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Nestlé dismisses small shareholders as unimportant

Nestlé Annual General meeting

April 3, 2003, 3pm Palais de Beaulieu, Lausanne

In a year when sales increased by 5.3% to US $ 63.7 billion (net profit increased by 13.2% to US$ 5.4 billion) Nestlé faced an increased number of criticisms about its disregard for human rights, the environment and consumer concerns. Nestlé management attempted to deflect criticisms with denials and public relations gloss.

In addition to Nestlé’s disregard for infant health, there were complaints about the company’s labour practices in Colombia, its low prices to coffee farmers, (see footnotes) its use of PET bottles, its policy on water and its use of Genetically Modified foods.

Patti Rundall, Policy Director of Baby Milk Action, and representing the views of boycotting groups in 20 countries, told shareholders how Nestlé’s refusal to change its baby food marketing policies and practice continue to contribute to the death and suffering of infants around the world, and that the growing public awareness and concern was leading to people wanting nothing to do with the company. Of special concern is Nestlé’s attempts to stop governments bringing in laws to protect health. Ms Rundall asked how a shareholder like her with only 20 shares, who has attended Nestlé AGMs for the last 10 years, could make any real impact on the company. Under Nestlé’s constitution a shareholder must own over US$ 200 million worth of shares in order to place an item the Agenda. Since Nestlé itself owns a large proportion of the shares (and noone can use voting rights in excess of 3% of the total share capital) it is hard to see how any binding Resolution on human rights could ever be passed. Patti Rundall claimed that the AGM was in effect pure theatre, and that all one could expect was yet more empty promises from Mr Brabeck. None of the promises he made to shareholders for the last two years have been carried out. He has also mis-led shareholders over matters such as a damning ruling by the Advertising Standards Authority over company claims to market infant formula "ethically and responsibly" and then refused to make corrections at the subsequent meeting (see Boycott News 25).

Ms Rundall reminded shareholders that last year Mr. Brabeck had displayed an article from the Guardian newspaper suggesting it was time to call off the boycott of Nestlé (see Boycott News 31). Asking for the use of an overhead projector (which was not forthcoming) Ms Rundall read from a more recent Guardian article (21 December 2002) which reported on the 2002 AGM: "Nestlé's chief executive, Peter Brabeck, chose to project a blown-up copy of the article across the podium at the company's annual meeting, goading all the activists present. It was deeply embarrassing stuff..."

Commenting on Nestlé's handling of its claim for compensation from the Ethiopian Government at a time of famine, the article stated: " If its executives are not alive to the sensitivities and subtleties required to run a modern multinational, they need to be replaced. If Mr Brabeck wants a display for his next shareholder meeting, we'll happily forward our thoughts in PowerPoint format."

Nestlé chair, Rainer Gut responded angrily to the intervention: "You are talking ‘we’ as shareholders. Who is we? Not you – it’s them. And I think each shareholder has spoken and we have over 403 million shares and each one has a vote. And I think its inappropriate that small shareholders try monopolise the meetings of this sort".

Mr Brabeck responded to the infant feeding accusations – this time with no false promises, but a brazenly hard line claiming that Nestlé does comply with the UN requirements and that all the problems are about interpretation.

Other shareholders later spoke about the total lack of women on the Nestlé Board, which meant that decisions show no sensitivity to the impact of the company on mothers and children.

Baby Milk Action will be writing to Nestle to ask for a list of the shareholders that Nestlé does consider important enough to listen to.


Ms Rundall also read a statement from Oxfam about the 25 million coffee farmers which face ruin because the low price Nestlé and other coffee roasters pay for coffee. Oxfam claimed that other than making promises, Nestlé has done virtually nothing to address this problem.

At a time when WHO and health advocates the world over are turning attention to the rapid rise in obesity, (30% of Americans are obese and 60% overweight - ref : Health, United States 2002)) Nestlé had no shame in pursuing its goal of acquiring Dreyer Grand Ice Cream in the US – a deal which is awaiting Federal Trade Commission approval Having already acquired Movenpick and Haagen-Dazs icecreams, Nestlé Chair Rainer Gut stated: "Once these transactions are completed we will be positioned at the same level as the current global leader in the sector."

Nestlé's strategy may have negative financial implications as well as the health impact. Investment bank UBS Warburg issued a report last year which gave a league table of companies at risk of losing significant income if measures are put in place by governments to limit the promotion of 'less healthy' foods, meaning those with high fat and high sugar. Product liability claims, as are now being seen in the United States, are also a potential threat to company profitability. 46% of Nestlé's income is estimated by UBS Warburg to come from 'less healthy' foods, putting it tenth on the list of global culprits. It was not higher as it also has a large share of the global pet food and cosmetics markets. (See The Guardian, 27 December 2002).

For further information

Patti Rundall, Policy Director, Baby Milk Action, 23 St Andrew's St, Cambridge, CB2 3AX
Work Tel: 01223 464420, Mobile: 07786 523493, Fax: 01223 464417

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