Brand Trust increasing

*Instant Noodle Retail Track

-AC Nielsen Market size estimate

Accelerated Market Share Recovery

98

3

79 81 83

Pre Crisis Crisis Jan 16 Mar 16 Apr 16

0%

11%

35%

44%

48%

Pre Crisis

Apr 15Crisis Nov 15

Launch

Dec 15 Jan 16 Feb 16 Mar 16 Apr 16

19,2

00

5,5

00

8,7

00

10,6

00

11,1

00

13,0

00

12,8

00

Nestlé India: MAGGI progressing ahead of expectations1

51%53%

79%

34

35

36

Nestlé India: MAGGI progressing ahead of expectations1

37

China: Reigniting growth by meeting consumer needs 2

Slow down, but still a great

consumer story

Evolving consumer needs

Channel dynamics

Implications for Nestlé

China New Normal

38

CHINA’S “NEW NORMAL” IMPACT TO FUTURE BUSINESS

Topline

impact

Cost

impact

Source: Chinese Government Report at NPC & CPPCC 2015; APEC CEO Summit 2014; Bain

Speed (速度)

• Slower GDP growth rate

Structure (结构)

• Consumption as key lever

to replace export

Steering (动力)

• Innovation-driven to replace

resource/ investment-driven

• Lower FMCG growth caused by softer economy

• Traditional channels facing competition from eComm

•Manage cost inflation (logistics, labor, etc)

• Embrace new technologies to improve efficiency

• Building talent and organization capabilities required

for this new business environment

Overall FMCG growth continues to slow down

39

Note: Data covers 106 FMCG categories (includes ambient and chilled food and beverages, and personal care and household products; excludes

fresh food, white goods and electronics); Q1, Q2 and Q3 are always 12 weeks; Q4 is 16 weeks Source: Kantar Worldpanel; Bain

Personal and home careFood and beverageTotal FMCG

40

Source: Euromonitor; Global Demographics; Lit Research; Bain Analysis Source: CEIC, Euromonitor, Bain

Inflation

One of the best consumer stories in the world ..

Fast growth of middle class and

upper middle class

Disposable income growth still

growing well above inflation

12.6

7.7

9.08.2

0

2

4

6

8

10

12

14

2011-12 2012-13 2013-14 2014-15

Growth of China’s per capita disposable income

(2011-2015)

2.6% 2.6%2.0%

1.4%

>$65K $25K-65K $10K-25K $5K-10K <$5K

Household distribution

By annual disposable income

China remains one of the best consumer stories in the world

41Source: Bain

Price transparency

and sensitivity

A new generation of Chinese consumers

Premiumization

Lifestyle categories vs.

daily necessities

Overseas purchase & cross-border

Digital /

ecommerce

Chinese urban shoppers affected by multiple factors

SHARE

~80% of shoppers give reviews online

42

DISCOVER

Source: Bain

>75% of customers use

internet for browse or purchase

PURCHASE

>12T RMB of online / mobile payment

(total of transactions)

ENGAGE

2Xmore satisfied on

e-channel vs. offline channels

DISCUSS

>700M usersactive monthly users

combined on WeChat = Weibo

SELECT

>50%of purchase decisions

are made online

Consumers in China are embracing digital much faster

43 Note: *Independent players refers to startups which didn’t receive equity investment from “BAT”

Source: Capital IQ; CV Source; Lit search; Bain

Independent

players*

Online travel Online “hypermarket” Online “category killer” Cross-border e-commerce

Customer engagement

Feedback

E-transaction

Decide & Transact

Lead generation

Discover & Research

1 2 3

Search engine Map

Shopping platform directing traffic to

E-commerce sites Social forum

Video streaming Travel-bookingPayment

processingcross-border e-commerce

cross-border e-commerce App download

Group-buying Rise-sharing

Travel bookingC2C

E-commerceB2C

E-commercePayment

processingDirect salesE-commerce Instant messaging Group buying

WiFimarketing

Videostreaming

Travelbooking

MapWeb browserDepartment

store

Electronics

retailer

Micro-

blogging Taxi hauling

Instant

messaging

Web portalInstant

messagingInstant

messaging C2C E-commerce App storeSocial

network Taxi hauling

Classified site Travel-booking B2C Ecommerce Mobile E-commerceC2C

E-commerceLocal deals /shop reviews

Group-buying

O2O laundryservice

Se

lf-

ow

n

Bu

yS

elf

-ow

n

Bu

yS

elf

-ow

n

Bu

y

“BAT” ecosystem affecting both consumer & trade dynamics

44

Demand creation pull

model for the future

In-store

executionBrand power

Successful channel push model for the last

20 years

Coverage Penetration

Product

portfolio

Trade model shifting from “Push” to “Pull”

Source: Company data

Nestlé GCR: Competing across ~10 major categories

Nestlé GCR Sales (CHF 7.1Bn)

45

Number 1 or number 2 position in most categories

Nestlé F&B

Globally

Managed

Businesses

58%

42%

Nestlé GCR: Majority of F&B businesses are stabilizing

46 Source: Company data

OG Trend

Coffee

Confectionery

Culinary

Dairy & Ice Cream

OG Trend

Peanut Milk

Congee

RTD Coffee

Nestlé F&B 2015 Sales CHF 4.1 billion

Other

Categories

47

Reconnecting with consumers through premiumization

Nescafé Dolce Gusto Confectionery

• 85% growth in 2015• Thick cut shortcake grew >10% Q1 2016

• KitKat launched prior to Chinese New Year

Premium Sachima

Candy

Kit Kat

Thick cut shortcake

Premium shopping experience

48

Winning back consumers with new and renovated products

NESCAFE

• #1 with 74% market share in 2015

• 100% - 60/40 win

Shark

Target young

people

Target mid-aged

people

NHWSachimaCaomijuan

SHARK & Hsu Fu Chi

• Shark #1 with 32% market share in

2015

TOTOLE

• 50% Market Share

Chicken Bouillon Halal Bouillon

Cooking Sauce Oil and Herbs

49

Deeper penetration and wider coverage across various channels

NESCAFE TOTOLE

• #1 with 47% market share in 2015

• 10% increase in Numeric Dist. in 2015• Growing presence in out-of-home

• Penetrate lower tier markets

50

eCommerce: Nestlé China eComm sales more than doubled in 2015

Leverage strategic partnerships, global brands and capabilities

+289% vs LY Chocolate

+68% vs LY Coffee

+67% vs LY Adult Milk Powder

+20% vs LY Biscuit

Note: online category growth is the sales growth rate of all Nestlé products sold online

2015 ZAOA online sales NiM scope

e-Commerce: Celebrating Nestlé’s 150th Anniversary with Alibaba

June 2016 kick-off Planet of Wonder campaign to delight

Chinese consumers with more than

150local and global products

51

YINLU: Main area of challenge

52 Source: Company data

OG Trend OG Trend

Coffee

Confectionery

Culinary

Dairy & Ice Cream

Peanut Milk

Congee

RTD Coffee

Nestlé F&B 2015 Sales CHF 4.1 billion

53

Yinlu had a winning,

traditional model

• Track record of strong, profitable growth

• #1 in Plant Protein Drink

• Nationwide distribution with ~2K Tier 1

distributors

• Extensive store coverage through a

multi-layer, push model

… but in turbulence

under “New Normal”

• Yinlu Core Range declining

• Consumers shifting rapidly to more

premium products

• Strong dairy competition due to low prices

• Deteriorating distribution quality, coverage

and in-store execution.

Yinlu: business in transition

54

Upgrade existing

products

Accelerate new

product

development

Move towards

“pull model”

Ensure strong

execution

• Upgrade existing products to meet the trend of premiumization and provide healthier choices to consumers

• Focus on successful launch of Shakissimo and Milo in 2016

• Explore opportunities in new RTD products

• Improve brand building and POS execution by leveraging Nestle expertise and working closely with distributors

• Empower turnaround taskforces with

best-of-class experts to ensure fast and practical execution for results

Yinlu turnaround will TAKE TIME but we will BRING YINLU BACK ON TRACK

Steering Committee

Project Management Office

TF1 TF2 TF3 TF4 TF5 TF6 TF7 TF8 TF9

HQ Frontline Consumers

A comprehensive turnaround plan is in place

1

ACCELERATE DIGITAL AND COMMERCE

2

CHINA STILL A GREAT CONSUMER STORY

3

PRODUCT PORTFOLIO HAS TO BE RELEVANT TO FAST EVOLVING

CHINESE CONSUMERS

55

4 Key Takeaways

YINLU TURNAROUND:GET IT RIGHT4

56

Reigniting Growth: Market Presentations

Japan:

• Innovation beyond

products

• Premiumization

Kohzoh Takaoka

CEO Nestlé Japan

5

3

Vietnam:

• Establishing Brands

• Building Capabilities

Ganesan R Ampalavanar

CEO Nestlé Vietnam

4

Nigeria:

• PPP

• RTM

Dharnesh Gordhon

CEO Nestlé Nigeria

5