N E S T L É S.A.
2GS/NY/08.05.01
AGENDA
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
3GS/NY/08.05.01
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
4GS/NY/08.05.01
Food and drinkGlobal market size in 2000
Top 20 manufacturers
48
290
900
2275
3500
bio. US$
1.4%
8.3%
65%100%
26%
Worldall food & non-alcoholic drink
Nestlé
World processed food & drink
Manufacturing value-added
% of all food
5GS/NY/08.05.01
The leading processed food group
Source: Annual reports/ estimates
2000 food & beverage sales (alcoholic beverages excluded)
05 000
10 00015 00020 00025 00030 00035 00040 00045 00050 000
Uni
leve
r Q
uake
r O
ats
Gen
eral
Mill
sPi
llsbu
ry
Kee
bler
6GS/NY/08.05.01
Nestlé number one global market positions
Soluble coffeeMineral waterPet care*Chocolate drinksChocolate & confectionery
Powdered and condensed milkFrozen prepared dishesDehydrated seasoningsInfant nutrition
* with Ralston Purina
7GS/NY/08.05.01
Nestlé – some facts and figures
Food industry leader with sales of SFr 81.4 bio.
479 factories in 81 countries
30% of sales in emerging countries
Products sold in nearly every country
40% of sales are made by the Nestlé brand
8GS/NY/08.05.01
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
9GS/NY/08.05.01
Real internal growth target of 4% per annum (volume excluding impact of price)
Internal targets for ROIC and profit margin improvement
EVA and economic profit are key measuresof management performance
Managers are remunerated on delivery of performance targets
Nestlé - focused on performance
10GS/NY/08.05.01
Underperforming businesses
Working capital improvement
Global Business Excellence (Project Globe)
Portfolio pruning
Bolt-on acquisitions
The performance drivers
11GS/NY/08.05.01
Operational efficiencyThe drive for continuous improvement
MH97Target 2004
Globe
Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Annual 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 ? 3.0targetsaving
Cumul. 0.6 1.3 2.2 3.1 E3.7 E4.2 E4.7 E5.2 ? ? savingsCHF bio.
?
12GS/NY/08.05.01
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
13GS/NY/08.05.01
World population by age, 2000 and 2010(in billion)
0 - 14 years 15 - 64 years Over 65 years
2000 1.82 3.86 0.42
2010 1.87 5.15 0.83
% 2.7 33 98 Increase
The Nestlé worldProducts and people
New born Elderly
CerealsDairyIce creamConfectioneryCulinaryJuicesMilkPerformancenutrition
Clinical nutrition
FoodService
CoffeecreamersMineral watersRTD
Ophthalmic14
Infant cerealsIMF (Infant nutrition)Wet jar foods
15GS/NY/08.05.01
Share of 1st and 2nd transformation goods
0
250
500
750
1000
0 5000 10000 15000 20000 25000 30000
65% 1st transf.10% dairy 35% 1st transf. 10% 1st transf.
Food
man
ufac
turin
g va
lue-
adde
d pe
r cap
ita(in
US$
at m
arke
t x-r
ates
)
GNP per capita (in PPP$)
16GS/NY/08.05.01
Growth around the worldGDP per capita, 1950-95, and share of world population, 2000
Source: JEP Winter 2000
Increase GDP Share of population
More developed areas + 210% 20%
Less developed areas + 190% 80%
China + 400% 21%
India + 150% 17%
Rest of Asia + 360% 21%
Latin America + 90% 9%
Africa + 40% 13%
17GS/NY/08.05.01
0
250
500
750
5000 10000 15000 20000 25000 30000
Korea
Spain
Cyprus Sweden USA
NorwayJapan
Holland
Austria
China
MexicoCzechiaChile
Finland France
Iran
CroatiaThail.Peru
MalaysiaColombia
Israel ItalyCanada
AustraliaGermany
Bolivia
Food manufacturing value-added p.c.(US$)
GNP per capita ($ ppp)
Source: UN National Accounts
India
Belgium
Potential for the Processed Food Industry
18GS/NY/08.05.01
2455 2380 1970
1498 1953 2679
12931725
2167
0
1000
2000
3000
4000
5000
6000
7000
1990 2000 2010
million people
above PPP US$ 6,000
between
below PPP US$ 1,800
48003700
World population by income groups1990 - 2000 - 2010
The Nestlé worldProducts and markets
Industrialised markets
Emerging markets
MilksIMF
CreamersCoffeeMineral watersRTD
OphthalmicAdult nutritionNespresso
Wet culinaryRTD Bevs.Ice creamFrozen foods
ConfectioneryCereals
Coffee + BeveragesDry culinary
19
20GS/NY/08.05.01
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
21GS/NY/08.05.01
Nestlé - the virtuous circleImproving profit
margins
Increasing brandinvestment
Profit margin (EBIT) 16.6% 0.3% 11.8% 16.1% 11.0%Brand investment 10.3% 7.7% 6.7% 17.8% 10.5%Sales growth (RIG) 3.2% 3.3% 3.6% 4.4% 3.6%
Annual 1997 1998 1999 2000 CAGincrease 2000/1997
Growing sales
22GS/NY/08.05.01
We believe in brands
We believe in training - growing brand experts
We believe in investing - today's brands are the foundation of tomorrow's growth
Nestlé's fundamental brand principles
23GS/NY/08.05.01
Branding at Nestlé
Nestlé makes products products are consumed
Consumers make brands brands are believed in
Brands exist in Nestlé understands consumer' minds consumers
24GS/NY/08.05.01
Consumers make brands
Food consumers have local preferences fulfilled by local brands
Local brands will always have a place
Brands must be self supporting
Branding and consumers
25GS/NY/08.05.01
Nestlé focuses on brand priorities, not on numbers of brands
Strategic brands Regional
Corporate
Worldwide
Corporate
Local
Corporate
Range/ProductRange/Product Range/Product
26GS/NY/08.05.01
For Nestlé For the consumer
Trust
Quality
Safety
Affinity
Relationship
Security
The benefit of brands
Loyalty of consumer base
Price premium
Database /direct marketing
Future health of the company
27GS/NY/08.05.01
Nestlé - the virtuous circle
Improving profitmargins
Increasing brandinvestment
Growing sales
28GS/NY/08.05.01
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
Introduction
Operational efficiency & performance improvement
Products, markets and trends
Brands
Conclusion
29GS/NY/08.05.01
We will deliver shareholder value through the achievement of sustainable, capital efficient and profitable long term growth through
– our geographic spread– our product spread– new product development– our brand expertise– our factories– benefits of electronic age
We are fit for growth
Conclusion