Case Study (Nestle)

Nestle: The Infant Formula Controversy
Summary and Highlights
The Charges:
Nestle (MNO) is marketing infant formula to developing countries in which misuse is leading to
unhealthy results. Most of the charges against infant formulas focus on the issue of discouraged
breast feeding among Third World mothers and have led to misuse of the products, thus
contributing to infant malnutrition and death.
 In northern Peru where water come from a highly contaminated river.

 Throughout the Third World, many parents dilute the formula to stretch their supply.
The children had never been breast fed, and since birth their diets were basically bottle
feeding.
 In rural Mexico, the Philippines, Central America, and the whole of Africa, therehas
been a dramatic decrease in the incidence of breast feeding.
For over 20 years, Nestlé has been directly and indirectly charged with involvement in the
death of Third World Infants in 1974, A report with a pamphlet entitled “Nestlé kills babies”
is published.
The Defense:
After some criticism, Nestle still said that they believe breast feeding is still the best for infant.
However, for some reason, mothers can’t feed their baby with their own milk so they should
use nutrition milk or mixed food instead.
However, in third world countries, material and water are really contaminated so it might be
harmful for infants. Nestle is just simply offering an alternative for those mothers that can’t
provide adequate nutrition.
The Resolution:
Nestle started educating consumers. WHO got involved and the INBC made their points of
difference. In 1974, Nestle, aware of changing social patterns in the developing world and the
increased access to radio and television there, reviewed its marketing practices on a region-by-
region basis.
In 1977, the Interfaith Center on Corporate Responsibility in New York compiled a case against
formula feeding in developing nations, and the 3rd World Institute launched a boycott against
many Nestle products.
The INFACT (The Infant Formula Action Coalition) lobbied the WHO to draft a code to regulate
the advertising and marketing of infant formula in the 3rd world.
In May 1982, Nestle formed the Nestle Infant Formula Audit Commission (NIFAC) NIFAC
recommended several clarifications for the instructions of the code. In October 1982, Nestle
accepted those recommendations. Other issues within the code, such as the question of a
warning statement, were still open to debate.
Nestle supports WHO codes:
Nestlé implements WHO codes:
 Immediately support the WHO codes

Issue instructions to employees, agents, distributors
Establish an audit commission
Consult with WHO, UNICEF, and NIFAC etc.
Nestlé policies:
 Adopting articles of the WHO code as Nestlé Policy
 Nestlé and other manufacturers are accused of violating WHO codes.
 Nestlé rejected the accusations
The new twist:
NO Sampling, NO mother craft workers, NO Point-of-sale advertising, & NO infant pictures on

labels.
The mothers may continue breast feeding to avoid being stigmatized once bottle feeding
becomes a badge of HIV infection. • In Thailand, pregnant women are given free milk powder
after founding HIV positive. • Demand for infant formula in South Africa grew 20% in 2004, and
the Government investigated the shortages as Nestlé scrambled to catch up with demand.
The Issues:
In 2001, it was believed that some 3.8m children around the world has contracted the HIV virus
at their mother’s breasts. • Majority of women in developing countries don’t know whether
they are HIV infected or not. Healthy mothers make their child safer by bottle feeding.
QUESTIONS:
Question #1: What are the responsibilities of companies in this or similar situations?
Question #2: What could Nestlé have done to have avoided the accusations of “killing Third
World babies” and still market its product?
Question #3: After Nestlé’s experience, how do you suggest it, or any other company, can
protect itself in the future?
Question #4: Assume you are the one who had to make the final decision on whether or not to
promote and market Nestlé’s baby formula in Third World countries. Were the decisions
socially responsible? Were they ethical?
Question #5: What advice would you give to Nestlé now in light of the new problem of HIV
infection being spread via mothers’ milk?

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Nestle: The Infant Formula Controversy

Summary and Highlights

 In northern Peru where water come from a highly contaminated river.

Nestle supports WHO codes:

Nestlé implements WHO codes:

 Immediately support the WHO codes

The new twist:

NO Sampling, NO mother craft workers, NO Point-of-sale advertising, & NO infant pictures on

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