Nestle Infant Formula: Pushing An Unsafe Product In Third-World Countries
In the 1970's, Netstle was among a handful of companies who were accused of selling unsafe projects to overseas markets. In particular, nestle produced a powdered infant formula tat was so unsafe it was called "the baby killer" by activists, which naturally had a damaging effect on the corporate image.
A handful of vocal critics latched onto the problems noted above, and portrayed Nestle as a company that was seeking to profit by selling a dangerous product to the naive people in third-world countries. The fact that the perceived victims were mothers and infants made the accusations particularly sensational, and polarized sentiment against the company.
Background
In 1867, Nestle developed and marketed a "milk food" product that was sold to nourish infants who were unable to take solid food. This product was basically condensed milk. The infant formula product was more recent, developed in the 1920's, as an alternative for breast milk. The difference is that the latter product is specifically designed for infants, which is engineered with more nutrients than the previous milk food product.
Nestle aggressively marketed infant formula to developing countries. This was largely a newfound need, as industrialization put women to work, such that they would be unavailable to breast feed their infants, and because the poor health of the mothers did, in many instances, make the product a better alternative for the health of the infants.
One criticism leveled at Nestle was its aggressive marketing, as it primarily promoting the product through medical professionals and even hiring a fleet of "milk nurses" to promote the products to new mothers, who were naive and gave great credence to medical professionals, and took these recommendations as medical advice.
Powdered infant formulas were sold in the overseas markets, but it is worth noting that the conditions overseas are deplorable: powdered formula was often mixed with contaminated water and put into unsterilized bottles and nipples, and it was not uncommon for mothers in impoverished companies to dilute the product.
There were some legitimate quality control problems: in 1977, bacteria traced to a Nestle factory caused about 25 infant deaths in Colombia and another 134 in Australia. This was found to be caused by a lien manager who attempted to sterilize equipment without halting production.
Nestle's Reaction
After the publication of the articles "The Baby Killer" and "Nestle Kills Babies," the company took steps to amend their promotional practices to acknowledge taht breast feeding was best, that infant formulas would be advertised as supplements, ads would recommend professional advice be sought, and would not utilize nurses as salespersons or promoters.
This did not quell the outrage, and some advocacy groups demanded extreme measures: that the company stop providing free samples, stop any marketing to the healthcare industry, and stop all consumer promotion and advertising. These groups incited protests and consumer boycotts, which had a significant impact on the company's domestic sales.
Nestle engaged PR firms to help repair its reputation, capitulated to all demands, and hired some of its harshest critics to come aboard as advisors for marketing the product.
It took a few years for the boycott to end, and estimates suggested that there were up to $40 million in lost profits as a result. The debacle also undermined Nestle's ability to establish a foothold in the infant formula market, both domestically and abroad
Lessons Learned
Larger firms face an increased danger of smear campaigns The problems of infant formula in third world countries were largely the same for all competitors in that market, but because Nestle was a large and well-known brand, it because the target of the majority of protests.
A firm cannot rely upon the press to be unbiased in its reporting. The press is eager to find a "fault object" as a villain for their stories, and tends to aggrandize and exaggerate to cause a sensation.
The PR damage done to a company over one product will have a negative impact on all its products, so even "minor" or "emerging" lines of business merit careful scrutiny.
Public relations efforts have less dramatic impact on a company's negative public image than do marketing efforts. PR tends to be effective for damage control, but not in the restoration of reputation.
Direct confrontation and an adversarial stance toward your critics tends only to make them push back harder and take more extreme positions. There is value in making an ally of the enemy and, as Nestle had done, give the enemy a share in the responsibility for addressing a problem, such that your enemy is put into a position where they feel their interest is served by convincing the public the problem is solved, nto in attacking you further.