Peter Brabeck – Elevating brand management to an art form
Brabeck-Letmathe airs his views on how public companies can assume corporate social responsibility and simultaneously create value for all their stakeholders. In the case of Nestlé, the company he has directed and shaped over the past 40 years, practically the entire globe is a stakeholder in one way or another. In 1968, Brabeck-Letmathe started working for the food and beverage company that presently employs over 280,000 people, and, at 66, he discharges his duties as company chairman. Brabeck-Letmathe was instrumental in the company’s development into the world’s largest food conglomerate whose brands are available in every corner of the globe. Nestlé is represented in “nearly every country” Brabeck tells the American public at the think tank in New York.
This causes problems when a country like the United States designates other states as the axis of evil.
His accented English and occasionally surprising opinions do not bother the audience in the least; if anything, they bestow yet more authenticity on the tall, distinguished Austrian. This is a knowledgeable man who has travelled the globe, speaks several languages, is a mountain climber with a number of notable mountain peaks under his belt, and, as a pilot, has flown over remote regions of the world. In excellent physical condition, the seasoned globetrotter can afford to give voice to opinions that are not always popular, and he backs these to the hilt.
There should be a price tag on water
Critics and anti-globalization activists charge the frontman of one of the largest water-selling companies in the world with being a hardened cynic. Naturally, if water were to become more expensive, his company would have a larger turnover; but poorer people in developed countries might find themselves unable to pay their water bills, and, in less-developed regions, water conflicts would surely ensue. An expert communicator, however, Brabeck astutely points out his opinion on that.
Things that are free get wasted.
If we continue at our present rate, we could run out of clean water even before we run out of oil. To achieve disciplined water management globally, he argues, humanity must to be made aware of how valuable water is.
Dealing with the water problem is just one of the issues defended passionately by the captain of an imperium that commands a budget larger than most countries have at their disposal. Peter Brabeck knows that his vehement convictions sometimes come across forcefully, but he never oversteps the mark. His good friend and founder of the World Economic Forum in Davos, Klaus Schwab, characterizes Brabeck as a “fact-driven, authentic entrepreneurial statesman.” In the latest biography about Brabeck-Letmathe, Schwab describes how these frank exchanges have sometimes led to a few “unpleasant” moments. However, he goes on to add, the charismatic Austrian’s directness ultimately inspires trust. “I have met many great personalities of this day and age. Peter Brabeck is in the top ten of those who have impressed me most,” Schwab writes.
The man who, in a mere 17 years , first conquered Latin America for Nestlé and then took on the rest of the world ends his talk at the Council on Foreign Relations by expertly fielding questions from the audience. Child labor on plantations in South America? Nestlé has instituted schooling programs, and for every child enrolled, parents working for the company receive a raise. Future global eating habits? The “global Austrian,” as his good friend Ernesto Zedillo, the former Mexican president, affectionately calls him knows the answer.
In the year 2050, nutrition will be tailored to meet individual needs. Nestlé will offer menus that help prevent cancer or are beneficial in a number of other health issues.
Mighty and influential a businessman as he is – the man also sits on the board of Credit Suisse and Texas oil giant Exxon Mobile – although you can take the man out of the mountains, you cannot take the mountains out of the man. The Austrian from alpine Carinthia is happiest when he is up in the mountains. Just man and nature. At present, he is looking forward to a skiing tour in Alaska, replies Brabeck-Letmathe when presider Michael J. Elliot asks where he is bound after his visit to New York. For those who want to scale the entrepreneurial peaks he has the following advice.
If, in order to reach the peak, you have to give it your all, do not go. You would have nothing left for the descent.
Following the presentation at the think tank, and after the guests have enjoyed a final Nespresso ristretto and been sent on their way into the cool, New York spring morning, the tireless entrepreneur finds time to answer The Brander’s questions.
Mr. Brabeck-Letmathe, what is your personal definition of quality?
Quality must be judged with a view to the relationship between price and value. An absolute minimum quality can be defined, but, in the other direction, the matter is not so easy. Minimum quality is a product that is not harmful to the customer and satisfies the fundamental expectations raised by the brand. Maximum quality is harder to quantify since non-material aspects may also play a role. A brand is a compilation of functional and emotional values. The product must satisfy minimum quality requirements, and the emotional aspects give additional value. Say we look at a scarf: Its functional value is to keep us warm. However, if the scarf has been made by Louis Vuitton, it becomes more valuable. This is not a question of function; the added value is based on the emotions we derive from wearing the scarf.
When creating a brand, what should the main focus be? And, once it has been established, what are the next crucial steps?
First you need to have a clear idea of the role the brand should play in the consumer’s life. What are they looking for? A faithful companion for the rest of their life? A memento of a certain occasion? You have to know exactly what you want the brand to stand for – and how you want the customer to perceive it. This is the point where, to me, brand management becomes almost an art. In principle, it is about how to give your brand a permanent, yet current value in the customer’s eyes. A client’s expectations change over time. As the manager in charge, you need to develop your brand to make it appear fresh and contemporary while simultaneously retaining the original relationship with the consumer. If the consumer moves forward, the brand has to move forward at approximately the same rate. This is how a brand becomes permanent. Which is why I do not believe that a brand has a life cycle. Products may have a lifespan, but not brands.
Do you personally have favorite brands?
From our company, Nespresso is certainly a huge success because the brand is imbued with an effective bundling of emotional values and, of course, also provides the highest possible quality in coffee consumption. However, the brand needs to be managed very carefully. Another example is Nescafé: Its global popularity is an example of good brand politics – invented in 1938 and still progressive and a leader in its market segment.
Which were the brands that fascinated you as a young man?
I grew up in the post-war era when supermarkets were stocked with maybe 500 products, not almost 50’000 as they are today. Back then, Nivea was already a very strong brand – this tin with the blue lid and the white logo – and remains a strong product today. Or Volkswagen – which were really the first cars made for ordinary people. In short, brands that were effectively positioned and have continued to develop as time passes.
What did you dream of becoming as a child?
I wanted to be an orchestra conductor. There is a certain similarity between the work of a conductor and a successful manager: You have to make sure your team can play together to achieve an overarching goal.
Do you play an instrument yourself?
If you ask me, the answer is yes. If you ask my family, they would probably give you another reply.
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