Campaign: Nestle sticks to principle of Ethiopia debt

Client: Nestle
PR Team: UK and Swiss-based in-house communication teams
Campaign: $6m (£3.7m) Compensation Case Against Ethiopia
Timescale: December 2002 - ongoing
Budget: Undisclosed

Global coffee giant Nestle is claiming $6m (£3.7m) from the Ethiopian government in compensation for a local business that was nationalised 25 years ago by a previous regime.

Despite an offer by the cash-strapped Ethiopian government of $1.6m, Nestle demanded the full payment as a 'matter of principle'.

In 1986 the food giant bought German firm Schweisfurth Group, which had a majority share in the Ethiopian Livestock Development Company (Elidco). The claim relates to nationalisation of Elidco by the previous Ethiopian military regime.

Meanwhile the Ethiopian government warns that 11 million people face hunger.

Charity Oxfam heard about Nestle's £6m claim and began a campaign against the company.

Objectives

To react quickly in the face of mounting hostile coverage of an issue that the UK PR team had no previous knowledge of. The six-strong UK comms team had to liaise with legal and comms staff in Nestle's headquarters in Switzerland, and the German office behind the compensation claim.

The multinational had to be seen to be sticking to a legitimate claim but not fuelling a humanitarian disaster. Nestle already struggles with an image problem following aggressive marketing of baby milk formula in poor countries, which the company claims it no longer does despite ongoing complaints from pressure groups.

Strategy and Plan

The Nestle UK comms team had little time to formulate a strategy as on Wednesday 18 December Oxfam demonstrated outside the head office in Croydon.

While Nestle in Switzerland examined its position, the UK comms team had to stick to the initial 'matter of principle' claim. An additional message was that it was in Ethiopia's interest in attracting foreign investment to honour debts.

Both The Guardian and Radio 4's Today programme broke the story the next day with Nestle maintaining a bullish line, which sparked further anger.

Oxfam claims the coverage helped spark a viral campaign of 33,000 emails.

During the follow-up Today interview on 20 December, Nestle spokesman Francois Perroud attempted to effectively deliver the company's interim 'softer' position that any money resulting from a claim would be injected into building new operations in the country, but that the principle of the claim had not changed.

Nestle UK comms and corporate affairs director David Hudson says the company's ability to respond to the story was hampered as key executives were away in the week prior to Christmas and there were legal complexities.

There was also 'nervousness' around the precedent that would be set if the claim was dropped.

Hudson admits the interim position 'did not go far enough' and only on Sunday 22 December was Nestle chief executive Peter Brabeck able to attempt to draw a line under the story by pledging to donate all the claim money to hunger relief in Ethiopia.

Oxfam branded the move a 'half measure' and continued to lobby for the multinational to drop the claim.

Measurement and Evaluation

Without being able to outline a clear position until the Sunday, Nestle was mauled in the domestic and international media right up until the Monday. Negative newspaper coverage included The Guardian, The Financial Times, The Independent, the Daily Mirror and The Times, while broadcast media featured stories on the Today programme, Radio Wales and Radio Ulster.

Once a clear line was outlined by Nestle's Brabeck, more positive stories were featured with The Guardian's headline on the Monday being: 'Nestle to plough debt money into Ethiopian aid'. Later, the newspaper also moved the story onto the remaining claimants in the total $500m legal action being brought against Ethiopia, and the wider issue of debt and developing countries.

Results

On 23 December, the Ethiopian government met to consider a response to Nestle's offer. As PRWeek went to press, no response had been made public.

Nestle executives are happy that the principle of the case - that all countries honour debt - had stood while managing to limit further bad publicity by pledging all the money to Ethiopia.

A secondary result is that while Nestle eventually assumed a good Samaritan role, other claimants in the $500m case were pressing ahead with their claims.

However, for Nestle the timing of the story could not have been worse as by the time it was in a position to deliver a palatable message it was the day before Christmas Eve and many people were switching off from the media.

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