Nestle Still Doesn't Get It

We have repeatedly requested that Nestle take responsibility for
its cocoa supply chain in Ivory Coast and are still waiting for clarification on
what the company has done to take the few simple, basic steps that we and others
requested years ago.  These include:

*Provide transparency of your supply
chain.  The farmers know which multinationals are buying their cocoa- why, then,
is it so hard for the multinationals to identify which farmers are selling to

*Create contracts with the farmers.  Nestle can be assured farmers
will do the right thing if the farmers can be assured that Nestle will honor its
arrangements with them.

*Support the re-establishment of an International
Cocoa Agreement.  West African farmers have no leverage nor ability to bargain
but Nestle and other chocolate companies are making more profit than ever.  Why
not re-establish the commodity agreement to provide poor farmers with some basic
guarantee of a stable world price?

*Buy Fair Trade cocoa.  For several
years Nestle has been claiming that social certification of its cocoa production
is impossible.  Yet, social certification exists for cocoa:  it's called Fair
Trade.  Why can't Nestle make a commitment to convert to Fair Trade?

more information on the issue of forced and trafficked child labor in global
cocoa/chocolate production, visit

(and for Nestle's side of the story see the article below!)

Brabeck-Letmathe: smooth defender of a tainted brand

Nestlé veteran who
started out selling ice cream is now an unlikely bogeyman
of food

Jane Martinson
Friday November 24, 2006

Politely pouring a cup of tea into a bone china cup in his
sumptuous Claridges suite, Peter Brabeck-Letmathe is an unlikely bogeyman.
Yet ask many food campaigners to name their least favourite corporate
executive and the silver-haired Austrian at the head of the world's largest
food company, Nestlé, would come high on many lists.

Ever since the
baby milk scandal in Africa first prompted a boycott of its products 30 years
ago, the producer of Kit-Kat, Nescafé and Perrier has been the byword for
corporate arrogance and even malice. This year, controversies have ranged
from a baby milk recall due to excessive iodine content in China, accusations
that the company sanctions child slavery in Ivory Coast and continuing
criticism by health campaigners, particularly in Britain, over its promotion
of children's cereals that contain high levels of sugar and salt.

criticism helps keep an army of press handlers and lobbyists employed by the
Swiss multinational. During our talk, Brabeck-Letmathe is surrounded by no
less than three bag-carriers with a further flunky waiting outside.Yet
the 38-year veteran of Nestlé seems not to need their help. Wearing a dark
shirt and tie to match his suit, the 63-year-old pilot who climbs mountains
and rides Harley-Davidsons in his spare time would not look out of place in
the famous advertisement for his rival Cadbury's Milk Tray. His answers to my
questions about the company's prickly reputation are
equally smooth.

The company first got into trouble for aggressively
marketing its baby milk formula to mothers in Africa decades ago, yet it is
still the bête noire of many health campaign groups. How does that feel? "I
can turn that around,"
he says. "You can see what a fantastic corporate
socially responsible company this is that after 30 years the only thing [you]
can still talk about is baby milk."

In London to deliver a speech on
doing business in Africa 18 months after the British-backed commission into
the issue, he is keen to promulgate the benefits of economic involvement in a
continent with growth rates more than double those of western Europe. Nestlé
opened its first African factory in the 1920s and employs 11,500 people

"If we can encourage business to invest over the long term in
Africa in a responsible manner because it makes good business sense ... we
have a genuinely sustainable development model for the continent," he

Owning up

The International Labour Rights Fund this year
accused the company of buying cocoa from plantations in Ivory Coast that use
child slaves. His answers stop short of an outright denial that could silence
such critics. He admits there is "no doubt that there were children of a
certain age working on farms, especially during harvesting time" and that the
company was working with international agencies. "We are trying to ensure
that there is not undue child labour on those farms."

Undue? "In this
area we have very careful policy," he begins, nodding to a flunky, who
quickly produces a copy of Nestlé's Corporate Business Principles. Turning to
the page headed "Child Labour", he says: "This was one of the most difficult
policies to make sure we are not doing more harm than

"Basically, if children are not allowed to help their parents
harvest theycould end up in a bar with European tourists". The tricky part
comes in keeping Nestlé's pledge against "all forms of exploitation of

In the past few years, the minefield of sustainable
development in Africa has been at the heart of Nestlé's campaign to prove its
corporate social responsibility (CSR). Brabeck-Letmathe is a fan of the
chancellor, Gordon Brown, and the feeling appears to be mutual. The Nestlé
boss has been a Downing Street guest several times. Involved in marketing and
sales for most of his career, Brabeck-Letmathe believes the emphasis on CSR -
criticised by ethical campaign groups - has already changed the

He points to a survey by research group GlobeScan that found
Nestlé's reputation on social responsibility to be good in Africa but bad in
Britain, saying it is only the bogeyman for some in the UK and possibly
Sweden. He has blamed Britain's colonial past, but, to me, he simply says the
UK is "centre of many civic society organisations". In a competitive
chocolate market, Britain was also the site of Nestlé's first and only
hostile takeover, of the historic Rowntree confectionery business. "Those
things combined always put us into the ugly part of big companies," he

Nestlé produces evidence from academic and campaign sources that
suggest its work on CSR has won plaudits. Mike Brady of Baby Milk Action,
which organises a boycott of the company's product, sees it differently.
"Peter Brabeck has made things worse. He is pursuing a very deliberate
strategy of putting company profits before the health of infants and rights
of mothers." This single-issue pressure group set up in 1977 has been at
loggerheads with Nestlé for decades.

Much more unusually, the urbane
Nestlé chief has faced criticism from analysts and investors in recent years
after he took on the mantle of chairman as well as chief executive in April

The shareholder complaints, organised by Swiss funds but
reflecting Anglo-Saxon corporate governance principles, highlight the
changing nature of the once largely Swiss-owned group. About 45% to 48% of
the company, still based in Vevey on Lake Geneva, is owned by mainly private
Swiss funds. The rest is owned by foreign investors, mostly American,
including US hedge funds.

Brabeck-Letmathe argued 18 months ago that
he needed to take on both roles to ensure that two huge strategic initiatives
were completed under his leadership. The first was to turn the food giant
into a nutrition, health and wellness company - buying into health and
fitness products such as bottled water and weight management companies and
moving away from sweets and fatty food. The second was to complete an
enormous IT project that has so far taken six years and 3bn Swiss francs

Austrian approach

Yet the controversy over his new job
obviously irked him. He threatened to resign to see through the vote, which
only went ahead after the company also promised several concessions. Does he
regret making that threat? His answer, which begins with a denial, is
delivered in his still-strong Austrian accent. "Let me say, I took an
Austrian [approach] to the whole thing, which was wrong."

The man who
started his working life as a 24-year-old selling ice cream for Nestlé
explains how he made this mistake: "In Austria, if a chancellor loses a
referendum he is supposed to stand down. That was the way I reacted, as an
Austrian. In Switzerland, you are not supposed to step down. You are supposed
to accept the verdict of the people and change your opinion."

Nestlé has had a relatively good run in recent months, its shares have
underperformed peers such as Unilever or US rivals such as General Mills and
Kelloggs despite top-line growth rates consistently higher in the 5-7% range
and margins that have improved from 10% to 13%. Alain Oberhuber, analyst at
Bank Vontobel in Zurich, believes Brabeck-Letmathe's manner detracts from
this performance. "When I talk to investors in the UK they say he comes
across as too Austrian. They mean he is not very sensitive to criticism ...
He believes analysts do not understand the potential of his company."

Other analysts say his comments - he accused the Italian authorities of creating a "storm in a teacup" over a contamination scare there - can be "too frank".

Brabeck-Letmathe believes enough will be done improving margins, revenues and its articles of association to improve
relations with his majority shareholders. The articles bar any investor from
holding more than 3%, for example. Brabeck-Letmathe suggests the company is
changing. "You have to change the company in accordance with the outside
environment, otherwise it won't work ... Consumer expectations are changing,
the social environment is changing, of course you have to change with it.
It's an ongoing process."

By the end of next year, Nestlé's transition
into a "wellness" company with a centralised IT system should be finished. By
November, investors expect a new  chief executive.

Brabeck-Letmathe is
expected to become executive chairman in spring 2008. "I have been chief
executive for 10 years. I have worked at this company for 40 years and I
think it's time now to relax a little bit and have a new generation taking
over a bit."

At the end of the interview, I ask what he would have done
if he had not started selling ice cream all those years ago. He admits he
trained as a conductor but did not feel good enough to reach the top. "Now,
if I could just get the company running like the Vienna Philarmonic," he
muses. "Of course, they got into trouble over their corporate social
responsibility - they didn't allow women." There's a hearty laugh from the
room and Brabeck-Letmathe goes to orchestrate enthusiasm for business in

The CV

Born: 1944 in Austria

Education: Studied
economics at University of World Trade in Vienna

1968: Joined Nestlé,
where his first job was selling ice cream. He spent much
of his career in
Latin America, mainly in sales and marketing

1987: Moved to HQ in Vevey in
charge of worldwide culinary products

1992: Took charge of marketing,
communications and public affairs and
business groups such as food, chocolate
and confectionery and ice cream

1997: Appointed chief

April 2005: Became chairman and chief executive

positions: On boards of Credit Suisse, Roche and L'Oreal and the
Round Table of Industrialists

Family: A married grandfather, with three
grown-up children




re: Nestle Still Doesn't Get It

I agree with you that Nestle is guilty of profiteering from child labour, however you need to highlight all the coco buyers who are doing the same in order to make a stronger statement - it appears like your organization is on a witchhunt - not very effective in making people listen

re: Nestle Still Doesn't Get It

Oh I forgot - you demand transparency from Nestle however your organization isn't very transparent - no current financial statements showing who is funding ILRF on your website. how much the payout was to the Burmese victims and how much your organization got as a cut of the payout - lets clean up your shop first before you take the high road with others - ps I'm definately for labor rights however I don't care for NGO like your's who are quick to demand reform from others but do none of their own. Clean up your house please and be ethical. Thanks