The Multinational Monitor



The Taming of Nestle

A Boycott Success Story

by Fred Clarkson

0n January 26, 1984, Doug Johnson, one of the key organizers behind the boycott of Nestle products, ended six and a half years of abstinence when he shared a Nestle chocolate bar with Nestle executive Neils Christiansen. Though a suspension of the boycott had just been announced, this action told the roomful of boycott organizers, corporate officials, and media representatives that the Nestle boycott was really, truly over. The historic occasion followed six weeks of secret negotiations between the Nestle corporation, and American and Canadian boycott leaders.

The concessions made by Nestle, the world's largest food corporation, were called "stunning" by boycott leaders, who believe the agreement may have turned Nestle from an adversary into an ally. "If Nestle abides by the agreement, it will do a lot to contribute to the lives of children," says Doug Johnson, who is National Chair of the Infant Formula Action Coalition (INFACT), the principal organizer of the boycott. "We now share with Nestle a mutual interest in seeing other infant formula companies bring their marketing practices into line with Nestle's."

The international boycott had called on the Switzerland-based company to halt the aggressive promotion of infant formula in the Third World. The campaign eventually mobilized some 100 groups in 65 countries, including ten nationally organized Nestle boycotts. Such extensive international organizing grew out of women's, consumer, and health activists' common concerns about the hazards of bottle feeding.

The well-documented health problems associated with bottle feeding in developing countries result in an estimated one million infant deaths annually, according to the United Nation's Children's Fund (UNICEF). Following a 1978 U.S. Senate hearing, Senator Edward Kennedy (D-Massachusetts) defined the problem this way: "Can a product which requires clean water, good sanitation, adequate family income, and a literate parent to follow printed instructions be properly and safely used in areas where water is contaminated, sewage runs in the streets, poverty is severe, and illiteracy is high?"

Among the high-powered sales tactics at issue in the campaign were mass media advertising and the use of "milk nurses"-company sales agents dressed in nursing uniforms who pushed formula use to new mothers at home and in the hospital.

The boycott agreement is based on Nestle's compliance with the World Health Organization/UNICEF Code of Marketing of Breastmilk Substitutes, the first international marketing code in history. Four remaining issues were resolved by the two sides during the secret negotiations, which were mediated in part by UNICEF.

The boycotters and the company have agreed to accept UNICEF's final word while they work out details of the agreement. Meanwhile, the International Nestle Boycott Committee (INBC), the umbrella organization of boycott supporting groups in North America, has suspended the boycott, pending a final evaluation of Nestle's progress in mid-August.

The agreement has been widely recognized as a major victory for the international consumer movement. "Business theorists will keep alive the memory of the Nestle boycott as a classic case history of marketing a good product, then ignoring the ensuing problem, and finally mismanaging the inevitable crisis," the trade journal Advertising Age commented recently. "The lesson to be learned here is that the absence of sophisticated regulatory mechanisms in the Third World should not be misconstrued as an open invitation to free-wheeling marketing behavior."

In the early 1970s, the devastating impact of decades of accelerating commercial promotion of infant formula and bottle feeding in the Third World began to be understood by the international medical community. The emotionally charged issue caught on in 1974 when The New Internationalist, a British journal concerned with Third World issues, ran an expose. This was followed by a more detailed monograph published by the British development organization War on Want which identified Nestle as the major company involved. The issue captured the attention of the popular press in Europe when Nestle sued a Swiss group for translating the War on Want report into German under a new title, "Nestle Kills Babies."

In the U.S., the churches took up the formula issue with American companies in which they owned stock. Since 1974, Protestant denominations and Catholic orders have investigated and worked for reform of company sales practices through the Interfaith Center on Corporate Responsibility. But the limited effectiveness of filing minority shareholder resolutions at annual meetings, and the need to challenge the industry leader -Nestle has 40 to 50 percent of the Third World formula market-led to the formation of the Infant Formula Action Coalition (INFACT) in 1977 to organize grassroots education and action in the U.S. At the first INFACT national conference in November 1977, 55 religious anti-hunger activists, students, and health workers, launched the Nestle boycott, primarily because of Nestle's refusal to meet with critics or acknowledge the seriousness of the problem.

The connection between corporate marketing practices and sick and dying infants struck a chord of conscience during a relatively non-political decade. "Everybody can identify with small children. Nobody's anti-baby," points out Cynthia Kokis of the Lane Country, Oregon chapter of Clergy and Laity Concerned. "We just had to confront the tragic fact that one in ten Third World babies dies by the age of five, and that many were sick because of misuse of a product." Kokis adds that the documentation of the problem provided by the church and medical communities profoundly affected "people who just couldn't imagine that corporations would lie or do anything wrong."

Another reason for the campaign's success was the universal appeal of the issue. There "wasn't a vested interest of common people siding with the corporations," says Kokis. Labor campaigns like the grape and lettuce boycotts in support of the United Farm Workers, or the more recent J.P. Stevens campaign, she adds, touch on "previous decisions people have made. People either say `I'm a union man,' or `I'll never be a union man.' But nobody wants a sick baby."

The basic demand of the boycott was to "halt sales promotion of infant formula in developing countries." This was to be a sticking point in the final negotiations, because the WHO Code called for application in both developed and underdeveloped countries to protect mothers and children from undue commercial pressure. Ultimately, the boycotters felt that to preserve the integrity of their campaign, they could not hold out for application of the code to developed countries and stuck to their original demand that Nestle follow the code in the Third World.

Along with organizing the boycott, INFACT aimed a letter writing campaign at Congress, which led to a dramatic Senate hearing in May 1978. Chaired by Senator Kennedy, the hearing brought Third World health workers, church activists, medical experts, and company executives to Washington, D.C. to present their cases. The hearing attracted tremendous media attention, and catapulted the issue into the national arena.

Kennedy and the industry later asked WHO and UNICEF to take up the issue at their upcoming conference on infant and young child feeding in 1979. Ultimately, that meeting produced a document that called on the industry to curtail various sales tactics, and urged health professionals to support breastfeeding through hospitals and to avoid acting as indirect sales agents for the industry. This became the basis of the WHO/UNICEF Code of Marketing of Breastmilk Substitutes, which was passed by the World Health Assembly in May 1981. The only negative vote on the code was cast by the U.S. delegate, under orders from the Reagan administration.

Around the time of the WHO/UNICEF meeting in the fall of 1979, two key campaign coalitions were formed to lead and organize the burgeoning infant formula movement. The International Nestle Boycott Committee was created, mainly to promote solidarity and set up the unified negotiating team which ultimately settled the boycott. The International Baby Food Action Network (IBFAN) was established as the coalition of all the groups in the international campaign primarily aimed at the WHO Code development process.

Code vs. boycott

The shift of the center of activity from the U.S. to the U.N. seemed a coup for Nestle. The company told potential boycott endorsers that there was no need for a boycott because the WHO was handling the matter.

After the WHO/UNICEF Code was passed, however, activists decided to use the boycott as the vehicle for enforcement of Nestle compliance with the code. Nestle still had a long way to go, they believed, though the company had made incremental changes in policy over the years. In 1978, Nestle pledged to stop mass media advertising in the Third World. In 1979, Nestle pledged to abide by the WHO/UNICEF statement and the "code process." In 1981, after bitterly fighting the code and the boycott, Nestle agreed to abide by the "aim" of the code, and in 1982, Nestle adopted the whole code as company policy, but instructed its field staff on how to interpret the code. Several sets of revisions followed under pressure from consumer activists and Nestle's own "audit commission" chaired by former Secretary of State Edmund Muskie.

But throughout this period Nestle's practices in the field routinely violated stated company policy. "We needed field data to see if Nestle was really putting the .:ode into practice," says Doug Johnson, "So we did guerrilla research. We sent people on intensive trips through several countries to visit hospitals, clinics, and homes to investigate the real field practices." This campaign documented violations which were then released to the press.

Nevertheless, since 1982, Nestle did make steady progress. At the same time, public understanding of the boycott and the WHO code was getting lost in a morass of obscure details about the code, and charges and counter-charges about code violations. Some boycott supporters defected during this period, notably the American Federation of Teachers and the Church of the Brethren, who were apparently convinced that Nestle was abiding by the code.

The remaining 87 members of the INBC analyzed Nestle's progress to date, and decided to continue the boycott over four remaining issues: limiting free supplies of formula to those who cannot breastfeed; stopping all personal gifts to health workers; revising misleading literature for mothers and health workers; and including clear warnings on infant formula labels about the hazards of bottle feeding and the benefits of breastfeeding.

A few days before the December 1983 press conference that announced these four demands, Doug Johnson happened to meet Neils Christiansen, a Washingtonbased Nestle executive, on an AMTRAK train between New York and Washington. Johnson explained the four demands to Christiansen, who took them back to Nestle. Thus began a critical series of 12 meetings primarily between Johnson and Christiansen, which were conducted with pledges of binding secrecy: both parties agreed that if details of the talks were leaked, the talks would be terminated. In six weeks, an agreement was reached.

To Christiansen, the two key elements of the agreement were the role of the churches, and the mediating role of UNICEF. "The termination of the boycott by the Church of the Brethren and most of the Methodists had a profound effect," he says. "The churches recognized Nestle's progress and recognized what we were doing to implement the code." Christiansen says that UNICEF's "willingness to negotiate" was the catalyst of the agreement. "When we sat down with UNICEF," he says, "both of our ideas changed to some extent. They helped us to reach consensus." The boycott, he says, "was not an issue" for Nestle. "Our sales figures never showed any impact of the boycott."

Doug Johnson disagrees with this explanation, however. He believes the key factors were: the pressure of the boycott; boycott organizers' public acknowledgement of Nestle's progress over time; and the willingness of Nestle to make the necessary changes to end the controversy. "Nestle finally did what many company ideologues didn't want them to do: go forward with face-to-face negotiations," he says. "This was an enormous breakthrough that allowed those of us most intimately involved to engage in a give-andtake exchange." Johnson also believes that changes in Nestle's top management may have permitted a more "pragmatic" approach.

Johnson stresses the role of big city "campaign centers" developed over the past year, where boycott volunteers have been systematically trained and organized to make a measurable dent in Nestle's sales. The first such centers in Chicago and Boston succeeded in getting Nestle's Taster's Choice coffee off the shelves of a number of stores, and at the time of the agreement, were putting pressure on the larger supermarket chains. Nestle was aware, says Johnson, that two more centers were to open soon. The centers are continuing operation, and gearing up for the next campaign.

Despite Nestle's dismissal of the economic impact of the boycott, a look at articles about Nestle in the business press makes a strong case for the effectiveness of the boycott tactic. In 1978, Fortune Magazine reported that Nestle, which at the time was selling almost $2 billion worth of food products a year in the U.S., hoped to double that figure and increase the U.S. share of its global sales from 18 to 30 percent by 1982. To reach this goal, the company launched a multimillion dollar advertising campaign.

In 1981, Business Week reported that Nestle's "U.S. sales and earnings were down slightly," adding that the company had revised its timetable for the 30 percent market share to 1985.

And a recent article in the Wall Street Journal suggests that it may have been the boycott that thwarted Nestle's strategy of trying to expand its North American market. "Weak" U.S. sales of $2.4 billion last year, says the Journal, "account for only 19 percent of world sales." "The end of a boycott against Nestle may... help" the company's efforts to increase their U.S. market share, the article states.

What's next for the boycott

While the end of the boycott may well be a boost for Nestle, IBFAN-the international coalition of groups active in the formula movement-almost came apart at the seams after the suspension was announced. In early February, about 125 IB\FAN activists held a strategy conference in Mexico City. Although most delegates were from North America, people came from as far away as Bangladesh, Thailand, India, Swaziland, Kenya, Zimbabwe, Western Europe, and Latin America.

Most delegates were pleased with the concessions gained through the Nestle agreement, but there were two problems voiced at the meetings.

The first was that IBFAN leaders believed they had not been adequately consulted on the boycott suspension-a major decision in which they felt they should have played a role. Secondly, the Europeans felt that the North American agreement effectively made a separate peace with Nestle, and undercut their boycott efforts in Europe. In several countries with no tradition of boycotts, the Nestle boycott had only caught on in the past year. They had also hoped to persuade Nestle to apply the WHO code in all countries, not just developing countries, as the already concluded agreement had specified.

But as the North American delegates from INBC explained to the conference, they felt constrained to not go beyond the original boycott demand in their negotiations with Nestle, largely for the sake of the integrity of the campaign in gaining enforceable agreements with other companies. The INBC agrees that the code should apply universally, and plans to help the European groups to gain an agreement with Nestle through all means short of boycotting.

In the end, the conference agreed that if Nestle fails to live up to its agreement, the boycott may be reopened and the stakes raised to include universal application of the code.

To head off future communications and decision-making gaps, the European boycott groups are being integrated into the INBC decision-making structure. IBFAN is tightening up its communications process, and for the first time, a North American IBFAN is being organized. This will allow the many groups with domestic agendas related to such areas as women's reproductive health, childbirth education, and women in the workplace to participate in the infant formula campaign in ways more central to their organizational goals, without a sole focus on boycotting. Thus there will be a broadened coalition to take up the struggle when INBC's reason for existence-the boycott-is no more.

Johnson believes that Nestle may now help lobby national governments into making the WHO code national policy so that all infant formula companies will have to play by the same rules. "Now that the infant formula giant is following the code," Johnson argues, "the others will have no excuse, other than greed, not to change their practices too."

Phyllis Gabriel of the Interfaith Center for Corporate Responsibility says that all three American manufacturers of infant formula are "giving lip service" to the code, but that so far have given no firm commitments to following the code. The companies are also concerned, however, about being "the next Nestle," and campaign activists plan to keep them guessing about upcoming strategies in hopes of gaining an industry-wide commitment to the code.

In assessing the impact of the boycott, Gabriel observes that "while the boycott didn't affect Nestle's corporate strategy, which is to make money, it did bring about significant changes in the company's marketing strategy. Also, the WHO Code was a significant victory in itself. Similar codes could be developed for other products. Finally, the network of health workers and consumers built up over the years could serve as the basis for another campaign."

To Richard Barnet, co-author of Global Reach: The Power of the Multinational Corporation, "The boycott demonstrates how effective people can be when they analyze the power of multinationals and call them to accountability. Nestle's agreement to change its practices represents a considerable victory and a model for other kinds of campaigns for consumers.

"The Nestle campaign was also successful," he adds, "because it was a clearcut issue-it violated a very elementary sense of decency-and because of the great energy and tenacity of its organizers, who didn't give up even when it looked like the campaign might fail."

For the thousands of people who participated in the Nestle boycott, the campaign will have a profound and long lasting impact-especially on their perception of corporate behavior and accountability. "Corporations have a more difficult time now," says Cynthia Kokis of Clergy and Laity Concerned. "People have started asking me for material on what corporations are doing well. Nestle did that."

Fred Clarkson is a freelance journalist based in Washington, D.C. He was a member of INFACT's advisory board for two years.

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