Sustainable Development & Innovation in Nestl
By: Nermeen Elhelw
Introduction
To many, sustainable business is synonymous with green business. In fact, the environment is only one aspect of sustainability. It takes much more than environmentally-friendly practices for a business to be truly sustainable. In order to figure out what makes a business sustainable, perhaps we should first define sustainable. The term sustainable development was minted by Gro Harlem Bruntland, the former Director General of the WHO[1], and has since been generally accepted in both business and political circles, Believing that sustainable development, which implies meeting the needs of the present without compromising the ability of future generations to meet their own needs, should become a central guiding principle of the United Nations, Governments and private institutions, organizations and enterprises[2] Now we know that a sustainable business is one that does not deplete or permanently damage its resources, those things are money, resources & social/human capital. With no money, a company cannot survive for long, so economic sustainability is important. If the resources needed to make the product disappear, the company will either have no ability to make the product or will have to change resources. If employees and customers are not loyal, they will not buy the product, and business will no longer survive.
[3]
The Case
Nestl is more than just the largest food and Beverage Company in the world. Increasingly, Nestl is becoming the worlds leader in nutrition, health and wellness. From the start, nutrition has been at the core of the business. However, today they are place far greater emphasis on it and on health and wellness. The Corporate Wellness Unit and the individual business units are driving forces in bringing Good Food, Good Life to all our consumers. In 1867 Henri Nestl, a pharmacist based in Vevey, Switzerland, developed a food for babies who were unable to breastfeed. He began experimenting with various combinations of cow's milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition. His first success was a new formula that he gave to a neighbors premature child who could not breastfeed. People quickly recognized the value of the new product and soon Nestls Farine Lacte was being sold in much of Europe.
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This Infant formula today is still improving, since they went into classifying infants stages of development into 4 stages, each stage has its own line of products including cereal, fruits, and beverages. Henri Nestl also showed early understanding of the power of branding. He had adopted his own coat of arms as a trademark; in Swiss German, Nestl means 'little nest'. One of his agents suggested that the nest could be exchanged for the white cross of the Swiss flag. His response was firm: "I regret that I cannot allow you to change my nest for a Swiss cross .... I cannot have a different trademark in every country; anyone can make use of a cross, but no-one else may use my coat of arms." The company added more products over the years including the following: In 1904, Nestl added chocolate to its range of food products after reaching an agreement with the Swiss General Chocolate Company. The 1920s, Nestl's first expansion beyond its traditional product line. The manufacture of chocolate became the Company's second most important activity. New products appeared steadily: malted milk, a powdered beverage called MILO, powdered buttermilk for infants, and, in 1938, Nescaf. (MILO was introduced in Malaysia in 1950, in 1999 Vitamin B was added to the formula, in 2002 MILO was further improved with ACTIGEN-E, a unique combination of 8 vitamins and 4 minerals, which helps to optimize release of energy from food and in 2006 - PROTOMALT was added to MILO , a malt extract with a mixture of different types of carbohydrates that provides energy and nutrients the body needs) In 1930, Nestls chairman was approached by the Brazilian Coffee Institute to solve a problem. Brazil had a huge coffee surplus and was looking for a way to both store coffee and to enable consumers to enjoy the beverage by simply adding water. Nestl already had a great deal of experience with hydrated products, and this expertise was put to use to create the first Nescaf. After seven years of research at the Nestl Research Centre laboratory in Switzerland, scientist Max Mortgenthaler finally achieved the desired results by spray drying the liquid coffee into a dry soluble product. Thus on 1 April 1938, Nescaf, the project name given by the R&D team, was launched. The science research and innovation in Nescaf has never stopped; in 1965 Nescaf introducing freeze-dried soluble coffee with the launch of Gold Blend, in 1986 Nescaf Original decaf was launched and in 2007 Nescaf Protect, with three times the antioxidants of green tea, was launched in Asia.
In those mentioned products particularly, Nestl is still trying to follow the sustainable development pattern; 1- Protecting the environment: Nestl chose Malaysia as the Land of MILO because it is the worlds largest consumer of the beverage, and at the same time Nestl sponsors about 25 sports events at various levels every month in Malaysia), moreover Nestl is encouraging recycling through it ad campaign to protect the rain forest (to educate and encourage the Malaysian public to play their part to conserve the natural forestry)
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2- Standing against Child Labor and being proactive towards the environment: As cocoa is an important resource for Nestle, In 2000 Nestl and other chocolate companies formed the World Cocoa Foundation that was set up specifically to deal with issues facing cocoa farmers, since poor farming techniques and poor environmental management lead to the wipe out of nearly most of Brazils crop. The WCF focuses on boosting farmer income, encouraging sustainable farming techniques and environmental and social programs. Nestl is a founding participant in the International Cocoa Initiative (ICI) that was setup in 2002 and dedicated to ending child and forced labor in cocoa growing, and eliminating child trafficking and abusive labor practices. (The International Cocoa Initiative (ICI) was created in 2002 as a result of a groundswell of opinion urging the chocolate industry to ensure child and forced labor were not used in the production of their products. An international protocol (known as the Harkin/Engel protocol) was signed in Washington, D.C. in September 2001, by representatives of the cocoa industry and governments. Establishing the ICI foundation was one of the steps required by the parties to the protocol, and was duly achieved in July 2002) [4]
In October 2009 Nestl announced its Cocoa Plan. The company will invest 110 million in the Plan over ten years to achieve a sustainable cocoa supply. On the 23rd October 2009 Nestl and 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. [5]
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Nestl is also now Working with the Rainforest Alliance, the Sustainable Agriculture Network (SAN), and the 4C (The Common Code for the Coffee Community) to transform coffee-farm management to benefit working and future generations of farmers as part of the NESCAF Plan. (The goal: Coffee farmers are harmed by fluctuating coffee prices which make it harder for them to invest in the next year's crop. If we can help them attain higher efficiency, cost reductions and quality improvements then they are less affected by these fluctuations. At the same time, we can also promote more sustainable agriculture by encouraging farmers to avoid pollution, use less pesticide and conserve water) [6] 3- Nescafe jars get a sustainable packaging: The jars are made of glass to be natural, inert, protecting the product from moisture and oxygen for a long time, and as claimed by the company, the redesign helped in saving a total of 7672 tons of glass .This represents a reduction of 6000 tons of carbon dioxide, the equivalent of what would be produced by 1300 cars in the course of a year. The 200,000 m3 of water also saved is enough to supply 3000 people for a year. And were also able to save 252 tons of plastic. This represents a reduction of 1000 tons of carbon dioxide emission, as well as a saving of 20,000 gigajoules of energy and 20,000 m3 of water. [7] 4- green fleet: To reduce emissions associated with the vehicles they operate, they tried to reduce the environmental impact of the fleet of passenger cars and light commercial vehicles. They initially focused on European operations, which is about 44% of the worldwide fleet of such cars. Green fleet scheme, which was awarded second prize in the International Green Fleet Award 2009 in November, they have reduced CO2 emissions by 17% from 167 g/km per vehicle as at end 2007 to 158 g/km in mid-2009, against a target of 130 g/km by the end of 2012. An approach to sustainable distribution: Over the last two years, our US ice-cream business Dreyers has undertaken a number of sustainable distribution initiatives to decrease the impact of its operations on the environment. By maximizing the number of cases carried per truck, and using APAL load technology in three of its largest manufacturing facilities to maximize trailer container weight and maintain even weight distribution, Dreyers has saved 1558 shipments, 1177 million miles and 136 000 tons of carbon. [8] Nermeen Elhelw- MBA- Contemporary Management- Assignment 2 | 7 December 2010 Page |4
The future for Nestl's R&D is firmly set on the path of Nutrition, Health and Wellness. The innovations and product renovations of the coming years will be driven by nutrition that is tailored to better meet the needs to our consumers. Examples for products under development: 1- Lightweight packaging, Nestl is committed to reducing the environmental impact of packaging without jeopardizing the safety, quality or consumer acceptance of its products. 2- Improving Clinutren products, that are targeted for elderly and malnutrinioned patients (specific types of patients according to the vitamins and nutrition needed) 3- Improving the formula of a pets nutritional product ProPlan. The Company's strategy will continue to be guided by several fundamental principles. Nestl's existing products will grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential will never be sacrificed for short-term performance. The Company's priority will be to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives, and to satisfy the growing need of nutrition, health and wellness that food and beverages can bring.
Conclusion
Nestl is applying the sustainable development in a variety of its production lines, in environment improvement, as the case in the Malaysia (recycling for rainforest), the cocoa plan, and for the Nescafe brand as well. It is also trying to improve its social concern through embracing the Anti-child labor (through ICI), and educating famers about new ways of farming to improve their financial state and prevent the farms being depleted from nutrition for farming. And for sure, it is a very successful company, which is having an annual increase in income every year. And moreover, it is trying to be innovative in anything concerning health and wellness, through finding new products, or improving old ones to match todays needs.
References
[1] [2]
The A-Z of Management Concepts and Models (Bengt Karlf and Fredrik Helin Lvingsson) 2005 United Nations. 1987."Report of the World Commission on Environment and Development." General Assembly Resolution 42/187, 11 December 1987. [3] The Future of Sustainability: Re-thinking Environment and Development in the Twenty-first Century. Report of the IUCN(International Union for Conservation of Nature) Renowned Thinkers Meeting, 2931 January 2006 http://cmsdata.iucn.org/downloads/iucn_future_of_sustanability.pdf [4] Protocol for growing and processing of cocoa beans and their derivative products Harkin/Engel protocol (2001) [5] Falling cocoa yields in Ivory Coast- the Financial Times Magazine [6] http://www.nescafe.com/sustainability-uk/en/Farming/Pages/Rainforest.aspx [7] http://www.nescafe.com/sustainability-uk/en/Consumption/Pages/Jar.aspx [8] http://www2.nestle.com/CSV/WaterAndEnvironmentalSustainability/TransportAndDistribution/Pages/TransportAndDistribu tion.aspx Nermeen Elhelw- MBA- Contemporary Management- Assignment 2 | 7 December 2010 Page |5
