Nestlé reported to UK Advertising Standards Authority over dishonest Fairtrade product advertisement
Press release 7 December 2005
Baby Milk Action, which coordinates the international boycott of Nestlé over its aggressive marketing of baby foods, has reported the company to the UK Advertising Standards Authority today for a misleading and dishonest advertisement about its Fairtrade Partners' Blend coffee and wider involvement in the coffee industry appearing in the Radio Times (3 – 9 December edition), which has a circulation of over 1 million copies. The Fairtrade product, launched in October, is already being used in attempts to counter the boycott and improve Nestlé's image.
Mike Brady, Campaigns and Networking Coordinator at Baby Milk Action, said:
“The dishonesty of Nestle's approach is all too familiar. Nestlé's advertisement and website for its Fairtrade product imply it will have a significant impact on farmers in El Salvador and that the company's activities in the coffee industry are ethical. The truth is only about 200 farmers in El Salvador supply coffee for Partners' Blend and over 3 million farmers globally who are dependent on Nestlé remain outside the Fairtrade system. Nestlé is held partly responsible for forcing down prices paid to suppliers, driving many into poverty, while its own profits have soared. Recently I interviewed a researcher from Colombia who told me 150,000 coffee farming families have lost their livelihoods due to Nestlé policies.”
Baby Milk Action has registered three complaints about the two-page advertisement (click here for full details):
Nestlé's portrayal of its involvement in coffee in El Salvador is dishonest and misleading
Nestlé's portrayal of its involvement in the coffee industry more generally is dishonest and misleading
Use of the Fairtrade mark is dishonest and misleading.
The advertisement bears the Fairtrade mark, and not the Nestlé logo, and refers to Nestlé in the third person, for example, “Nestlé has stated its commitment to sustainability and in 2002 they co-founded the Sustainable Agriculture Initiative…” Readers may believe the advertisement was placed by the Foundation. The Fairtrade mark includes the text 'Guarantees a better deal for Third World Producers' which readers could incorrectly believe applies to all Nestle's activities referred to in the advertisement. According to experts only 0.02% of Nestle's global coffee purchase complies with the Fairtrade criteria.
Mike Brady said: “We did warn the Fairtrade Foundation that, based on our experience of the baby food issue, Nestlé would use the Fairtrade mark as a fig leaf to try to cover its negative impact on coffee farmers and to try to undermine our work to protect infant health and the boycott. We argued that the Foundation's ‘disrepute' clause should be invoked to refuse the mark. We hope the Foundation will now reconsider its decision and, at the very least, take action to correct the misleading impression given to the millions of readers of the Radio Times. It is regrettable that we have to spend time exposing Nestlé's dishones use of the Fairtrade mark when we have so much else to do to counter its baby food marketing malpractice.”
Further details are given in Baby Milk Action's letter to the ASA.
Contact: Mike Brady, firstname.lastname@example.org , 01223 464420 or 07986 736179.
Notes for editors
The Guardian reported on 1 September 2005: "What do Nike, Coca Cola, McDonald's and Nestlé have in common? Apart from being among the world's most well-known brands, they happen to be the most boycotted brands on the planet. That finding came from this week's global GMIPoll, an online opinion poll that surveyed 15,500 consumers in 17 countries. Nestlé emerges as the most the most boycotted brand in the UK because of what respondents consider its "unethical use and promotion of formula feed for babies in third world countries."
Nestlé won a global internet poll for the world's 'least responsible company' coinciding with the World Economic Forum in Davos in January 2005. Nestlé received 29% of the votes. This was more than twice that of joint second Monsanto and Dow Chemicals (of Bhopal infamy), each on 14% ( click here for details ).
For information on baby food marketing malpractice see the codewatch and boycott sections of this website. The Corporate Watch website has a detailed report on Nestlé. The BBC Radio 4 programme Face the Facts reported on the destruction caused by Nestlé's water bottling activities in Brazil and the US on 22 July 2005 (click here for details). Swiss church and campaigning organisations are holding a tribunal into Nestlé's trade union busting activities in Colombia and other corporate crimes on 29 and 30 October 2005 (information in German and French) .
Nestlé's 2005 coffee report (click here) states: "Nestlé recognises that Fair Trade is a useful way to raise consciousness about the coffee issue and for individual consumers to express their solidarity with a group of coffee farmers in the developing world. However, if on a broad basis, coffee farmers were paid Fair Trade prices exceeding the market price the result would be to encourage those farmers to increase coffee production, further distorting the imbalance between supply and demand and, therefore, depressing prices for green coffee. Worldwide, the Fair Trade movement accounts for less than 25 000 tonnes of green coffee. Nestlé's direct purchasing accounts for 110 000 tonnes of green coffee per year. This system enables the farmer to retain a greater portion of the price paid by Nestlé, therefore improving his income." (see page 6). Note that Nestlé's claim about buying direct does not indicate it is paying a fair price for the coffee. The farmer would receive a greater portion of the price paid by Nestlé even if the company paid less than commercial market rates.
According to Nestlé's 2005 coffee report, the global Fair Trade coffee market is 25,000 tonnes. Nestlé compares this to the 110,000 tonnes it buys direct. The 110,000 tonnes represents 14% of Nestlé's green coffee purchase, according to the report. This suggests that Nestlé's total coffee purchase is 756,000 tonnes or 13% of the 6 million tonnes Oxfam says is produced every year by 25 million farmers. So on a pro rata basis 3,270,000 farmers are dependant on Nestlé. According to Nestlé's press release it is "working with over 200 smallholders in four Fairtrade certified co-operatives" in El Salvador and sourcing some coffee from a co-operative with an undisclosed number of farmers in Ethiopia. Even if the number of farmers amounted to 3,000 this would be less than 0.1% of Nestlé's coffee suppliers. Virtually 100% remain outside the Fairtrade system.
- Excerpt from FLO Trader Application Evaluation Policy
6.2.5 Bringing FLO Fairtrade into Disrepute
FLO reserves the right to exclude traders that engage in behaviours that, even though are not directly related to Fairtrade transactions, are so bad that FLO's association with the trader would seriously undermine the legitimacy of FLO Fairtrade in the minds of consumers. FLO shall take into consideration any relevant information it receives regarding the trader from FLO National Members and others. To justify denial of the application, the behaviour would have to be severe and the trader has not taken any measures to rectify the situation. In some cases, this criteria may cause the applicant to take corrective and preventative action. FLO therefore takes a rehabilitative approach to traders, and will respond to any criticism of their acceptance in this manner. Therefore, where the applicant has engaged in serious and repeated;
• predatory commercial practises that resulted in disadvantage to producers,
• fraudulent product labelling; or
• contravention of core ILO covenants
o Covenant 87 Freedom of Association and Right to Organise, 1948
o Covenant 98 Right to Organise and Collective Bargaining Convention, 1949
o Covenant 100 Equal Remuneration Convention, 1951
o Covenant 111 Discrimination, 1958
o Covenant 29 Forced Labour, 1930
o Covenant 105 Abolition of Forced Labour Convention, 1957
o Covenant 138 Minimum Age Convention, 1973
o Covenant 110 Plantations Convention, 1958
o Covenant 155 Occupational Safety and Health Convention, 1981
for which it has not taken any measures to rectify, then the application may be denied. The test is intentionally made difficult in order to prevent spurious denials of trader applications.All FLO Trader Contracts shall provide that the trader shall not engage in any of the above activities that might bring FLO Fairtrade into disrepute.