Case: Nestl's Palm

Oil Crisis in 2010

Group
1

Hoang Trong Truong

Tran Minh Ngoc A
Hoang Anh Ngoc
Le Van Nhan

OUTLINE

BACKGROUND
INFORMATION

Analysis

Solutions

1. BACKGROUND INFORMATION
1.1. Company background
Nestle was founded in 1866, with its
headquarter
based
in
Vevey,
Switzerland.
The company is one of the leading
players in the food and beverage
categories. It has more than 2000 brands
in portfolio, from global icons to local
favorites.
The company has a global presence and
employed 281,000 people as of 2010. Its
revenues and profits for the year 2010
were CHF 209.72 billion and CHF 34.23
billion respectively.

 KitKat brand is a favorite chocolate brand of

Nestle. According to its annual report, 150 KitKat
bars are consumed worldwide every second.

1. BACKGROUND INFORMATION
1.2. Relating information

Greenpeace Organization:
A
non-governmental
environmental
organization.
The stated objective of Greenpeace is
to ensure the ability of the Earth to
nurture life in all its diversity.
Greenpeace has focused on issues of
deforestation,
global
warming,
commercial whaling, overfishing, and
nuclear issues.
Known for its use of direct action
lobbying and research for achieving its
goals.

Palm oil
Palm oil has a range of uses and is
principally grown in Indonesia where it
makes a substantial contribution to
the economy.
However, the expansion of palm oil
cultivation came at the cost of
destruction of rainforest, which were a
home to orangutans.
Besides, the clearing of rainforests
contributed to greenhouse gas
emissions, leading to global warming.

Rain forests are home to orangutans

1. BACKGROUND INFORMATION
1.3. Timeline of the case
14th March
2010

17th March
2010

The Independent stated that

Nestls Kit Kat contained
palm oil resulting in
deforestation and threats to
the Orangutans.
Environmental Group
Greenpeace requested Nestl
to give the rainforest a
break by ending its business
On
partnership
withGreenpeace
Sinar Mas. accused
its website,
Nestle of contributing to deforestation as a result of its choice of
palm-oil suppliers in Indonesia.
Greenpeace also made a parody of
the Kit Kat commercial which drew
attention to palm oil on YouTube.
Nestle immediately asked YouTube to
remove the video because of

18th March
2010

17th March
2010

Greenpeace released the

video on Vimeo and it reached
78,500 views in few hours.
The videos started spreading
quickly via social networks.

The videos was back on YouTube and

reach 185,000 views
Greenpeace supporters then changed
their profile pictures to an anti-Nestl
logo and posted boycotting Nestl
messages on Nestls Twitter and
Facebook page.
However, Nestl deleted those
negative comments with anti-Nestle
logo and posted
To repeat: we welcome your comments,
but please dont post using an altered
version of any of our logos as your
profile pic they will be deleted.
The statement further angered online
users and escalated the negative

 The video on YouTube

reach 1.2 million
views
Nestles Facebook was
overwhelmed with
negative comments,
Negative comments on
Twitter appeared every
15 minutes with more
than 215,000 related

29th March
2010

tweets
The Wall Street Journal
covered and spread the
story.
This negative buzz in
social media,
apparently, led to a
decrease in both brand
reputation and sales
volume.

2. ANALYSIS
2.1. Public Analysis
Indonesi
a
governm
ent

Suppliers
(Sinar
Mas)

Retailers

Custome
rs

Public

Internal
publics

Opponen
t

Greenpe
ace
activists

Media

Who

Benefit

Loss

Power

Stop using Nestl's products

Customers

Opponent

Gain market share

Worsen the situation

Greenpeace
activists

Protect environment,
gain reputation

Influence customers

Media

News

Spread the news,

inform the public

Internal publics

Unemployment/
Labor cut down

Retailers

Income reduction

Cancel services

Suppliers (Sinar
Mas)

Decrease profit
share, money

Stop providing Nestles

resource

Indonesia
government

Worsen/ improve the

situation

Suspend the operation of

Sinar Mas

High

POWE
R

Government
(keep satisfied)

Consumers
Media
Greenpeace
activists
(manage closely)

Opponents
Internal publics
(minimal effort)

Retailers
Suppliers
(keep informed)

POWER
MATRIX

Low
Low

INTERE
ST

High

2. ANALYSIS
2.2. Crisis Analysis
Issue

Risk

Level

Suppliers selection

Inappropriate partners may deteriorate

the reputation of the company in terms of
disqualified materials

Substantial

Environmental
responsibility

The company cannot fullfil their

responsibility for the environment

Moderate

Communication

Lack of interactivity with the public

Substantial

The development of
Information against the company may
internet and social
spread rapidly
media

Severe

Public awareness of
The public criticize the company
environmental
environmental responsible
issues

Substantial

Scope:
It took the crisis 12
days to spread from
the social media to
mainstream media.
Until 29th March
2010,
the
video
attracted 1.2 million
views on Youtube
and
started
spreading
on
newspaper
with
uncontrollable
speed.

3. SOLUTIONS

Solution 2:

Solution 1:
Sue Greenpeace in terms of
copyright issue

Quickly perform action to

fulfill environmental
responsibility

Solution 3:
Quickly provide a site for
Q&A, change supplier, and
participate in environmental
activities.

3. SOLUTIONS
Solution 3: Quickly provide a site for Q&A, change supplier, and participate in
environmental activities.
Action 1: (14th Mar 2010)
- Form a crisis management team
- Call an internal meeting to:
Inform the current situation
Give out a course of actions in
case of dealing with the press and
customers.

Action 2: (15th Mar 2010)

Provide an official site for Q&A for
customers/ followers to:
- Drive peoples attention away from
its social network site
- Update continuously on social
network site

Action 3: (From 15th Mar 2010)

- Suspend sourcing from Sinar Mas
- Find a credible external partner to
certify the sustainability of its palm oil
suppliers.
- Hold meetings with Greenpeace to
provide details of the company palm oil
supply chains.
- Announce the consumers and the
media about the change in suppliers of
Nestle.

Action 4: (April 2010)

Action to protect the environment:
- Participating in global environment

THANK YOU FOR

LISTENING!
Group
1

Hoang Trong Truong

Tran Minh Ngoc A
Hoang Anh Ngoc
Le Van Nhan