#1June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nestlé Investor Seminar 2014 Nestlé in Brazil Juan Carlos Marroquín, CEO Nestlé Brazil June 3rd & 4th, Liberty Hotel, Boston, USA Nestle#2Disclaimer 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. 1 | June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nestle#3Nestlé in Brazil: 2013 sales by product category 19% 38% 2 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 ■Confectionery and Beverages1 Sales 2013: 43% ■Milk products and ice cream CHF 5.1 bn Other (incl. Nutrition & Health Care, PetCare and Prepared dishes & cooking aids (1) Including Waters Nestle#4Agenda ■ Brazil continues to be a country of opportunities Nestlé 93 years in Brazil and recent performance ■ Our vision and strategies to win in the new reality 3 | June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nestle#5Agenda ■ Brazil continues to be a country of opportunities Nestlé 93 years in Brazil and recent performance ■ Our vision and strategies to win in the new reality 4 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nestle#6Brazil is the 7th largest consumer market NORTH 4.4 Density 5% 5.5 % GDP GDP/capita MIDWEST 9.3 Density $ 10% 11.1 % GDP GDP/capita SOUTH 49.9 16% 9.7 Density % GDP GDP/capita 5 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Population density (people / km²) SOUTHEAST % GDP Brazil / GDP per capita (CHF k) BRAZIL • 200 m inhabitants (84% urban) • • • 8,5 m km² world's #5 (47% South America) 25 years of political stability 20 years of economic stability ⚫ GDP per capita CHF 9,500 91.3 Density 3 NORTHEAST ШУ 13% 35.9 Density 4.1 % GDP GDP/capita 55% 11.3 % GDP GDP/capita Source: IBGE Nestle 1 CHF R$ 2,51 (average 2013)#7Large growing market, with fiercer competition F&B Market¹ ■CHF 217 bn (2013) Food Industry Consolidation² Others ■8.5% F&B Inflation 3 250bps consumer inflation 81% 77% 6 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 19% 23% Top 5 2008 2013 Source: (1) ABIA, (2) Euromonitor Package Food (3) 2012-2013, BRL currency devaluation leads to a zero growth in CHF Nestle#8Winning in Brazil requires deep local insights Consumers: Evolving demographics, needs and aspirations High 22% Middle Class 54% CHF 1,000+ per capita ☐ ■ 45 m people ☐ ■ 40% consumption ☐ - Purchasing power ~ Europe CHF 450 per capita 110 m people 41% consumption Over 40 m new people ■CHF 125 per capita Low ■ 45 m people 24% ■ 19% consumption ☐ ■ Shop in small retailers 49% overweight adults 34% overweight children DEMOGRAPHIC BONUS IN THE NEXT 30-40 YEARS Shoppers ■ Brazil is #1 developing country for retail investment¹ ■ Preference for small retailers: convenience ■ 46% of sales in modern trade Pharmacies growing in importance ■ Bars losing relevance, but still responsible for 22% of sales 7 | June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 (1) Global Retail Development Index 2013:score of 69,5 Nestle#9Brazil's journey to become a developed economy BRAZIL DEVELOPMENTS 38% increase GDP per capita¹ Doubled government incentives to families² 14.1 9.5 6.9 6.5 Brazilian riot 2003 2013 2003 2013 CHALLENGES AHEAD Cost of doing business in Brazil is 36% higher than in developed countries and 28% higher than in emerging markets Reduction of 0.9% in total productivity in 2013 Negative productivity changes in the last decade 5.4x higher bank spread Rio 2016 65x longer to comply with fiscal regulations4 15% currency devaluation 3 Halved unemployment World's largest exporter 12.3 5.4 2003 2013 Beef, poultry, coffee, sugar, orange juice, soy and tobacco FIFA WORLD CUP Brasil 2014 FIFA World Cup and the 2016 Olympics ASTICA 19% paved roads 1.7 m km total 7.5x longer to unload and custom clearance 5 São Paulo has 18% of London Subway (km) 75% functional illiteracy 8 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Brazilian elections 2014 Source: Brazilian Central Bank and IBGE (1) CHF '000; (2) Numbers of families; (3) 2013 vs. USD; (4) In comparison with Switzerland; (5) Brazil compared with Rotterdam Nestle#10Agenda ■ Brazil continues to be a country of opportunities Nestlé 93 years in Brazil and recent performance ■ Our vision and strategies to win in the new reality 9❘ June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nestle#11Nestlé has 93 years in Brazil with presence in 99% of the households. NINHO CONTINUOUS Nestle EXCELLENCE NESTL MAGOI caldo Araras factory 1921 galinha MAGOL caldo carne Nestle 2005 Nestle Garoto 2002 1944 1962 1988 > PURINA 2001 FIFA WORLD CUP Brasil 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2014 1930 1957 1970 1999 2011 CHOCOLATE EN TO COFFEE Nestle 1932 Caçapava factory Nutrir Chocolate Gardano acquisition 10 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 2007 Feira de Santana factory Source: Nestlé Brazil website Nestle#12Brazil is the 4th largest Nestlé market WITHIN NESTLÉ Brazil Brazil: Group FOR BRAZIL EMPLOYEES 23 k 1:14 FACTORIES 28 1:17 SALES $ CHF 5.1 bn 1:18 VOLUME 1.9 m tonnes/year 1:27 11 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 23,000 employees 220,000 indirect jobs 117 brands in 16 categories for 200 m people Source: Company report 2013 Nestle#13Strong market positioning Nestle Farinha 1st 1st NIGH MUCILON arre NISHE NINHO 1st Neste Moca 1st Maggi Galinha NESCAU DOG CHOW 12 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nethe NAN COMFOR 1st >>> Nestle 1st NESCAFÉ 1st nutren senior 1st 1st or strong 2nd in the largest majority of our portfolio 1st NOVO Nesfit 2nd Neste 2nd SORVETES Nestle 2nd 2nd GREGO 5th ■ Undisputed leadership in several NHW carrier categories - infant nutrition, cereals, dairy, breakfast cereals Source: Nielsen 2013 Nestle#14Relentless in offering healthier and tastier options to consumer through innovations SUPERIOR PORTFOLIO INNOVATIONS 80% 77% FAST NESTLE RITMO Healthier Tastier 14 bn of fortified servings per year nutren senior 13 | June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 NESCO Dolce Gusto OHNIN) OHNIN OHNIN Nestle#15Nestlé Brazil superior reputation NESTLÉ BRAND IMAGE: recognized by 41% as expert and leader in Nutrition (2nd player with 17%) Trust 256 Advocacy 244 Tastier and Healthier Choices 282 Nestlé 196 #2 182 Nestlé #2 Nestlé 200 100 indexi Industry average #2 Source: Corporate Equity Monitor (CEM) 2013 SELECTED AWARDS TOP of MIND FOLHA Top of Mind in Food, Chocolate and Milk EMPRESAS QUE MAIS RESPEITAM O CONSUMIDOR Respect to our consumers DATA POPULAR "Brands of the Brazilian middle class heart" Carta Capital AS EMPRESAS MAIS ADMIRADAS NO BRASIL. 2013 votado pelos i fores PREMIO EMARGAR EPOCA CONFIANCA Beloções do 2012 der's Diges 6x Most #1 most admired Company in F&B Reliable Brand Reclame AQUI AS MELHORES O CONSUMIDOR 1 3 EMPRESAS PARA 14 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Source: Global Rep Trak; Modern Consumer and Shopper Experience; Marketing Best Award; Readers Digest/IBOPE; Data Popular Consulting; Folha Newspaper (SP) Nestle#16Agenda ■ Brazil continues to be a country of opportunities Nestlé 93 years in Brazil and recent performance Our vision and strategies to win in the new reality 15 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nestle#17Driving our performance Operational pilers Nestle Roadmap Growth drivers Make choices ORTUNI CH ICE Grasp opportunities Strengthening portfolio Value what consumers value Engage with the community and stakeholders Allocating resources Have Embrace digital the best people Compettive advantages Expand the boundaries of nutrition Priorities 16 | June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 NestleHealthScience Mastering complexity Focus areas Nestle#18Making choices # SKUS SIMPLIFICATION 25% REDUCTION Week 2011 2013 Week MSR MGR MOR MFR Week 3 MBP O nosso ciclo ploriejamento Focus on top 20% SKUs Flawless execution 17 | June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 CLEAR PORTFOLIO STRATEGY In confectionery, biscuit portfolio transformation towards NHW brought NESFIT from 6th to 2nd brand Focused efforts for performance improvement and capital efficiency Cost-savings compensation plans over CHF 100 m Nestle#19Grasping opportunities NESPRESSO Dolce Gusto NESCAFÉ COFFEE Brazil is the second coffee market in volume Already 1st market in Latam Largest coffee exporter Nestle PROFESSIONAL Beyond the cap colabo LIQUIDS ■ Growth and Profitability ■ 3rd largest category in Brazil ■ New mindset & model 3 focus brands Molia JOHNIN CHOCOLATE KIT KAT - Market Share FIFA/CBF 15% 10% 2012 2013 Market share in snack segment 18 | June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 NUTRITION JOURNEY 2014 Strengthen nutrition territory ■ Pharma channel growth FIFA WORLD CUP Brasil ■ Enhanced nutritional benefits under a bolder communication Nestle Source: Internal data Nestle#20Strengthening our foundation COMMUNICATION Strengthen our brands with consumers (BBNW) Nestle Faz Bem Preserve strong position of Nestlé Faz Bem and positively impact kids' lives DIGITAL Rich & relevant proprietary content w/ 2 m visits/month f GAROTO is Garoto Brazil #1 fan page1 #Negresco Desenrola Over 1 m views in a single day Fresco 1st chocolate co-created on fan-page ROUTE-TO-MARKET Leverage our size into scale PORTFOLIO Premium NESPRESSO STAR Best in Class Broker model to traditional trade NESCAFÉ Mainstream Creating a bridge to win ICP Focused & simplicity in commercial planning Popular 19 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Balon NESCAFE Dolce Gusto NINHO Source: Internal data #1 of Food Companies in Brazil; Nestle Nestle#21Creating Shared Value Nestlé Nutrir Crianças Saudáveis 1.7 m children impacted MARKE NG BEST Curso Nestlé de Atualização em Pediatria Nestlé Course is the largest event for pediatricians CSV SUSTE IDADE 2012 Benchmarking Brasil 10 anor SUSTAINABILITY Sustainability Awards Food Safety System Certification 22000 Food Quality certification in Araras (DPA), Goiânia and Vila Velha COMPLIANCE NHS Young Nutritionist Program: 120 new/year 20June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Cocoa Plan ecolaboration ALIANCA Beyond the cap 4,000 tonnes of certified coffee NAMENTO DPA COM O PRODUTOR 10% increase milk producer productivity 15 years of continuous efforts - reduction is equivalent to the consumption of a city with: • • • Water: 310 k population CO2: 115 k population •Energy: 125 k population 94% of employees feel proud to work at Nestlé 9 m quality tests Nestle#22Having and developing the best people Se tra Nestle DEVELOPMENT Neetio EMPRESA DOS SONHOS DOS JOVENS 2013 Career Acceleration Company of the dreams for Programs youngest GENDER BALANCE 34% Women in succession plan for management position INTERNATIONAL MOBILITY #1 F&B company for leadership (Hay Group) 98% aligned with succession plan PEOPLE AT THE CENTER OF EVERYTHING WE DO FAVORABILITY INDEX AT TOP QUARTILE Nestle RECOGNITION Reconhecer faz bem Formal Recognition Programs Muito obrigada! N-Cards NESTLÉ CORPORATE BUSINESS PRINCIPLES IR System Strong Commitment Campaign & Training EDUCATION & TRAINING Website to Expats/ Inpats 71 Expats 64 Inpats Over 440k training hours Over 23,000 employees (half week per employee) 21 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Tailor to diversity and special needs Nestle#23Nestlé in Brazil financial figures +12% CAGR (1) +14% CAGR (1) 2011 2012 2013 2011 2012 Sales (in local currency) 22 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 2013 Trading Operating Profit (in local currency) (1): 2011 to 2013 change Nestle#24Winning proposition: build on our heritage to accomplish even more NESTLE FEZ BEM E VAI FAZER AINDA MELHORI Nestle Faz Bem 23 June 3rd & 4th, Boston | Nestlé Investor Seminar 2014 Nestle