Will Nestle Ever Make it in the Fair Trade World?

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Blog Post #4

Yesenia Gomez

Social side of Distribution- Powerbars

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Will Nestle Ever Make it in the Fair Trade World?

Let’s go back to the 1950s. Why? Well, the movement towards fair trade products began in the 1950’s. However, many believe fair trade has broken away from its original purpose. Back in this time it was called “alternative trade”. Its focus was to ensure fair wages were being paid to those who were sowing and reaping coffee beans, cocoa beans, and other products enjoyed by consumers. Have multinational corporations like Nestle  made progress?

Before 2005, Nestle declared itself to “fairly trade” cocoa and coffee, when in reality it refused to comply with fair trade regulations. Nestle discarded any intentions to change its “marketing, labor, or pricing strategies” for that matter. For over a decade, Nestle continued to be at odds with fair trade. Suddenly in 2005, it released a “fair trade product” called Nescafe Partner’s Blend. The Fairtrade Labeling Organization immediately certified Nestle as a fair trade corporation. This singe action from the FLO was enough to spark tension in the fair trade movement. Many European fair trade movements claimed that the FLO gave into Nestlé’s whims due to the fact that Nestle held a powerful position in the coffee and cocoa industry. There were angry outburst and many criticized the intentions of Nestle in the realm of fair trade after all they only had one fair-trade product in the market. Many were in disagreement with FLOs actions to label Nestle a fair trade company. Nestle has been called the problem much more than the solution. The treatment of the FLO towards Nestle was overtly one of interest. Nestle was selling only one-tenth of one percent of their fair trade coffee. Many began to question FLO and its betrayal by making fair trade a niche market far way from its original purpose to reform the global trading system.

O’Nions article, Fair Trade and global justice, reports that in 2002 while many fair trade coffee industries suffered from economic downfall, Nestle made 26% profit margins with their supply of instant coffee. Many coffee farmers and growers were selling fair-trade coffee for such low prices, and Nestle took advantage of it. The corporation was able to look good for selling fair trade coffee, and it did not even have to spend excessive amounts of capital on fair trade coffee. Nestle also participated in the distribution of low wages in Colombia in 2003. Columbian union leaders even accused Nestle of threats and murder. In the Philippines, Nestlé also undermined the working rights of people. Many reported abuse in the work place and extreme low wages. Nestlé’s infamous reputation in unethical business methods has pushed many to feel uneasy about their “fair trade” label.

Nonetheless, the article “Fairtrade Coffee: Nestle Enters the Ethical Frey” explains the new connotation fair trade products have acquired. Americans, as well as Europeans, were asked about their take on fair trade products. There was a total of 57% who responded that it was very important to purchase products ethically obtained. Nestle, in response, “jumped on the ethical bandwagon” causing many supporters of fair trade to worry about negative effects a notorious corporation such as Nestle could have on the value and meaning of fair trade. On the other hand, if Nestle whole-hardheartedly adopts fair trade regulations, smaller companies may suffer due to the Nestlé’s established power and influence in the cocoa and coffee industry.

Lyon, S., & Moberg, M. (2010). What’s fair? The paradox of seeking justice through markets. Lyon, S., & Moberg, M. Fair trade and social justice: global ethnographies (1-23). (Eds.), New York: New York University Press

Nestle: fair trade?. (2004). MarketWatch: Global Round-up, 3(6), 43-44.

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Will Nestle Ever Make it in the Fair Trade World?

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