Nestle Chairman Skeptical Of Growth In Organic Food Market

SALZBURG, AUSTRIA—How does the chairman of the world's largest food company—Nestlé S.A.—view consumer trends toward organic foods, slow foods, and farmer's markets in parts of the U.S. And Europe? 

"You have to be rational," says Peter Brabeck-Letmathe, Chairman of the Board of Nestlé S.A. "There's no way you can support life on earth if you go straight from farm to table."

Nestle, like many "big food" companies in recent years, has made acquisitions of several premium brands that organic-loving people tend to buy: San Pellegrino water, PowerBar energy bars, and Skinny Cow ice cream. The company has also tweaked its motto in recent years to de-emphasize candy bars and shift the focus to health and wellness: "Good food, good life."

But when it comes down to it, Brabeck-Letmathe thinks organic products (known as "bio" products in Europe) are not key to Nestlé S.A., which had sales of 110 billion swiss francs and profits of 34 billion in 2010.

"It sounds good. It is good. We have to help our farmers who make these products. It allows them to create added value for people who are willing to pay for it," Brabeck-Letmathe said during an interview at the Salzburg Festival, where Nestlé S.A. sponsors the Young Conductor's Award. But "it's a privilege. We also have to think of the world food supply."

Brabeck-Letmathe says that "bio" products have 30% less yield than normal agriculture and "wouldn't allow us to feed the world today." Certainly, wealthy people in areas rich in agriculture, like Austria, Germany, and the U.S., have the privilege to pay higher prices for organic foods. But he views it as a "romantic" notion that is not scalable.

"From a nutritional point of view, studies show no nutritional difference from bio to other foods," he said. "But it's more dangerous." He said organic foods in Europe are often fertilized with livestock manure and people don't always realize they need to wash it thoroughly. He said it leads to 30-40 deaths per year from such products.

 

Nutrition professors and some food scientists dispute many of those claims, suggesting that organic foods do show nutritional difference and are not more dangerous than processed foods. They consider those ideas to be myths that the big food industry promotes and suggest that large companies like Nestlé, Kraft Foods Inc., and Dole Food Company, Inc., don't embrace ideas in nutrition and fresh foods because it runs counter to their business model and profit base. 

They also point out that other food companies—such as Amy's Kitchen, Eden Foods Inc., and Cliff Bar & Co.—show a stronger commitment to health and wellness. Some of them also resist acquisition attempts by larger food companies like Nestle because they believe it's harder to make organic foods on a larger scale—which in a sense, may prove Brabeck-Lethmathe's point.

 

Brabeck-Letmathe said he realizes that films like Food Inc., Michael Pollan books, and farmer's markets are real trends that are shifting the American approach to produce and food production, adding that Nestle is investing more money in life sciences and the intersection of medicine and nutrition because its executives believe that how we eat plays a large role in chronic diseases.

While he is skeptical of the slow food movement gaining the scale to feed the world, he says that movement has affected Nestle's approach to its supply chain as more consumers demand to know where their food comes from. Nestle's improved its identification and tracking of where its food products come from, tracking it all the way to farmers. "This is a positive development," Brabeck-Letmathe said. Nestlé helps farmers of cocoa, coffee, and milk install control mechanisms to prevent contamination and to improve production quality.

Organic Monitor estimates that global sales of organic foods reached $54.9 billion in 2009, up from $50.9 billion in 2008, the latest figures available. The countries with the largest markets are the U.S., Germany, and France. The Organic Trade Association reports U.S. sales of organic food and beverages have grown from $1 billion in 1990 to $26.7 billion in 2010. Sales in 2010 represented 7.7 percent growth over 2009 sales. Organic food and beverage sales represented approximately 4 percent of overall food and beverage sales in 2010.

But Brabeck-Letmathe, for one, thinks the growth of the elite, wealthier organic food consumers in the U.S. and the E.U. have hit a peak. “It will stay the same," he says. "I don't think it will grow much more than it is.”

[Image: Flickr user Jessicamera11]

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9 Comments

  • sly

    At least the loggers that are chopping down the amazonian rainforest don't come out and advertise that what they're doing is yielding the highest profits, because they don't care about impact of their processes on the environment and sustainability. He's talking about cases when people are dying because the soil is fertilized with manure (age old practice and probably used his "scientists" again in coming up with the numbers), but how about the slow death they sell by adding chemicals directly in their products and the soil they grow the ingredients in, modifying produce to include toxins that kill pests but also killing us slowly as well. Ask yourself when you're getting old why your liver and kidney are failing: from trying to filter out all this garbage they sell us as food. But hey, it's bringing the highest profits. Mister chairman, after cashing in part of this profits what are you paying for to put on your table, is it organic food by any chance?

    I'm wondering if their purchase of organic brands is just to take them out of business since the chairman has such a narrow minded view about the processes involved in food making, and the poor guys are trying so hard to resist selling their business.

  • Walter White

    Lies will never be truths and sheer logic dictates the fact that foods laden with toxic chemicals will never be safer than organically grown. Buying into the fallacy that toxic food will "feed the world" leaves one stumbling up a slippery slope.

  • Jan Steinman

    Ah yes. The tired old "can't feed the world" argument.

    I disagree that organic methods produce less food in the first place, but for argument, let's say they do produce 30% less than food that is soaked in fossil sunlight. What's going to happen as fossil sunlight goes into decline, causing prices to spike? Governments are falling because of high food prices -- the "big ag" model Brabeck-Letmathe espouses is totally dependent on cheap energy, and is doomed to failure as soon as the next few years, or certainly within a decade.

    People on this list may not like it, but more people are going to be more involved with their food. Fossil-sunlight-agriculture companies like Nestle face a downward spiral in revenue as more people cannot afford good food, and turn to growing it in their back yard. In Russia, 45% of food is being produced on 7% of the land -- by ordinary people. THAT is what he doesn't want you to think about! THAT is what gives "big ag" food executives nightmares!

    Of course organic "can't feed the world." But neither can big ag based on fossil sunlight. The world is going to have to re-learn how to feed itself.

  • SiliconJon

    There are a plethora of studies showing that organic farming can be superior to GMO & chemical farming techniques in yield, environmental impact, and consumer health.  Rotation studies have shown that using advanced rotation techniques can make the use of chemicals a questionable cost just in immediate profit concerns, not even considering environmental or consumption concerns and their related costs.  After checking this out for a quick starter try Googling "organic crop yields" for more.  Don't let a quicker buck in the short term take from larger profits, greater sustainability, and superior quality in the long term.

    http://www.cnr.berkeley.edu/~c...

    "Can
    we afford not to go Organic?

    From the
    studies mentioned above and from an increasing body of case studies,
    it is becoming evident that organic farming does not result in neither
    catastrophic crop losses due to pests nor in dramatically reduced yields
    as many critics from agribusiness and in academia would have us believe.
    A report from UC Davis predicted a 36% reduction in tomato yields in
    California if conventional insecticides and fungicides were eliminated
    (Agricultural Issues Center 1988).

    On the
    contrary, organic farming systems have proven that they can prevent
    crop loss to pests without any synthetic pesticides. They are able to
    maintain high yields, comparable to conventional agriculture without
    any of the associated external costs to society. Furthermore, organic
    and agroecological farming methods continually increase soil fertility
    and prevent loss of topsoil to erosion, while conventional methods have
    the opposite effect. In the end, only a conversion to organic farming
    will allow us to maintain and even increase current crop yields."

  • melissa

    "There's no way you can support life on earth if you go straight from farm to table." - big food propaganda.  Kudos to editorial staff on getting the quote. To the people who left comments: u don't really understand organic or cage free if u think for one second KRAFT practices organic farming practices.  http://www.cornucopia.org/who-...

  • Rudy Amador

    The statement on Dole is incorrect. Most of this Company's business involves marketing of fresh fruits and vegetables. Dole has as strong focus on nutrition and started the Dole Nutrition Institute to communicate the importance of food and nutrition to consumers. Dole also is the industry leader in sales of organic bananas and organic pineapples in response to consumer needs.

  • Andy Strote

    Why would anyone listen to the chairman of Nestlé about organic food? It's not the business they're in, it's not where they make their money. They have very vested interests in non-organic food. I think that's pretty obvious.

  • Karin Elizabeth

    I appreciate Nestle taking steps to let consumers know where their food comes from, but what I'd really like to know is if the eggs that Nestle uses in their products are coming from hens that are cruelly confined in cages. I suspect they are, and as an animal lover I really prefer to only support companies that use cagefree eggs. I know that Kraft started doing this, so it'd be really nice to see Nestle do it too. Honestly it seems like a no-brainer to me- it's better for the animals and the planet, and  I get cagefree eggs at Walmart or Costco and theyre not really much more expensive.