Nestlé's Nescafe Partners' Blend: The Fair-Trade Decision

Nestlé's Nescafe Partners' Blend: The Fair-Trade Decision

ISSUE AND SCOPE

The case reflects an opportunity of a company acting as a proactive member of society, influencing coffee farmers in developing countries as part of its supply chain and by aiding them in achieving a better quality of life.

The main UN principle at stake is Human Rights. We believe this, because Nestlé's plan of support to the farmers in both El Salvador and Ethiopia is really broad and reaches a high number of factors like working conditions, education, and access to water. Also, the company intends to improve farmer's technical knowledge by instructing them how to diversify their crops.

We have identified the following macro circumstances among coffee producers. We believe these to be the main external drivers influencing Nestlé in launching a new coffee brand in the UK:

a. The high fragmentation coffee supply: small, independent farmers in developing countries; highly sensitive to fare fluctuations.

b. Farmers working conditions: We can imply from the text that working and living conditions were quite precarious.

c. The current trends in the UK coffee market: growth in the fresh category; the awareness of FairTrade label among consumers.

d. A perceived lack of "ethical coffee" in the instant coffee category in the UK market.

Among inner drivers, the most relevant is Nestlé's Corporate Strategy: Creating Shared Value (framework).

Based on the above mentioned circumstances, the main objective of Nestlé's management is to assist in developing a high quality and sustainable producer and supplier of coffee, thinking on a long-term basis. Giving the fact that Nestlé obtains 16% of its coffee supply directly from small producers; management has chosen to influence this particular channel. Management has chosen Ethiopia and El Salvador to have their first experience.

Last, we assess that a useful piece of information would have been extra details on working and living conditions in the countries chosen as suppliers.



Corporate Social Responsibility Nestle Case Analysis

Christina Bartels; Diego de Vries MIB Cohort

STAKEHOLDERS ANALYSIS

TABLE 1 - Major stakeholders groups and their level of involvement, concerns, motivations and priority.

Stakeholder group

Level of involvement

Concerns

Motivations

Priority

Farmers

High

* Fair wages

* Improve living conditions

* Education

* Safety (diversification leads to independence

from coffee farming)

* Long-term profitability

* Long-term relationship with buyer

High

Wholesalers

Low

* High margin

* Higher income

Neutral

Middlemen

Low

* High margin

* Higher income

Neutral

Export companies

Low

* High margin

* Higher income

Neutral

Retailers

Low

* Reputation, image

* Margin remains the same at a

higher pricehigher income

* Better reputation

* Wider product range

* Higher income

High

NGO

Medium

* Support growers in third- world countries

* Improve living and working conditions of coffee farmers

* Make the public aware of the existing bad working conditions of the coffee farmers

High

University Student Unions

Low

* General activism for a better world

* Improve living conditions around the world

* Enforce human rights

* Make the public aware of the existing bad

working conditions of the coffee farmers

Low

Fairtrade Associations

High

* Certification

* Stable prices

* Decent working conditions

* Make the public aware of the existing bad working conditions of the coffee farmers

* Ensure the implementation of the fair-trade principles

High

Consumers

High

* Product, which is produced under UN Global Compact Principle standards

* Reasonable