Peter Brabeck-Letmathe: Ad Hall of Fame Inductee Talks Nestlé and Clean Water
Even before the internet was firmly established, Peter Brabeck-Letmathe, chairman emeritus and former chairman and CEO of the Nestlé Group, strove to establish a one-on-one relationship with consumers. His view was that mass communications was no longer effective.
"You have to become more and more a one-on-one partner with your consumers. But in the early '90s that wasn't the model, Peter told me in a video interview for his induction into the Advertising Hall of Fame. When ad agencies bought media for Nestlé campaigns, they wanted Nestlé to broaden the message by increasing frequency.
"[They said,] 'Make your sending strong. Push more,' and I said no. If I'm not recognized by the individual as a partner, they won't listen to me."
You have to change the model, and that is exactly what we're doing nowadays. Only now we have the one-on-one communications, which of course is facilitated through the new technology, which back in 1992 we didn't have."
Digital, Peter said, is the "perfect" medium—a "major facilitator" to achieve one-on-one contact between the brand and the consumer.
I mentioned to Peter that one criticism of digital is that it only tracks the best customers and does not build the brand by attracting nonbuyers as legacy media do. His response: "I would say it depends what the brand has to offer to the customer. If you only talk about the product as such, then I don't think you have understood the difference between the product and the brand. The brand has an enormous amount of objective value, physical value, but it also has an enormous amount of emotional value," and you can attract new customers by concentrating on the emotional side, Peter asserted.
For instance, millenials are very interested in sustainability and organic foods and ingredients, and if the advertising talks about now Nestlé coffee is coming from the small farmer, "you can invite the consumer on a digital trip. You can get the consumer who would never have come to you if you had done normal advertising," he said. "I'm not saying that normal advertising is completely useless today. But you can really multiply the effect by intelligently using the digital world."
Nestlé has changed from a food and beverage company delivering a quantity of calories to a nutrition, health and wellness company delivering qualitative calories, Peter explained. "This does not take away that our products have to be good tasting, have to be pleasant to our customers, but they have to have a sound nutritional base. That's the difference."
The company took nutrition "to the next stage" when it created Nestlé Skin Health and Nestlé Health Science. Skin, Peter said, is the biggest organ humans have, and "it is very much exposed to the influence of nutrition."
Peter doesn't believe that companies should take a "philanthropic approach" to what he calls "creating shared value." He is "absolutely convinced that in order for a company to be successful in the long term it has not only to create value for its shareholders, it has to create value for the society in which it is allowed to act. Now this value creation comes and should come through its regular strategy.
"If we make an investment and we build a factory we are creating jobs. We educate people, we train them, we are paying taxes, we help the education system. So we create value for society by doing what we're doing," he said. "This creating shared value is the most adequate approach to doing good for society."
But Peter also contended that "in today's world it's not good enough to just to do good. You also have to communicate that you're good. That's part of today's life." And such communication, he added, "should be more inherent" in Nestlé's advertising, and it will be in the future.
Peter, a native of Austria, learned everything he needed to know by being a Nestlé ice cream van salesman in Chile, his first job for the company. "So every morning I had to decide who were going to be my customers for the day, what was my route for the day. I knew all my customers' worlds, so I had to make my mind up—what are they going to buy from me this day? If the sun was shining, the temperature was high, it was raining, it was not raining. That was how I loaded my truck. So you have to have market research built into your brain if you want to be a good salesman."
The next step, Peter said, is "you're going to meet your customer. You have to convince him that he wants to buy what you have in your truck and what fits into the ice cream freezer. Then you're cashing in. You get the money. So you really finish the whole business, come back home, give the money back and load up the truck for tomorrow. It's a full business cycle. So you learn everything you need to be a successful businessman."
Peter has made water—and the lack of it—one of his key interests since relinquishing active duty at Nestlé. He has said that we could run out of water before we run out of oil.
"We have to recognize that water is the most precious natural resource we have, and we should be using it with a little bit more respect," he said. [We're running out of water] very, very rapidly."
We have the technology to hold down water usage, he added, "but nobody wants to do it because it takes investment, and investment is not justified if the water is free of charge."