It's ironic that Nestle has announced further grand plans to take a bigger share of the global halal food market, with its Malaysian operations as the major hub, while at the same time national CBA negotiaions are still deadlocked and tied up in the Industrial Court as management refuses to negotiate in good faith. Even more ironic is the fact the halal food certification requires stringent controls over health, safety and hygiene and strict traceability of all inputs. Yet throughout Nestle's operations - including Malaysia - high rates of permanent "seasonal workers" (long-term casuals) and outsourcing raises serious doubts about whether Nestle can guarantee these high standards in the long-term.
See the previous story here on the deadlocked CBA negotiations.
While the company may believe that halal certification can be achieved through "brand name" status and political clout alone, the fact is that it risks a major Muslim consumer backlash if/when it becomes known that Nestle doesn't know where its inputs are sourced, how its animal product-based ingredients are produced (i.e. proper religious and sanitary procedures for killing and cleansing of livestock and poultry), or is unable to explain deteriorating health, safety and hygiene conditions in co-packing plants and subcontractors and the rise in contamination scares.
So while Nestle claims to have 75 factories certified halal globally (66 in AOA Zone, 7 in Europe and 2 in the Americas), the real question is whether these are all Nestle-owned factories. As we saw with GLOBE, more than half of the factories where GLOBE is implemented are co-packers!
So we see another link between the rampant jobs-destroying outsourcing of production by Nestle and the inherent unsustainability of such practices.
Below is a story from the BUSINESS TIMES (Malaysia) on Nestle's global halal food business that is a good example of the recent news reports on Nestle's plans.
Nestle takes bigger bite of global halal food business
By Fauziah Ismail
BUSINESS TIMES (Malaysia)
December 28 2006
NEXT year is going to be a big year for Nestle SA where the halal food business in concerned.
In March, it plans to send a top level Malaysian delegation to the UK in an effort to promote its halal products worldwide.
Nestle, which is repositioning itself as a nutrition, health and wellness company, is working with UK retailer Tesco to introduce its halal products in 40 stores there.
If that is successful, the halal products could also see itself on shelves in some 500 stores and Nestle Malaysia's range of products is expected to be prominent in the scheme of things.
Nestle's executive vice president and zone director for Asia, Oceania, Africa and Middle East (AOA) Datuk Frits Van Dijk said the company is ready to take advantage of the global halal food explosion.
It has more than 75 halal-certified factories worldwide with more than 100 halal certified production lines. Of the total, 66 are Zone AOA (including Malaysia), Europe (7) and Americas (2). In Malaysia alone, Nestle has 8 factories and 6 sales and distribution companies.
In 2005 Nestle SA recorded more than US$3 billion (RM10.6 billion) in sales in markets where Islam is practised.
"We are clearly seeing an increased interest in halal food consumption. There are tremendous opportunities," Van Dijk said.
The global halal food business is expected to touch US$500 billion (RM1.8 trillion) in 2010 compared with US$150 billion (RM531 billion) today. The Muslim population is expected to increase 22 per cent and world consumption by 11 per cent in 2020.
Nestle has been in Malaysia since 1912. The company began as the Anglo-Swiss Condensed Milk Company in Penang and later moved to Kuala Lumpur in 1939.
Its first factory in Petaling Jaya was established in 1962. It was publicly listed on the Kuala Lumpur Stock Exchange on December 13 1989.
Employing over 3,500 people, Nestle Malaysia is currently the biggest halal food producer in the Nestle world. The company exports its products to more than 40 countries worldwide with export sales of over RM470 million.
It also imports halal products from the 66 Nestle factories worldwide, which are certified halal.
It is in fact the first multinational to voluntarily request for halal certification of all its food products when the certification was first introduced in 1996.
The certified halal status for all Nestle Malaysia products provides assurance that Nestle products are manufactured, imported and distributed under the strictest hygienic and sanitary condition in accordance with the Islamic faith.
And in view of this, Nestle Malaysia is recognised as the centre of excellence for halal matters in the Nestle world.
"We have been working here with the Government for many years and we have built up this body of knowledge that we are able to transfer to other Nestle markets around the world," van Dijk said.
Nestle Malaysia is also a key partner to the Malaysian government in establishing the global halal hub. Since 2000, the company has trained some 1,200 small and medium enterprises in good halal manufacturing practices.
Also see the previous news item: August 24, 2006 - Nestle picks Malaysia as halal hub