#1Nestle Good Food, Good Life Wyeth Nutrition and Nestlé Nutrition Greater China Region 1139 John Cheung Regional President GCR Wyeth Nutrition James Chiu Regional Business Head GCR Nestlé Infant Nutrition#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. 2 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nestle#3AGENDA I The China IF/ GUM Market II Wyeth Nutrition & Nestlé Nutrition: 1+1=3 III Winning strategies of Wyeth Nutrition & Nestlé Nutrition 3 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#4Strong market growth in the Greater China Region GCR IF/GUM Market Size Bio CHF, %, 2008-2013E 5.7 5.1 CAGR: +12% 9.9 7.8 1.8 84 2008 0.3 2013E Mainland China Hongkong Taiwan Key Growth Drivers Mainland China: - - 15~17 mio newborns; one-child policy Urbanisation - Premiumisation Hong Kong / Taiwan: - HK benefits from mainland - shoppers and mainland babies born in HK TW is stagnant due to declining births 4 | September 30th, 2013 | Nestlé Investor Seminar 2013 Source: Nielsen, China Statistic Bureau Nutrition Nestle#5Rapid urbanisation and household incomes increase China Urbanisation Trend %, 2008-2018E Disposable income per capita USD 52% 51% 50% 47% 46% 57% 12-'18 CAGR: +13% 2,691 2,321 1,887 1,455 1,642 5,477 2008 2009 2010 2011 2012 2018E 2008 2009 2010 2011 2012 2018E More working mothers with growing income Source: China Statistic Bureau, Economist, McKinsey 5 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#6China city tier at a glance % of City tier # of city Population (million) GDP/Capita national city (CHF) population IF market value size (weight%) Key 4 10-19 4% 12,034 15% A 27 1.5-9 12% 7,989 21% B 282 0.2-4 32% 4,538 31% C/D 1,633 0.2-1.5 27% 1,387 33% Town 32,608 0.02-0.07 25% 6 | September 30th, 2013 | Nestlé Investor Seminar 2013 Lots of room for growth Source: Nielsen and China Statistics Bureau of 2011 data Nutrition Nestle#71% Premium and super premium segments growing rapidly IF segment value importance %, 2008-13E 3% CAGR %, 2008-13E 18% 99% Super premium 46% 69% 18% Premium 70% 23% -10% Upper-Mid 19% 30% 9% 9% 3% 2008 2010 2013E -32% Mid Premium and super premium the two largest segments Note: Segment definition (RMB price/per kg), Stage 1 as example: Super premium: > RMB 290; Premium: (190,290); Upper-mid: (125, 190); Mid: <125 Source: Nielsen, team analysis | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#8Unique attitude of Chinese moms towards IF / GUM First time mom Food safety concerns • 7159 Chinese moms' psychology/ behaviour Safety / reliability brand choice pre-requisite Willing to pay premium Do extensive brand research - Internet / social media / retail shopkeeper Quick to adopt new technologies Internet generation High expectation Chinese moms insecure about food safety and always look for latest innovations 8 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#9Latest directives by State Council poised to change China IF/GUM landscape Milk Farm/ Source Manufacturing Import Self controlled / own milk source Pharma GMP; 3rd party manufacturing discouraged New factory certification and registration requirements Channel Industry Consolidation 2028 S-26 Progress GOLD 金裝品 From 128 to 50 companies with sales of RMB 5 bio by 2018 Source: Ministry of Industry and Information Technology Electronic tracking system, drug store channel pilot 9 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#10Wyeth Nutrition and Nestlé Nutrition well-positioned to capture market opportunities Commitment to WHO Code and FTSE4Good standards Comprehensive product offerings Strong brand image: advanced science, quality Strong share position in urban markets Dedicated channel resources and capabilities 10 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#11Commitment to WHO Code and FTSE4Good Our Commitments To support breastfeeding with specific programs • Nestlé policies: . - no public promotion no samples to mothers Wyeth Nutrition is implementing Nestlé policies Dedicated resources on compliance Breastfeeding support activities Nestlé Instructions toe implementation of the WHO International Code of Marketing of Westm Nestle Nestlé instructions 围产期母婴护理服务实践项目 国家卫生和计划生育委员会优质护理示范工程 主管单位:国家卫生和计划生育委员会医收司 主办单位:中华医学会围产医学分会 协办单位:Wyeth 楊氏 母乳喂养 启未来 母乳喂养教育推广 试点项目单位 主管单位:至生部医政司 主办单位:中华医学会图产医学分会 Breastfeeding promotion 11 | September 30th, 2013 | Nestlé Investor Seminar 2013 Perinatal nursing supports [孕期健康教育中心 Pre-natal consumer education Nestle Nutrition#12Portfolios of Wyeth Nutrition and Nestlé Nutrition highly complementary - covering the First 1,000 Days Maternal illuma 启财 IF / GUM Nestle 超级能恩 NAN HA Infant cereal K Super premium Premium WN Mama Upper mid Mid 12 | September 30th, 2013 | Web Materna Nestle 惠氏妈妈 DHARD 雀巢妈妈 Wyeth Mama DHA Materna 复方多维元素片(23) NN Mama Nestlé Investor Seminar 2013 illuma Easy absorption gut comfort Nestle 雀巢力多精 LACTOGEN NAN HA Allergy |Lactogen immunity LEES-26 Progress GOLD 11016 Wyeth S-26 Gold Brain development Gerber Nestle 雀巢能恩 Nestle 鵝宝贝营+ NAN NAN Immunity Nestlé Nestle 宝贝营养十 Nestlé 钙 Nutrition Nestle#13Wyeth Nutrition and Nestlé Nutrition both steadily growing market share China market Wyeth Nutrition value share % China market value share % Nestlé Nutrition 2011 2012 2013 YTD July 2011 2012 Source: Nielsen July, 2013 13 | September 30th, 2013 | Nestlé Investor Seminar 2013 2013 YTD July Nestle Nutrition#14Wyeth Nutrition Premium focused portfolio growing strongly y-o-y Super Premium illuma High growth trajectory GCR Sales EES-26 illuma 启赋 AR Wyeth B illuma 启赋 illuma SUUSSION 启赋 Premium S-26 Gold IF / GUM Special Feeder Maternal EES-26 Progress COLD 100 Wyeth WRO S-26 BEES 26 EES-26 PE GOLD 主白膳儿加 3-26 MAMA 三仁爱儿加 SMA PDF GOLD 爱儿乐四四 科学创新 金为宝宝 本氏妈妈 D 14 | September 30th, 2013 | Nestlé Investor Seminar 2013 DHA illuma S-26 Gold '04-'12 CAGR: +28% 04 05 06 07 08 09 10 11 12 Nutrition Nestle#15Wyeth Nutrition Strong brand equities built on effective marketing model S-26 Gold leading image attributes illuma leading image attributes Weth EES-26 Progress GOLD LEAD JUS 全方 • BLESSE POW 9001 . Brain & eye development, helps learning ⚫ Complete nutrition Reliable / high quality • Latest science Wyeth illuma • 启赋 Gut health and absorption • Imported/super premium quality Frequent product MOH *cooperation innovation Consumer marketing CRM services Key account management Source: BHT report 2013 *MOH: Ministry of Health 15 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#16Wyeth Nutrition Comprehensive quality management to support highest quality image Wyeth Nutrition quality management Consumer perception on brand with good quality (% of total respondents) Wyeth Gold Reliable and 100% GMP standard Highly automated traceable milk source process Competitor 1 50 50 42 42 Competitor 2 41 Competitor 3 48 Competitor 4 21 Wet blending mixing process Source: BHT 2013 16 | September 30th, 2013 | "Pharma" practice quality assurance Professional CRM system Competitor 5 16 | Average of leading brands: 36 Nestlé Investor Seminar 2013 Nutrition Nestle#17Wyeth Nutrition Disciplined geographic expansion drove our strong position in the key / A cities 2005 2008 2013 # of cities 45 180 300+ 20,000 30,000+ # of outlets 5,000 Expansion prioritisation considering resources, capability and return Sustainable growth Top 3 position in important cities Source: Nielsen 17 | September 30th, 2013 | Nestlé Investor Seminar 2013 Tianjin Beijing Nanjing Wuhan Shanghai Chengdu Changsha Shantou Guangzhou Shenzhen Nutrition Nestle#18Nutrition Nestle Deeply rooted in China Since 1908 1908 estlé sales office pened in Shanghai *** 913 Nestle launched LACTOGEN. The first international IMF brand sold in China 雀巢Nestléon Launched NAN 雀巢能恩 NAN 3 1990 Nestlé Shuangcheng factory started production 雀巢Nestled 超级能恩 NAN H.A. Launched Gerber Launched NAN HA GerberⓇ 3 嘉宝 18 | September 30th, 2013 | Nestlé Investor Seminar 2013 Started construction of the Dairy Farming 2013 Nestle Nutrition#19Nestle Nutrition Comprehensive portfolio covering different price tiers and life stages $225 雀巢Nestléng 雀巢力多精金卷 LACTOGENOLO Nest 宝贝营养+ NEZAPA 雀巢 Nestléans Nestle 超级能恩 能恩NANT 3 NAN HA 3 Mixed Fruits Gerber Cereal Formula 粉水果营养米粉 GARNERON 雀巢Nestlé 金装宝贝营养 HERD Healthy Growth Protection 19 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nestle Nutrition#20Nestle Nutrition Key success factors driving business growth Multiple milk sources & Zero tolerance on quality Nationwide coverage & route to market single world-class standard GCR Sales '07-'12 CAGR: +30% Superior science & research 8 0 Modernised field force (E-detailing, mobile solutions) Ethical business conduct 07 08 09 10 11 12 Solid growth delivered by Nestlé Nutrition 20 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nestle Nutrition#21Nutrition Nestle Driving sustainable growth in China: Align with the Chinese government to address key issues 中华 MINISTRY 国卫生品 OF HEALTH PR CHINA Maternal mortality rate Infant mortality rate Under 5 mortality rate 21 | September 30th, 2013 | Nestlé Investor Seminar 2013 Under 5 underweight Obesity Nestle Nutrition#22Nestle Nutrition Study mission: platform to empower the health of China's future generation 明 ING MINGT Maternal & Infant Nutrition Growth UNIVER 尖 1898 RSIT Nestle Research 雀巢科研 Nest Ne Nest 3 超级能恩) NAN HA Nestle Start Healthy Stay Healthy Enlightenment Research partners Identify nutrition 4000 infants gap Develop products for China Start Healthy, Stay Healthy 22 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nutrition Nestle#23Wyeth Nutrition & Nestlé Nutrition: 1+1=3 A highly complementary combination Wyeth Nutrition + Nestle Nutrition Strong fit Strategic fit Cultural fit Financial fit 23 | September 30th, 2013 | Nestlé Investor Seminar 2013 Nestle Nutrition#24Nestle Good Food, Good Life Wyeth Nutrition and Nestlé Nutrition Greater China Region 1139 John Cheung Regional President GCR Wyeth Nutrition James Chiu Regional Business Head GCR Nestlé Infant Nutrition