UNMASKING A GIANT

PART I. Nestle
A. Profile
Transnational Corporations (TNCs): enterprises which branch out to many parts of the globe to have a
larger market for their products and an outlet to invest the capital they have accumulated. It is also
known as a multinational corporation which operates in more than one country.
Nestle S.A. a classic example of a TNC.
- It started as a small enterprise single-plant family enterprise in Vevey, Switzerland in 1866 by Henri
Nestle.
- It has become one of the worlds leading TNCs in the food industry and a world leader in beverage
food, infant formula, chocolate and coffee.
- Among the top 50 in Fortune magazines list of the top 500 corporations in the world.

B. Philippine Roots
1911 Nestle Philippines established its first trading house in Manila
1944 Filipinos were introduced to instant coffee
1947 Nestle change its name to Filipro, Inc. which many believed was coined from the words
Filipino products
1962 first manufacturing plant in Alabang, Muntinlupa, Metro Manila
1976 second Nestle plant in Cabuyao, Laguna was inaugurated
1979 San Miguel Corp. bought 49% of Nestle
1984 Nestles Cagayan de Oro plant was completed in Mindanao
In 1990, Nestle Philippines was the second largest European owned company in the country after
Pilipinas Shell Petroleum Corporation.
In 2010, according to Philippine Business Profiles and Perspectives Top Corporation (PBPPI), Nestle
ranks at number 8 (Business Profiles 2009-2010 edition).

Part II. Nestles labor practices

Nestles highly successful business operation is marred by the violence and harassment that
characterized MANAGEMENT-LABOR DISPUTES. There was a time Nestle workers were harassed and even
dismissed outright whenever they pressed for better wages and benefits.

A. Union Strikes
Union: An organization whose membership consists of workers and union leaders, united to protect and
promote their common interest.
January 1, 1982: First Union Strike. The Nutritional Products Association of Free Workers (NPAFW)
launched a strike after negotiations for a collective bargaining agreement reached a deadlock. Nestle
management rejected the unions demand for wage increases and fringe benefits. The workers
protested unfair labor practices as well as the nonpayment of an earlier Christmas bonus.
March 1982. Nestle management finally gave in to workers demands and entered into a COLLECTIVE
BARGAINING AGREEMENT (CBA). The expiry dates of all CBAs in the company were to end in June 30,
1987.

BONDING TOGETHER
Nestle Philippine Workers Council (NPWC): an alliance of workers belonging to the labor unions in
Alabang and Cabuyao and the employees union in Makati, Cebu, Davao, and Cagayan de Oro.
Union of Filipro Employees Drug, Food, and Allied Workers, Kilusang Mayo Uno (UFE-DFA-KMU): the
unions further consolidated themselves under this banner in 1987

GRAND DECEPTION
As tensions at Nestle intensified, workers benefits were arbitrarily withheld and withdrawn. The CBA
was violated by management and harassment of union leaders heightened.
January 22, 1986 unions second strike, protesting Nestles unfair labor practices, union-busting
attempts and the nonpayment of legally-mandated benefits.

A BETRAYAL
President Aquino declared TOTAL WARagainst militant labor groups.
The National Labor Relations Commission (NLRC) of the Department of Labor and Employment
(DOLE) declared the then ongoing strike as well as the strike staged earlier in 1986 as both illegal.
Nestle management dismissed the striking union officials and refused to release the unions fund in
spite of a ruling of the Second Division of the Supreme Court.

B. INDUSTRIAL PEACE CONFERENCE

In November 1991, the pro-worker union prevailed and industrial peace pact was signed.
It turned out that Nestles profits from 1988 to 1990 reached P1,550 million more than enough to
meet the P449 million three-year package the union requested.

C. NESTLE FAiLING ON CHILD LABOR ABUSE

Nestle falling on child labor abuse says FLA report
Humphrey Hawkesly, BBC News
June 29, 2012
The food company Nestle has been accused of failing
to carry out checks on child labor and other abuses in
part of its cocoa supply chain.
A report by an independent auditor, the Fair Labor
Association (FLA) says it found multiple serious
violations of the companys own supplier code.
The code includes clauses on child labor safety and
working hours...
Ivory Coast, West Africa: leads the world in production and export of the cocoa beans used in the
manufacture of chocolate and supplies Nestle, among other large chocolate producers, Ivorian
cocoa.
Nestle is now taking direct responsibility for decreasing the risk of child labor abuse.
D.

Partners in Development?
The problems of high unemployment and low incomes can only be successfully resolved in the
context of growth but the right type of growth. While the contribution of TNCs to the countrys
gross national product (GNP) cannot be discounted, their activities must be judged in terms of
whether or not they really help improved the working peoples quality of life and the over-all
economic development of the country. Raymund Addun, Nestle: Whats Brewing?

PART III. The Silent Slaughter

A. Nestles Marketing Strategies to Evade Restrictions on
Promoting Infant Commercial Products:
1. AGGRESSIVE
PROMOTION
OF
FOLLOW-ON MILK which NESTLE
insists are not breastmilk substitutes.
Follow-on milk carries similar brand
name as the pre-starter formula and
these are expressed by numbers. Ex.
Nestogen 1,2,3,4

Follow-on milk formulas are needed if it

is recommended for a mother to stop
breastfeeding. However, follow-on milks
are mistakenly used as breastmilk
substitutes.

Aside from follow-on milk foods,

CONDENSED MILK is also known to be
a Silent Killer. Condensed milk is still
used as an alternative milk food for
Filipino babies. However, it is mainly
sugar and it cant give babies their
necessary dietary requirements.

The office of the MATERNAL AND

CHILD HEALTH (MCH) published a
document entitled Milk Code Violations
by Company (1989-1990). It listed
Nestle as the leading violator of the
Philippine Milk Code with six cases, with
violations ranging from dissemination of
advertising materials without clearance
to
unauthorized
distribution
of
promotional gimmicks for infant formula
products. Also listed were Nestles
donations to health facilities and
workers from 1987-1988 without DOH
approval.

2. MARKETING OF HYPOALLERGENIC
AND SPECIAL FORMULAS FOR LOW
BIRTH WEIGHT AND PREMATURE
INFANTS.
3. ADVERTISING
THE
LOGO
OR
SYMBOL OF A MILK FORMULA instead
of its brand name in gift items and
assorted materials.
4. GIVING OTHER NESTLE PRODUCTS
AND
RELATED
PROMOTIONAL
GIMMICKS
5. VERBAL PROMOTIONS including TV
advertisements.
6.
7.

B.
C. VICTIMIZING THE THIRD WORLD
D. BOTTLEFEEDING- identified by
WHO AND UNICEF as worlds major
health problem. With this, bottlefed babies are 40 times more likely
to die in their infancy than
breastfeed babies.
E. The international milk code and
the Philippine milk code share one
objective: to curtail the dangerous
effects of corporate marketing of
breastmilk substitutes while
improving infant health by
promoting breastfeeding.
F.

G.
H. THE MAIN PROVISIONS OF
THE INTERNATIONAL MILK
CODE.
1. No direct advertising to the
public
2. No free supplies to hospitals or
clinics and no free samples or
gifts to mothers.
3. No professional service
representatives, mother craft
nurses or similar personnel to
be used in health care facilities.
4. No promotion of infant feeding
products in health care facilities.

5. No gifts, personal samples or

financial inducements for health
workers.
6. No words or pictures idealizing
artificial feeding
7. No false claims about how close
the milk product is to breastmilk
8. No promotion of unsuitable
products like sweetened
condensed milk foe babies.

9. All information for health

workers should be factual and
scientific.
10.All products should be of high
quality and should take into
account the climatic and
storage conditions of the
country where they are used.
I.
J.

***

K.
In
October
1991,
the
international baby food action
network documented hundreds of
codes violations worldwide and
among 80 companies, the worst
offender was nestle.

promote baby milk products with

prior approval from an interagencycommittee (AIC) composed
of the secretaries of health, trade
and industry, justice and social
services, and development.

L. 1981- Philippines signed

international milk code

N. Nestle
gave
35
Separate
Donations To 15 Hospitals and
Clinics And 10 Physicians In Metro
Manila, Cebu, and Cotabato Worth
Around
P354,628.
These
are
medical
oxygen
tanks,
airconditioner, folding beds, blood
pressure
apparatus,
air-shield
incubator,
refrigerator,
and
phototherapy.

the

M. October 20 1986, President

Corazon Aquino signed executive
order no. 51the national code of
marketing
of
breastmilk
substitutes, breastmilk supplement
and other related products. This is
a law where it imposes penalties
for violations, particularly 2 months
to 1 year imprisonment or a fine of
p1000 to p30000, or both, plus a
recommendation from the DOH to
suspend or revoke the license of
health personnel and facilities as
well as milk manufacturers and
distributors involved in repeated
violations
(section
13).
But
alarmingly, the Philippine milk code
allows firms to advertise and

O. In
1991
,
Balikatan
at
UgnayangNaglalayongSumagipsaS
anggol
(BUNSO),
a
national
coalition promoting and protecting
the health and rights of mothers
and children, uncovered other
Nestle practices which aimed to
reinforce its hold over mothers and
hospital personnel.

P.
Q. IV. Nestles Economic Agenda
R.
a. A Giant of Sorts
S.
For
generations,
Nestle
commercials mesmerized the public into
patronizing their products. It maximized
its media, allowing it to expand its
territorial domain in the country.
b. Filling up Public Coffers

T.
Aside from providing jobs,
Nestle also contributes a lot to the
government via tax payments. They also
contribute to the community through
donations.
U.
However, Nestle is also a heavy
borrower. May even suspect that they
only pay taxes in Laguna, wherein tax

c.

d.

e.

f.

g.

h.

rates are low, disregarding their plants in

other places.
Strong Earnings
V.
Nestles corporate performance,
in terms of profits and revenues are
phenomenal. But, their wages cannot
even sustain a person.
Impotent Impetus
W.
According
to
free-market
philosophy, foreign investment will
stimulate growth in the economies of
host countries. Thus, the government
allowed foreign firms to operate in the
country.
Out to Shop: Nestles Procurement
X.
As Nestle became involved in
manufacturing, the government hoped
that they would:
1. Stimulate the agricultural sector as
their source of raw materials
2. The dairy industry for milk products
3. The packaging industry for their
finished products
Y. However, majority of their
materials are still being imported
from other countries, with only a
small portion coming from the
Philippines, most of which includes
sugars, coffee beans, banana,
pineapples, and soya beans.
Well-Nestled
Z.
Nestle has tried to convince
farmers to cultivate robusta coffee,
cacao, and soya beans. To lure farmers,
they provided the seeds and technical
assistance. In the end, Nestle assured
farmers of a ready market.
Coffee
AA.
1979- Nestle propagated the
robusta variety from Ivory Coast
AB.
They distributed these cutting to
Bukidnon,
Lanao,
Basilan,
Iloilo,
Bacolod, Batangas, and Cavite. Slowly,
they replaced traditional coffee varieties
such as Arabica (kapengtagalog) and
liberica (barako).
AC.
As a result, farmers became
more and more dependent on Nestle for
seedlings.
Cacao
AD.
Nestle also convinced farmers
to adopt the cacao variety grown in

AL.

AM.

V. Epilogue

Papua New Guinea, which, when

fermented, is the main ingredient in
Nestles Milo.
i. Soya
AE.
Nestle established a research
and demonstration farm in Tupi, South
Cotabato for their soya based products.
They lent seedlings and technology to
farmers and eventually signed a
contract with them.
AF.
They say that theyre helping
the farmers, but in the end, theyre the
ones who determine the price and buys
their output.
j. The Usual Casualty
AG.
Whether by intent or accident,
Nestle has exposed farmers to the risks
which accompany export crops, such as
erratic price fluctuations, cancellations,
and droughts. Come hard times, cacao,
coffee, and dried soya beans are not
exactly marketable, nor can the stave off
hunger.
k. The Best of Both Worlds
AH.
Production workers revealed
that the company selects coffee beans
of higher quality and sells these abroad,
while those of lower quality are used for
local products. Still, the local price of
Nescafe is higher than its export price.
l. Whipping Up the Milk Industry
AI.
Although milk is a very
important nutritional requirement, 99%
of our milk needs still come from outside
the country. This makes milk expensive
and beyond the reach of the average
Filipino family. Milk, which should be a
necessity, has become a luxury.
m. Integration: Good or Bad
AJ.
Although Nestle buys coffee
from the local farmers, it has not
changed the general state of the local
coffee industry.
n. Packing Them In
AK.
Nestle
has
whipped
its
competitors. What is appalling is that we
inevitably find ourselves in the mercy of
these foreign companies since they
have the control over the supply of
important food.

AN. The experience of Nestle Philippines validates the common perception on big TNCs on third
world countries that they are here simply for profit.
AO.
AP. The crucial issue here is for the country, despite the benefits of TNCs such as Nestle, to be able
to freely and knowingly pursue its economic and social objectives.

AQ.