Why us? Nestlé hits back at shareholder demands for more healthy products

18 Mar 2024 --- Nestlé has rejected shareholder criticism that it offers too many “unhealthy and not enough healthy products.” The F&B giant rebuffs allegations from a shareholder coalition led by NGO ShareAction that its portfolio lacks a healthy and nutritious focus.

The behemoth argues that the opposite is true as it is a world leader in offering various nutritious products. The company also refutes claims that three-quarters of its sales come from unhealthy products.

“We appreciate the constructive dialogue with ShareAction and the investor coalition over recent years, so this resolution is disappointing and counterproductive,” a Nestlé spokesperson tells Nutrition Insight.

“ShareAction is targeting the wrong company. We are already moving and more would be accomplished by asking other firms to level up.”

Calls for a transparent nutrient profile
The resolution filed last week asks Nestlé to disclose the proportion of its sales that come from healthy and unhealthy foods using a “transparent nutrient profile” endorsed by a government. 

According to Nestlé, 59% of food and beverage sales come from products with a Health Star Rating (HSR) of 3.5 or above.“Nestlé was the first food and beverage company to provide transparency on the nutritional value of its entire portfolio against a nutrient profiling model endorsed by any government. This demonstrated that we offer a diverse range of products that are not reliant on indulgent or less nutritious options,” responds the spokesperson. 

The company doesn’t use phrases such as “healthy” and “unhealthy.” According to its nutrition and health page, 59% of food and beverage sales come from products with a Health Star Rating (HSR) of 3.5 or above. 

The HSR front-of-pack labeling system used in Australia and New Zealand rates products on a five-star scale, with products ranked 3.5 or above being considered “healthy.” 

Defining nutritious products
Nestlé and the shareholder coalition disagree over the definition of “healthy” or so-called “more nutritious” products. 

The coalition argues that Nestlé is still offering too “many unhealthy and not enough healthy options,” which they say is not in line with current consumers demands. This, they argue, creates “reputational and even regulatory risks” for shareholders, as more governments around the world are taxing unhealthy foods to curb public health spending costs. 

Nestlé rejects the claim about offering too many “unhealthy and not enough healthy” products. 

Moreover, the company has shifted to classifying its products as “more nutritious” rather than “healthy.”

“The assertion that three-quarters of our sales come from unhealthy products is wrong,” Nestlé’s spokesperson tells us. “We have made progress already in year one of our reporting, with more nutritious and specialized nutrition products going from 57% to 59% of global sales.”

ActionShare criticizesNestlé’s decision to include its “specialized nutrition category” alongside its “more nutritious” products in company net global sales data. 

According to the company’s latest data on the nutritional value of its entire global portfolio, 21% of the 79% net sales, excluding PetCare, come from specialized nutrition, which includes aging care, critical care (for gastrointestinal and surgery support), diabetes, obesity, oncology and pediatrics-targeted products. 

“Looking at it another way, 50% of our sales now come from coffee, pet care and Nestlé Health Science products, up from 30% a decade ago. The numbers are going in the right direction.” 

ActionShare further argues against Nestlé’s decision to include coffee in its “more nutritious” category. 

Nestlé aims to increase the sales of  “more nutritious” products globally by US $22.6–28.2 billion by 2030.Taking responsibility
The NGO highlights that as the largest food and drink manufacturer and supplier worldwide, Nestlé has the “potential to make a positive change in people’s diets globally” by setting more ambitious targets. 

“We take our role in the food sector seriously and have been working for decades to adjust our portfolio, reformulate our products, provide transparency, guide consumers toward balanced consumption and strengthen our responsible marketing practices,” the Nestlé spokesperson responds.

“Our commitment to continuously enhance the portfolio was further solidified last year when we set an ambitious, timebound target to increase the sales of our more nutritious products globally by CHF 20-25 billion (US$22.6–28.2 billion) by 2030. This is at the top end of our company growth guidance.” 

ActionShare responded: “The target that they released last September came after a significant engagement with the shareholders in our coalition, but many are still not satisfied with that target. One of the problems with it is that it is an absolute target, which says that they’re going to try to sell more healthy food. It makes no commitment regarding the unhealthy foods, which are what really cause the negative health impact.” 

“So really, the sales of unhealthy food could increase at a faster rate even than those healthy foods. There is no commitment on that.”

 The Nestlé spokesperson counters: “While we take note of ShareAction’s perspective, we disagree with the notion that we should aim to limit growth in specific areas of our portfolio. A proportional target is counterproductive to our value creation model. It would require us to weaken valuable parts of our portfolio, creating opportunities for competitors without yielding public health benefits.”

“Our goal is to achieve success across all segments of our portfolio, ensuring that we address responsibly the diverse needs and preferences of our consumers. There continues to be space for enjoyment in moderation as part of a healthy and balanced diet,” the spokesperson concludes. 

By Milana Nikolova