Nestlé
Investor Seminar
2014
Nestlé in Brazil
Juan Carlos Marroquín, CEO Nestlé Brazil
June 3rd & 4th, Liberty Hotel, Boston, USA
June 3rd & 4th, Boston
Nestlé Investor Seminar 2014
Disclaimer
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.
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Nestlé Investor Seminar 2014
Nestlé in Brazil: 2013 sales by product category
Confectionery and
Beverages 1
19%
Sales 2013:
CHF 5.1 bn
38%
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Nestlé Investor Seminar 2014
43%
Milk products and ice
cream
Other (incl. Nutrition &
HealthCare, PetCare
and Prepared dishes &
cooking aids
(1) Including Waters
Agenda
3

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
June 3rd & 4th, Boston
Nestlé Investor Seminar 2014
Agenda
4

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
June 3rd & 4th, Boston
Nestlé Investor Seminar 2014
Brazil is the 7th largest consumer market
BRAZIL
•
•
•
•
•
NORTH
5%
4.4
Density
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
5.5
%GDP GDP/capita
NORTHEAST
13%
MIDWEST
35.9
9.3
Density
10%
Density
11.1
13,4
SOUTHEAST
16%
49.9
Density
June 3rd & 4th, Boston
%GDP GDP/capita
%GDP GDP/capita
SOUTH
5
4.1
9.7
%GDP GDP/capita
Nestlé Investor Seminar 2014
Population density (people / km 2)
% GDP Brazil / GDP per capita (CHF k )
91.3
Density
55%
11.3
%GDP GDP/capita
Source: IBGE
1 CHF = R$ 2,51 (average 2013)
Large growing market, with fiercer competition
Food Industry Consolidation2
F&B Market1
 CHF
217 bn (2013)
Others
F&B Inflation3
250bps > consumer inflation
 8.5%
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Nestlé Investor Seminar 2014
81%
77%
19%
23%
2008
2013
Source: (1) ABIA, (2) Euromonitor Package Food
(3) 2012-2013, BRL currency devaluation leads to a zero growth in CHF
Top 5
Winning in Brazil requires deep local insights
Shoppers
Consumers: Evolving demographics, needs and aspirations

High
22%
Middle Class
54%
Low
24%
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










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
45 m people
19% consumption
Shop in small retailers
Nestlé Investor Seminar 2014

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
49%
overweight
adults
34%
overweight
children
DEMOGRAPHIC
BONUS IN THE
NEXT 30-40
YEARS
(1) Global Retail Development Index 2013:score of 69,5
Brazil’s journey to become a developed economy
CHALLENGES AHEAD
BRAZIL DEVELOPMENTS
Cost of doing business in Brazil is
38% increase
Doubled government
GDP per capita1
incentives to families2
6.9
2003
14.1
9.5
6.5
2013
Halved unemployment
36% higher than in developed countries and
28% higher than in emerging markets
2003
Brazilian riot
Reduction of 0.9% in total productivity in 2013
Negative productivity changes in the last decade
5.4x higher
bank spread
2013
65x longer to comply
with fiscal regulations4
World’s largest exporter
2014 FIFA World Cup
and the 2016 Olympics
12.3
15% currency
devaluation3
7.5x longer to
unload and custom
clearance5
19% paved roads
1.7 m km total
5.4
São Paulo has
18% of London
2003
2013
Subway (km)
Beef, poultry, coffee,
sugar, orange juice,
soy and tobacco
75%
functional illiteracy
Brazilian elections 2014
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Nestlé Investor Seminar 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
Agenda
9

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
June 3rd & 4th, Boston
Nestlé Investor Seminar 2014
Nestlé has 93 years in Brazil with presence in
99% of the households
2005
2002
Araras factory
1921
1920
1944
1930
1930
1940
1962
1950
1957
1932
Chocolate Gardano
acquisition
1960
1988
1970
1970
1980
2001
1990
1999
2000
2010
2014
2011
Caçapava factory
2007 Feira de Santana factory
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Nestlé Investor Seminar 2014
Source: Nestlé Brazil website
Brazil is the 4th largest Nestlé market
WITHIN NESTLÉ
Brazil
Brazil:Group
EMPLOYEES
23 k
1:14
FACTORIES
28
1:17
FOR BRAZIL
23,000
employees
11
SALES
CHF 5.1 bn
1:18
VOLUME
1.9 m
tonnes/year
1:27
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Nestlé Investor Seminar 2014
220,000 indirect jobs
117 brands in
16 categories for
200 m people
Source: Company report 2013
Strong market positioning
1st
1st
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1st
1st
1st
1st
1st
1st or strong 2nd
in the largest
majority of our
portfolio

Undisputed
leadership in
several NHW
carrier
categories –
infant nutrition,
cereals, dairy,
breakfast cereals
1st
1st
1st
2nd
2nd
2nd
2nd
2nd
5th
Nestlé Investor Seminar 2014

Source: Nielsen 2013
Relentless in offering healthier and tastier
options to consumer through innovations
SUPERIOR PORTFOLIO
80%
77%
Healthier
Tastier
14 bn of fortified servings per year
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INNOVATIONS
Nestlé Brazil superior reputation
NESTLÉ BRAND IMAGE: recognized by 41% as expert and leader in Nutrition (2nd player with 17%)
Trust
Advocacy
244
256
196
Tastier and Healthier Choices
282
200
182
100 index
Industry
average
Nestlé
#2
Nestlé
#2
Nestlé
#2
Source: Corporate Equity Monitor (CEM) 2013
SELECTED AWARDS
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Top of Mind in
Respect to
Food, Chocolate and Milk
our consumers
June 3rd & 4th, Boston
Nestlé Investor Seminar 2014
"Brands of the Brazilian
middle class heart"
#1 most
admired
Company in F&B
6x Most
Reliable Brand
Source: Global Rep Trak; Modern Consumer and Shopper Experience;
Marketing Best Award; Readers Digest/IBOPE; Data Popular Consulting; Folha Newspaper (SP)
Agenda
15

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
June 3rd & 4th, Boston
Nestlé Investor Seminar 2014
Driving our performance
Roadmap
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Priorities
Nestlé Investor Seminar 2014
Focus areas
Making choices
SIMPLIFICATION
# SKUS
25% REDUCTION
2011
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
Focus on top
20% SKUs

Flawless
execution
2013
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
Grasping opportunities
COFFEE
LIQUIDS
 Growth and Profitability
 Brazil is the second coffee
market in volume
3 focus brands
 3rd largest category in Brazil
 Already 1st market in Latam
 New mindset & model
 Largest coffee exporter
CHOCOLATE
KIT KAT – Market Share
NUTRITION JOURNEY
FIFA/CBF
 Strengthen nutrition territory
15%
10%
2012
 Pharma channel growth
2013
Market share in snack segment
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Nestlé Investor Seminar 2014
 Enhanced nutritional benefits under a bolder
communication
Source: Internal data
Strengthening our foundation
COMMUNICATION
DIGITAL
Rich & relevant proprietary content w/
Strengthen our brands
with consumers (BBNW)
GAROTO is
1st chocolate
Brazil #1 fan page1
Preserve strong position of
Nestlé Faz Bem and
positively impact kids’ lives
2 m visits/month
co-created
on fan-page
#NegrescoDesenrola
Over 1
m views in a
single day
ROUTE-TO-MARKET
Leverage our size into scale
Best in Class Broker model to traditional trade
Focused & simplicity in commercial planning
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Nestlé Investor Seminar 2014
PORTFOLIO
Premium
Mainstream
Popular
1#1
Source: Internal data
of Food Companies in Brazil;
Creating Shared Value
1.7 m children
impacted
Nestlé Course is the
largest event for
pediatricians
4,000 tonnes
CSV
of certified coffee
SUSTAINABILITY
Sustainability Awards
10% increase milk
producer productivity
15 years of continuous efforts – reduction is
equivalent to the consumption of a city with:
• Water: 310 k population
COMPLIANCE
• CO2: 115 k population
• Energy: 125 k population
Food Quality certification
in Araras (DPA), Goiânia
and Vila Velha
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NHS Young Nutritionist
Program: 120 new/year
Nestlé Investor Seminar 2014
94% of employees
feel proud to work at Nestlé
9 m quality tests
Having and developing the best people
DEVELOPMENT
#1 F&B company for leadership
RECOGNITION
(Hay Group)
98% aligned with
succession plan
Career Acceleration Company of the dreams for
Programs
youngest
GENDER BALANCE
Formal Recognition Programs
PEOPLE AT THE CENTER
OF EVERYTHING WE DO
34% Women in succession plan
NESTLÉ CORPORATE BUSINESS
PRINCIPLES
IR System
Strong Commitment
Campaign & Training
for management position
FAVORABILITY INDEX
AT TOP QUARTILE
INTERNATIONAL MOBILITY
Website to
Expats/ Inpats
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71 Expats
64 Inpats
Nestlé Investor Seminar 2014
N-Cards
EDUCATION & TRAINING
Over
23,000 employees
440k
Over
training hours
(half week per employee)
Tailor to diversity and
special needs
Nestlé in Brazil financial figures
+12%
+14%
CAGR (1)
2011
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2012
CAGR (1)
2013
2011
2012
2013
Sales
Trading Operating Profit
(in local currency)
(in local currency)
Nestlé Investor Seminar 2014
(1): 2011 to 2013 change
Winning proposition: build on our heritage to
accomplish even more
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Nestlé Investor Seminar 2014