Boycotting the ‘baby
killers’? Nestlé and the ongoing infant formula controversy
This case discusses
the controversy surrounding Nestlé’s marketing of infant formula, and in
particular looks at how the campaign against Nestlé has been sustained over 30
years despite attempts by the company to appease its critics. The case provides
the opportunity to examine the ethics of marketing practices, as well as to
discuss the role of ethical consumption in curbing perceived ethical
violations.
The ‘Baby Killer’ is
the title of War on Want’s 1970s incendiary report on Nestlé’s marketing of
infant formula in developing countries. While much has been said about the
issue over the last 30 years, with evidence being marshalled from both sides
proclaiming the company’s innocence and guilt, the world’s largest food company
remains mired in a controversy that seems destined never to go away. Since the
issue first went public in 1973, Nestlé has continued to face intense
opposition to its practices, and has the dubious distinction of having endured
the world’s longest consumer boycott. Has Nestlé failed to listen properly to
its critics? Does it simply not care? Or is it that the critics have either got
it wrong, or will never be satisfied? In what has been one of the most remarkable,
and probably the most well- known, campaign against an individual company, over
just one single issue, the truth of the matter remains thoroughly contested.
The details of the
Nestlé infant formula controversy (or in truth a series of related campaigns
from several parties) have been extensively discussed, to the point now of
becoming business ethics folklore. There have been three major books about the
events; various academic and media articles; numerous reports from research
institutes, development agencies, non-government organizations (NGOs), the
World Health Organization (WHO), and others; and nearly all of the major
business ethics textbooks seem to include a case on the subject.
Unfortunately, all
this discussion hasn’t brought a whole lot of agreement. However, in a
nutshell, these are the basic details of the criticisms against the company.
Nestlé, the Swiss-based multinational behind global brands such as Nescafé,
Kit-Kat, Perrier, Maggi, Milo, and Buitoni
pasta, is one of the leading suppliers of infant formula (powdered baby milk)
across the globe. There have never been any major criticisms of infant formula
as a product, but problems can arise when it is used or marketed
inappropriately. For example, before being fed to babies, infant formula needs
to be mixed with water, and all utensils need to be thoroughly sterilised. In
many countries though, high levels of illiteracy can mean that mothers are
unable to read the necessary instructions, and poor sanitation can lead to
babies being accidentally fed formula mixed with contaminated water. Similarly,
mothers in poor countries may try to save money by ‘economizing’ on the formula
by using less than the recommended dose or substituting it with other inferior
alternatives such as cow’s milk, rice water, or cornstarch with water.
Many of the initial
problems for Nestlé, and one of the main reasons why it has continued to spark
hostility, arose from the claim that it has ‘aggressively’ promoted infant
formula. Ironically, the product is actually a vital health resource for
mothers who cannot for one reason or another breastfeed. Infant formula is
clearly a preferred alternative to other ‘traditional’ substitutes such as
those mentioned above. More recently, formula has also been seen as an important
alternative to breastfeeding for HIV/AIDS infected mothers. However, critics
argued that Nestlé actively promoted the product to mothers who could
breastfeed safely. This allegedly included practices such as:
· Free samples to mothers.
· Free supplies to hospitals and clinics.
· Advertisements encouraging mothers to adopt
‘modern’ bottle feeding in place of ‘old-fashioned’ and ‘inconvenient’
breastfeeding.
· Posters and pamphlets announcing the benefits
of formula in hospitals.
· Promotional booklets ignoring or downplaying
the benefits of breastfeeding.
· Incentives to milk nurses and health workers
to endorse bottle-feeding.
With breastfeeding in
decline and sales of infant formula on the rise, many saw the actions of Nestlé
(and the rest of the industry) as a direct cause of infant mortality in the
developing world. Widespread condemnation ensued and boycott action was
initiated against the company during the 1970s. Although there was much debate
about the causal relationships involved, criticisms of such aggressive
marketing practices eventually led to the WHO introducing a code of conduct
governing the marketing of infant formula in 1981.
Virtually all of the
above practices were effectively banned by the code (and its subsequent
resolutions), which also eliminated all direct company contact with consumers,
and called on producers to ensure that products contained appropriate health
warnings, and used languages understood by local users. Although a voluntary
agreement, and only legally enforceable once adopted by national governments,
Nestlé announced it would comply fully with the code.
That should have been
the end of the story. However, in many ways it was only the beginning. Although
the first boycott of Nestlé was effectively called off in 1984, various groups
initiated further campaigns throughout the 1980s, 1990s, and 2000s, usually as
a result of new allegations surfacing of apparent non-compliance with the WHO
code, or lobbying by Nestlé to prevent governments translating the code into
legislation. IBFAN, the international pressure group coordinating the global
campaign against Nestlé argues in a 2005 publication that Nestlé is singled out
for boycott action because independent monitoring finds it to be the ‘largest
single source of violations’ of the WHO code and because it ‘takes the lead in
attempting to undermine implementation of these measures by governments’. In a
2004 report, Breaking the Rules – Stretching the Rules, the group identified
hundreds of alleged violations of the code from countless different countries,
including donating formula to hospitals in China, calling on new mothers at
home in Indonesia, and distributing brochures in Thailand that claim Nestlé’s
products give ‘valuable nutrients which have complete benefits for baby from birth
to one year’.
Nestlé’s response to
the alleged violations has tended to rely on denial, correction of perceived
inaccuracies, arguments about incorrect interpretations of the code, and
blaming of occasional miscreant employees. Although it has admitted making
mistakes in the distant past, the company maintains that it has always abided
by the WHO code and that campaigners simply have got it wrong. The company is
unambiguous in its public pronouncements that ‘breastfeeding is best for
babies’. Its policy claims that Nestlé supports the WHO global public health
recommendation ‘calling for exclusive breastfeeding for six months and
introduction of safe and appropriate complementary foods thereafter’, ‘does
warn mothers of the consequences of incorrect or inappropriate use of infant
formula’, ‘does not advertise or promote infant formula to the public,’ and
‘will take disciplinary measures against any Nestlé personnel who deliberately
violate this policy.’
Aware that
campaigners remained unconvinced, over the last few years the company has
stepped up efforts to develop new ways of managing the baby milk issue. In
2002, the company introduced an ‘ombudsman system’ to encourage employees to
confidentially report violations of the code without fear of retribution. This
was followed by an independent assessment of its African operations by Bureau
Veritas, a global auditing firm, that declared in 2005 that it had found ‘no
systematic shortfalls in terms of Nestlé’s implementation of its Instruction on
the Marketing of Breast-milk Substitutes’. The company also, for the first
time, released dedicated reports on its economic and social impacts in Africa
and Latin America – which were cautiously welcomed by the reporting industry,
but predictably condemned as part of a PR offensive by boycotters.
Whichever way you
look at it, the boycotters of Nestlé have certainly made considerable progress
in forcing the company to change its ways. Although there seems to be little
chance of any staunching of the steady flow of criticism about its marketing
practices, Nestlé has clearly done much to respond to its critics. Nonetheless,
one might wonder why, if the company is so committed to the WHO code, not to
mention its own policy, is it seemingly possible for its critics to uncover
further examples of violations. You would have thought that a 30-year boycott
would have helped stop all such problems before now. After all, the infant
formula business makes only a minor contribution (about one per cent) to the
multinational’s profits, yet has generated vast amounts of adverse publicity
for the company.
Nonetheless, it is
difficult to determine whether the ongoing boycott actions have actually harmed
the firm’s profitability. As the Financial Times recently commented: ‘on the
face of it, the boycott has done Nestle little harm’, pointing out that it was
rated the world’s 11th most respected company in the 2004 Financial Times/PwC
survey and had been in the top 20 every year since 1998, when the survey began.
Since the beginning of 1977 when the boycott first began, the newspaper reports
that Nestlé’s share price has increased by 1,592 per cent, outperforming Morgan
Stanley’s European stock index by 166 per cent.
Ultimately though,
despites its protestations that it is doing no wrong, Nestlé still remains
among the handful of companies universally condemned by anti-corporate
activists, students unions, and pressure groups. A recent poll revealed that
Nestlé was one of the world’s most boycotted companies, and was the number one
target for boycotters in the UK.
So, whilst the company may continue to dispute the legitimacy of the claims
made against it, it still has a long way to go before it convinces its critics
of its ethics. Given that the company has recently launched its own range of
fair trade coffee, and is now a part owner (through its stake in L’Oreal) of
the Body Shop, it remains to be seen whether the firm will be successful in
attracting more ethically minded consumers.
Questions
1. Set
out the main ethical criticisms of Nestlé’s marketing of infant formula. Which
consumer rights are these practices failing to respect?
2. Many
of the criticisms of Nestlé’s practices stem from the argument that consumers
in the developing world are ‘vulnerable’. To what extent is this a valid
argument?
3. What
are the arguments for and against continuing the Nestlé boycott from the point
of view of consumers seeking to enhance the well-being of mothers and babies in
the developing world? What implications does your answer have for notions of
consumer sovereignty?
4. How
would you explain Nestlé’s apparent failure in pacifying its critics? What
would you suggest the company do to end the boycott?
Sources
Clark,
A. 2002. Nestlé appeases critics. Guardian, 29 March: 21.
Newton,
L.H. 1999. Truth is the daughter of time: the real story of the Nestlé case.
Business and Society Review, 104 (4): 367–98.
Skapinker, M. 2004.
How baby milk marketing fed a long-life campaign. Financial Times, 26 May: 16.
.babymilkaction.org/”>www.babymilkaction.org
.ibfan.org/”>www.ibfan.org
.nestle.com/”>www.nestle.com
