Nestle’s Marketing Strategies

Restore

Blog Post #3

Yesenia Gomez

Economic side of Distribution- Powerbars

Nestle’s Marketing Strategies

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Recently, Nestle has broadened its marketing strategy by working as a franchise machine across the world. It is a global multinational corporation that exists within local communities. Nestle brands everything locally and works regionally. Most of its plantations are abroad while corporations are in the US and Europe. They have a global approach in technology and are very advanced in the way it enters new markets. Rapoport’s article, Nestle’s Brand Building Machine, calls Nestle the modern day “Roman Empire School of Marketing” for its tactic in settling in, colonizing as much territory as possible, adapting to the new land, and keeping away competition that trying to intervene for resources.

Nestlé’s business approach consists of traveling across open markets to discover new markets. Its persistence in entering markets in China has led it to reach a leading role as a food company in China and Vietnam. Nestle has already branded many products and resources in Mexico, Brazil, Chile, and Thailand. Nestlé is considered one of the most powerful food companies in the global economy. There is a give and take with the companies it makes business with. For example, Rumble the Jungle explains the extraction of palm oil in Indonesia is hurting the local communities. Yet, the Indonesian government benefits from the income gained from the extraction of palm oil; it goes towards the corrupt elite. Why?
Well, when every metric ton in Indonesia forests are priced at $900 and there is an annual 24 billion dollars made from exporting palm oil from Indonesia…it is tempting for those who want more money and power.

Nestle does not always buy directly from “damaging” markets. It is careful about its reputation. It has been humiliated and media-bombed for its engagement in labor exploitation and destruction of natural environment resources in the past. For example, farmer’s beans are bought by other middlemen which later exports goods to Nestle. The supply chain goes through a series of distributors and as the cocoa or coffee beans gain market value, it is too late for the primary farmers to receive their proper share. They are forgotten and left at the bottom of the value chain. Farmers are left with little to nothing.

Rapoport, C. (1994). Nestlé’s brand building machine. Fortune,130147.

Gilbert, D. (2013). Rumble in the jungle. Earth Island Journal, 27(4), 40-45.

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Nestle’s Marketing Strategies

You pay $2.39 for a Powerbar. How much does the laborer get from your pocket?

Restore

Blog Post #1

Yesenia Gomez

Economic side of Production- Powerbars

You pay $2.39 for a Powerbar. How much does the laborer get from your pocket?

Child Labor and Nestle videoImage

It’s  a long Tuesday.

There is no time for the Cafeteria. The next best option is the Restore. Let’s see…something quick, filling, healthy, and tasty. There it is—the Powerbar.
You pay $2.39. The price does not even matter at that point.
However, does the price matter somewhere else or to someone else?

How much does the laborer get paid to open cacao pods all day with a machete in the Ivory Coast? How do they combat their opposition for forest clearings due to palm oil exports? How can they see their children and tell them they barely make ends meet?

Many of the ingredients and resources needed to produce a Powerbar are found in countries “abundant” in cacao, soy, palm oil and sugar. In many ways, the excessive use and exploitation of laborers affects the economic stability of a community and the global economy.

Nestle, one of the biggest multinational chocolate producers and owner of Powerbar, recently agreed to let the Fair Labor Association (FLA) trace and assess their cocoa supply chain. More than a third of the cocoa around the world comes from the Ivory Coast in West Africa; yet, many of the laborers in the Ivory Coast live in poverty. There are local Ivory Coast individuals like Jean in From bean to bar: Why chocolate will never taste the same again who inherit land but gain little to no profit from it. Some of the poorest rural regions have these coffee and cocoa plantations, but they are easily exploited. The growers are positioned at the bottom of the cocoa value chain. Therefore, workers only see a small proportion of the profit gained from Nestle’s supply of bars containing chocolate. The local governments and nation-state politicians know the troubles with implementing higher working standards for cocoa workers. In this video, Quest talks with Prime Minister Daniel Duncan about the income of cocoa farmers in the Ivory Coast. In addition, take into consideration that the annual GDP per capita in the Ivory Coast is a little over $1,000. How is it that the GDP per capita is so low in a place where cocoa holds up 3.5 million people?

Farmers prefer to hire children since they cannot afford to pay adults. However, Nestle is slowly recognizing its power and position in positively impacting the lives of workers in cocoa plantations. Nestlé’s article, Nestle Action Plan on the Responsible Sourcing of Cocoa from Cote d’Ivoire shares the 11 recommendations the FLA believes will eradicate child labor from the cocoa supply. Nestle believes this will produce greater returns.

Nestle’s Responsible Sourcing Guideline has approached ways to implement international standards to their supplier code. On the other hand, there are still products in the Powerbar other than cocoa that need more in depth investigation. For example, there is the still questioning of where Nestlé’s palm oil comes from. The cheapest vegetable oil is palm oil, and it is even considered “green”. Nestle has been publicly humiliated for its consumption of palm oil. Although Nestle reports that it has stopped purchasing from Indonesian palm oil growers or any other damaging markets, it still acquires palm oil from private markets. Rumble in the Jungle uncovers Nestle’s purchasing of palm oil tanks from Rotterdam’s spot market. Rotterdam does not report an origin of its palm oil; they claim to be untraceable. It is that easy for Nestle to remove its bad reputation. As long as it is not directly connected to damaging markets, it can claim “blissful ignorance”. This is just a touch of make-up for Nestle. The demand for palm oil is high, so Nestle continues to purchase from third-party suppliers.

The production of Powerbars in the economic realm is questionable. There is enough evidence to support that laborers are receiving the bare minimum or nothing at all due to their little or no bargaining power.

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You pay $2.39 for a Powerbar. How much does the laborer get from your pocket?

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?