#1Nestle Good Food, Good Life Nestle 100 Good Food, Good Life YEARS OF BUILDING HAPPY NESTS Nestlé in India: Winning in the New Reality Helio Waszyk Chairman and Managing Director Nestlé India Nestlé Investor Seminar, Shanghai September 25th, 2012 Agenda 1. Introducing Nestlé India 2. Winning in The New Reality 3. Performance 2 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Nestle Printer on 25/09/2012 Page 1#2Nestlé India part of India Inc. GROWTH. INCLUSION. LEADERSHIP Nestle Good Food, Good Life $100 YEARS OF BUILDING HAPPY NESTS NestleⓇ Good Food, Good Life • Nestlé India is a public listed company Nestlé SA holds 62.76% share •Market Capitalization INR 402 bn (7.1 bn CHF) Nadia Limited Report 2010 3 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Nestlé India Limited Annual Report 2011 Market Capitalization end 2011 Exchange rate end 2011: 1 CHF = INR 56.70 Balanced Portfolio with Leading Brands 2011 Nestlé India: Sales of INR 74.9 bn* 8% of Zone AOA Sales 3015 Nestle LACTOGEN Nestle. NAN. Milk Products & Nutrition 45% Nestle Every Day Prepared Dishes & Cooking Aids 29% *Exchange rate (Avg.2011): 1 CHF = INR 52.59 | September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Nestle CERELAC Munsh 13% 13% Chocolate & Confectionery Beverages Maggi NESCAFÉ Nestle NESTEA Nestle Page 2#3The Multi-faceted Opportunity & Demographic Dividend Young Population an Asset ⚫54% population below 24 years • Net growth +1.3% p.a. Increasing Awareness & Digitalization • 900 million mobiles • 84% reach of TV in Urban 125 million internet users 5 | September 25th, 2012 | Nestlé Investor Seminar, Shanghai Urban-Rural Tiers .69% population is Rural • 53 cities with 1 million+, 8 cities with 5 million+ population GDP Growth and the New Reality GDP per capita $1500+ Consumer Confidence Index 119 (-4) 9.5 8.5 7.7 7.4 7.1 5.4 % 2007 2008 2009 2010 2011 YTD 2012 The New Reality Inflation, rising commodity costs & weakened Rupee Inflation Trends Nestlé India Commodity Basket (Price Index) USD: INR Average Exchange Rate 9.2 6.4 4.9 127 17.7 12.0 A 8.7 8.4 10.9 9.6 148 138 7.3% 123 12.1% 9.5 9.1 9.5 112 110 8.3 8.9 10.4% 7.4 1.6% 100 10% 48.4 45.7 43.6 46.6 Nestle 52.3 41.3 2.4 Closing Exchange Rate at 30/Jun/2012 1USD = 56.21 INR 2007 2008 2009 2010 2011 H1 2007 2008 2009 2010 2011 Inflation (WPI) 2012 Inflation (Food) H1 2012 2007 2008 2009 2010 2011 H1 2012 6 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Nestle Page 3#4The Multi-tier Income Pyramid offers scope across Premium, Mainstream, PPP Population distribution 2005 2015 Income distribution 2005 2015 CONSUMER BASE Global India Seeking & Striving India Aspiring India Deprived India Source: NCAER, Projections Income pyramid will move from a triangle to a diamond... ...generating additional genuine inclusive growth... ...equally distributed across income tiers 7 | September 25th, 2012 | Nestlé Investor Seminar, Shanghai The Double Burden Micronutrient deficiencies and health issues Micronutrient deficiencies Overweight Iron Iron 60 million overweight/obese (BMI>25) 60 million children under 3 years 90 million urban Women Diabetes Vitamin A Vitamin A From 50 million to 80 million diabetics in India by 2030 Heart health lodine lodine 30 million Coronary Heart Disease 120 million hypertension, 60% of cardiac patients in the world are Indians. Health issues 8 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 95 million children under 6 years Nestle 7 million children born p.a. unprotected from mental impairment Nestle Page 4#5Agenda 1. Introducing Nestlé India 2. Winning in The New Reality 3. Performance 9 September 25th, 2012 | Nestlé Investor Seminar, Shanghai The Nestlé Strategic Roadmap to Win in The New Reality Nestle Nestle Competitive advantages Nestle Unmatched product and brand portfolio Unmatched research and development capability Innovation and renovation Operational efficiency Sustainability Compliance pillars Whenever, wherever, however Unmatched geographic presence People, culture, values and attitude Creating Shared Value Nestle Good Food, Good Life Our objective is to be the recognised and trusted leader in Nutrition, Health and Wellness, and the industry reference for financial performance Nestlé culture. values and principles Out-of-home consumption Nutrition, Health and Wellness Emerging markets and Popularly Positioned Products Growth drivers Nest Nestle Operational 10 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Consumer communication Premiumisation Nestle Page 5#6Our Overall Strategy SOURCES OF SALES GROWTH OUR STRATEGY > We will accelerate penetration AND increase frequency AND develop winning concepts > We will focus on both growth AND margins PENETRATION (sell same to new) FREQUENCY (sell more to same) NEW PRODUCTS & BUSINESS (sell new to same & sell new to new) *does not include new opportunities 11 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Value Creation with a Multi-tier portfolio. Emerging markets and Popularly Positioned Products Mainstream PPP ACTOGEN Premium Milkybara's 12 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 BAB NESTLA EveryDay Mung Milkybar y Milkmaid Munch roll mungh 2 Nestle Bar One C Nestle Premiumisation Nestle Page 6#7Driving Nutrition, Health and Wellness Neste India 241 100 13 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Nestle Start Healthy Stay Healthy st 100 days A healthy foundation for life Engagement with Consumers Bakery Out of Home Opportunities abound Driving Vending NESCAFE Building Food Maggi 14 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Nutrition Health and Wellness Nestle Out-of-home consumption NESCAFE Corners NESCAFÉ Channels Sunrise செல்வம் தேதிர் நிலையம் SELVAM TEA STALL Sunrise NESCAFE Rick It Cam It's International New NESCAFE Caramel Macchiato Nestle Page 7#8Winning with Distribution and Route to Market Distribution Reach Million Outlets General Trade & Organized Trade Whenever, wherever, however 2.8 +290K 2.5 3.7 +490K 3.2 +380K 2008 2009 2010 2011 15 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Thungh Milk Products & Nutrition Enhancing the Quality of life and Delighting consumers, building on the goodness of milk Innovation & renovation Enhancing the Quality of life Market Position • No. 1 in Dairy Whitener • No. 1 in Baby Food • No. 1 in Infant Formula Tea Creaming Neste EveryDay 16 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Delighting consumers Nestle a+ dahi COGEN ACTOGEN NAN NAN NESTOGEN Nestle Consumer communication NESTUM MESTUM Health Care Nutrition Maternal Nutrition RESOURCE BABY Diabetic me Creations Creations Milkmaid Milkmaid Milkmaid Milkmaid Creations Creations Abooo Nestle Page 8#9Prepared Dishes & Cooking Aids Tasty & Balanced food everyday Market Position No. 1 in Instant Noodles, Sauces & Pasta • No. 2 in Soups Maggi Taste Bhi Health Bhi Khushiyan Bhi Innovation & renovation Consumer communication Noodles/Light Meals Fortification/Goodness of grains Maggi Masala Maggi VEGETABLE ATTA NOODLES PAZZTA Multigra VEGETABLE Retail and Brand Activation masmagic Among Top 10 Most Trusted Brands in India. Bates141 COLGATE 2 JNT LUX 3JW. Tapost India ARTEL 4 Lowe Lintas LIFEBUOY 5JWE WAK Brund Equity FOOD PRODUCT Britannia Maggi Tata Salt 4 Kurkure ture RSCG DETTOL 8 Ogilvy VODAFONE Publicis Capi MOST TRUSTED BRADOS 2011 5 Amul MAGGI 10 Lowe Lintas CLOSEUP Parle Sunfeast Source: Economic Times, 2011 Call Toll Free 1800-102-1116 Joke Suno Sunao & spread Hasi Khushi! McCann Erideon, Love, Grey BRITANNIA 17 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Nestle Beverages Value Leadership in Instant Coffee & Building the new category of Iced Tea Market Position Innovation & renovation Driving NESCAFÉ Consumer communication No. 1 in Instant Coffee . Strong presence in Vending • Leading Iced Tea Innovation NESCAFE Sunrise NESCAFE GOLD Classic 1.5 Million NESCAFÉ Facebook Fans HT 4cc 4x4cm BE MY NEIGHBOUR* Call 090041 90041 Building a new category NESTEA Sms & Conditions Acoy NESCAFE Switch on the beat in you 18 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Nestle Page 9#10Confectionery Delight in every bite - meeting consumer needs for pleasure Market Position • No. 1 in Wafers & Whites monsh Innovation & renovation Consumer communication Winning at point of purchase 10 Milkybar POLO Enjoy the new Dark Innovation MERA CRUNCH MAHAN PRIDING Impactful Communication munchro CRUNCH Machao 19 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Nestle Global R&D center in India strategically placed to leverage local insight and global technology Popularly Positioned Products Indian Cuisine Mastership Unmatched research & development capability Noodle Technology VEGETABLE ATTA NOODLES ATTA NO 20 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Localized Cereals/Chocolates CERELAC CERELAC Munchro Nestle Page 10#11Developing Moga milk district 09 • Nestlé quality collection centers •Milk Chillers installed at the villages Transparency in rates •Regular payments to ~50,000 farmers • Better quality & better price for both the farmer & Nestlé 21 September 25th, 2012 | Nestlé Investor Seminar, Shanghai 1+ million liters/day ! Win Win Model! Creating Shared Value Nutrition Non Water Nestle Saanjhäpan Water Rural Development Rural Development Nestle Nestlé Healthy Kids Programme In collaboration with Universities Nestlé Healthy Kids for Delhi Health Camp: Micronutrient awareness In collaboration with Drishtee Foundation Clean Drinking Water Projects • Access to clean drinking water in village schools across factories Water Awareness Programme Creating awareness among village school students International Water management Institute Study on the water footprint of Milk, rice and wheat in the Moga region • Water Awareness Programme for milk farmers Milk Farmers ⚫ Technical assistance and training to farmers Village Women Dairy Development Programme Chicory farmers •Training, Improve chicory quality and productivity The NESCAFÉ Plan ⚫Launched on 5th Jan 2012 Sanitation facilities • Sanitation projects benefitting girl students 22 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Nestle Page 11#12Agenda 1. Introducing Nestlé India 2. Winning in The New Reality 3. Performance 23 | September 25th, 2012 | Nestlé Investor Seminar, Shanghai Nestlé India doubled sales in the last 4 years Index Sales Growth - India 2011 Sales INR 74.9 bn CAGR 2007-2011= 20.9% 146 123 100 2007 2008 2009 178 214 Exchange Rate (Avg 2011) 1CHF= 52.59 INR 24 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 2010 2011 • Doubled sales in the last 4 years • Operating Profit 18.5% in 2011 . ROIC 50% in 2011 ⚫ 500 million CHF Capex in 2010-12 •Healthy working capital 4.7% in 2011 Nestle Nestle Page 12#13EPS (INR) 2001 Low & further improving operating working capital 2007 2008 Basis Nestlé Internal Reporting Standards 25 September 25th, 2012 | Nestlé Investor Seminar, Shanghai 2009 2010 2011 ■TNWC as % of sales (indexed 2007 = 100) Nestlé India earnings per share multiplied 5.5 times in 10 years Nestlé India EPS Nestlé India Share Price Movement 2001 X 1.8 2006 X 3.0 2011 INR per Share 5,000 X 5.5 99.7 84.9 4,000 67.9 3,000 55.4 42.9 2,000 32.1 32.7 27.3 26.1 20.9 18 1,000 CAGR 18.7% 26 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 Year 2007 2008 2009 2010 2011 Nestlé India Share Price CAGR 38% (BSE SENSEX CAGR 4%) Nestle Nestle Page 13#14Nestlé India ranks among the top companies in India Dun & Bradstreet Business Insight 2011 Rank among Top 500 companies across industries Total Income Net Profit Market Cap RONW 97 90 43 1 RONW: Return on Net Worth or Return on average equity is computed as follows NET PROFIT FOR THE YEAR / AVERAGE OF OPENING AND CLOSING SHAREHOLDER FUNDS FOR THE YEAR 27 | September 25th, 2012 | Nestlé Investor Seminar, Shanghai Nestlé India continues to unlock opportunities and invest for the future 28 September 25th, 2012 | Nestlé Investor Seminar, Shanghai Printer on 25/09/2012 •Strong profitable growth •Taking into account the new reality •Investing for the future Well poised to capture the opportunities Good Food Good Life Nestle Nestle Page 14#15Nestle Good Food, Good Life 100 YEARS OF BUILDING HAPPY NESTS Printer on 25/09/2012 Page 15