Friday, August 21, 2009

Good Times at Nestlé?


Say it Ain’t So, Wilona

© 2009 Leighann Lord
You know you’re jaded when you can find the bad side of a good news story. I was reading a relatively harmless article on the front page of "The Wall Street Journal’s" Market Place section about Nestlé’s drop in first half earnings. The company was pleasantly surprised, however, to find that "performance in it’s pet care business was ‘excellent.’" Some good news? Tell me more.

"Despite the tough economic times, consumers weren’t deterred by Nestlé’s price increases, which helped lift the pet-care division’s profit margin by more than a percentage point to 15.7%.

"Purina and Friskies are among Nestle’s fastest growing brands, with sales of each up by more than 6% in the first half. Dog Chow, which saw sales jump by more than 16%, had the second-fastest growth among Nestle’s major products..."

As a dog owner, I am not surprised at the money people spend on their pets. Rolie (His Lordship), our rescued, special needs cocker spaniel wants for nothing. He’s living a comfortable life, which we are more than happy to give him considering the abuse he sustained at the hands of his previous owners. (I often fantasize about tracking them down and beating them with a broom.)

With His Lordship’s myriad medical problems (almost complete deafness, cataracts, deteriorating hips, hyper thyroid, dry skin, and a surly disposition for which there is no cure) his care is not cheap. Thankfully his Veterinarian gives us the Senior Dog Discount.

We are also very lucky that despite his regal bearing, His Lordship likes to eat the cheap stuff. We learned after much trial and error that this breed of dog is notorious for choosing to go hungry rather than eat something it doesn’t like. Apparently you can lead a cocker spaniel to the Dog Chow, but you can’t make it eat.

That said, I was curious that Nestlé’s own analysis of it’s earnings data was so rosy. It assumes, perhaps innocently, that the increase in pet food sales came from people spending money on their pets. Who’s to say in these strained economic times that people aren’t buying pet food for themselves? Am I the only one who remembers that episode of "Good Times" where Wilona was reduced to eating dog food? It haunts me still.

Nestlé’s bottom line bump doesn’t exist in a vacuum. How could the company not take into account the heart breaking reports of animal shelters swelling past capacity with the pets financially strapped families could no longer afford to care for?

The article also said, "The bright outlook for pet products is also luring insurers into the market in search of growth rates faster than those for traditional car and life plans."

No doubt pet health insurance is a hot product, but like human health insurance not everyone can get it. By conservative estimates, His Lordship was five to seven years old when we rescued him, so no insurance for him. From nose to nub he’s a 30 pound pre-existing condition.

Animals and humans suffer from many of the same diseases. Since pet insurance, when you can get it, is cheaper maybe savvy pet owners are using Fido as a stalking horse for their own ailments. I wouldn’t blame them. Seeing the level of care His Lordship gets from his Vet, I like and trust him more than my own doctor.

I’m not sure if my personal take on this says more about my pessimism or Nestlé’s naivete, but I certainly understand it. Switzerland’s business community could use some good news right now. There was a time when tax dodging kabillionaires could stash their cash in Swiss bank accounts – bills still soggy with blood – and be guaranteed absolute secrecy. Wealth has it’s privileges, or at least it used to.

Swiss bank UBS has lost a big legal battle with the U.S. Internal Revenue Service. The bank is being forced to divulge the identities of thousands of American account holders believed to be evading taxes. And the IRS promises to be vigorous in it’s prosecution of these wealthy tax cheats. Now that’s a reality show I’d like to see. I envision it as a classy version of "Cops." After interest and penalties the perpetrators won’t be able to afford Friskies. Go get ‘em Geithner! We American’s have pricey pet food to pay for.


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