Peter Brabeck, Chairman of Nestlé, reflects upon the evolution of the company and its culture, and how he came to spend his career there.
Topic: Looking back
Peter Brabeck: I was born in an Austrian city that was one of the heaviest bombed during the Second World War. My first memories are of a city that had been burned down and that there was basically no house standing. But at the same time there was a magnificent surrounding of lakes and mountains. My parents, since I was able to walk, took me out to the mountains and at two and a half years I was standing on a pair of skis. Since then I have not stopped skiing and I have not stopped climbing mountains.
It was somehow this contrast between a broken down city and the perfect nature, which would somehow form to certainly part of my character, no doubt about it. The other thing was that it was a time where nothing could be worse, only things could be better. Therefore, there was an embedded optimism in the people in general. Everybody was optimistic; everybody was thinking that tomorrow will be better than it is today. I think that's another part that has certainly formed my character. I’m very optimistic about things in life and I always look forward to see how you find solution to problems.
Question: How did you end up at Nestlé?
Peter Brabeck: The beginning was very agonistic if you want. I was just coming back from the first Austrian Hindu Kush expedition where we tried to climb these high mountains in Alpine style, which was at that time quite revolutionary. Coming back, I had to confront reality that I needed to work and that I had to make my own living. On the other hand, I really wanted to continue to be able to climb mountains and I knew that Latin America would be one place where I combine both things. So I presented myself to multi-national companies and I always said, “Is there any possibility to go to Latin America one day?” Until I came to this ice cream and frozen food company, which was called Findus.
As I said, I didn't know it belonged to Nestlé. It happened that I also spoke Swedish. Findus was a Swedish company. And my question was answered positively in the sense that it was said, “Look. We engage here in Austria but if you really do very, very well there might be a possibility for you somewhere in Latin America.” That's why I started with Nestlé and that's how it all came about.
Question: How has Nestlé changed through the years?
Peter Brabeck: I started to mention that in the sixties, of course '68, you know very well what the public opinion was. From a political issue, it was the area of socialism, it was the area of anti-capitalism, it was the area of against multi-national companies which then led to policy-making that said that the future would be joint ventures. In many parts of the world, you were not allowed to have a 100 percent foreign owned company if you wanted to be in the food or if you wanted to be in the retail sector.
State intervention was extremely important. Import substitution was very important, so if you wanted to sell something, you had to produce locally. You were not supposed to import. The usage of local raw materials and so on and so on. So it was a very heavily state intervened society at that time.
Like in most everything, things change. In Latin America the biggest change factor was Pinochet who really introduced a more open society, a freer economy. With this fantastic economic success of his regime, many, many other Latin American countries followed afterwards, opened up their markets, freed the economy, and suddenly the state intervention became much less. We were allowed to have 100 percent companies in countries like Venezuela or Ecuador, where I also lived and worked as a CEO for quite some time. This opened up and brought more competition into this market, more competitiveness, more productivity in this market. I think it was good for the local population.
Again, things change. While Latin America started to move backwards, other parts of the world moved up. The fall of the Berlin Wall, of course, was a very important event, which then basically opened up more than 2.5, almost 3 billion people to a market-oriented economy. Those were great opportunities for Nestlé. We were very early on participating in this opening up of new markets and new economic opportunities, taking advantage of the experiences we had in many other parts of the world and very easily in Africa, for example.
Africa is really just opening up very recently and opened new opportunities for us and we are very active now working in Africa or in the Middle East. The Middle East was another region which was very state controlled and is only opening up very recently.
If you look at it from a global perspective, what you are seeing is that you have in one part counter-movements, on the other part you see movements which are opening up and it's, like always, a small roller coaster. It goes up and then it comes back and then it will come back again in some parts. And some other parts will be more state intervened.
I think, as a company, you have to understand, first of all, the political, social, and cultural contexts in which you will be working. I think this is extremely important. You cannot suppose that you can take your model, your cultural model, even your ethical model and your economic model and try to export this to the rest of the world. What you have to do is to take the basics -- your basic fundamental principles-- and then see whether a given country, a given region, allows you to adapt to your model to the reality of this country or the region without violating the fundamentals of your belief.
I think that's basically what you have to do. This is an ongoing process and demands a lot of cultural understanding and political understanding of what is going on in this world and when these things are happening. Timing becomes an incredibly important part of this.
Recorded on August 25, 2009