Wednesday, August 29, 2007

Learning from the ice-cream wars

What can we learn from ice cream? I sometimes cite Nestlé's ice-cream war with Unilever when people question why Nestlé has not yet given in to the demands of boycott coordinators. Certainly we have won some grudging changes to policy and can stop specific cases of aggressive baby food marketing targeted by our Campaign for Ethical Marketing. But Nestlé still refuses to agree to our four-point plan aimed at saving infant lives and ultimately ending the boycott. It won't even agree to the first point, that it should accept the validity of the World Health Assembly marketing requirements.

Even Nestlé acknowledges that the company is 'widely boycotted'. Independent surveys have found it to be one of the four most boycotted companies on the planet.

So why hasn't it accepted the four-point plan? Well, we can learn from ice cream and I am prompted to write about this by an article in Business Week. See Ice Cream Wars: Nestlé v. Unilever.

Ice cream is a US$59 billion industry, now dominated by the two companies as they have gone on tit-for-tat acquisition sprees, buying up national ice cream companies. You may have seen this happening. A Nestlé oval appears around the old company name, such as Lyons Maid in the UK or Yopa in Brazil. After a few years for people to get used to that, the old company name is unceremoniously booted out and Nestlé replaces it in the centre of the oval.

It is a cut-throat business and Nestlé in particular demands strong growth. Though ice cream contributes billions to Nestlé turnover, it dumps any brand that is not reaching its growth targets of 5-6% per year. So Lyons Maid was divested a few years ago, with Nestlé continuing to profit from the licensing of brand names to the new owners.

Country by country Nestlé and Unilever go head to head, trying to out compete the other. Asia and Latin America are the current battle grounds and a fortune is being spent in trying to convince customers of the merits of their respective products.

This is the daily reality of Nestlé executives. With this aggressive culture permeating the company, the boycott is seen as another factor in their operating environment. Executives generally try to throw money at the problem, with their anti-boycott team, expensive publications and Corporate Social Responsibility strategy of improving the company image. When the pressure is too great, they are forced to give ground. Stopping a promotion. Changing an aspect of policy.

Our work for legislation is most effect because, when given no choice, the companies can comply. But it does require a strong stance as even then Nestlé is loathe to comply, for example, refusing to turn up to court in Costa Rica and India when prosecutions were brought. In India it took the government to court to try to have the law changed.

The Business Week article doesn't mention it, but the ice cream war is also a legal battle, with the companies suing and counter-suing over restrictive practices as they try to achieve exclusive deals for ice cream distribution. At least Baby Milk Action has never faced a legal challenge as Nestlé knows it would lose, so further fueling the campaign for it to change.

This is a campaign - and not just a request to Nestlé - for the simple reason that Nestlé is not willing to change. Whatever it may say as it tries to endear itself to the public and organisations it wants on its side, Nestlé is still contributing to the unnecessary death and suffering of infants around the world through its aggressive baby food marketing practices. It is still responsible for more violations of the marketing requirements than any other company.

The campaign has its successes and with greater support, through people spreading the word, writing to Nestlé and supporting us financially (perhaps by buying some of the boycott merchandise we sell) we can have a greater impact.

But don't be surprised that there is resistance from Nestlé. Infant nutrition has to deliver the same year-on-year growth as the rest of its sectors to comply with what the Chief Executive calls the Nestlé model. He has promised shareholders he will deliver and they shout down anyone who raises concerns about his methods. Nestlé won't stop its aggressive marketing readily.

Lives are at stake so we will not give up and we will continue making gains that help to save lives. But it is not easy taking on Nestlé.

Just take a look at the ice-cream war.

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