Nestlé Corporate Crime

'Good Food, Good Life'

Nestlé has been serving Pakistani consumers since 1988,

when our parent company, the Switzerland-based Nestlé
SA, first acquired a share in Milkpak Ltd.

Today we are fully integrated in Pakistani life, and are

recognised as producers of safe, nutritious and tasty food,
and leaders in developing and uplifting the communities in
which we operate. We at Nestlé Pakistan ensure that our
products are made available to consumers wherever in the
country they might be. Convenience is at the heart of the Nestlé philosophy, and our aim is to
bring products to people's doorsteps.

In line with our parent company's global philosophy, we are proud of our commitment to
excellence in product safety, quality, and value. Our products cater to human needs, and we are
active in the communities we serve. From spreading awareness about nutrition and wellness to
digging wells in the Thar desert and succouring earthquake victims, we are committed to serving
our country and its people.

The consumer's voice is key to Nestlé Pakistan's vision and working. Whether you live in the
remotest village or the metropolis of Karachi, our consumer services team stands ready to listen
to your concerns and provide answers about our products and guidance on matters of health and
wellness.

Overview

Market Share/Importance:

Nestlé employs approximately 253,000 people in some 511 factories worldwide. Nestlé is not only
Switzerland's largest industrial company, but also the world's largest food company, considerably
larger of than its nearest rivals Kraft Foods Inc. and Unilever plc. With products like Perrier and
Nescafé, it is the market leader worldwide in coffee and mineral water, the largest manufacturer
of pet food, and is fast increasing its share of the ice cream market.

Nestlé acquired Ralston-Purina, a US pet food company, in 2001. Despite producing pet food
through its subsidiary, Carnation, since 1985, this acquisition now sees it outstrip Mars as the

1
 Nestlé Corporate Crime

world's largest pet food manufacturer. Not to be outdone by Unilever's acquisition of Ben and
Jerry's, Nestlé's merger with US food corporation Dreyer's to form the Dreyer's Grand Ice Cream
Company in 2003 has given it the number one spot in the US ice-cream market, having already
bagged the Häagen Dazs, Schöller and Mövenpick brands. Globally, Nestlé is now hot on the
heels of Unilever as the number one ice cream seller, a position that it seeks in every market and
category in which it operates around the world.

History:

In 1830, German pharmacist Heinrich Nestlé arrived in Vevey, Switzerland, to work on a

substitute for breast-milk. In 1866 he launched the product onto the market, founding the
company in 1867. Nestlé's own versions of its history can be viewed at:
www.Nestlé.com/all_about/history/index.html and at http://www.Nestlé.co.uk/about/ (Under
'Nestlé Heritage', for Nestlé's British presence). Needless to say, however, this version doesn't
give a very full explanation of the scandals which have plagued the company. The most obvious
damage to Nestlé's reputation has been its unethical marketing of artificial baby milk, particularly
in the global south. This started to become a major issue in the 1970s when War on Want
published a report called "The Baby Killer", which was translated into German by the Berne Third
World Action Group who were subsequently sued for libel, having named their version "Nestlé
Kills Babies".

However, as McDonalds were later to find out, suing critics tends to have a rather galvanising
effect, and the publicity which came out of the case hurt Nestlé much more than the activists. In
1977 a boycott was launched, which continued until 1984, when Nestlé agreed to abide by the
World Health Organization's International Code of Marketing of Breast-Milk Substitutes. However,
the fact did not match up to the promises and the boycott was re-launched in 1988, continuing
vigorously today.

Illegal extraction of groundwater

Nestlé production of mineral water involves the abuse of vulnerable water resources. In the Serra
da Mantiqueira region of Brazil, home to the “circuit of waters” park whose groundwater has a
high mineral content and medicinal properties, over-pumping has resulted in depletion and long-
term damage. In 2001, residents investigating changes in the taste of the water and the complete
dry-out of one of the springs discovered that Nestlé/Perrier was pumping huge amounts of water
in the park from a well 150 meters deep. The water was then demineralized and transformed into

2
 Nestlé Corporate Crime

table water for the “Pure Life” brand. Water usually needs hundreds of years inside the earth to
be slowly enriched by minerals, and overpumping decreases its mineral content for years to
come. Demineralisation is illegal in Brazil, and after the “Citizens for Water” movement turned to
the authorities, a federal investigation was opened which resulted in charges against
Nestlé/Perrier. Although Nestlé lost the legal action, pumping continues as it gets through the
appeal procedures, a legal process which could take ten years.

Pollution

Nestlé has been involved in a number of pollution incidents, including one at a pumpkin
processing plant [55]. Incidents of this kind show the hazardous nature of industrial food
production: even apparently benign materials like pumpkin can turn into a serious hazard in large
enough quantities. Nestlé has also been involved in water pollution incidents in Britain.

Pyres of Burning Animals

Nestlé has recently been exposed regarding its part in persuading the British government not to
vaccinate livestock during the Foot and Mouth disease crisis. The then Chief Executive of Nestlé
UK, Peter Blackburn, who is also president of the Food and Drink Federation, lobbied the
government, which was apparently about to introduce a vaccination programme, and, along with
the National Farmers' Union, who also opposed vaccination, managed to force a complete
turnaround in policy [53]. This is thought to be because Nestlé's profit's would be damaged by the
loss of exports of powdered milk. It would probably have meant the closure of Nestlé's factory in
Dalston, Cumbria, which employs 500 people and is a major producer of powdered milk to
developing countries.

Fraudulent Labeling

In November 2002, police ordered Nestlé Colombia to decommission 200 tons of imported
powdered milk. The milk had come from Uruguay under the brand name Conaprole, but the
sacks had been repackaged with labels stating they had come from a local Nestlé factory, and
stamped with false production dates of 20th September and 6th October 2002. The real
production dates were between. A month later another 120 tons with similarly false country of
origin and production dates were discovered, pointing to systematic fraud. The discoveries
caused a stir, with senators insisting the Attorney General conduct a full inquiry leading to

3
 Nestlé Corporate Crime

prosecutions. Senator Jorge Enrique Robledo charged Nestlé with using sub-standard,
contaminated milk, “a serious attack on the health of our people, especially the children”.

Promoting unhealthy food

A recent report by the UK Consumers Association claims that 7 out of the 15 breakfast cereals
with the highest levels of sugar, fat and salt were Nestlé products.[footnote: Articles about the
Consumers. Unsuprisingly, Nestlé dismisses the role of corporate responsibility in promoting
healthy food. In a Daily Telegraph interview (2/3/04) Mr Brabeck claimed that he is not obese yet
'every morning I have a tablet of dark chocolate as my breakfast' and that it is the perfect balance
and contains everything he needs for the day.

Backlashing against Fairtrade

Over the last 10 years, sales of 'fairly traded' products have risen massively, with many
supermarkets not only stocking Fair trade products, but also introducing Fairtrade lines amongst
their own brands in products such as coffee, tea and chocolate. Similarly, some major branded
food companies, both processors and food service, offer the consumer a fair trade choice, from
Starbucks to Procter and Gamble.

The Fairtrade Labelling Organisation stipulates standards for both smallholders organised into co-
operatives and for organised workers, whose employers pay decent wages, guarantee the right to
join trade unions and provide good housing where relevant. In the trading relationship, they
stipulate that traders have to pay a price to producers that covers the cost of sustainable
production and living, pay a premium that producers can invest in development, partially pay in
advance when producers ask for it, and sign contracts that allow for long-term planning and
sustainable production practices.

With coffee production in deep crisis due to overproduction, the collapse of the International
Coffee Agreement and a highly concentrated industry and the prices paid to producers massively
declining, some have seen mainstreaming fairtrade coffee as a possible solution. Nestlé
disagree. Nestlé 'do not believe that the fair-trade approach is a solution for the present coffee
crisis' because it would 'encourage those farmers to increase coffee production, further distorting
the imbalance between supply and demand and, therefore, depressing prices for green coffee'.
Nestlé claim that their purchase of 14% of beans directly from farmers 'enables the farmer to
retain a greater portion of the price paid by Nestlé, therefore improving his income'.

4
 Nestlé Corporate Crime

This is not necessarily the case, however. With prices so low at the moment, many coffee farmers
have responded by increasing production to compensate for lost income. If farmers received a
fair price for their coffee they would be more likely to reduce production than increase it.