nestléinvestor seminar 2007 · 2019-07-14 · absolutenumberson slide40. 17 nestléinvestor...

Nestlé Investor Seminar – Vevey June 7-8, 2007 Name of chairman1

Nestlé Investor Seminar 2007

Niels ChristiansenHead of Public Affairs

Creating Shared Value for Shareholders and Society: A Core Nestlé Competitive

Strategy

Nestlé Investor Seminar – Vevey June 7-8, 2007 Name of chairman2

Disclaimer

This presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.

Nestlé Investor Seminar – Vevey June 7-8, 2007 Name of chairman3

COMPLIANCELaws, Business Principles, codes of conduct

SUSTAINABILITYProtect the future

Hierarchy of Corporate Social Responsibility

CREATESHARED VALUEReduce poverty

Improve nutrition, health and wellness

CSR is built into Nestlé’s strategy & enhances shareholder value

Nestlé Investor Seminar – Vevey June 7-8, 2007 Name of chairman4

Nestlé Corporate Business Principles

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ØOur investments must begood for the Countries wherewe operate, as well as good for the Company.

ØWe will not sacrifice long term profit for short term gain.

Core Business Principles

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Reporting on Shared Value Creation activities

2002: The NestléPeople DevelopmentReview 2003: Faces of

Coffee 2004: The Nestlécommitment to Africa

2005: The Nestléconcept of CSR as implemented in Latin America

2001: SustainabilityReview

2006: The Nestlé Water Management Report

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Water is important for Nestlé

Our suppliers of agricultural raw materials depend on water

We need water for manufacturing

We sell and provide bottled mineral and pure water to millions of consumers, including access to safe drinking water in times of disaster

Our consumers need safe, clean water to prepare many of our goods

2007:The Nestlé Water Management Report

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Nestlé is committed to responsible water management

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Creating Shared Value:A basic strategy for competitive advantage

Nestlé Society

Ø Superior raw materials Farmers' improved incomehigher value produce

Ø Factories: quality and safety Food safety standards, environmental standards, trained and motivated workers

Ø Superior product appeal Better Nutrition plus Taste

Ø Superior brand reputation Improvements in knowledge, through social reputation health, standards of living

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Products & consumers

• New/renovated products for nutrition, health & wellness

• Increased knowledge/awareness -Nutrition, health

• Bottom of the pyramid

• Public - Private partnerships

Creating shared value for our shareholders and stakeholders along the value chain

• Agricultural & local supplier development

•

Purchasing practices (e.g. direct sourcing)

Sustainable agriculture/ supply chain approach

Agricultural sourcing

• Industry initiatives

•

Manufacturing &distribution

• Environmental practices

Labour health and safety

•

Food safety standards

•

Workforce development

• Distributor development

•

Michael Porter/Mark Kramer, Nestlé Creating Shared Value analysis(Harvard Business Review December, 2006)

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Cooperation with farmers: Improving farmers' incomes & ensuring quality supply

Agricultural Experts (850 worldwide) reaching more than 500'000 farmers

Milk in India, Pakistan, China, Indonesia, Morocco, South Africa, Mexico, Panama etc.Coffee in Mexico, Ivory Coast, Thailand, Vietnam, Indonesia, Philippines, China etc.

Objective: ensure quality / sustainable supply

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Method Farmer assistance• Specific support to develop progressive farms• Continuous extension of decentralized collection

(>2500 village cooling centres)Lady Extension Teams to reach rural women• Concentrate on water, health and hygiene• Partnership with UNDP: scaled up to reach

5,000 women

Value For Society:• Knowledge sharing, improved agricultural water

management practices • Nestlé supports rural economy with more then

USD 100 Mio annually improving livelihood of farmers and families

Value for Nestlé:• Increased quantity by >300% from 1994 to 2006

to 374,000 tons annually • Quality supply from motivated and enabled

farmers

The Nestlé Milk District Model, Pakistan

Objective: Increase fresh milk volume in line with business growth (>20% annually)

Nestlé Investor Seminar – Vevey June 7-8, 2007 Name of chairman13

Improving living standards400+ school wells in India and Pakistan

Value for Society: clean water in crisis situations and in water-poor regionsValue for Nestlé: quality supplies from motivated, enabled farmers

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Member companies (May 2007)

In cooperation with

Sustainable Agriculture Initiative: Nestlé a founding member

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• Energy consumption down 28% 2002 - 2006• CHF 40 million invested annually• CO2 emissions down by 31% 2002-2006 despite

22% production increase

Reduction in greenhouse gases, energy consumption

Value for Society: reduced carbon footprintValue for Nestlé: risk and cost reduction

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-28.2%-21.4%

-11.4%-8.1%

-35%

-25%

-15%

-5%

5%

15%

25%

2002

2003

2004

2005

2006

Ener

gy ra

tio e

volu

tion

from

200

2

Benchmark of the energy ratio evolutionfrom 2002

Source: Nestlé, based on public data. Absolute numbers on slide 40.

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Progress in environmental sustainability: Water

• Production volume doubled • Water consumption down 29%• Waste water down 37%

• 47 billion litres saved in 5 years, of which• 8 billion litres in bottled water

• 354,000 tonnes of packaging material saved

Value for Society: reduced impact on water availability/waste/packagingValue for Nestlé: risk and cost reduction

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-34.7%-29.5%

-15.0%

-6.8%

-35%

-25%

-15%

-5%

5%

15%

2002

2003

2004

2005

2006

Wat

er ra

tio e

volu

tion

from

200

2

Benchmark of the water ratio evolutionfrom 2002

Source: Nestlé, based on public data. Absolute numbers on slide 41.

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Workplace safety is improving

0

2

4

6

8

10

12

14

16

18

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Lost

Tim

e In

jurie

s (p

er m

illio

n ho

urs

wor

ked)

Injury rate: 4.8 (-31%)

Value for Society: higher work security, increased workforce health and safety Value for Nestlé: healthy, motivated and committed workforce; risk and cost reduction

Source: Nestlé, based on public data

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Workforce development: South Africa and Kenya

From construction worker to industrial services team leader

From laboratory analyst to Regulatory Affairs

Adult education program in South Africa

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Improving workers' incomesIncreasing their motivation

• 2/3 of all 250'000 employees receive formal training every year• Superior to average pay scale, benefits• Average years of service at retirement : 27 years

Value for Society: industrializing developing countries, skills transferValue for Nestlé: motivated, engaged, more productive colleagues

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Improving distributors' incomes: Bottom of the pyramid

Ivory Coast - December 2004• 500 carts• 48,000 CFA/week/operator

December 2006• 627 carts, despite conflict

• Rolled out: •Senegal, Guinea, Ghana, Sahel, Cameroon, Nigeria,Gabon

• 2,500 carts total• Continued growth expected

Value for Society: income creation, skills transfer, microfinanceValue for Nestlé: appropriate route to market for growth segment

PLUS: Brazil: 30,000+ door to door distributors by 2008, new "PPP" factory PLUS: Ice cream street distributors in South Africa, Thailand

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Bottom of the Pyramid

From this.... To this....

Maggi's iconic status means better nutrition and extra income opportunity

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Driving Nutrition, Health and Wellnessinnovations

‘Slow churned’ ice creamLOWER CALORIE + SUPERIOR TASTE- 50% less fat- 30% fewer calories

TECHNOLOGY-BASED PRODUCT INNOVATION

SCIENCE-BASED PRODUCT INNOVATION

New drinking-yogurtdesigned to elicit a feelingof satisfaction, enhancesatiety.

WHOLE GRAIN

Whole grain offers many knownhealth benefits, includinghelping to maintain a healthyheart and a healthier body weight

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15 Years of Nestlé support: Fighting childhood obesity

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Obesity in test village children declined... control town obesity increased

11.219.02

12.64

17.77

02468

1012141618

Test Control

19922004

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Promoting nutrition knowledgeand information

Austria

Portugal

Switzerland

Australia

Peru

Germany

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• 1,000,000 children

• Based on Sesame Street characters

• Developed by Russian Academy of Education and Russian Institute of Nutrition

Nestlé Russia: Nutrition education programme

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Nestlé Hungary /100,000 students

Nestlé Switzerland and HungaryNutrikid Education Programme

Joint-venture with Swiss Society of Nutrition, Nestlé Alimentarium, Nestlé Switzerland/11,000 students

Lessons kit, video, games cards, teachers and student books

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• Nestlé Nutrition Duchess Club / 100,000 women

• Nestlé Nutrition school competition / 800,000 students

Nestlé Nigeria

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120+ projects supporting UN Millennium development goals (MDGs)

Value for Society: systematic, locally focused community investment against MDGsValue for Nestlé: further integration in societies where we operate

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Global Partnership: International Federation of Red Cross/ Red Crescent

1,200,000 million young Nigerians learn about HIV/AIDS

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Left: Signing extension of IFRC partnership, Geneva, March 29th 2006

Right / below: inauguration of first well, Ribaue, NorthernMozambique, 1/11/06

• Recently presented to EU: €2mio scale-up funds secured

• New partnership: World Lutheran Federation, 25,000 villagers in Rwanda

Clean drinking water project in Mozambique and Rwanda

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"How do you rate the following company on fulfilling its responsibilities to society?"

(among best, above average, average, below average, among the best)

21 countries, 21,000 random sample.

GlobeScan CSR Ratings

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Nestlé scores high in “Fulfilling Responsibilities to Society”

Net Ratings,* 20 Countries Surveyed, 2005–2006

*“Best” and “Above average” minus “Below average” and “Worst”

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Nestlé’s perception in “Fulfilling Responsibilities to Society” is improving

*Nestlé's net rating minus average net rating of six companies

Competitive Net Rating,* by Country, 2006

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Nestlé well rated for sustainability and social responsibility

AAA rating (1st out of 47) from

Climate Leadership Index : 75

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COMPLIANCELaws, Business Principles, codes of conduct

SUSTAINABILITYProtect the future

Next step - define measures

CREATESHARED VALUEReduce poverty, Improve health

Empower people

Hierarchy of Corporate Social Responsibility

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Nestlé Investor Seminar 2007

Back-up

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2.212.42

2.732.83

3.08

0

1

2

3

2002

2003

2004

2005

2006

Ener

gy ra

tio (G

J / t

onne

)

Benchmark of energy consumption2002 - 2006

Source: Nestlé, based on public data

MJ per kg of product

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Benchmark of water withdrawal 2002 - 2006

Source: Nestlé, based on public data

Litres per kg of product

4.054.37

5.275.78

6.2

1

2

3

4

5

6

720

02

2003

2004

2005

2006

Wat

er ra

tio (

m3

/ ton

ne)

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Nestlé Investor Seminar 2007