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Nestlé’s successful entry into Asia

Thomas Schelling

7th May, 2010

T Schelling, May 2010

Nestlé: Good Food, Good Life

The world’s leading nutrition, health

and wellness company


Nestlé at a glance: Key figures


• CHF 108bn sales in 2009

• EBIT CHF 15.7bn

• Over 280,000 employees

• 449 factories

• Operations in 83 countries

Nestlé Roadmap



•Americas

•44.3%

•Asia, Oceania, Africa

•19.9%

•Europe

•35.8%

Sales by RegionPercentage of Total F&B Sales in 2009

Nestlé vs our competitors in 2009Food and beverages sales


The Nestlé story – how it all began1867 1866

1929

1938

1947

1960s

1970s

1980s

1990s

2000s

Henri Nestlé

1866


2 continents 47 countries 57 Factories

13 time zones Innumerable languages 55% of World’s population

All major religions Variety of cuisines/tastes Tremendous GDP growth

The Diversity of Asia



Thailand

1924

Japan

1913

India

1912

Philippines

1911

China 1908

Indonesia

1919

Hong Kong 1911

Malaysia

1905

Commercial presence in Asia –trading period 1905-1979

Pakistan

1979


Thailand

1968

Japan 1933

India

1959

Philippines 1962

China 1990

Malaysia

1962Indonesia

1972

Korea

1979

Vietnam 1997

Local Industrialisation in Asia from 1960’s

55% of the World's Population in Asia

Pakistan4 factories

More than 2400 employees

IndochinaThailand: 6 factories, Vietnam: 3 factories

More than 3,500 employees

Malaysia6 factories, Around 5,000 employees

Indonesia3 factories, more than 2,300 employees

Philippines4 factories, more than 3,000 employees

Singapore1 factory, around 350 employees

Korea2 factories, around 540 employees

South Asia Region7 factories

More than 6,200 employees

Japan3 factories, around 2,000 employees

China18 factories, around 14,000 employees


Vision for Asia:

We will become the recognized leading NHW

Company by establishing leadership positions

in those categories most relevant to our

consumers

We will become the recognized leading NHW

Company by establishing leadership positions

in those categories most relevant to our

consumers


Asia is Nestlé’s Future Growth Driver

In 2010 Asia represents:

• 55% of the world’s Population

•56% of the world’s Babies

Huge growth potential for Asia

Source: Population Division of the Department of Economic and Social Affairs of the United Nations


PremiumPremium

MainstreamMainstream

PPPPPP

Which feeds into our Multi-Tier Strategy


PPP

growth driver

Meeting the needs of the emerging consumer is a 20bio CHF opportunity

• Population Growth

• Consumer Needs

• Micro-Nutrient Deficiencies

• ‘Wealth-Creation’ – Migration to higher Income

Classes

• GDP/capita growth

• Urbanization

• Economical Challenge (financial crisis)

• Political Stability (in developing countries)


PPP Success Factors

The Emerging Consumer

The Emerging Consumer

Product & Packaging

Development

Product & Packaging

Development

PricingPricing

PPP Financial Models

PPP Financial Models

Route to Market / Route to

Consumer

Route to Market / Route to

ConsumerManufacturing

& Sourcing

Manufacturing &

Sourcing

OrganisationSetup

OrganisationSetup

Partnerships &

Cooperation

Partnerships &

Cooperation

CommunicationCommunication


Key Focus: more affordable products


Strong support from the R&D Network with focus on Asia (Singapore, Beijing, Shanghai, Tokyo)

Singapore

Beijing

Shanghai

Tokyo

Abidjan


Nutrition, Health and Wellness3 dimensions


Opportunity to target the most

Prevalent Micronutrient DeficienciesMicronutrient Main Function ImportanceMicronutrient Main Function Importance

Iron Energy Metabolism30% of world's population

(2 billion people) are anaemic

(WHO)

Vitamin A Sight & Immunity500 thousand children per year

go blind due to vitamin A

deficiency (FAO)

Iodine Brain Development35 % of world's population has

insufficient iodine in their diet

(WHO)

Zinc Growth & ImmunityGlobal prevalence not well

documented but children are

most at risk.


Creating Shared Value (CSV)

Acceleration of the CSV Strategy with focus on Nutrition, Water and Rural

Development

Creating value both for Shareholders and Local Communities


Creating Shared Value (CSV)

Examples from Thailand


Contributing to broader local prosperity

through business opportunities

‘Business on Wheels’, Philippines


Key Success Factors:


• Early Presence and Sequenced Market Entry

• Understanding of history, culture and values of host countries

• Deep Consumer Insight

• Long term vision and staying power even through local crisis

• Investment in People

• Agricultural Assistance

• Longstanding relationship with trade

• PPP Strategy

• Build and support strong Brands

• Decentralised and Empowered Management


Business Principles & Drivers

North America Europe Asia

Law Logic Relationship

Logic Relationship Logic

Relationship Law Law










• PPP Strategy



Localisation of Products











• PPP Strategy



Outlook for 2010 and beyond

We are well positioned to

further grow our brands

with consumers

in Asia


Future Capital Investments

We are strongly committed to Asia

RIBBON CUTTING: Nestlé CEO Paul Bulcke and Mr VoVanMot, Chairman of Dong Nai People Committee

officially open a new production facility in Vietnam, June 2009.


Nestlé’s successful entry into Asia

Thomas Schelling

7th May, 2010


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