Nestlé chair warns over ‘difficult’ Swiss climate

Swiss-based Nestlé’s expat chairman warned on Thursday that while the world’s largest food company wants to stay in Switzerland, the environment for publicly listed companies in the country is becoming more difficult and the stability of laws for business is “constantly being challenged.”

Nestlé chair warns over 'difficult'  Swiss climate
Nestlé Chairman Peter Brabeck-Letmathe at annual meeting: veiled warning? Photo: Nestlé

Peter Brabeck-Letmathe’s comments to the 146th annual general meeting of the company in Lausanne were widely interpreted in Swiss media as a veiled threat that the company is prepared to move its headquarters if domestic regulations become too unfriendly.

“The political and regulatory environment for publicly listed companies is becoming more difficult in this country,” Brabeck-Letmathe said, according to a copy of his speech issued by the company.

“The long-term stability and predictability of the legal framework and reasonable regulation, which are crucial prerequisites of entrepreneurial activity, are constantly being challenged.”

The 69-year-old Austrian said a new consensus was needed between the Swiss economy, politics and society.

“Efforts need to be made on all sides to deepen mutual understanding and to find the right balance,” he said.

“Nestlé wants to stay in Switzerland,” he insisted. 

But “Nestlé – the management and the employees – want to continue to feel welcome in this country and contribute to its success story, not only today, but also in the future.”

Brabeck-Letmathe, who got his start with Nestlé in 1968 when he delivered ice cream to customers in a freezer truck that he drove around the Swiss Alps, was earlier critical of the Minder initiative to stop “abusive” executive pay.

The initiative, spearheaded by small businessman Thomas Minder and backed by Swiss voters last month, requires Swiss companies to give shareholders a binding vote on the total compensation for executives.

Pay doled out in advance to new executives is also to be banned along with golden parachutes to departing bosses.

Before the vote Brabeck-Letmathe warned that no company in its right mind would set up headquarters under Minder’s rules.

He changed his tune slightly on Thursday, saying it was crucial to “respect the Swiss voting population’s decision”.

Brabeck-Letmathe added that it was necessary “to find practical legislative solutions which safeguard the long-term attractiveness of Switzerland as a business location.”

He underscored the benefits Nestlé, which is celebrating its 150th anniversary of its founding in Vevey (in the canton of Vaud) this year, brings to the country.

Although sales in Switzerland account for only two percent of the company’s global turnover, the company has invested 3.2 billion francs in its home country in the past 10 years (seven percent of the global total). 

More than 60 percent of Nestle’s research and development spending worldwide is in Switzerland.

But while the company’s headquarters remain in Vevey, production in Switzerland only accounts for around five percent of global turnover, and 80 percent of that is exported.

Only three percent of Nestlé’s 339,000 employees work in Switzerland, while ownership of the company is two-thirds foreign and just one-third Swiss.

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‘Unlimited resources’: Switzerland’s Nestle goes vegan

Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.

'Unlimited resources': Switzerland's Nestle goes vegan

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.