of the baby formula. All the methods
suggested above might solve the controversy between Nestl and campaigners to a large extent if
these methods were carried out responsibly and carefully, however it will be a long way to go in
the future.

References
1) Crane, A. and Matten, D.(2010) Business Ethics: Managing Corporate Citizenship and
Sustainability in the Age of Globalization. Third edition. Oxford: Oxford University Press.
2) Fortune. (2011). Nestl's Brabeck: We have a "huge advantage" over big pharma in creating
medical
foods.
Retrieved
march-2015,
from
http://archive.fortune.com/2011/04/01/news/companies/nestle_brabeck_medical_foods.fortune/ind
ex.htm
3) Heber Longhurst (2015). Nestl & the Infant Formula Controversy: Did Nestl Incur and
Ethical Violation through Marketing of Infant Formula? Retrieved march-2015, from
https://www.academia.edu/7146054/Nestle_and_the_infant_formula_controversy?

4) Mizzoni, John (2010). Ethics: The Basics . John Wiley & Sons. p. 104.
5) Nestl. (2015). About us.
http://www.nestle.co.nz/aboutus

Nestl

today.

Retrieved

march-2015,

from

6) Sage Publication (2006). Ethical Decision Making and Action. Retrieved march-2015, from
http://www.sagepub.com/upm-data/12906_Chapter3.pdf
7) Waller, Bruce N. (2005). Consider Ethics: Theory, Readings, and Contemporary Issues. New
York: Pearson Longman. P.23.