NESTLE-THE INFANT FORMULA INCIDENT

Nestle Alimentana of Vevey, Switzerland, one of the world’s largest food-processing companies
with worldwide sales of over $8 billion, has been the subject of an international boycott. For over
20 years, beginning with a Pan American Health Organiza-tion allegation, Nestle has been
directly or indirectly charged with involvement in the death of Third World infants. The charges
re-volve around the sale of infant feeding formula, which allegedly is the cause for mass deaths
of babies in the Third World. In 1974 a British journalist published a report that suggested that
powdered-formula manufacturers contributed to the death of Third World infants by hard-selling
their products to people inca-pable of using them properly. The 28-page report accused the
industry of encouraging mothers to give up breast-feeding and use powdered milk formulas. The
report was later published by the Third World Working Group a lobby in support of less-
developed countries. The pamphlet was entitled, “Nestle Kills Babies,” and accused Nestle of
unethical and immoral behavior. Although there are several companies that market infant baby
formula internationally, Nestle received most of the attention. This incident raises several issues
important to all multinational com-panies. Before addressing these issues, let’s look more closely
at the charges by the Infant Formula Action Coalition (INFACT) and others and the defense by
Nestle. The Charges. Most of the charges against infant formulas focus on the issue of whether
advertising and marketing of such products have discouraged breast feeding among Third World
mothers and have led to misuse of the products, thus contributing to infant malnutrition and
death. Following are some of the charges made: · A Peruvian nurse reported that formula had
found its way to Amazon tribes deep in the jungles of northern Peru. There, where the only water
comes from a highly contaminated river-that also serves as the local laundry and toilet
-formulafed babies came down with recurring attacks of diarrhea and vomiting. · Throughout the
Third World, many parents dilute the formula to stretch their supply. Some even believe the
bottle itself has nutrient qualities and merely fill it with water. The result is extreme malnutrition.
· One doctor reported that in a rural area, one newborn male weighed 7 pounds. At four months
of age, he weighed 5 pounds. His sister, aged 18 months, weighed 12 pounds, what one would
expect a 4-month-old baby to weigh. She later weighed only 8 pounds. The children had never
been breast-fed, and since birth their diets were basically bottlefeeding. For a four-month baby,
one tin of formula should have lasted just under three days. The mother said that one tin lasted
two weeks to feed both children. · In rural Mexico, the Philippines, Central America, and the
whole of Africa, there has been a dramatic decrease in the incidence of breast feeding. Critics
blame the decline largely on the intensive advertising and promotion of infant formula. Clever
radio jingles extol the wonders of the “white man’s powder that will make baby grow and glow.”
“Milk nurses” visit nursing mothers in hospitals and their homes and provide samples of
formula. These activities encourage mothers to give up breast feeding and resort to bottle feeding
because it is “the fashionable thing to do or because people are putting it to them that this is the
thing to do.” The Defense. The following points are made in defense of the marketing of baby
formula in Third World countries: · First, Nestle argues that the company has never advocated
bottle-feeding instead of breast-feeding. All its products carry a statement that breast-feeding is
best. The company states that it “believes that breast milk is the best food for infants and
encourages breast feeding around the world as it has done for decades.” The company offers as
support of this statement one of Nestle’s oldest educational booklets on “Infant Feeding and
Hygiene,” which dates from 1913 and encourages breast feeding. · However, the company does
believe that infant formula has a vital role in proper infant nutrition as (1) a supplement, when
the infant needs nutritionally adequate and appropriate foods in addition to breast milk and, (2) a
substitute for breast milk when a mother cannot or chooses not to breast feed. One doctor reports,
“Economically deprived and thus dietarily deprived mothers who give their children only breast
milk are raising infants whose growth rates begin to slow noticeably at about the age of three
months. These mothers then turn to supplemental feedings that are often harmful to children.
These include herbal teas and concoctions of rice water or corn water and sweetened, condensed
milk. These feedings can also be prepared with contaminated water and are served in unsanitary
conditions.” · Mothers in developing nations often have dietary deficiencies. In the Philippines, a
mother in a poor family who is nursing a child produces about a pint of milk daily. Mothers in
the United States usually produce about a quart of milk each day. For both the Philippine and
U.S. mothers, the milk produced is equally nutritious. The problem is that there is less of it for
the Philippine baby. If the Philippine mother doesn’t augment the child’s diet, malnutrition
develops. · Many poor women in the Third World bottle-feed because their work schedules in
fields or factories will not permit breast-feeding. The infant feeding controversy has largely to do
with the gradual introduction of weaning foods during the period between three months and two
years. The average well-nourished Western woman, weighing 20 to 30 pounds more than most
women in less-developed countries, cannot feed only breast milk beyond five or six months. The
claim that Third World women can breast feed exclusively for one or two years and have
healthy, well-developed children is outrageous. Thus, all children beyond the ages of five to six
months require supplemental feeding. · Weaning foods can be classified as either native cereal
gruels of millet or rice, or commercial manufactured milk formula. Traditional native weaning
foods are usually made by mixing maize, rice, or millet flours with water and then cooking the
mixture. Other weaning foods found in use are crushed crackers, sugar and water, and mashed
bananas. There are two basic dangers to the use of native weaning foods. First, the nutritional
quality of the native gruels is low. Second, microbiological contamination of the traditional
weaning foods is a certainty in many Third World settings. The millet or the flour is likely to be
contaminated, the water used in cooking will most certainly be contaminated, the cooking
containers will be contaminated, and therefore, the native gruel, even after it is cooked, is
frequently contaminated with colon bacilli, staph, and other dangerous bacteria. Moreover, large
batches of gruel are often made and allowed to sit, inviting further contamination. · Scientists
recently compared the microbiological contamination of a local native gruel with ordinary
reconstituted milk formula prepared under primitive conditions. They found both were
contaminated to similar dangerous levels. · The real nutritional problem in the Third World is not
whether to give infant’s breast milk or formula; it is how to supplement mothers’ milk with
nutritionally adequate foods when they are needed. Finding adequate locally produced,
nutritionally sound supplements to mothers’ milk and teaching people how to prepare and use
them safely is the issue. Only effective nutrition education along with improved sanitation and
good food that people can afford will win the fight against dietary deficiencies in the Third
World. The Resolution. In 1974, Nestle, aware of changing social pat-terns in the developing
world and the increased access to radio and television there, reviewed its marketing practices on
a region--byregion basis. As a result, mass media advertising of infant for-mula began to be
phased out immediately in certain markets and, by 1978, was banned worldwide by the
company. Nestle then undertook to carry out more comprehensive health education pro-grams to
ensure that an understanding of the proper use of their products reached mothers, particularly in
rural areas. “Nestle fully supports the WHO (World Health Organization) Code. Nestle will
continue to promote breast-feeding and ensure that its marketing practices do not discourage
breast-feeding anywhere. Our company intends to maintain a constructive dialogue with
governments and health professionals in all the countries it serves with the sole purpose of
servicing mothers and the health of babies.” -this quote is from Nestle Discusses the
Recommended WHO Infant Formula Code. In 1977, the Interfaith Center on Corporate
Responsibility in New York compiled a case against formula feeding in developing nations, and
the Third World Institute launched a boycott against many Nestle products. Its aim was to halt
promotion of infant for-mulas in the Third World. The Infant Formula Action Coalition (IN-
FACT, successor to the Third World Institute), along with several other world organizations,
successfully lobbied the World Health Organization (WHO) to draft a code to regulate the
advertising and marketing of infant formula in the Third World. In 1981, by a vote of 114-1
(three countries abstained and the United States was the only dissenting vote), 118-member
nations of WHO endorsed a vol-untary code? The eight-page code urged a worldwide ban on
promo-tion and advertising of baby formula and called for a halt to distrib-ution of free product
samples and/or gifts to physicians who promoted the use of the formula as a substitute for breast
milk. In May 1981 Nestle announced it would support the code and waited for individual
countries to pass national codes that would then be put into effect. Unfortunately, very few such
codes were forthcoming. By the end of 1983, only 25 of the 157 member na-tions of ‘the WHO
had established national codes. Accordingly, Nestle management determined it would have to
apply the code in the absence of national legislation, and in Febru-ary 1982 issued instructions to
marketing personnel, delineating the company’s best understanding of the code and what would
have to be done to follow it. In addition, in May 1982 Nestle formed the Nestle Infant Formula
Audit Commission (NIFAC), chaired by former Senator Ed-mund J. Muskie, and asked the
commission to review the com-pany’s instructions to field personnel to determine if they could
be improved to better implement the code. At the same time, Nestle continued its meetings with
WHO and UNICEF (United Nations Children’s Fund) to try to obtain the most accurate
interpretation of the code. NIFAC recommended several clarifications for the instructions that it
believed would better interpret ambiguous - areas of the code; in October 1982, Nestle accepted
those recommendations and issued revised instructions to field personnel. Other issues within the
code, such as the question of a warning statement, were still open to debate. Nestle consulted
extensively with WHO before issuing its label warning statement in October 1983, but there was
still not universal agreement with it. Acting on WHO recommendations, Nestle consulted with
firms experienced and expert in developing and field-testing educational materials, so that it
could ensure that those materials met the code. When the International Nestle Boycott
Committee (INBC) listed its four points of difference with Nestle, it again became a matter of
interpretation of the requirements of the code. Here, meetings held by UNICEF proved
invaluable, in that -UNICEF agreed to define areas of differing interpretation-in some cases
providing definitions contrary to both Nestle’s and INBC’s inter-pretations. It was the meetings
with UNICEF in early 1984 that finally led to a joint statement by Nestle and INBC on January
25. At that time, INBC announced its suspension of boycott activities, and Nestle pledged its
continued support of the WHO code.

Nestle Supports WHO Code. The company has a strong record of progress and support in
implementing the WHO Code, including: · Immediate support for the WHO Code, May 1981;
and testimony to this effect before the U.S. Congress, June 1981. · Issuance of instructions to all
employees, agents, and distributors in February 1982 to implement the code in all Third World
countries where Nestle markets infant formula. · Establishment of an audit commission, in
accordance with Article 11.3 of the WHO Code, to ensure the company’s compliance with the
code. The commission, headed by Edmund S. Muskie, was composed of eminent clergy and
scientists. · Willingness to meet with concerned church leaders, international bodies, and
organization leaders seriously concerned with Nestle’s application of the code. · Issuance of
revised instructions to Nestle personnel, October 1982, as recommended by the Muskie
committee to clarify and give further effect to the code. · Consultation with WHO, UNICEF, and
NIFAC on how to interpret the code and how best to implement specific provisions including
clarification by WHO/UNICEF of the definition of children who need to be fed breast milk
substitutes, to aid in determining the need for supplies in hospitals. Nestle Policies. In the early
1970s Nestle began to review its infant formula marketing practices on a region-by-region basis.
By 1978 the company had stopped all consumer advertising and direct sampling to mothers.
Instructions to the field issued in Feb-ruary 1982 and clarified in the revised instructions of
October 1982 to adopt articles of the WHO Code as Nestle policy include: · No advertising to
the general public. · No sampling to mothers. · No mother-craft workers. · No use of
commission/bonus for sales. · No use of infant pictures on labels. · No point-of-sale advertising.
· No financial or material inducements to promote products. · No samples to physicians except in
three specific situations: · A new product, a new product formulation, or a new graduate
physician; limited to one or two cans of product. · Limitation of supplies to those requested in
writing and fulfilling genuine needs for breast milk substitutes. · A statement of the superiority
of breast-feeding on all labels/materials. · Labels and educational materials clearly stating the
hazards involved in incorrect usage of infant formula, developed in consultation with
WHO/UNICEF. Even though Nestle stopped consumer advertising, it was able to maintain its
share of the Third World infant formula market. By 1988 a call to resume the seven-year boycott
was called for by a group of consumer activist members of the Action for Corporate
Accountability. The group claimed that Nestle was distributing free formula through maternity
wards as a promotional tactic that undermines the practice of breast-feeding. The group claims
that Nestle and others including American Home Products, have continued to dump formula in
hospitals and maternity wards and that, as a result, “babies are dying as the companies are
violating the WHO resolution. As late as 1997 the Interagency Group on Breastfeeding
Monitoring (IGBM) claims Nestle continues to sys-tematically violate the WHO code. Nestle’s
response to these ac-cusations is included on their Web site (see www.nestHi.com for details).
The boycott focus is Taster’s Choice Instant Coffee, Coffeemate Nondairy Coffee Creamer,
Anacin aspirin, and Advil. Representatives of Nestle and American Home Products re-jected the
accusations and said they were complying with World Health Organization and individual
national codes on the subject. The New Twist. A new environmental factor has made the entire
case more complex: Circa 1998 it was believed that some 3.8 million children around the world
have contracted HIV at their mothers’ breasts. In affluent countries mothers can be told to bottle
feed their children. However, 90 percent of the child infections occur in developing countries.
There the problems of bottle-feed-ing remain. Further, in even the most infected areas, 70
percent of the mothers do not carry the virus, and breastfeeding is by far the best option. And the
vast majority of pregnant women in the de-veloping countries have no idea whether they are
infected or not. One concern is that large numbers of healthy women will switch to the bottle just
to be safe. Alternatively, if bottle-feeding be-comes a badge of HIV infection, mothers may
continue breast-feeding just to avoid being stigmatized. In Thailand, pregnant women are offered
testing, and if found HIV positive, are given free milk powder. But in some African countries
where women get pregnant at three times the Thai rate and HIV infection rates are 25 percent
compared to the 2 percent in Thailand, that solution is much less feasible. The Issues. Many
issues are raised by this incident and the ongoing swirl of cultural change. How can a company
deal with a worldwide boycott of its products? Why did the United States de-cide not to support
the WHO Code? Who is correct, WHO or Nestle? A more important issue concerns the
responsibility of MNC marketing in developing nations. Setting aside the issues for a moment,
consider the notion that, whether intentional or not, Nestle’s marketing activities have had an
impact on the behavior of many people. In other words, Nestle is a cultural change agent. And,
when it or any other company successfully introduces new ideas into a culture, the culture
changes and those changes can be functional or dysfunctional to established patterns of behavior.
The key issue is what responsibility does the MNC have to the culture when, as a result of its
marketing activities, it causes change in that culture? Finally, how might Nestle now participate
in the battle against the spread of MV and AIDS in developing countries?

Questions 1. What are the responsibilities of companies in this or similar situations?

2. What could Nestle have done to have avoided the accusations of “killing Third World babies”
and still market its product?

3. After Nestle’s experience, how do you suggest it, or any other company, can protect itself in
the future?

4. Assume you are the one who had to make the final decision on whether or not to promote and
market Nestle’s baby formula in Third World countries. Read the section titled “Ethical and
Socially Responsible Decisions” in Chapter 5 (pp. 138-39) as a guide to examine the social
responsibility and ethical issues with the marketing approach and the promotion used. Were the
decisions socially responsible? Were they ethical?

5. What advice would you give to Nestle now in light of the new problem of HIV infection being
spread via mothers’ milk?