Learn from Nestle: How Not To Handle A Crisis

The company’s track record of dealing with the press has never been impressive.

WrittenBy:TR Vivek
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In Nestlé’s most terrible moment of crisis in India, it’s not hard to miss the country’s media tucking into the schadenfreude like hungry hostel mates a late-night bowl of Maggi. Ask any business journalist on the consumer goods beat about the hardest companies in India to deal with, and Nestlé would surely figure very high on the list. Until some years ago (and on current evidence, it would hold true even today) the obduracy of Nestlé in parting with information or stonewalling was the stuff of legends. The joke among journalists was that heading Nestlé’s PR was the easiest job in the world. You just had to say “no” to any information request without even opening the journalist’s email.

In the days when snazzy corporate websites hadn’t been built, journalists were pretty much at the mercy of companies to secure even the most banal piece of factual information about them. The smarter, and more seasoned in the habit of meticulously collecting annual reports of companies they tracked, consequently, had an exalted status in the newsroom.

It was during such times that a journalist friend was handed the unenviable task of filing a smallish piece on Nestlé. All he asked the company for in the process was some extremely trivial information on the number of employees, some indicative figures about their retail presence, or something on those lines. As expected, when no help came forth, the deadline and editors breathing down his neck, the reporter did what they usually do—tell the company that they’re going ahead with the story regardless (only in more colourful language). A paranoid Nestlé representative camped inside the media organisation’s office, strategically after the editors had left, to bully the reporter out of the story. The young reporter by then had lost his patience and a bit more. As an act of revenge he offered the esteemed guest a foamy cup of vending machine coffee generously flavoured with foreign substances far less harmful than lead or MSG.

Nestlé’s handling of the Maggi Noodles crisis ever since it broke a few weeks ago with Maggi samples in Lucknow reported to have tested positive for lead and monosodium glutamate (MSG), seems to follow the same time tested path.

Before its worldwide Chief Executive Officer (CEO), Paul Bulcke addressed a news conference today in Delhi and announced a voluntary recall of Maggi Noodles from shop shelves across India, Nestlé’s response had ranged from outright denial of any problem at first to putting out clunky PDF files of “independent” lab test results of Maggi on its website to bickering with regulators on technicalities such as whether Maggi Noodles was subjected to lab tests raw or cooked.

While Maggi is hardly the first comestible brand to come under the adulteration scanner in India, it certainly is the most high-profile case in the era of social media when consumer judgments can be instantaneous. And Nestlé’s handling of the crisis has been widely criticised. Two such critiques can be found here and here.

In 1990, the soft drinks brand Rasna was found to contain a substance called brominated vegetable oil (BVO) that binds artificial citrus flavours to the water. India was one of the earliest countries to ban the substance – in 1990 – in which is known to induce memory loss of allied disorders. In the US, beverage giants Coke and Pepsi shunned it completely only sometime last year. Rasna survived the controversy but lost ground to competition and changing consumer preferences in later years.

Dhara, the edible oil brand of the National Dairy Development Board, then headed by the legendary Verghese Kurien, found itself in controversial territory in 1998 when its mustard oil was found to contain argemone oil.  A major outbreak of epidemic dropsy occurred in Delhi claiming more than two dozen lives owing to the consumption of contaminated mustard oil. Dhara recalled every packet of mustard oil from the market, and the situation virtually snowballed into a mini agriculture and food crisis. The crisis, however, did help in cleaning up the pervasive argemone oil contamination in the entire edible oils business.

When Centre For Science and Environment (CSE) in 2003 alleged that its tests found pesticide traces in both PepsiCo and Coca-Cola flagship beverages, the initial response of the two giants wasn’t dissimilar to Nestlé’s. With claims and counter-claims about the credibility of tests, labs and data, it descended into a free for all. That’s when Outlook’s editor Vinod Mehta cheekily sent a bottle each of Coke and Pepsi to a large, well-known lab in London, and the test results gave both MNCs a clean chit.  That fuelled the stoichiometric war further. The hustling members of the two companies’ PR machinery went from newsroom to newsroom “sensitising” the media about CSE’s anti-business designs.

In times of a pitched cola war between Coke and Pepsi, the controversy brought the two CEOs of the two companies to address a joint press conference—the rarest of rare sights. There was a mini farcical controversy even at the press conference when the two CEOs instead of publicly glugging their own brown sodas to reassure consumers, were photographed sipping “generic” water while on stage. The boo-boo added to their list one more PR bomb to be diffused to their list. And it was diffused by an afterthought photo-op with the two gentlemen holding their own respective cola cans.

Arguably the best handling of a similar crisis pretty much around the same time as “pesticides in cola” was done by the chocolate-maker Cadbury. A consumer encountering a worm-infested pack of Dairy Milk chocolate was a big blow for a company that had always made a big show of its Quaker roots and clean image globally.

Cadbury went into overdrive to tell consumers that improper storage of what is essentially a perishable commodity might lead to worm infestation. It’s then CEO, Bharat Puri, fronted up visiting media offices around the country meeting reporters and editors answering mostly hostile questions.

Instead of going into denial mode, Cadbury’s first response was acceptance of the problem and then addressing it through changes visible to the consumers.  The new double packaging even for the then smallest offering, the Rs 5 Dairy Milk, had the bar wrapped in an aluminium foil enclosed in a sealed polyflow pack. All that padding, and a new ad campaign cost the company some Rs 50 crore.  However, it regained the market share and the trust it had lost in a matter of months.

Maggi’s road to redemption may turn out to be a bit longer.


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