Richard Smith: Nestlé—a force for good or ill?

Richard SmithNestlé, one of the world’s largest food companies, sells 1.2 billion products a day. This gives it huge potential for good or ill in a world where a billion people are undernourished, more than 2 billion are deficient in micronutrients (iron, iodine, zinc, and vitamin A), and 1.6 billion are overweight. So which is it, good or ill?

Readers of the Lancet and PLoS Medicine have been told that “big food” in general is a bad thing, akin to tobacco companies, and that Nestlé in particular is suspect. Nestlé is strongly associated with breaching the WHO international code on marketing of breast milk substitutes. These alleged breaches occurred in the 70s and 80s and led to a boycott of Nestlé products that still continues (but without much effect, as the company’s sales show). Indeed, the idea that Nestlé regularly breaches the code seems to be widespread, although it hasn’t been true for years and may never have been a major issue. This is a problem for Nestlé: once you are seen as a villain it can be very difficult to promote any other view.

Those attending the C3 Collaborating for Health breakfast meeting last week heard, however, from Janet Voûte, head of global public affairs at Nestlé, that breaching the code has long been a sackable offence. More surprisingly Nestlé is now the leading advocate for WHO’s recommendation of six months of exclusive breast feeding at the beginning of life in many countries—because, said Voûte, nobody else is doing it. (The meeting heard about the percentage of women in Scotland achieving six months’ exclusive breast feeding: less than 1%).

Nestlé has pioneered the concept of shared value. They define it as “going a step beyond corporate social responsibility to create value through our core business both for our shareholders and society.” The belief is that companies can only survive long term if they not only generate profits for shareholders, but also do good things for society. Nestlé has survived for a more than a century, which is much longer than most companies, and it is not listed on the New York Stock Exchange and so doesn’t have to publish quarterly results. The emphasis, said Voûte, is on the long term, which is made easier by some of the shareholders being fifth generation Swiss farmers. These differences have allowed Nestlé to escape the shareholder hostility experienced by Pepsico for trying to make existing products healthier and develop new healthy products.

The main targets of shared value have been improved nutrition, water preservation, and rural development. The company has set targets for reducing salt, fat, and sugar in its products, and one of the differences between a company like Nestlé and, say, WHO is that companies are much stronger on implementation and may be legally obliged to meet published targets. Nestlé  manufactures lots of unhealthy products, like chocolate and ice cream, and it contemplated selling its confectionery business. But, said Voûte, “zero is not the answer,” and if the world is going to continue to have chocolate and ice cream then Nestlé can stay in the business, but reduce portion sizes and develop lower calorie but tasty products. Skinny Cow ice cream, hot chocolate, and candy are examples.

The company also wants to play a positive role, and it is doing this through supplementing its Maggi products (bouillons, seasonings, noodles, soups, and recipe mixes) with micronutrients. Around 200m people, most of them in Africa, use these, and the company has sold 100 billion Maggi products supplemented with iodine.

Interestingly Nestlé has also developed a health science business, trying to develop nutritional rather than drug treatments for conditions like diabetes and Alzheimer’s disease. Nutrition and healthcare is about 11% of the global business and contributes 14% of the profits. I can see that many people might prefer nutritional to drug treatments, and maybe adherence will be a lot better.

With 486 factories spread around the world Nestlé has great scope for reducing its water consumption, and its total consumption fell from 143 million m3 in 2011 to 138 million m3 in 2012, and it has a commitment to reduce consumption by 40% per tonne of product from 2005 values by 2015. An overall reduction in water use can be achieved only by reducing the amount used per product as overall production is increasing.

Reducing water consumption will reduce costs, something that’s important in all businesses, and the same goes for carbon emissions. Nestlé  has reduced its greenhouse gas emissions by 24% since 2002. Over the same period the NHS carbon footprint increased by about 15%. Competitive pressure to reduce costs is strong for businesses but so is the social pressure to reduce greenhouse gas emissions because companies are seen as “baddies” while health services are “goodies.” In many countries health services are exempt from reducing carbon consumption, which seems absurd to me.

The third part of Nestlé’s shared value proposition is rural development, and it has considerable scope here as it has contracts with 690 000 farmers, many of them in Africa and other low and middle income countries. As I learnt at the World Economic Forum Africa meeting in Cape Town last year, African farmers have huge potential to improve production and efficiency. But they must do this while coping with many problems, including rising temperatures and falling rainfall. Working with farmers is again self-interest for Nestlé because it needs a sustainable supply chain, but it has given financial assistance to 44 000 farmers and trained 27 000 farmers in 2012.

Just as there is division in the outside world so there is division within companies, and classically the researchers are keen on promoting health and the marketing people sceptical that financial targets can be met through encouraging healthy products. Voûte said, however, that with growing global concern over obesity the marketing people do not want Nestlé to be seen as part of the problem.

To many readers (if there are any) I must sound like an apologist for Nestlé, and when I attended the United Nations meeting on NCD in 2011 I spent some 40 minutes in a queue with a woman who talked without interruption about the evils of for-profit companies in general and Nestlé in particular. She would presumably like a world without such companies, but it’s impossible to imagine such a world.  There will, of course, be times when the interests of the companies conflict with broader social interests, but that’s true of all organisations and individuals. (See our essay on the fallacy of impartiality). I’m convinced that companies like Nestlé have a vital role to play in promoting environmental sustainability and health, but just as we must all keep a critical eye on governments, so we must on companies.

Competing interest: RS works for a for-profit company, is the chair of a for-profit startup, and spent a year (at the expense of the BMJ) at the Stanford Business School, all of which probably incline him towards supporting for-profit businesses. And he’s a trustee of C3 Collaborating for Health, which avowedly believes that we can prevent the epidemic of NCD only with a “whole of society, whole of government” approach, which includes private companies. RS has no financial connections with Nestlé and doesn’t like instant coffee, but does enjoy chocolate.

Richard Smith was the editor of the BMJ until 2004 and is director of the United Health Group’s chronic disease initiative.