| Type | Société Anonyme |
|---|---|
| Traded as | SIX: NESN Euronext: NESTS OTC Markets Group: NSRGY |
| Industry | Food processing |
| Founded | Vevey, Switzerland (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 | CHF 109.72 billion (2010)[1] |
| Operating income | CHF 16.19 billion (2010)[1] |
| Profit | CHF 34.23 billion (2010)[1] |
| Total assets | CHF 111.64 billion (end 2010)[1] |
| Total equity | CHF 62.60 billion (end 2010)[1] |
| Employees | 281,000 (2010)[1] |
| Website | www.nestle.com |
Nestlé S.A. (French pronunciation: [nɛsˈle]) is the world's largest food and nutrition company. 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. Today, the company operates in 86 countries around the world, and employs over 280,000 people.
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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 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.[2]
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 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 were 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 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.[3] 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.[4]
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.[5][6][7]
In December 2007, Nestlé entered into a strategic partnership with a Belgian chocolate maker, Pierre Marcolini.[8] 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.[9]
On March 1, 2010, Nestlé concluded the purchase of Kraft'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.[10]
Nestlé has some 6,000 brands,[11] with a wide range of products across a number of markets, including coffee (Nescafé, Nespresso, etc.), bottled water (Buxton, Perrier, etc.), milkshakes and other beverages (Nesquik, Milo, Carnation, etc.), chocolate (Milky Bar, After Eight, and many others), ice cream (Häagen-Dazs, Skinny Cow, etc.), breakfast cereals (Golden Nuggets, Shreddies, etc.), infant foods (now including Gerber products), performance and healthcare nutrition (Nesvita, PowerBar, etc.), seasonings, soups and sauces (Maggi, Buitoni, etc.), frozen and refrigerated foods (Findus, Lean Cuisine, etc.), confectionery (Rowntree products, Caramac, Wonka products, etc.), and pet food (Winalot, Felix).
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.[12]
In 2009, consolidated sales were CHF 107.6 billion and net profit was CHF 10.43 billion. Research and development investment was CHF 2.02 billion.[13]
Nestlé holds 26.4% of the shares of L'Oréal, the world's largest company in cosmetics and beauty. 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. Others joint ventures include Cereal Partners Worldwide with General Mills, Beverage Partners Worldwide with Coca-Cola, and Dairy Partners Americas with Fonterra.
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.[14]
Nestlé is a founding participant in the International Cocoa Initiative (ICI), an independent foundation set up in 2002 and dedicated to ending child and forced labour in cocoa growing, and eliminating child trafficking and abusive labour practices.[15] However, there is little evidence that Nestlé has reduced any of its child labour practices in countries such as the Ivory Coast.
In October 2009, Nestlé announced its 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.[16][17]
Nestlé is launching a Fair Trade-branded Kit Kat in the UK and Ireland from January 2010.[18]
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.[19] Nestlé continues to draw criticism that it is in violation of a 1981 World Health Organization code[20] that regulates the advertising of breast milk formulas. Nestlé's policy[21] states that breast-milk is the best food for infants, and that women who cannot, or choose not to, breast feed, for whatever reason, need an alternative to ensure that their babies are getting the nutrition they need.
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.[22]
In late September 2008, the Hong Kong government claimed to have 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.[23] Nestlé affirmed that all its products were safe and were not made from milk adulterated with melamine. On 2 October 2008, however, 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". [24]
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".[25][26][27] 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".[25] 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.[26][28] The advertising campaign has been called greenwashing.[26][27][28]
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.[29] Nestlé later stopped buying milk from the dairy farms in question.[30]
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.[31] In particular, where peat swamp forests are cleared, destroying the habitat for many threatened species of animals such as the orangutan, much public attention[32] has been given to the environmental impact of palm oil and the role of multinationals such as Nestlé in this.[33] There is ongoing concern by various NGOs including Greenpeace.[34]
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."[35] Nestlé's attempt to engage with the issue met with criticism, including headlines stating: "Nestlé fails at social media",[36] and "Nestlé Loses Face On Facebook".[35] 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.[37]
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.[38][39][40]
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.[41]
The 2010 documentary The Dark Side of Chocolate 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.[42] 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. 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.[43]
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