Nestlé Infant Formula Marketing Controversy

An International Marketing Case Study

Group 1Ram Kumar GM04124Arryazua Sapie GM04181Azlina Idris GM04172Masni Awang GM04138Norfaizah Abas GM04222Noorul Amilin GM04253

Nestle the world’s leading nutrition, health and wellness company

#1 F&B FirmVevey, Switzerland in 1866 by Henri NestléCHF 108bn sales in 2009EBIT CHF15.7bnOver 280,000 employees456 factories Operations in 84 countries

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Henri Nestlé1866

Henri Nestlé develops the first breast milk substitute. In his "Memorial on the Nutrition of Infants" printed in 1869

“the mother’s milk will always be the most natural nutriment but there will be never be enough woman’s milk to nourish all the children that are born. We must then seek some suitable substitute… I have endeavoured to make a food suitable for infants, and fulfilling all the conditions sought for by physicians” Henry Nestle.

1950s: Breast milk substitutes widely used in the industrialized nations. Only slightly more than 20% of US mothers choose to breast-feed.

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Americas44.3%

Asia, Oceania, Africa19.9%

Europe35.8%

1867 1866

1929

1938

1947

1960s

1970s

1980s

1990s

2000s

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The Issue

Nestle and the controversy over the marketing of breast milk substitutes in developing countries – a protest against the ethics.

Corporate Social Responsibility – social and environmental

WHO and UNICEF1.5 million babies die every year

One of the root cause: they were not breastfed

Third world countryWater is unsafe - bacteria disease

Aggressive marketing of infant formulaMarketing violation by Nestle -

breastmilk substitutes

Free milk to maternity hospitals - newborns are routinely bottle fed.Babies got dependent on formula

After hospital - formula no longer free, could cost up to 50% of the family

income - affordability issueCorporate greed - taking advantage

of the poor and illiterateRacism

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IssuesIssues

Facing critics, governments, the WHO, UNICEF, or the public?

The controversy started 1968 – Britain action group published “The Baby Killers” 1974.1977 - International boycott organized by INFACT (Infant Formula Action Coalition)1981 – WHO adopts International Code of Marketing of Breast–milk Substitutes1988 – Resumption of boycott1991 – Muskie Commission agree Nestle in compliance with WHO code1993 – More action groups accuse the infant formula industry of multiple violation of the WHO code. Nestle denied, only 3 out of 455 charges accurate.

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Focus

Key aspect of controversy: using infant formula as a substitute for breast milk in the early months of a baby’s life.Counter argument: “it is essential to make formulas, foods and instructions for good nutrition of their infants available to those mothers who do not breast feed for various reasons” U.N Protein Advisor Group.Real issues: Dangers of bottle-feeding using unsafe water & excessive dilution

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Nestle Infant - international boycott

Accusations: directly or indirectly responsible for the death of Third World infants via infant feeding formulaAdvertising and marketing - discouraged breast feeding among Third World mothers and led to misuse of the products.Contaminated river water to dilute the formula - recurring attacks of diarrhea and vomiting.Small amount of formula and a large amount of water, resulting in extreme malnutritionMothers relied solely on the formula for excessively long amounts of time.

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1977 - First Nestlé boycott led by U.S.-based INFACT (Infant Formula

Action Coalition); end to infant-formula promotion demanded.

1979 - INBC (International Nestlé Boycott Committee) and IBFAN (International Baby Food Action

Network) are formed.

Nestle’s Argument

We never supported the idea of replacing breast milk with formulaDoes play a vital role in proper infant nutrition as a supplementThe formula is better in comparison to other supplemental feedings that were harmful to infants, including herbal teas, rice water, corn water and sweetened, condensed milk as these feedings can also be prepared with contaminated water and served in unsanitary conditions.

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Guidance in Nestle Website

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Guidance in Nestle Website

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Q1 - What are the responsibilities of

companies in this or similar situations?

Noorul Amilin GM04253

Educate the public about breastfeeding and infant formula

effects

The company should segment the market on the basic of socio-economic factors

Necessary instructions to be required to be written in local languages

Should encourage Breastfeeding at the time of giving free samples.Give stress on communication:

Live demonstration in publicDemonstration through media (E.g : parenting skills website)

Should promote alternative breastfeeding for HIV/AIDS infected mothers. (such as bottle-feeding the mother's expressed breast milk, breast milk from a healthy wet-nurse or bottle-feeding breast milk from another woman collected through a human-milk bank).

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Contd… They should follow the international code of conduct for

advertisement and promotion – (E.g : Product labeling will affirm breast-feeding as the first choice for the nutrition of infants.)

The instruction should be in the regional language for the benefit of illiterate mother

Arrange some programs i.e. for caring pregnant women

It should not be made free to the hospitals and clinics – reduce or eliminate this practice of Infant Formula Sampling and Discharge Gift bags in hospitals

A product should be promoted according to the people but which should not be harmful to the infant-like the incidence of malnutrition and diarrhea.

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Contd..It should be clearly mentioned in packages that “Breastfeeding is an ultimate best”- infant formula is the choice with the recommendation to seek professional advice. 2% Sodium Hypochlorite can be distributed freely with each Nestle milk packet – sterilization purpose.

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Q2 - What could Nestle have done to have avoided the accusations of

“killing Third World babies” and still market its product?

Arryazua Sapie GM04181

Nestle could have..

Get consultation and guideline from WHO or UNICEF before entering the 3rd world market. Campaign on “breastfeeding” worldwide : why is it good for babies and what mothers should prepare themselves with. Join forces to get the best strategies and raise funds in creating awareness.Emphasize on the fact that formula milk is a supplementary only, not an alternative to breastfeeding milk.

Nestle could have..

-”roadshow” in educating the consumers of 3rd world countries (ranging from  doctors, mothers, schools, hospitals, pharmacies, nurses andmidwives) on everything about formula milk by Nestle.-extensive research on the current issues regarding mothers and babies of the 3rd world countries especially on culture and their conservative practices that might be exposed to risks.Post-purchase research to obtain findings on the effectiveness of formula milk.

Q3 - After Nestle’s experience, how do you suggest it, or any

other company, can protect itself in the future?

Norfaizah Abas GM04222

Nestle and other companies that produce and sell infant formula should:

• Get certification or approval from WHO

•Around the world every country countries has their own law to protect its people from illegal or illogical operation of companies every company should respect country’s law and they also should play their production and marketing activities with considering these laws.

• Has a prudent business policy - which comes after deep scrutiny about the environmental,

cultural impact of their activities. (understand more on the culture and lifestyle

differences understand how people live there, what their traditions are, economic status

and health care issues.)

Nestle and other companies that produce and sell infant formula should:

Nestle and other companies that produce and sell infant formula should:

• Be more aggressive in term of their product research - know about the places where their product will be distributed and marketed.

• Study the social and medical effects of their products and services – companies that provide these types of food products can have psychological effect on cultures, with the assumption that products replace certain vital nutrients.

Nestle and other companies that produce and sell infant formula should:

• Smarter marketing approach where the company should deliver proper knowledge about the formula

or process to use its product. - information and instructions written in local

languages.

Nestle and other companies that produce and sell infant formula should:

• Actively promoting healthy eating habits

- promoting their product as infant nutritional supplementary rather than as complementary product.

- Gerber’s approach is through nutritional education.

Q4 - Assume you are the one who had to make the decision on whether or not to promote and market Nestle’s baby formula in Third World countries.Were the decision socially responsible? Were they ethical?

Masni Awang GM04138

What is Business Ethics?

The principles and standards that determine acceptable conduct in business organizations (Ferrell). The acceptability of behavior in business is determined by customers, competitors, government regulators, interest groups, the public, and as well as each individual’s personal moral principles and values.

What is Social Responsibility?

Social responsibility is a business’s obligation to maximize its positive impact and minimize its negative impact on society (Ferrell).It is important to be socially responsible—that is, to work with stakeholders such as employees, customers, communities, and governments to make sure that the company does its part to minimize negative impacts on society and maximize contributions to important issues that are being addressed worldwide.

Difference between Ethics and Social Responsibility

Business ethics relates to an individual’s or a work group’s decisions that society evaluates as right or wrong, whereas Social responsibility is a broader concept that concerns the impact of the entire business’s activities on society.

Example:Global warming, recycling, and sustainability are social responsibility issues; Employee misconduct in performing business activities is a significant concern of business ethics.

Ethical principles

Utilitarian ethics – Does the action optimize the ‘common good’ or benefits of all constituencies? And who are the pertinent constituencies?Rights of the parties – Does the action respect the rights of the individuals involved?Justice or fairness – Does the action respect the canons of justice or fairness to all parties involved?

Are Nestle marketing is ethical or no..

1) Status of Infant Formula – is it bad thing?2) Role of Infant Formula in Child Death –

is it arise from the misuse of in appropriate marketing or due to other causes?

3) Supplying Infant Formula in Areas of Weak Healthcare Systems – is it morally culpable to supply the infant formula in the countries with inadequate health system?

4) Compliance with the International Code – it is enough?

5) Social Responsibility Considerations - are the infant formula producers showing a narrow legalistic ‘compliance’ attitude to the Code, but ignoring broader ethical issues?

In Short..

Will promote the infant formula in the Third World countries but with following rigorously the code that had been set up as the guideline and by close monitoring on the marketing activities to make sure there is no violation/breach on the conduct.

Q5 - What advice would you give to Nestle now in light of the new problem of HIV infection being spread via mother’s milk?

Azlina Idris GM04172

Brief History of Breastfeeding and HIV1985 – 1st case reported in Australia – mother infected with HIV after giving birth & baby getting infected through breastfeeding. CDC policy in US – HIV-infected women should not breastfeed their infants. 18987 – WHO issued statement suggested screening milk donors for HIV and pasteurizing donated milk. However, breastfeeding should continue to be the feeding method of choice – probability of HIV transmission still “relatively small”. 1989 – UNICEF’s report stated in their State of the World’s Children 1989 that “breastfeeding is not a significant means of transmitting AIDS.”

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Brief History of Breastfeeding and HIV…cont.1992 – Worldwide study estimated a breastfeeding transmission rate of 14% from mothers infected before delivery and 29% from mothers infected after delivery.1997-8 – WHO published new infant feeding guidelines – all mothers should be counseled about possible feeding options and allowed to make their own decisions. 1999 – South African study - babies exclusively breastfed for the first three months of life were not much more likely to become infected with HIV than those given replacement food.

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Brief History of Breastfeeding and HIV…cont.

2001 – WHO introduced the “AFASS” criteria - “when replacement feeding is acceptable, feasible, affordable, sustainable and safe, avoidance of all breastfeeding by HIV-infected mothers is recommended”.

Several studies showed that mixed feeding carries a higher risk of HIV infection than exclusive breastfeeding.

2005 – Study in Zimbabwe led by Dr. Jean Humphrey. 2007 – Study of nearly 3000 mothers in South Africa.

Several studies showed that mother-to-child transmission rate can be reduced to 2% with Antiretroviral Therapy (ART)

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How can the HIV virus be transmitted through breastfeeding?Studies still being conducted to properly understand how HIV becomes present in breast milk.Suggestion saying that HIV-infected CD4 cells have a greater capacity to replicate themselves in breast milk than in blood.Virus can enter the infant’s body through breaches in the infant’s mucous membranes.Other suggestions - HIV transmission can happen through the tonsils as they contain cells that are capable of HIV replication.

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Advice for HIV-infected mothers in high-income countries

Some countries advice NOT to breastfeed but to provide infant with replacement foods (infant formula or home-modified animal milk).

In some countries there are legal consequence that may result in an HIV positive woman being arrested if she breastfeeds her infant knowing that she runs the risk of passing on the disease.

“Under exceptional circumstances, and after seeking expert professional advice on reducing the risk of transmission of HIV through breastfeeding, a highly informed and motivated mother might be assisted to breastfeed.” UK Department of Health

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Advice for HIV-infected mothers in low & middle-income countries

Due to lack of clean water, sanitation and health service, breastfeeding may be the only realistic option.

WHO 20102 guidance - mothers, or their infant(s), are advised to take a course of antiretroviral drugs throughout the breastfeeding period.

“Mothers known to be HIV-infected… should exclusively breastfeed their infants for the first 6 months of life, introducing appropriate complementary foods thereafter, and continue breastfeeding for the first 12 months of life.” World Health Organization.

Study in South Africa – only 25% of mothers exclusively breastfeed during 1st 6 months.

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What can Nestle do?

Continue to show support towards breastfeeding.

Contribute towards programs that provide education and empowerment for women, especially in Third World countries.

How to have safe sex How to get access to HIV testing How to get counseling How to get access to treatment/ART How to properly breastfeed and the benefits of exclusively

doing so for the 1st 6 months How to conduct heat treatment for expressed milk from HIV-

infected mother – inactivate the HIV

Contribute towards research on how to reduce the risk of mother-to-child transmission

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CONCLUSIONNestle displayed negligence and did not fulfil CSR to the public.Marketing practices were unclear, which led to the misconception that formula was a good way to replace breast milk and other forms of nutrition vital to child development. Fail to educate the public as to the proper methods of using the productDid not consider the different living conditions as a factor which could lead to misuse.Third world countries economically underdeveloped and do not have access to many resources, including uncontaminated waterNestle permitted the use of clever radio jingles to imply that the products distributed by companies established in certain countries would make a baby growAllowed the distribution of samples by nurses in hospitals and homesEncouraged mothers to give up breast feeding and turn to bottle feeding because it was “the new thing to do”, thus infringing on their commitment to the responsibility of developing policies that integrate responsible practices into daily business operations.

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