'Our aim is to create shared value for the Pakistani community,' Zone Director Asia Oceana Africa, Nestlé

Nandu Nandkishore has been a Member of the Executive Board and Executive Vice President, Zone Director for Asia, Oceania, Africa and Middle East at Nestle SA since October 2011. Prior to that, he served as Member of the Executive Board and Deputy Executive Vice President Nestlé SA, Head of Nestle Nutrition at Nestle SA from October 2010. He graduated from Indian Institute of Technology, Delhi, with a Masters of Business Administration, in 1982, and from Indian Institute of Management, Ahmedabad, with a Degree in Electrical Engineering in 1980.
BR research recently sat down with the gentleman during his visit to Lahore. Following is a brief transcript of the conversation that took place during the meeting.
BR Research: Nestlé is a company that is globally supporting CSV initiatives in three areas. Why these three?
Nandu Nandkishore: The Nestlé philosophy is something that goes back to our roots and is the philosophy of creating shared value. So, what this philosophy says is very simple: it says that the only way any company can be successful in a sustained manner over a period of time is if you simultaneously create value for society while you create value for shareholders. Now this distinguishes it from charity. Charity is giving a man fish he eats for the day, creating shared value is teaching him how to fish so he eats for the rest of his life.
We at Nestlé have chosen to focus on creating shared value on three axes. The first amongst the three is rural development, second is water and the third nutrition. Why these three, because these three are closest to our DNA. Rural development is crucial because that is where there is agro-sourcing. Water, because it is the scarcest resource on the planet today and 70 to 80 percent of all the water usage is for agriculture and for agro-food products. So, if as mankind we don't conserve water, food production will be a problem and agro-sourcing will be a problem so working towards responsible usage of water is also in our own self-interest.
And the third of course is nutrition, which is the cornerstone on which this company is founded. We have in fact the world's most extensive body of research on nutrition and apart from sharing this knowledge we have amassed, we also use the knowledge to design the product that fundamentally address nutritional issues in society.
BRR: According to the 2011 National Nutrition Survey in Pakistan, the country is one of the three countries that account for half of malnourished women and children globally. Nestlé is repositioning itself as a Nutrition, Health and Wellness company, how do you plan on being the part of the solution?
NNK: Pakistan is basically facing a double burden of disease. On one hand, you have a large segment of society which is malnourished and you have something like 35 percent or one third of children below the age of 5 who are under height, underweight and under developed in some form or the other; and this is largely linked to nutritional deficiency in early childhood and infancy. It can be protein deficiency or quite commonly micro nutrient deficiency such as iron, zinc, iodine and vitamin-A deficiencies. All of which retard the development of the children through pregnancy to age of 5, and this is a preventable tragedy and we are actively engaged in being a part of the solution.
We can educate people on the role of protein supplementation. What a lot of people don't realise-and this is very interesting-is that around 50 percent of the total animal protein that we consume comes from dairy. So the amount of protein that we get from dairy amounts to more than what we get from beef, chicken eggs and fish combined. But one of the common tendencies particularly amongst the poorer people in Pakistan is to transition children away from milk to a solid diet as quickly as possible and when you move away from a milk diet to solid diet which is more carbohydrate loaded-whether it is roti or whatever-then you are actually compromising on protein. So one of the best things you can do is to continue keeping younger children on milk.
Then we come to other burden of disease which is the other side of the spectrum-obesity. Obesity and non-communicable diseases related to that like diabetes, hypertension, cardiovascular diseases are amongst the fastest growing diseases in emerging economies like Pakistan where people are coming out of poverty. People here are born in certain economic circumstances where their bodies are genetically programmed to encounter scarcity of food but as people are moving up the ladder of economic well-being, that scarcity has been vanishing-which is a big driver of obesity in the country.
To counter this, we can all start by spreading the word, educating people. We can share information. In that lieu we have planned a huge campaign that we are launching on nutrition, health and wellness starting with our employees, and we are also reaching out to consumers to help them choose wellness-which means an active lifestyle and a balanced diet.
BRR: Does Nestlé have any plans to introduce new products or re-launch old products after making them more nutritious?
NNK: From our end, the things we can do are: progressively reduce the amount of sodium, eliminate trans-fatty acid, reduce the amount of sugar in our products to meet the norms that WHO has set-which are translated internally into what we call the "nutritional foundation norms" for Nestlé products.
Currently, our policy is that if a product for whatever reason cannot meet nutrition foundation results in a set timeframe then we will simply stop selling that product. All our products have to meet the nutritional foundation and at the same time taste better. After all it's easy to take out all that stuff but then you're left with something which doesn't taste good and nobody wants to eat it. So that's where the R&D comes in and that's what we see as our contribution to address the double burden of disease; malnutrition and over nutrition.
We also believe that promotion of safe milk consumption is an important part of nutrition. Also let me elaborate on the word safe. Today a lot of milk in Pakistan tends to be in the unorganised sector. Organised sector is 4 percent of the market which pays all of the taxes for the entire sector. But ultimately the organised sector is the sector that has to keep up its promise of quality standard and the one which is regulated by the government to meet minimum norms.
So, when Nestlé promises safe high quality nutrition we also make sure that our products are fortified by micro nutrients which can help the masses who have deficiencies. We fortify our products with iron, zinc and various other micro nutrients such as Vitamin-D-which disturbingly enough is a big deficiency amongst the masses here.
BRR: You have talked about Creating Shared Value. Can you expound on its meaning in the context of Nestlé Pakistan?
NNK: Absolutely! Let me give you an example. For instance, if we take the Nestlé Pakistan business in the year 2013, we see that total sales last year amounted to around Rs86 billion. Conversely, the money that went to farmers every day in the form of milk purchases is Rs20 billion. Then you look at another Rs20 billion that was basically shared 3 ways between taxation, employees' salaries and profits to shareholders which were given out as dividends. So, if you look at the big picture, Rs20 billion went to farmers, Rs20 billion went to the government, employees and shareholders and, maybe, another 20 billion went to retailers, distributors and transporters, which is a perfect example of a firm creating shared value in a society. Not only are you creating wealth for the stakeholders, you are creating value for retailers, for transporters to farmers and the amount of money you have given them through this economic activity is higher than the amount of money your shareholders have gotten.