How long will the living and working conditions of the epidemic last in 2020? The answer may be by 2021. This is the latest view from the top management of Nestle, the world’s largest food company.
Recently, Nestle CEO Schneider was interviewed by Fortune magazine, talking about his observation of the epidemic situation and the latest business trends of Nestle, including the logic of developing plant-based products and disposing of drinking water assets.
At the beginning of the interview, Schneider recalled that in the first few weeks of February, he watched the epidemic as quietly as anyone else. “We have gained first-hand experience through our extensive operations in China.” For Nestle group, China is the world’s second largest market after the United States.
What made Schneider change was something that happened in the Italian market. On February 21, he said, a colleague sent him an email with photos showing panic buying in northern Italy. He pointed out that the message was clear – things were out of control and the epidemic could no longer be controlled globally.
Since then, he said, e-mails with the following content circulated inside Nestle: “please do the inventory work, no matter what the products are. Don’t expect to make a wise choice, just make sure we’re well prepared, because you don’t know which raw materials will be in short supply and which supply chain will go wrong. “
Mark Schneider, Nestle’s chief executive officer (photo)
“We all know that it is crucial that the food and beverage supply chain is not disrupted.” ‘people want to see products on the shelves, and some of the early panic shopping is what makes people suspicious,’ he said.
Then Nestle issued a global travel ban on February 25. “At that time, I was actually on my way to the United States on a business trip. This was my last big cross-border business trip. I wanted to be the first to comply with these measures.”
The logic of not giving up
Referring to the epidemic changing the way of working, Schneider said that although long-distance travel has been replaced by online meetings, there is one thing that has not changed: the closer you are to the front-line staff of the business, the better. He recalled visiting the Swiss factory in March, when Nestle was busy ensuring the safety of its supply chain and its employees.
He said he got first-hand information on best practices and how to implement them in the plant area, and also conveyed a message to front-line employees that the company’s top management was with them because he believed the plant was still safe. He also added that Switzerland has not adopted very strict blockade measures, nor has Nestle’s headquarters been closed. He himself returns to the headquarters every day and has checked the access control system more than 10 times, hoping to ensure that everything is done right.
Finally, on why he didn’t give up the 2020 performance guidelines like other competitors, Schneider said, “for me, one of the ways to contribute to stability as a business is to fully fulfill its commitments.” In Europe, there is a debate about whether companies should delay or cancel dividends, but Nestle did not, “because it’s the income of others.”.
He also predicted that unless there is a vaccine, people will be in an awkward situation from time to time, that is, sometimes the blockade measures are relaxed, and sometimes they are strengthened because of the rise of cases. “I think that’s how we’ll spend 2020, maybe even most of 2021.”
Therefore, he believes that in the epidemic period, under the condition of accepting certain risks, how to ensure the work can be carried out and how to make a living is an important thing. There is no possibility of hiding away and passing away.
In addition, Schneider was also asked about Nestle’s acquisition. Statistics show that since becoming Nestle’s CEO in 2017, Schneider has promoted more than 50 mergers and acquisitions and business restructuring. When asked whether it was purely a business decision or wanted to shape product lines for the company, he said that the purpose of the transaction decision was to enable Nestle to obtain a product portfolio with faster growth, higher profit margin, and more healthy and sustainable appearance.
“That’s what we’ve been hoping to do for years.” If you want to sum up in one sentence, he said, “the product is good for you and good for the planet.” these two points are very attractive to today’s consumers. Plant based meat is such an alternative, he said, and Nestle called it a “needless to say” area of development and was “very active” in that area.
“We are producing plant-based products that taste the same, have more nutrients and have less impact on the environment. It’s like a lighthouse to me, but obviously, the same principles can be used to measure a lot of what Nestle is doing He said.
On the possible sale of the U.S. drinking water business, Schneider said Nestle has always been a big player in bottled water. In the 1980s, when there was a global debate over who would win the “coke war,” Nestle had bet that drinking water would become a healthy way to replenish water. To ensure that consumers can get drinking water in a safe and convenient way is something he thinks is very worthwhile and what Nestle insists on doing.
He said that a large part of the U.S. drinking water business is in the “no obvious characteristics” range, basically pure water, local spring water products. “We believe that there will be better opportunities for high-end drinking water, or functional products that add micronutrients for health benefits.”
As for the environmental problems of drinking water, he admitted that the company needed to face them, and Nestle had no intention of shirking responsibility. However, he stressed that if companies sell high-end drinking water or functional products, they are in a price band that also allows companies to promote more ambitious environmental solutions, such as better and more interesting packaging strategies.