Business Strategy
Case Study
Nestle Under Fire Over Unhealthy Product Portfolio: Will the Company Emerge Unscathed?

Article Details
Pub. Date : Sep' 2021
Product Name : The IUP Journal of Business Strategy
Product Type : Article
Product Code : IJBS30921
Author Name : Shwetha Kumari and G V Muralidhara
Availability : YES
Subject/Domain : Strategic Journals
Download Format : PDF Format
No. of Pages : 24



The case discusses the 2021 controversy over the unhealthy food portfolio of the world's largest packaged food and beverages company, Nestle. Nestle was formed in 1905 through the merger of the Anglo-Swiss Milk Company, established in 1866 by brothers George and Charles Page, and Farine Lactee Henri Nestle, founded in 1867 by Henri Nestle. Nestle's success was driven by a combination of product innovation and acquisitions. It was the motivation for growth and diversity that had allowed the company to become a key player in nutrition. Nestle owned more than 2,000 brands that were sold in over 197 countries around the world as of early 2021. However, through the years, the company had been mired in various controversies, facing criticism and boycotts over its marketing of baby formula as an alternative to breastfeeding in developing countries, its reliance on child labor in cocoa production, and its production and promotion of bottled water, among other things. In June 2021, Nestle found itself in yet another controversy as an internal document from the company came out into the public. The leaked document suggested that 60% of Nestle's mainstream food product portfolio was unhealthy. Industry experts wondered how Nestle was going to rebuild its image as a healthy brand and regain customers' confidence amidst this controversy and the unfavorable dialogue in the public space.

We have made significant improvements to our products... (but) our portfolio still underperforms against external definitions of health in a landscape where regulatory pressure and consumer demands are skyrocketing.i

- Nestle, June, 2021


On June 2, 2021, Nestle, the Swiss food and drink processing conglomerate, came under fire over a leaked internal report that more than 60% of the food items and beverages in its mainstream portfolio did not meet the required health standards. According to the Financial Times, the leaked report was an internal presentation circulated among the company's top executives in early 2021. The document noted that only 37% of Nestle's food products were