The Real Life Soap (or shall I say, Coffee) Opera as written by Yutani Weyland (http://yutaniweyland.blogspot.com)

Monday, December 21, 2009

Nestle Philippines: Good scheming for a good life

Nice tag line. You can bet that they mean it in every sense of the words.

From 2003 to 2007, a distribution company operating in the Northern Quezon City area was illegally terminated for its services by Nestle Philippines, Inc.

Here is an overview of what is happening now not only to that Northern QC company but many others all over the country.

Nestle lures businessmen to become Nestle distributors that start with priming activities such as large amounts of actual start-up promotions, incentives and assistance (i.e. monetary, equipment, or services). Once a distributor takes the bait, they are slowly reeled in, with promising rates of return and greater rewards. With good early net earnings, distributors were encouraged to invest more money into the distribution business.

Once further engaged, Nestle systematically and deliberately withdraws these incentives. The distributor then has to play the investment game with the rules unfairly set in the favor of themselves where more often than not lead's to the distributor's demise.

When distributors are irretrievably committed in substantial financial manpower, and equipment investments, Nestle bullies them into absorbing the entirety of the financial risks. With this particular distributor, it started in 2006. All the hard work is passed on to the distributors through cleverly worded contracts of adhesion.

Fast Moving Consumer Goods (FMCG) distribution is generally a high volume low-margin business. Since trading and retailing in the Philippines is dominated by small and medium scale businesses, the average distributors of most FMCG manufacturers only have PhP 2-5 million in paid-up capital.

When its inventories financing was transferred to local banks in 2006, Nestle started to unfairly push and require its distributors to break barriers in order to sell more of their products without assuming any of the risks. Nestle then began to impose unreasonable sales targets and increased them geometrically ensnaring the distributor into a money trap.

This is their story and these are the players in the game:

1. John Miller - Current President and CEO of Nestle Philippines Inc. (NPI). Problems did not occur under him but being unfamiliar with the situation or perhaps covering his own ass, he does not want to "take the bull by the horns". He allegedly lets his committee decide what should be done, whether right or wrong, especially with how they are trying to weasel their way out of the Central Luzon incident. Could be guilty of sin of omission. Must step up and be morally upright to salvage reputation.

2. Nandu Nandkishore - Former President and CEO of NPI, now global head of infant nutrition. Problems exploded during his tenure. Perhaps, he is the instigator of the "weasel-your-way-out-by-using-SIZE-to-bully-the-small-Filipino-entrepreneur" strategy. Managed to escape by being transferred out to Switzerland. Perhaps, he is washing his hands now and leaving it up to John Miller to fix.

3. Shahab Bachani - Current Sales Director of NPI, to be transferred to Brand Marketing next January. Always blames the distributor for any problem and never himself nor his company. Perhaps, the main proponent of "Hit Target at All Costs" mentality leading to massive discounting (yet until about September, he denies that massive discounting exists). Pretends he wants to listen to the problem, concerns and opportunities of the distributor but apparently never retains anything. Possibly autistic.

4. Atty. Belen Caberte - Former Legal Chief of NPI, now serving as legal consultant to fix the mess she partially was responsible for. Reputation for being an excellent labor negotiator by allegedly bribing and granting favors to labor leaders. Purported NPI policy maker of "Using-your-own-money-against-you-to-make-you-sign-a-general-quitclaim" passing it off as a standard policy and therefore is morally correct. Also heard to direct their external legal team to delay cases against Nestle to wear out the poor Filipino victim.

5. Atty. Russell Andaya - Current Legal Chief of NPI, former second in command of Atty. Caberte. Apparently does whatever the Caberte and the board says.

6. Peter Noszek - Chief Finance Office of NPI. Possibly the one of about three sane figures in the NPI board but could be overruled by the other clowns. Excellent marathon runner.

7. Alejandrina Puno - Director of Corporate Communications. Active member of PANA board - "Truth in Advertising" yet was found out to contact by various columnists, opinion writers and editors of various newspapers to stop writing "negative" things by threatening to pull out Nestle's advertising from various broadsheets. She clearly violated the standard of PANA of not letting advertising budgets curtail journalistic freedom.

8. Atty. Aileen Cero - Legal Office of NPI. Allegedly notarized a document she negotiated that is in clear violation of notarial rules on conflict of interest. Implementor of the "Using-your-own-money-against-you-to-make-you-sign-a-general-quitclaim" NPI standard policy. Has pending disbarment case against her. Allegedly, was doing forum shopping by filing a case in a different court in relation to the pending disbarment case in the Supreme Court.