1 Nestlé India: MAGGI progressing ahead of expectations

Brand Trust increasing Accelerated Market Share Recovery

79%

53%
51%
48%
98 44%
79 81 83
35%

3 11%
0%

11,100
10,600

13,000

12,800
19,200

5,500

8,700
Pre Crisis Crisis Jan 16 Mar 16 Apr 16
Pre Crisis Crisis Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16
Apr 15 Launch

*Instant Noodle Retail Track

-AC Nielsen Market size estimate

34
35
 1 Nestlé India: MAGGI progressing ahead of expectations

36
 2 China: Reigniting growth by meeting consumer needs

Slow down, but still a great

consumer story

Evolving consumer needs

Channel dynamics

Implications for Nestlé

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 China New Normal

Speed (速度)
• Lower FMCG growth caused by softer economy
• Slower GDP growth rate Topline
impact • Traditional channels facing competition from eComm

Structure (结构)

• Consumption as key lever

to replace export
• Manage cost inflation (logistics, labor, etc)

Cost • Embrace new technologies to improve efficiency

Steering (动力) impact
• Building talent and organization capabilities required
• Innovation-driven to replace
resource/ investment-driven for this new business environment

Source: Chinese Government Report at NPC & CPPCC 2015; APEC CEO Summit 2014; Bain

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 Overall FMCG growth continues to slow down

Total FMCG Food and beverage Personal and home care

Note: Data covers 106 FMCG categories (includes ambient and chilled food and beverages, and personal care and household products; excludes
fresh food, white goods and electronics); Q1, Q2 and Q3 are always 12 weeks; Q4 is 16 weeks Source: Kantar Worldpanel; Bain

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 One ofremains
China the bestone
consumer stories
of the best in the world
consumer .. in the world
stories
Fast growth of middle class and Disposable income growth still
upper middle class growing well above inflation
Household distribution Growth of China’s per capita disposable income
By annual disposable income (2011-2015)
14
12.6
12 Inflation

10
9.0
8.2
8 7.7

4
2.6% 2.6%
2 2.0%
1.4%
0
2011-12 2012-13 2013-14 2014-15
>$65K $25K-65K $10K-25K $5K-10K <$5K

Source: Euromonitor; Global Demographics; Lit Research; Bain Analysis Source: CEIC, Euromonitor, Bain

40
 Chinese urban shoppers affected by multiple factors

A new generation
Digital /
of Chinese
ecommerce consumers

Premiumization Price transparency

and sensitivity

Lifestyle
categories vs. Overseas purchase &
daily necessities cross-border

41
Source: Bain
 Consumers in China are embracing digital much faster

DISCOVER DISCUSS
>75% >700M users
of customers use active monthly users
internet for browse or combined on
purchase WeChat = Weibo

SHARE ENGAGE
~80% 2X
of shoppers give more satisfied on
reviews online e-channel vs. offline
channels

PURCHASE SELECT
>12T RMB >50%
of online / mobile payment of purchase decisions
(total of transactions) are made online

42 Source: Bain
 “BAT” ecosystem affecting both consumer & trade dynamics
Discover & Research Decide & Transact Feedback
1 Lead generation 2 E-transaction 3 Customer engagement
Self-
own

Shopping platform directing traffic to

Search engine Map E-commerce sites Social forum
Buy

Payment cross-border cross-border Group-

Video streaming Travel-booking processing e-commerce e-commerce App download buying Rise-sharing
Self-own

C2C B2C Payment Direct sales

Travel booking E-commerce E-commerce processing E-commerce Instant messaging Group buying

WiFi Travel
marketing booking
Buy

Video Department Electronics Micro- Instant

Web browser Map streaming store retailer blogging Taxi hauling messaging
Self-own

Instant Instant Social

Web portal messaging messaging C2C E-commerce App store network Taxi hauling
Buy

C2C Local deals / Group- O2O laundry

Classified site Travel-booking B2C Ecommerce Mobile E-commerce E-commerce shop reviews buying service

Independent Online travel Online “hypermarket” Online “category killer” Cross-border e-commerce
players*

43 Note: *Independent players refers to startups which didn’t receive equity investment from “BAT”
Source: Capital IQ; CV Source; Lit search; Bain
 Trade model shifting from “Push” to “Pull”

Successful channel push model for the last

20 years

Coverage Penetration

Demand creation pull

model for the future

Product In-store
Brand power
portfolio execution

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 Nestlé GCR: Competing across ~10 major categories

Nestlé GCR Sales (CHF 7.1Bn)

Globally
Managed
Businesses 42%

58%
Nestlé F&B

Number 1 or number 2 position in most categories

45 Source: Company data

 Nestlé GCR: Majority of F&B businesses are stabilizing

Nestlé F&B 2015 Sales CHF 4.1 billion

OG Trend OG Trend

Coffee
Peanut Milk
Confectionery Other
Categories Congee
Culinary
RTD Coffee
Dairy & Ice Cream

46 Source: Company data

 Reconnecting with consumers through premiumization

Nescafé Dolce Gusto Confectionery

Kit Kat Premium Sachima

Candy Thick cut Premium shopping

shortcake experience

• Thick cut shortcake grew >10% Q1 2016

• 85% growth in 2015
• KitKat launched prior to Chinese New Year

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 Winning back consumers with new and renovated products

NESCAFE SHARK & Hsu Fu Chi TOTOLE

NHW Chicken Bouillon Halal Bouillon

Shark Caomijuan Sachima

Cooking Sauce Oil and Herbs

Target young Target mid-aged

people people

• #1 with 74% market share in 2015 • Shark #1 with 32% market share in
• 50% Market Share
• 100% - 60/40 win 2015

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 Deeper penetration and wider coverage across various channels

NESCAFE TOTOLE

• #1 with 47% market share in 2015 • Growing presence in out-of-home

• 10% increase in Numeric Dist. in 2015 • Penetrate lower tier markets

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 eCommerce: Nestlé China eComm sales more than doubled in 2015

Leverage strategic partnerships, global brands and capabilities

+289% vs LY +68% vs LY +67% vs LY +20% vs LY

Chocolate Coffee Adult Milk Powder Biscuit

50 Note: online category growth is the sales growth rate of all Nestlé products sold online
 e-Commerce: Celebrating Nestlé’s 150th Anniversary with Alibaba

June 2016 kick-off Planet of Wonder campaign to delight

Chinese consumers with more than

150
local and global products

2015 ZAOA online sales NiM scope

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 YINLU: Main area of challenge

Nestlé F&B 2015 Sales CHF 4.1 billion

OG Trend OG Trend

Coffee
Peanut Milk
Confectionery
Congee
Culinary
RTD Coffee
Dairy & Ice Cream

52 Source: Company data

 Yinlu: business in transition
Yinlu had a winning, … but in turbulence
traditional model under “New Normal”

• Track record of strong, profitable growth • Yinlu Core Range declining

• #1 in Plant Protein Drink • Consumers shifting rapidly to more

premium products
• Nationwide distribution with ~2K Tier 1
distributors • Strong dairy competition due to low prices

• Extensive store coverage through a • Deteriorating distribution quality, coverage

multi-layer, push model and in-store execution.

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 A comprehensive turnaround plan is in place
• Upgrade existing products to meet the trend of
Upgrade existing premiumization and provide healthier
products choices to consumers

Accelerate new • Focus on successful launch of Shakissimo and

product Milo in 2016
development • Explore opportunities in new RTD products

• Improve brand building and POS execution

Move towards
by leveraging Nestle expertise and working closely
“pull model” with distributors
HQ Frontline Consumers

• Empower turnaround taskforces with Steering Committee

Ensure strong best-of-class experts to ensure fast and Project Management Office
execution
practical execution for results TF1 TF2 TF3 TF4 TF5 TF6 TF7 TF8 TF9

Yinlu turnaround will TAKE TIME but we will BRING YINLU BACK ON TRACK
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 4 Key Takeaways

1 CHINA STILL A GREAT CONSUMER STORY

PRODUCT PORTFOLIO HAS TO BE RELEVANT TO FAST EVOLVING

2 CHINESE CONSUMERS

3 ACCELERATE DIGITAL AND COMMERCE

4 YINLU TURNAROUND:GET IT RIGHT

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 Reigniting Growth: Market Presentations

3 4 5

Japan: Vietnam: Nigeria:

• Innovation beyond • Establishing Brands
5 • PPP
products • Building Capabilities • RTM
• Premiumization

Kohzoh Takaoka Ganesan R Ampalavanar Dharnesh Gordhon

CEO Nestlé Japan CEO Nestlé Vietnam CEO Nestlé Nigeria

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