I recently attended the seminar “The Governance of The Leader Enterprises That Endure” in which top management members of the food industry had the opportunity to chat with Peter Brabeck-Letmathe, Chairman of the Board of Directors of Nestlé, on various issues relating to leadership (here, a previous post on the alignment of values for innovation). One of the matters raised was the responsibility of companies in the sustainability challenge . Nestlé’s case is a good example of how companies can approach it from their immediate environment through innovation.
Peter Brabeck- Letmathe was emphatic in stating that the current growth model is not sustainable. Nestlé’s challenge is water, one of the central elements of food production. He said the concern over this issue reaches the 140th anniversary of the company, founded in 1866, on the question of what factor will be crucial to address the coming years?
In 2010, the annual water consumption exceeded 10% which is considered sustainable while it is envisioned that, by 2030, water withdrawals will exceed natural renewals by 60%. To the population growth ( more than nine billion in 2050) must be added along with the cost in water of producing food. Each calorie of food from a plant requires a liter of water, while each animal calorie needs 10.
This situation forces to give more value, not just price, to raw materials like water, said Peter Brabeck- Letmathe. Being the leader in water bottling, the company has reduced the amount of water used in their production of food and beverages, including bottled water, where they reduced from a liter to 0.76 liters the extra expense of water to produce each liter sold to the consumer.
Similarly, the commitment to water extends to other issues such as innovation in their own projects or the best use of water reserves, reusing water and using alternative resources like rainwater harvesting.
But besides aligning with the social engagement, innovation in the field of water has also allowed Nestlé bring new products to market. As explained in the talk Mr Brabeck- Letmathe, the European legislation on water requires the ownership of the spring; the packaging of the water there, in containers of no more than 1.5 liters, and not treating the water. The more the springs buyed, the more brands on the market. But that does not cheapens the product, which because of its transport, is more costly when arriving to countries like Thailand, where Nestlé has the factory in which Mr Brabeck- Letmathe had the idea to change the process.
Water quality is extremely important for the extraction of coffee and Nestlé had a purification system available for it. Mr Brabeck- Letmathe returned to Switzerland after his visit to the factory in Thailand and asked about the possibility of creating a watermark in which, first, water was standardized, then, the minerals were added. It took a year to achieve it, due to the susceptibility of water to the change of flavor and its stability. So Nestlé Pure Life was born , which nowadays is the leading worldwide brand of water.
