PR PROJECT:

Nestle kit-kat Its crisis

And management

NESTLE:

Nestle is the world’s leading nutrition, health and wellness company. Their tagline says, “Good Food, Good Life”. To provide customers with the best tasting, most nutritious choices in a wide range of food and beverage categories.
Nestle owns several major consumer brands such as Stouffers, Nescafe, Kit-Kat, Carnation, Nestle Water, and many others. All in all, 30 of Nestle’s products earned 1 billion CHF or more during 2010, making Nestle a major force in the global food and beverage industry.

NATURE OF CRISIS:

THE CRISIS:

Nestle, the world’s largest food conglomerate, has undergone a turbulent period since 2010. On March 14 2010, the Independent, a UK-based newspaper, stated that Nestle’s Kit Kat contained palm oil that results in deforestation and threatens the livelihood of the endangered Orang-utans. Environmental Group Greenpeace immediately requested Nestle to “give the rainforest a break” by ending its business partnership with Sinar Mas, its palm oil supplier in Indonesia, as soon as possible.
The report spurred Nestle to cancel its contract with Sinar Mas—months after Sinar Mas was shown to be involved in illegal deforestation—but the corporation continues to purchase oil palm from Cargill, which is supplied in part by Sinar Mas. For its part, Cargill says it is investigating Greenpeace's allegations and if Sinar Mas is found to be committing illegal deforestation they will drop them. Nestle has said in a statement: "we share the deep concern about the serious environmental threat to rain forests and peat fields in South East Asia caused by the planting of palm oil plantations."
Thousands of hectares of rainforests in Malaysia and Indonesia have been cleared to make way for palm oil plantations, depriving tribes of ancestral lands, increasing climate change emissions and killing rare animals such as the Sumatran tiger, sun bear, clouded leopard and pangolins. Campaigners have particularly stressed the damage done to orang-utans, a close relative of man.
Not only are these areas key habitat for orang-utans, but also crucial carbon stores; the destruction of these areas is a major cause of Indonesia's rocketing carbon emissions.
Indonesia is the world's third largest emitter of greenhouse gases largely due to large-scale deforestation across the nation. Between 1990 and 2005, Indonesia lost more than 28 million hectares of forest, including 21.7 hectares of virgin forest. The country has declined from 82% forest cover in the 1960s to less than half today.
Nestle denied it bought oil from Sinar Mas but said it would ask its supplier, Cargill, to investigate the claims. That was not enough to stop the campaign.

GREENPEACE AND ITS IMMEDIATE ACTION:

On 17 March, Greenpeace began a campaign against Nestle, launching an early morning protest at its UK headquarters in Croydon, Surrey.
Their first step that grabbed attention was when they uploaded a Kit Kat commercial video to YouTube. In this video an employee opens a Kit Kat wrapper and eats a bloody finger of an Orang-utan. The tagline clearly says “Kit Kat Killer”
Successfully, the video received more than 78,000 views within a few hours and people began posting negative comments about Nestle via various social media platforms. Nestle responded to the video and claimed that it violated their copyright, which further angered supporters of Greenpeace. It’s when YouTube agreed to discard the video, Greenpeace found a new home for the same video, and that is Vimeo; an alternative video platform. And within a couple of days, the video went viral, receiving incredible support from people globally. With such a tremendous response, by 21st March 2010, the video appeared back on YouTube, it had been viewed 1,80,000 times overall.
After this, Greenpeace supporters then changed their profile pictures to an anti-Nestle logo and posted boycotting Nestle messages on Nestle’s Twitter and Facebook page. However, Nestle deleted those negative comments with anti-Nestle logo and posted “To repeat: we welcome your comments, but please don’t post using an altered version of any of our logos as your profile pic — they will be deleted.”
Nestle kept on deleting the negative comments and thus faced additional backlash for handling their social media poorly.
Such response from Nestle further angered online users and escalated the negative situation to a major social media crisis.
Eventually, the organization realized the error of its ways, and the representative apologized for his out-of-line behaviour.
According to analysis, the incident generated an overwhelming buzz on Twitter from 13th March to 22nd March 2010, with more than 215,000 related tweets.
This negative buzz in social media, apparently, led to a decrease in both brand reputation and sales volume.

On 15 April 2010, Greenpeace disrupted Nestle's annual general meeting in Lausanne. Protesting "orang-utans" met arriving shareholders and, inside the building, activists hidden in the ceiling unfurled banners with the message: "Nestle, give the orang-utans a break".
Apparently braced for the protests, the company's chairman, Peter Brabeck, defended the company's position, saying Nestle only used 320,000 tonnes of palm oil a year, slightly less than one per cent of global production and less than the 500,000 tonnes used for bio-fuel in the UK and Germany. To applause, rather than blaming Nestle for deforestation in Indonesia, he blamed a "political decision" to use palm oil as a bio-fuel. The protests continued.
Nestle finally announced what Greenpeace hailed as a positive step – the auditing of its supply chain by the Geneva-based Forest Trust.
The company said: "By setting critical requirements for its procurement process and checking compliance with our supplier code, Nestle wants to ensure that its products have no deforestation footprint."
The company intended to source 18 per cent of its palm oil from "sustainable sources" in 2010 and 50 per cent by the end of 2011.
Scott Poyntor, the Forest Trusts's executive director, said the commitment was a "game changer". "For the first time, a global company is saying it doesn't want its products to have a deforestation footprint, and is taking action to live up to its words," he said.
Greenpeace welcomed the agreement, which it warned it would closely monitor. "Online and offline the message to Nestle had been strong and relentless over those past two months," it told its supporters.

MISTAKES MADE BY NESTLE AT THE ARRIVAL OF THE CRISIS:

First Mistake:
Nestle had the video removed from YouTube, saying that it violated their copyrights and trademarks. This most likely to be true, however, this action from their side angered the Greenpeace organizers and supporters so much that they started to post negative statements on Nestle’s official FB page.

Indication:
The removal of the video clearly shows that Nestle denied the claims and charges made by Greenpeace which angered the masses on social media.

Second Mistake:
Nestle then moved to protect its FB page by removing critical comments and removing the comments of profiles who had used the altered Nestle logo. They also replied very negatively and harshly to the people on its page.

Indication:
This was a very defensive act from Nestle. Instead of communicating effectively with the public, their actions led to uproar.

Third Mistake:
Nestle continued to remove comments with the altered logo from their Facebook until about March 19th. At which time Nestle proudly announced their intention to use only sustainable Palm Oil by 2015. Just 5 short years from now.

RESULT:
Nestle’s silence, defensive actions and inefficient communication brought immense damage to their reputation.
They should have taken into consideration the sentiments of people, instead they snapped on their FB page on profiles of people commenting negatively.

HOW COULD NESTLE HAVE AVOIDED THE DAMAGE:

As soon as the news broke out, Nestle should have organised a meeting with Greenpeace and should have discussed the issue and work with them on a joint statement.
Since Nestle is a global company having extremely good blogger relationships, they should have put that into use and with their help they could have conveyed their version of the story effectively.

TRANSPARENCY:

Without a doubt the executives at Nestle were concerned about the Greenpeace issues. Most likely there are several senior executives who are actually environmentally sensitive themselves.
The sweet giant kept all of their deliberations quiet, none of the “we’re considering our options” talk would leak out of the chocolate halls. This lack of transparency and apparent unconcern was translated into disdain and unfeeling by the Greenpeace movement. When yours is the only voice in the room people have a tendency to listen. Nestle’s silence spoke volumes.
If they had told people they are trying to find ways to work this out, make everyone happy and protect the environment, things would have cooled down.
THE DAMAGES:
It is apparent that this movement has not hurt Nestle’s stock price which is currently outperforming the Dow. They haven’t undergone a significant loss in market share and it’s unlikely since the event has now culminated.
There are a lot of Greenpeace supporters who will avoid Nestle products for a long while. And if Nestle backslides on their commitment to Greenpeace the movement may be easily resurrected.
Nestle already had a bad reputation in the eyes of social media users over the world, But their revenue rose 6.1% in the last half of 2010.
The thing about Nestle is that while it certainly did have a considerable quantity of fans and users on Facebook, it likely also had a large, very-loyal customer base which either doesn’t pay attention to social media or didn’t hear of the controversy.
Perhaps as a result of this (and some clever marketing by Nestle outside of the controversy), it managed to draw more users under its wing.
This doesn’t mean that this controversy didn’t damage the brand, however. For all we know, if it hadn’t been for the Greenpeace disaster, revenue may have risen by as much as 12%.

THE STRATEGY:

The challenge for José Lopez, a senior operations manager, and his team was twofold. They had to limit the immediate damage. And in the longer term, Nestle needed to address the palm oil sourcing issue and turn the reputational risk into an opportunity.

Instead of trying to control social media conversations, Mr Lopez’s team had within two months adapted its approach.
First, to deal with the short-term damage, Nestle suspended sourcing from Sinar Mas, and the company held meetings with Greenpeace in which it provided details of its palm oil supply chains.
With a focus on the longer term, Nestle sought a credible external partner to certify the sustainability of its palm oil suppliers.
The company chose the Forest Trust, a non-profit organisation that helped the company when it came to liaising with Greenpeace as well as helping Nestle to audit its suppliers.
In May 2010, Nestle also joined the Roundtable for Sustainable Palm Oil, a partnership of companies and other parties aimed at eliminating unsustainable production.
A year later Nestle had also changed its marketing and communications strategy by hiring Pete Blackshaw for the new post of global head of digital and social media.
Mr Blackshaw, a newcomer to Nestle, was recruited to help provide a fresh perspective.

THE RESULTS:

Soon Mr Blackshaw had set up a “digital acceleration team” as part of Nestle’s efforts to monitor social media sentiment 24 hours a day. When the team sees problems, the communications unit co-ordinates the company’s engagement with the relevant parties, such as suppliers, campaigners, governments and consumers.
In addition, Nestle executives from across the globe visit the digital acceleration team centre at the headquarters in Switzerland, to learn about managing social media communications and digital marketing.
“On social media,” Mr Blackshaw says, “perhaps the best measure of success is the resounding sound of silence.”
On the issue of sourcing, Nestle now has a goal of using only palm oil certified as sustainable by 2015.

THE LESSONS LEARNT:
A sustainability risk is potentially big when the whole world can find out about it overnight.
Nestle discovered that engaging with its critics and addressing some of their concerns was more effective than trying to shut down discussion on social media.

ABOUT THEIR PR:

This incident, however, could have been managed or even avoided if Nestle acted quickly and accountably in response to the initial request made by Environmental Group Greenpeace. At the beginning, Nestle didn’t comply what Greenpeace requested and continued business with Sinar Mars as usual. This reaction, to a large extent, showed the company’s disregard for the environment, thus infuriating Greenpeace and its supporters. In order to have a sound reputation, every company should behave ethically and act responsibly.
From a PR perspective, we can learn about the importance of Corporate Social Responsibility, the continuing commitment by business to behave ethically and contribute to economic development, while improving the quality of life of the workforce and their families as well as of the local community and society at large. Over the last year an increasing number of companies worldwide started promoting their business through Corporate Social Responsibility strategies because the customer, the public and the investors expect them to act sustainable as well as responsible.
It used to be the jobs of PR professionals to identify the situation and create an appropriate response to the public outcry when crisis occurs. But now, in the era of social media, a company needs to keep in mind that any negative situation has the possibility of becoming a major PR crisis. Having a team of PR professionals proactively monitoring the company’s various social media channels and quickly responding to negative feedback is the tendency for any company to maintain its reputation.
Additionally, Nestle’s initial Facebook update was too defensive and provoking. At sometimes, a defensive response only adds fuel to the fire and intensifies conflicts. Just like Porter Novelli, Associate Director Kerry Gaffney said: “Nestle’s status updates are pushing people on to its official site to see its corporate response. Someone within Nestle is also responding to posts, but they are not corporate in tone and are juvenile. The company should be tailoring its response more to the environment with a more human tone.”
For Nestle, it is of necessity to develop a social media crisis communication plan, anticipate what can happen in various social media channels, know the appropriate company personnel who respond in different levels of crisis escalation, and have an internal sharing system for all members of the crisis team to consistently keep them in the same tone. Generally, be well prepared for any crisis that may occur in different social media channels in the future.
It was getting pretty nasty for Nestle, and as the vilification of their brand continued, it was abundantly clear that their public relations efforts via their social media platforms were only rubbing salt in the wound. The biggest mistake the company made was to attempt to go authoritarian in the governance of their Facebook page by threatening users with fan page deletion if they were seen with any branded logos in their profile pictures.
It seems that Nestle’s PR disaster contingency plan has since been put in place.
But I think it took them a while to get something in effect.
If you look at it now, the company’s Facebook fan page is now littered with various links to articles aggrandizing green initiatives, public statements relating to the company’s decision to abandon the supplier of the palm oil and their intentions to address an alternative source to palm oil however the damage has already been done. Big brands are the most volatile when it comes to negative sentiment online. The company failed in its duty to properly educate staff about public relations online and the ‘ripple’ effects of the social web. As the company goes into damage control and tries desperately to salvage any positive reputation it will be interesting to see how long it will take Nestle to recover from such a debacle.

BIBLIOGRAPHY:

1. http://www.nestle.com/media/statements/update-on-deforestation-and-palm-oil 2. http://www.independent.co.uk/environment/green-living/online-protest-drives-nestl-to-environmentally-friendly-palm-oil-1976443.html 3. http://news.mongabay.com/2010/319-hance_nestle.html 4. http://qx272.wordpress.com/2013/04/18/nestles-pr-crisis-kit-kat-or-kit-kat-killer/ 5. http://socialmediastrategiessummit.com/blog/how-much-damage-can-a-social-media-disaster-really-do-to-a-brand/ 6. http://www.greenpeace.org/international/en/news/features/Sweet-success-for-Kit-Kat-campaign/