Nestlé buffs its image with its living wage policy

July 4, 2014

The global consumer goods giant Nestlé develops its living wage policy. Will the approach help it avoid further lapses in Corporate Social Responsibility?

In June 2014, Nestle announces an extension of its policy of paying the living wage to employees. From 2017, the company will pay contractors in a similar fashion to its own workers.
[For an explanation of the minimum wage concept see this BBC article]

The unrepentant chocolatier

In 2009, the Economist examined Nestlé’s history and current strategy in an article entitled The unrepentant chocolatier.

The potted history reveals how a little Swiss firm making chocolate products became the World’s largest manufacturer of food products by revenues, ahead of Kraft, an American multi-national.

The stated plan is to strengthen future growth through a move into ‘wellness products.’ The Economist notes the commercial logic of the plan, but identifies a dilemma for Nestlé

The Dilemma

The Dilemma is suggested in the title of the article. Nestlé is seeking to reposition itself as a thoroughly ethical company,. Yet it will persist as a purveyor of many products seen as unhealthily loaded with carbohydrates and fats. The Dilemma has some similarities to challenges that facing the giants in the soft drinks and the alcoholic beverages markets.

The dilemma is made tougher for Nestlé for its historical record of association with stories damaging to the company’ brand. These include the baby milk scandal in Africa, and more recently the bottled water product with chose affinity to branded tap water, and meat products of dubious origins.

The company hopes to promote a policy that preserves its hard-earned revenues from its indulgence brands and grows new brands associated with the ‘noble cause’ of functional foods and wellness products.