Business Innovation to Combat Malnutrition
Procter and Gamble: Fighting Malnutrition This paper was prepared by Melissa Tritter (Harvard Business School), Michael Jarvis (World Bank Institute), Bérangère Magarinos (Global Alliance for Improved Nutrition), and Djordjija Petkoski (World Bank Institute). It is based on interviews with executives and scientists at Procter and Gamble. We would like to express our gratitude to the P&G team for sharing information with us, participating in numerous meetings, and providing comments on the draft paper. Our particular thanks go to Ethel Cormier. For participation in interviews and follow-up guidance we would like to thank Haile Mehansho, Kenneth Smith, Don Compton, and Mike Jensen of Procter and Gamble.
P&G withdrew NutriStar from Venezuela in 2003, and sought a buyer for the brand. After it became apparent that none of the potential buyers planned to truly leverage the product, the R&D team advocated for keeping it. In 2004 they began working with P&G’s External Business Development Group to move NutriStar toward a licensing model. External Development had been formed a decade earlier to make use of the many patented technologies that had not been incorporated into commercialized P&G products. As with the calcium-fortified orange juice, the plan was now to license the GrowthPlus technology to someone else who was willing to commercialize it. The development team wrote up a prospectus for NutriStar and began to actively market it to third parties. NutriStar’s first licensing partner was a local manufacturer in Nicaragua who started production in early 2004. The newly-simplified manufacturing process resulted in dramatic cost savings, as did the local manufacturer’s ability to access naturally-occurring distribution systems. The project also relied on funding from USAID – but in late 2004 the agency shifted its focus from nutrition to HIV/AIDS, and the manufacturer’s funding was cut. Production of NutriStar ceased in Nicaragua, despite signs of a promising market.
Case Study Series
Case B
Ying Yang Zing A related product was also just coming to market. It was an iron- and calcium-fortified rice intended for the Chinese market, branded as Ying Yang Zing (YYZ) – which roughly translated as “NutriStar” in Mandarin. In 2006, P&G was testing the commercial model for YYZ. One of the key challenges was the strong regionalization of the Chinese market. The product was selling, but it wasn’t flying off the shelves – though P&G had not yet built up a large branding campaign or concerted social marketing effort to support sales. P&G was actively seeking licensing partners for YYZ, but so far had come up short.
Parting Thoughts Mike Jensen, the R&D Vice President of Snacks & Beverages, offered some optimism for future sales: One business model that is still open for opportunity is locally-sourced intervention for school feeding programs. These have several advantages. They’re centrally cited, so kids come there and you can intervene with lots of kids every day. They are also something people are already investing in – so they
Copyright © 2007, the World Bank Institute and the Global Alliance for Improved Nutrition The views expressed in this paper are those of the authors only.
don’t require any new government spending. And since they exist in many places already, you’re not faced with the challenge of setting up a whole new program But many of the original product developers were also feeling frustrated. Don Compton expressed a common line of thinking: In low income countries, our business still faces the same problems we would in the U.S. – competition with similar products, high trade margins, distribution and logistics problems. But all that can be solved if you have the right partnerships. So we’ve learned a lot, we’ve done a lot, but the technology is still not out there. In fact, technology is not the issue – and process is not the issue, quality is not the issue, manufacturing is not the issue. Willingness to get it done is the issue. The micronutrient problem identified 30 years ago. I don’t know why these people are still suffering. There are solutions already – technical and business solutions. Why it hasn’t happened is still the big question.
Improved Choco Milk introduced in Mexico
Hawaiian Punch fortified with calcium
Newly-fortified Star Margarine introduced in Philippines Nutri Delight launched in the Philippines
NutriStar introduced in Venezuela
NutriStar withdrawn from Venezuela
P&G divests all non-coffee beverages
Citrus Hill fortified with calcium Sunny Delight fortified with calcium
Star Margarine fortification proposed
Dr. Latham visits P&G
Choco Milk divested
Nutri Delight withdrawn from the Philippines
Crisis in Venezuela
NutriStar production ends in Nicaragua
NutriStar licensed in Nicaragua
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Richardson Vicks acquired by P&G
UN Summit for Children
Exhibit 1. Timeline of case events