If you’re part of the problem, how can you also be part of the solution?

Nestle’s acquisition of the weight loss company, Jenny Craig, sure makes for strange bedfellows. Here’s Nestle, which pumps out such weight-inducing, artery-clogging candies as Nestle Crunch andCrunch_2  Nesquik, about to simultaneously market a ‘meal’ of prepackaged low-calorie meals and motivational   workshops. Say what?

While the move is a pure profit play since Jenny Craig is red hot in the wake of the Kirstie Alley spokesperson campaign, it does create some interesting mixed messages. In supporting the acquisition, Nestle chief executive and chairman, Peter Brabeck-Letmathe, said, "The rise of obesity and resulting metabolic disorders, such as diabetes and cardiovascular disease, is a major public health concern, not only in the U.S.A., but the world over. The Jenny Craig acquisition puts us in the privileged position to help many of our consumers." Well, yeah. But, you’re hurting them at the same time with all that rich, gooey chocolate stuff you’re making.

Maybe, like RJR, which presents a balanced portfolio above and beyond its line of health-wrecking cigarettes, Nestle is justifying its bad stuff with its new line of good stuff. Or, maybe they’ll re-position themselves as a more holistic marketer ("We made you fat. Now we’ll help make you thin. But then we’ll make you fat again…").

If the Nestle "lifecycle" marketing trend takes off, maybe we’ll see other smart partnerships take root. A pediatric clinic, for example, could merge with a funeral parlor chain to create Morning & Night, Inc….."We’re the hello and good-bye people!" Or, how about a tricycle maker partnering with a manufacturer of walkers and canes? ("For your first spin and very last step"). McDonald’s could get into the act by striking a partnership with, say, the Tour de France ("Slowing you down before you   speed it up").

I guess Nestle’s made a smart business move, but I sure wouldn’t want to have to explain it to a group of activist shareholders at an annual meeting ("People people! Please calm down. Mr. Brabeck-Letmathe will be happy to answer all of your questions. But, you have to stop eating so many Crunch bars for crying out loud. Those things are like speed. Happily, we have a Jenny Craig clinic starting in a few minutes in one of the breakout rooms so you guys can work off all that pent up stress.")

Hat tip to Moon Kim for this idea.

19 thoughts on “If you’re part of the problem, how can you also be part of the solution?

  1. Sorry to not have responded to you I-man. I haven’t checked the blog (sorry Repman) until now…
    To answer your question, I led Repman to the article but did not dictate the timing or the direction of his post. Just so you know, this blog represents Repman’s views.. not Moon’s or anyone else’s. Hope this clarifies.
    As for my own opinion, I’m stuck in the gray area. I see this as a good CSR move for the company as well as a way for Nestle to justify pumping out sweet, but unfortunately fattening, delicacies. But Jackie is right- moderation is key. I just wish we all knew how to properly moderate. (Has anyone heard the saying, “moderation is key, even moderation.” I love that quote!)

  2. This merge reminds me of the Steven Wright line
    “I like to put a humidifier and dehumidifier in the same room and see what happens”

  3. Interesting post. I’m working with a group of politicians (in American equivalent it’s like a state legislative committee) in Canada trying to find ways to combat childhood obesity. One challenge for us is to move social consciousness to the point where overeating, obesity etc. have the same negative connotation as, say, tobacco. But how can you demonize any product or company when they also sell diet products? Quite the connundrum…

  4. most of my customers aren’t available at 7:42 in the morning. and yes, they actually do.

  5. completely disagree rep with your last statement about consumers doing business with companies they respect. sure, that statement by itself is correct, but in this case 99% of consumers would have no idea that nestle owned jenny craig as well as any of their other product lines. i bet you couldn’t even name half of the brands under the nestle name.
    point is, this move is a smart business decision and there are no image implications whatsoever. this is yet another case where you generalize and throw out fortune studies and the like that have nothing to do with to try and prove the point.
    finally, (i saved the best for last) it might have helped had you or Moon done your homework on this one. see, there is an article on this topic in an obscure publication called Forbes. I have pasted the link so you can read the whole thing for yourself, but here is a quote that ends this debate:
    It becomes clearer why Brabeck-Letmathe said in a statement that, “With this strategic acquisition, the [Nestlé] group takes another important step in its transformation process into a nutrition, health and wellness company.” So hold the holy water and stifle the Mephistophelian pipe-organ toccata: Nestlé is using its corporate clout for good, not…evil.

  6. Gee, I go on a business trip and don’t have access to the web and bam, all hell breaks lose. I-man, Jackie, Ted et al, I refer you to the annual Fortune’s most admired corporations list. it intrinsically links image, reputation and “doing good” with both short- and long-term performance. I-man’s problem is that he’s ADD when it comes to image and reputation. For the I-man, it’s all about the here and now. Ditto for your stock analyst buddies. What did you expect them to say? They live and die with each day’s Dow index. Guys (and that includes you, too, Jackie):image and reputation is critically important. While Nestle’s move may be a very wise business decision, it sends a very confusing message to consumers who, study after study will tell you, want to do business with companies they respect. And, I-man, lay off Moon.

  7. talk about giving one’s self a pat on their own back, moon. you applaud rep for the timing of the story but you were the one that gave him the idea.
    being that you did so, and after reading the remarks of so many saying that this isn’t an image problem, i would like to hear your reason why you thought this was an image problem.

  8. I’m with Leo, Ted, Jackie et al. It’s a smart merger. And, if we are only to look at the chocolates and the diet foods (and we know that there is more to it than that), it is a no-brainer, reputation or image problems no matter.
    However, I do agree with Rep and Ted about image being very important to the overall picture a company paints itself.
    Some of the posters here should cache these pages and turn to them for reflection in case one day he/she happens to be a C-level exec at a publically traded producer of pornography, who lands a partnership with penance provider and then gets caught cheating on his/her spouse.

  9. Guess who’s gracing People this week? Ms. Kirstie Alley herself.. and the cover story is her weight loss triumph! Great timing, Repman!

  10. The acquisition is ironic and I agree that it is sending mixed messages. When you think of Nestle you think of Quick and Crunch. But, at the end of the day, the purchase of Jenny Craig won’t have a negative effect on Nestle’s rep. In fact, as Jackie said, the company has a Nutrition Division with a host of products including baby formula, weight loss drinks, Powerbar, and Uncle Tobys (a diet snack/cereal brand). Unlike Hersheys, they are a very diversified company…

  11. Nestle will create customers for Jenny Craig, Jenny Craig will eventually bring bring new customers to Nestle – let’s face it no one can eat that “special food” forever. It’s a marriage made in heaven. It’s not any more complicated than that.

  12. ted-
    great points and i agree with you that image plays in the chain to the bottom line. but the bottom line is the bottom line, period. if the bottom line is healthy and take into account all the factors that make up a company then the only argument that you could ever make is where a company suffers due to its image. but if the bottom line isnt suffering then to argue that the image card is baseless.
    that is why i very much disagree everytime the repman talks about image as it relates to a public company.
    now that you and jackie disagreed with the rep, i would love to hear him debate you…sort of a repchatter in writing 🙂

  13. I-man:
    I don’t have time to write War and Peace here but I’ll try to respond as best I can in a brief manner:
    A) Share price, stock valuation, etc. are all short-term plays. I agree with you in that none of this in the short-term is greatly impacted by image issues unless it’s very serious. I’m talking about the long-term health of the company and how all stakeholders – shareholders et al – are impacted by the image and reputation of the company. Remember, a company’s image may not impact the short term buying decisions of an investor but it could impact the buying decisions of a client or customer, which in turn impacts the revenues of the company which in turn impacts the bottom line and the long-term health of any company. Hence, my opinion that image indirectly impacts the long-term buying sentiments of an investor.
    B) I’m not debating you on the Nestle issue. I actually don’t agree with Repman on this one. I’m debating you on the topic from a general standpoint.

  14. RepMan, I’m not really sure you made your case with this one. Nestle makes Crunch bars, but they don’t try to tell consumers to eat them morning, noon and night and lie to consumers about the health risks. If you follow the “everything in moderation” philosophy, then can’t an otherwise healthy person indulge once and a while? Also, Jenny Craig is not the company’s veiled attempt to provide healthy products. They are also one of the nation’s largest bottlers and distributors of spring and purified water (Poland Springs, Pellegrino, etc.) and they own Lean Cuisine meals.
    If anything, Nestle seems to be a nicely diversified company and I don’t really see an image problem with that.

  15. ted-
    being that i am not a financial guru, nor do i play one on the blogsphere, i called two friends who are analysts at two separate major financial institutions. both of them agreed that image plays a very minor role in stock valuation and their analyst reports that are released to investors. one of them said that it really depends on how you define image, but went on to say that a well-known brand like Coke might trade at a higher valuation b/c of its popularity. (they both viewed image as popularity)
    when i asked about this and the time warner example, both said that they had absolutely no effect on the company, stock price, etc, and certainly would have no effect on any analyst or investor valuation. they said that items such as company mismanagement, fraud, or anything else criminal would, but these examples are so small that no one in the financial world would care.
    on this example, one said this was a great move for the company b/c its shows that nestle is balancing the company. they said that if jenny craig bought nestle that it would seem a “bit curious” but wouldn’t effect their opinion on the company.
    when i asked about financials and image being linked, they said that they are linked b/c every aspect of a company is essentially linked but image (when limited to events that the street wouldnt consider major) is such a small part of the overall picture that no one would know it was there.
    finally, they said that when it comes to wall street, 99% of investors, financial houses and the like only care about results, which according to this analyst is why they call it the “bottom line,” b/c a bottom line takes everything into account. if the company perfoms well and the bottom line is healthy, the street is happy. one said that to make the argument that the bottom line is not what a clear majority (in the 95-99% range) care about would be a baseless argument from someone that clearly didn’t understand stocks, the street or financials.
    to sum, this is the info that i am repeating as it came from 2 analysts who work on wall street that do this for a living. one went to wharton and one to columbia. i actually asked both of them to post their remarks but they can’t as their firms do not allow blog posting as it could be a conflict of interest.
    would love to hear you debate these points.

  16. I-man: Are you saying that shareholders, or any key stakeholder in a company, should not be concerned about image of the company and its brand? Should they only be focused on the financial reporting or the bottom line as you put it.
    Putting the debate over Nestle aside for a moment, nothing could be farther from the truth. A company’s image and its financials are definitely linked. Yes, shareholders, especially the institutional set, look at the financials and closely study the company’s key performance indicators. But, indirectly, they are all or should be looking at a company’s image, especially if they are in it for the long-term buy.
    As a shareholder, even if a company was doing well financially at the moment, would you buy it if its image was tarnished, out-of-date, stale, unfavorable, etc.? You shouldn’t because a company’s image, in my opinion, is one of the best indicators of long-term performance. No one can or should guess the market short-term but you can pick winners over the long-term if you look at a combination of financials and image related issues.

  17. Or perhaps a flip-flop maker partnering with an at-home pedicure supplier?
    Hope I didn’t miss too much during my week at the shore. From the looks of it, I-man is up to his same old, same old.

  18. rep, interesting post and good points. my question to you about this one is simple. do you really think that this “image problem” you are trying to create is really a problem for anyone else outside of your blog. meaning, do you think tommy snackeater is going to put down the crunch bar and opt for a krackel bar b/c nestle owns jenny craig and that seems like an oxymoron? better yet, do you think judy weightloss is going to quit the jenny craig program b/c they are now owned by the crunch bar people? my thinking is no chance in hell.
    also, you like to bring up shareholder meetings when you talk about public companies, but if you went to a bunch of them and listened in on company conference calls, you would know that investors and shareholders are interested in the bottom line. they want to know how a company is doing, how they are growing and what they are doing to increase shareholder value. they don’t sit there and say “well mr chairman, sounds great that we are acquiring x company and shareholders will see an additional x increase in value next year, but do you think this is a good idea b/c the repman blog might think this hurts our image?”
    people and funds invest in companies that are financially sounds, that are growing, and that make smart BUSINESS decisions. i know your repsonse will talk about TYCO and ENRON and Worldcom and where their respective companies went, but the difference is those companies suffered b/c of fraud and criminal problems, not image problems. the “image” problems only came about b/c of much more important criminal problems. a prime example of my thinking would exxon. look at what the valdez spill did to them short term, but look at the company now. investors and the street have rewarded them b/c of a sound BUSINESS model. and exxon mobil has rewarded them in return.
    the point is that you are so focused on the small image problem you like to create that you miss the big picture. same with time warner last week- no one is selling their stock b/c their CFO had an affair, end of story.
    you are correct in your blogs about bonds and steroids and his reputation b/c fans are very unmistakeable in their view. but the day will come when you blog about the 30 second spot being the greatest tool in the world before you see people booing tommy snackeater for buying a cruch bar, or a picket of nestle company products b/c of their “image” problem.