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Type | Société Anonyme |
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Traded as | SIX: NESN Euronext: NESTS OTC Pink: NSRGY |
Industry | Food processing |
Founded | Switzerland, Vevey (1866) |
Founder(s) | Henri Nestlé |
Headquarters | Vevey, Switzerland |
Area served | Worldwide |
Key people | Peter Brabeck-Letmathe (Chairman), Paul Bulcke (CEO) |
Products | Baby food, coffee, dairy products, breakfast cereals, confectionery, bottled water, ice cream, pet foods (list...) |
Revenue | € 69.6 billion (2011)[1] |
Operating income | ![]() |
Profit | ![]() |
Total assets | ![]() |
Total equity | ![]() |
Employees | ![]() |
Website | www.nestle.com |
Nestlé S.A. (Euronext: NESTS) is the world's largest nutrition, health and wellness company.[3][4] Founded and headquartered in Vevey, Switzerland, Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, established in 1867 by brothers George Page and Charles Page, and Farine Lactée Henri Nestlé, founded in 1866 by Henri Nestlé.
The company grew significantly during the First World War and again following the Second World War, eventually expanding its offerings beyond its early condensed milk and infant formula products. Over 29 of Nestlé's brands bring in more than 1 billion Swiss francs (about $ 1.1 billion) annually,[5][6] such as Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer's, Vittel and Maggi. Nestlé is also one of the main shareholders of L'Oréal, the world's biggest Cosmetics and personal care company.[7]
In 2011, Nestlé was listed No. 1 in the Fortune Global 500 as the world's most profitable corporation.[8] With a market capitalization of $ 200 billion, Nestlé ranked No. 13 in the FT Global 2011.[9] The company has 449 factories, operates in 86 countries around the world, and employs over 328,000 people.
On April 23rd, 2012, Nestlé announced that they have agreed to acquire Pfizer Inc.'s infant-nutrition unit for $11.9 billion.[10]
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The company dates to 1867 when two separate Swiss enterprises were founded that would later form the core of Nestlé. In the succeeding decades, the two competing enterprises aggressively expanded their businesses throughout Europe and the United States.
In August 1867 Charles (US consul in Switzerland) and George Page, two brothers from Lee County, Illinois, USA, established the Anglo-Swiss Condensed Milk Company in Cham, Switzerland. Their first British operation was opened at Chippenham, Wiltshire, in 1873.[11]
In September 1867 in Vevey Henri Nestlé developed a milk-based baby food, and soon began marketing it. The following year saw Daniel Peter begin seven years of work perfecting his invention, the milk chocolate manufacturing process. Nestlé's was the crucial cooperation that Peter needed to solve the problem of removing all the water from the milk added to his chocolate and thus preventing the product from developing mildew. Henri Nestlé retired in 1875 but the company under new ownership retained his name as Société Farine Lactée Henri Nestlé.
In 1877 Anglo-Swiss added milk-based baby foods to their products and in the following year the Nestlé Company added condensed milk so that the firms became direct and fierce rivals.
In 1905 the companies merged to become the Nestlé and Anglo-Swiss Condensed Milk Company, retaining that name until 1947 when the name Nestlé Alimentana SA was taken as a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company Alimentana SA of Kempttal, Switzerland. Maggi was a major manufacturer of soup mixes and related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company was operating factories in the United States, United Kingdom, Germany, and Spain. The First World War created demand for dairy products in the form of government contracts, and, by the end of the war, Nestlé's production had more than doubled.
After the war, government contracts dried up, and consumers switched back to fresh milk. However, Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate-manufacture becoming the company's second most important activity.
Nestlé felt the effects of the Second World War immediately. Profits dropped from US$20 million in 1938, to US$6 million in 1939. Factories were established in developing countries, particularly in Latin America. Ironically, the war helped with the introduction of the company's newest product, Nescafé ("Nestlé's Coffee"), which became a staple drink of the US military. Nestlé's production and sales rose in the wartime economy.
The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi, a well-known manufacturer of seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in L'Oréal in 1974. In 1977, Nestlé made its second venture outside the food industry, by acquiring Alcon Laboratories Inc.
In 1984, Nestlé's improved bottom line allowed the company to launch a new round of acquisitions, notably American food giant Carnation and the British confectionery company Rowntree Mackintosh in 1988, which brought the Willy Wonka brand - among others - to Nestlé.
The first half of the 1990s proved to be favourable for Nestlé. Trade barriers crumbled, and world markets developed into more or less integrated trading areas. Since 1996, there have been various acquisitions, including San Pellegrino (1997), Spillers Petfoods (1998), and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002 – in June, Nestlé merged its U.S. ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America, the creator of Hot Pockets. In the same time-frame, Nestlé came close to purchasing the iconic American company Hershey's, one of its fiercest confectionery competitors, although the deal eventually fell through.[12] Another recent purchase included the Jenny Craig weight-loss program, for US$600 million.
In December 2005, Nestlé bought the Greek company Delta Ice Cream for €240 million. In January 2006, it took full ownership of Dreyer's, thus becoming the world's largest ice cream maker, with a 17.5% market share.[13]
In November 2006, Nestlé purchased the Medical Nutrition division of Novartis Pharmaceutical for $2.5B, also acquiring, in 2007, the milk-flavouring product known as Ovaltine.
In April 2007, returning to its roots, Nestlé bought US baby-food manufacturer Gerber for $5.5 billion.[14][15][16]
In December 2007, Nestlé entered into a strategic partnership with a Belgian chocolate maker, Pierre Marcolini.[17]
Nestlé agreed to sell its controlling stake in Alcon to Novartis on 4 January 2010. The sale was to form part of a broader US$39.3 billion offer, by Novartis, for full acquisition of the world’s largest eye-care company.[18]
On 1 March 2010, Nestlé concluded the purchase of Kraft Foods's North American frozen pizza business for $3.7 billion.
In July 2011, Nestlé SA agreed to buy 60 percent of Hsu Fu Chi International Ltd. for about $1.7 billion.[19]
Nestlé has some 8,000 brands,[20] with a wide range of products across a number of markets, including coffee, bottled water, milkshakes and other beverages, breakfast cereals, infant foods, performance and healthcare nutrition, seasonings, soups and sauces, frozen and refrigerated foods, and pet food.[21] Nestlé's best known brands include:
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As of year end 2010, Nestlé held 29.7% of the shares of L'Oréal, the world's largest company in cosmetics and beauty. Its brands including Garnier, Maybelline, and Lancôme as well as The Body Shop stores. L’Oréal holds 10.41% of the shares of Sanofi-Aventis, the world's number 3 and Europe's number 1 pharmaceutical company.[1]
The Laboratoires Inneov is a joint venture in nutritional cosmetics between Nestlé and L'Oréal, while Galderma is a joint venture in dermatology with L'Oréal. Other joint ventures include:
The executive board, a distinct entity from the board of directors, includes:
According to a 2006 global survey of online consumers by the Reputation Institute, Nestlé has a reputation score of 70.4 on a scale of 1–100.[28]
Nestlé is the biggest food company in the world, with a market capitalisation of roughly 191 billion Swiss francs, which is more than 200 billion U.S. dollars.[29]
In 2011, consolidated sales were CHF 107.6 billion and net profit was CHF 10.43 billion. Research and development investment was CHF 2.02 billion.[30]
Nestlé's largest international competitors are Kraft Foods and Unilever. It also faces competition in local markets or specific product ranges from numerous companies, including Sara Lee and Danone.[31]
Marketing of formula
One of the most prominent controversies involving Nestlé concerns the promotion of the use of infant formula to mothers across the world, including developing countries – an issue that attracted significant attention in 1977 as a result of the Nestlé boycott, which is still ongoing.[32] Nestlé continues to draw criticism that it is in violation of a 1981 World Health Organization code[33] that regulates the advertising of breast milk substitutes. Groups such as the International Baby Food Action Network (IBFAN) and Save the Children claim that the promotion of infant formula over breastfeeding has led to health problems and deaths among infants in less economically developed countries.[34][35] Nestlé's policy[36] states that breast-milk is the best food for infants, and that women who cannot or choose not to breast feed need an alternative to ensure that their babies are getting the nutrition they need.
Ethiopian debt
In 2002, Nestlé demanded that the nation of Ethiopia repay $6 million of debt to the company. Ethiopia was suffering a severe famine at the time. Nestlé backed down from its demand after more than 8,500 people complained via e-mail to the company about its treatment of the Ethiopian government. The company agreed to re-invest any money it received from Ethiopia back into the country.[37]
Melamine in Chinese milk
In late September 2008, the Hong Kong government found melamine in a Chinese-made Nestlé milk product. The Dairy Farm milk was made by Nestlé's division in the Chinese coastal city Qingdao.[38] Nestlé affirmed that all its products were safe and were not made from milk adulterated with melamine. On 2 October 2008, the Taiwan Health ministry announced that six types of milk powders produced in China by Nestlé contained low-level traces of melamine, and were "removed from the shelves". [39]
Greenwashing
A coalition of environmental groups filed a complaint against Nestlé to the Canadian Code of Advertising Standards after Nestlé took out full-page advertisements in October 2008 claiming that "Most water bottles avoid landfill sites and are recycled", "Nestlé Pure Life is a healthy, eco-friendly choice" and that "Bottled water is the most environmentally responsible consumer product in the world".[40][41][42] A spokesperson from one of the environmental groups stated: "For Nestlé to claim that its bottled water product is environmentally superior to any other consumer product in the world is not supportable".[40] In their 2008 Corporate Citizenship Report, Nestlé themselves stated that many of their bottles end up in the solid-waste stream, and that most of their bottles are not recycled.[41][43] The advertising campaign has been called greenwashing.[41][42][43]
Zimbabwe farms
In late September 2009, it was brought to light that Nestlé was buying milk from illegally seized farms currently operated by Robert Mugabe's wife, Grace Mugabe. Mugabe and his regime are currently subject to European Union sanctions.[44] Nestlé later stopped buying milk from the dairy farms in question.[45]
Palm oil use
Rapid deforestation in Borneo and other regions, in order to harvest hardwood and make way for palm oil plantations, releases large amounts of carbon dioxide into the atmosphere.[46] In particular, where peat swamp forests are cleared, destroying the habitat for many threatened species of animals such as the orangutan, much public attention[47] has been given to the environmental impact of palm oil and the role of multinationals such as Nestlé in this.[48] There is ongoing concern by various NGOs including Greenpeace.[49]
On its official Facebook page, the company met with "a deluge of criticism from consumers, after a large number of Facebook users posted negative comments about the company's business practises."[50] Nestlé's attempt to engage with the issue met with criticism, including headlines stating: "Nestlé fails at social media",[51] and "Nestlé Loses Face On Facebook".[50] Nestlé Chairman, Peter Brabeck-Letmathe, in answer to a question from Greenpeace, told the Company’s Annual General Meeting in Lausanne on 15 April 2010 that in 2009 Nestlé used 320,000 tonnes of palm oil worldwide, comparing this with the 500,000 tonnes of palm oil used for biodiesel in Germany and Italy alone.[52]
In May 2010, Nestlé said it was inviting The Forest Trust, a not-for-profit group, to audit its supply chain, and promised to cancel contracts with any firm found to be chopping down rainforests to produce the palm oil which it uses in KitKat, Aero and Quality Street. Greenpeace welcomed the agreement promising to monitor it closely.[53][54][55]
E. coli
In June 2009, an outbreak of E. coli O157:H7 was linked to Nestlé's refrigerated cookie dough originating in a plant in Danville, Virginia. In the USA, it caused sickness in at least 69 people in 29 states, half of whom required hospitalization. Following the outbreak, Nestlé voluntarily recalled 30,000 cases of the cookie dough. How the dough became contaminated is unclear, because E. coli is not known to live in any of its constituent ingredients.[56]
Child labour
The 2010 documentary The Dark Side of Chocolate[57] alleges that Nestlé purchases cocoa beans from Ivory Coast plantations that use child slave labour. The children are usually 12 to 15 years old, and some are trafficked from nearby countries.[58] The first allegations that child slavery is used in cocoa production appeared in 1998.[59] In late 2000 a BBC documentary reported the use of enslaved children in the production of cocoa in West Africa.[59][60][61] Other media followed by reporting widespread child slavery and child trafficking in the production of cocoa.[62][63] In September 2001, Bradley Alford, Chairman and CEO of Nestlé USA, signed the Harkin-Engel Protocol (commonly called the Cocoa Protocol), an international agreement aimed at ending child labour in the production of cocoa.[64]
In 2005, after the cocoa industry had not met the Harkin-Engel Protocol deadline for certifying the worst forms of child labor (according to the International Labor Organization's Convention 182) had been eliminated from cocoa production, the International Labor Rights Fund filed a lawsuit in 2005 under the Alien Tort Claims Act against Nestle and others on behalf of three Malian children. The suit alleged the children were trafficked to the Ivory Coast, forced into slavery, and experienced frequent beatings on a cocoa plantation.[65][66] In September 2010, the US District Court for the Central District of California determined corporations cannot be held liable for violations of international law and dismissed the suit. The case was appealed to the US Court of Appeals.[67][68]
A 2009 joint police operation conducted by INTERPOL and Ivorian law enforcement officers resulted in the rescue of 54 children and the arrest of eight people involved in the illegal recruitment of children.[69]
Water, Bottled Life
A 2012 documentary with the title "Bottled Life" critizises Nestlés practices concerning its water business. According to the documentary, buying a truckload of water in the United States costs Nestlé 10 USD, which is then sold for USD 50,000.[70][71][72] Nestlé were in contact with the producers of the documentary, but finally declined to be interviewed as they were under the strong impression that the film would be one-sided and not represent the company and its employees in a fair manner. Nestlé denies that bottled water companies pay next to nothing for the water they use and make a huge profit for selling it. According to Nestlé, the price of a bottle of water is similar to that of other packaged beverages as it incurs similar costs linked to production, quality assurance, bottling, storage and distribution. One-third of the costs can be attributed to water and raw materials, one-third to production and one-third to distribution.[73]
World Cocoa Foundation
In 2000, Nestlé and other chocolate companies formed the World Cocoa Foundation. The WCF was set up specifically to deal with issues facing cocoa farmers, including ineffective farming techniques and poor environmental management (disease had wiped out much of the cocoa crop in Brazil). The WCF focuses on boosting farmer income, encouraging sustainable farming techniques, and setting up environmental and social programmes.[74]
Sustainable Agriculture Initiative
Together with Danone and Unilever, Nestlé founded in 2002 the Sustainable Agriculture Initiative (SAI) to promote sustainable agriculture in a comprehensive way. Within the framework of SAI, Nestlé has worked with farmers to elaborate best practices in the areas of milk production and coffee and cocoa growing. The main objectives for SAI are to manage: i) Quality and safety problems in the food supply chain that may affect consumer confidence in everyday food products; ii) The growing demand for quality food that will arise from population growth, increases in expendable income and expected changes in diet; iii) Possible adverse effects and pressure of agriculture on natural resources and environment that may affect agricultural productivity.
SAI act on a worldwide scale as a platform for industry collaboration in the development and implementation of sustainability in agriculture. It offers a platform for development in areas of public concern such as the quality and safety of produce, the well being of rural communities, animal welfare, and soil, water, air, energy and biodiversity aspects.[75]
Creating Shared Value: The Cocoa Plan
Creating Shared Value (CSV) encourages businesses to create economic and social value simultaneously by focusing on the social issues that they are uniquely capable of addressing. In 2006, Nestlé became (one of) the first organisations to adopt the CSV approach, but their history of working together with society stems back to their roots. For maximum impact, the company has focused its Creating Shared Value efforts and investments on three areas – nutrition, water and rural development – as these are core to their business activities and vital for our value chain.[76]
In October 2009, Nestlé announced its 'The Cocoa Plan'. The company will invest CHF 110 million over ten years to achieve a sustainable cocoa supply. On 23 October 2009, Nestlé and CNRA (the Ivorian National Centre for Plant Science Research), signed a frame agreement for cooperation in plant science and propagation, with a target of producing 1 million high-quality, disease-resistant cocoa plantlets a year by 2012. The aim is to replace old, less productive trees with healthier new ones.[77][78]
In September 2011, Nestlé introduced ‘The Cocoa Plan’ in the Netherlands. The initiative is an extensive approach in which Nestlé focuses on improving the livelihoods of cocoa farmers. The five main focus points within the program are: better quality cocoa plants, train farmers, chain management, improved social circumstances and cooperation with partners. KitKat is the first product in the Netherlands which carries the logo of The Cocoa Plan on pack. This means that Nestlé will source the cocoa volume needed to produce all KitKat’s in the Netherlands from cocoa farmers and cooperatives that participate in The Cocoa Plan. Part of these farmers and cooperatives are already certified by UTZ Certified, a certification program for agricultural products launched in 2002 which claims to be the largest coffee certifier in the world.[79][80]
Nestlé made the commitment with UTZ Certified to source only sustainable cocoa by 2014.[81]
Ecolaboration
On June 22nd, 2009, Nestlé Nespresso and Rainforest Alliance signed a pact called "Ecolaboration". One of the shared goals is to reduce the environmental impacts and increase the social benefits of coffee cultivation in enough tropical regions so that 80 percent of Nespresso's coffee comes from Rainforest Alliance Certified™ farms by the year 2013. Certified farms comply with comprehensive standards covering all aspects of sustainable farming, including soil and water conservation, protection of wildlife and forests, and ensuring that farm workers, women and children have all the proper rights and benefits, such as good wages, clean drinking water, access to schools and health care and security.[82]
Expanding Business in Health Care Nutrition
In September 2010, Nestlé announced to invest more than $500 million between 2011 and 2020 to develop health and wellness products to help prevent and treat major ailments like diabetes, obesity, cardiovascular disease and Alzheimer’s, which are placing an increasing burden on governments at a time when budgets are being squeezed. Nestlé created a wholly owned subsidiary, Nestlé Health Science, as well as a research body, the Nestlé Institute of Health Sciences.[83]
Member of Fair Labour Association
In 2011, Nestlé started to work with the Fair Labor Association (FLA), a non-profit, multi-stakeholder association that works with major companies to improve working conditions in their supply chains.
On February 29th, 2012, Nestlé became the first food company to join the FLA. Building on Nestlé's efforts under the Cocoa Plan, the FLA will send independent experts to Côte d’Ivoire in 2012 and where evidence of child labour is found, the FLA will identify root causes and advise Nestlé how to address them in sustainable and lasting ways.[84]
Good Food, Good Life
Nestlé launched in several countries such as France, United Kingdom and Russia "Good Nutrition Programs" to help children adopt healthy nutrition habits as a component of a healthy lifestyle.
In Russia, the programme has been introduced in 27 regions. Over 300,000 children in 5,000 schools are annually involved in the programme, and in total nearly 1,5 million Russian children have learned about good nutrition as a result of it.[85]
Animation
In 1993, plans were made to update and modernize the overall tone of Walt Disney's EPCOT Center, including a major refurbishment of The Land pavilion. Kraft Foods withdrew its sponsorship on September 26, 1993, with Nestlé taking its place. Co-financed by Nestlé and the Walt Disney World Resort, a gradual refurbishment of the pavilion began on September 27, 1993.[86] In 2003, Nestle renewed its sponsorship of The Land; however, it was under agreement that Nestle would oversee its own refurbishment to both the interior and exterior of the pavilion. Between 2004 and 2005, the pavilion underwent its second major refurbishment. Nestlé’s withdrawal from the Land dates back from 2009.[87]
Music Festivals
On August 5, 2010, Nestlé and the Beijing Music Festival signed an agreement to extend by three years Nestle's sponsorship of this international music festival. Nestle has been an extended sponsor of the Beijing Music Festival for 11 years since 2000. The new agreement will continue the partnership through 2013. [88]
Nestlé partners the prestigious Salzburg Festival in Austria already for 20 years. In 2011, Nestlé renewed its sponsorship of the Salzburg Festival until 2015.[89]
Sports
Nestlé's sponsorship of the Tour de France began in 2001 and the agreement was extended in 2004, a move which demonstrated the company’s interest in the Tour. In July 2009, Nestle Waters and the organisers of the Tour de France announced that their partnership will continue until 2013. The main promotional benefits of this partnership will spread on four key brands from Nestlé's product portfolio: Vittel, Powerbar, Nesquik or Ricore.[90]
On January 27th, 2012, the International Association of Athletics Federations announced that Nestlé will be the main sponsor for the further development of IAAF's Kids' Athletics Programme, which is one of the biggest grassroots development programmes in the world of sports. The five year sponsorship started in January 2012.[91]
Nestlé supports the Australian Institute of Sport (AIS) on a number of nutrition and fitness fronts, funding a full time member of the AIS Sports Nutrition team, an athlete career scholarships for young athletes, and customised nutrition literature for athletes and all Australians. In particular, Nestlé and the AIS have developed free nutrition educational resources for school teachers. Over 60% of Australian primary schools have downloaded this information since the program's inception.[92]
Other sponsorships of sports-related events include FIVB Women's Club World Championship, Tour de Langkawi, São Paulo Indy 300, Osasco Voleibol Clube, Mentor Nestle Nesquik Cup, Southeast Asian Games, Sukma Games, Sultan Azlan Shah Cup and Association of Southeast Asian Nations.[93]
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