03 - nis 06 l. olofsson

Name of chairman

Nestlé Investor Seminar

Nestlé Investor Seminar - Vevey June 8-9, 2006

Lars Olofsson

Bigger, better, bolder Innovation:Growing strategic categories and brands

2 Name of chairmanNestlé Investor Seminar - Vevey June 8-9, 2006

Disclaimer

This presentation contains forward looking statements whichreflect 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 anduncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.


BiggeropportunitiesFewer, broader and deeper

Better executionFaster deployment leveraging scale and knowledge

Bolder initiativesNew technologies, business systems and RTMs

3 Strategies Underpin our Innovation



Hot PocketsBeneful DryNestlé IdealChocolate Wafers

Bigger Opportunities


714

774

835

2003 2004 2005

Building on the Hot Pockets success in the US

A US icon, Hot Pockets continuesto grow through innovation in

proprietary dough technology, as well as new variants

Sales performance- US$ Mio -

Bigger Opportunities – Hot Pockets


20+

40+

2005 2006E

Into Europe: Maggi Hot Pockets

Launches

• France

• Germany

• Spain

• Belgium

2005 2006

• Switzerland

• UK

• Portugal

Sales performance– CHF Mio –

Bigger Opportunities – Hot Pockets


1.0%

4.6%

US 2001 Germany2005

Share in year of launch

Launched in the US, now a success in Europe

Already a CHF 400mio brand

Bigger Opportunities – Beneful Dry


Low income families: a major consumer segment and an opportunity for profitable growth

Bigger Opportunities -Popularly Positioned Products

0

200

400

600

800

1'000

1'200

1'400

Chi

na

Indi

a

Indo

nesi

a

Braz

il

Paki

stan

Bang

lade

sh

Rus

sia

Nig

eria

Mex

ico

Philip

pine

s 0%

10%

20%

30%

40%

50%

60%

70%

Pop

ulat

ion

Mio

.

% W

orld

Pop

ulat

ion


Insight:

“I wish I could give my family a quality milk with the brand I trust and for the price I can afford.”


In Brazil 71% of the population earn 20% of total income


40%

35%

Engineered to a low price but with enhanced nutritional benefits, iron, calcium, vitamins A, C & D

Penetration rate

launched in 2005

Nestlé milks Nestlé milks+ IDEAL

25% growth in affordable milks in Latin America – rolling out in AOA as well



300350400450500550600650700750800850900950

1'000

2000 2001 2002 2003 2004 2005

India: Availability in retail outlets (in ‘000 outlets)

0

1'000

2'000

3'000

4'000

5'000

6'000

7'000

8'000

9'000

10'000

1997 1999 2001 2003 2005

China: Sales evolution(in tons)

"Affordable indulgence" for lower income families




ClustersInnovation Acceleration Teams (IAT)


Better Execution


IAT

Market Market Market Market

Zone(s) PTC BusinessExec Managers

SBU

Clusters drive business focus, alignment and innovation across similar markets

Better Execution - Clusters

IAT drive faster and more rigorous deployment of winning initiatives


Developed leaderJapan UKAustralia Korea

Criteria: Consumer preferencesNestlé market positionMarket maturity

Developing leaderRussia MexicoThailand Philippines

Coffee Clusters




Developing markets• 3 in 1, with milk and sugar• Purchasable individually – affordable

Developed markets• Nescafé café inspired mixes• Introducing younger consumers to coffee

Nescafé global growth +6.7%; mixes +17.6%

Different clusters; different execution


Tea enhancers: building on the success of India & Pakistan

§ Deployment in Egypt, Malaysia, Middle East and South Africa

§ Launched in 8 months

§ Product, packaging and sourcing harmonized

§ Expected incremental sales: CHF 40Mio+

Better Execution -Innovation Acceleration Team

IAT drives faster and more rigorous deployment of winning initiatives


Bolder initiatives

New technologies, business systems and RTMs

Direct Store Delivery (DSD)Beneful WetLow Temp. Freezing (LTF)



Bolder Initiatives


Share of Traditional Trade Outlets0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

IndiaVietnam

IndonesiaPoland

ColombiaPhilippines

ThailandBrazil

MalaysiaChina

MexicoCzech Republic

Chile

Nestlé is strong in the traditional trade

Bolder Initiatives - DSD


MEXICO Wholesaler

6%Nestlé

8% ConsumerDistributor6%

Street outlet24%

Nestlé20% ConsumerStreet outlet

24%

changing the route to market model

An opportunity to capture more of the value chainand increase product availability



200346 Routes

10,000 Customers

2005556 Routes

133,000 Customers

Key benefits

§ Better channel mix § Increased control of availability and

visibility§ Broadened product portfolio coverage



Deployment across other Latin America

markets

DSD: results and future potential

2005 vs 2003Market share + 25%Sales growth + 24%

Nestlé is now Number 1 in Chocolate & Confectionary in Mexico



Beneful Wet success in the US

Consumer insight triggered bold move within a declining category with extraordinary results

• just like human food• new technology • new packaging

Bolder Initiatives - Beneful Wet

Name of chairman

100

200

300

400

500

600

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Weeks Since Launch

Beneful Alpo Cesar

SOURCE: ACNielsen Scantrack 4-29-06

Beneful sales momentum exceeds successful benchmarks

Bolder Initiatives – Beneful Wet

6.3%Market Sharein 2 months

Representativeregion

$'000per week


Dreyer Slow Churned success in the US

• Retaining all qualities of an "indulgent" product

• Dreyer's Slow Churned grew 66% in 2005

• Dreyer's takes leadership in the US in 2006

Bolder InitiativesReinventing the light segment


Dreyer’s "Slow Churned”light ice cream

The first light premium and super-premium Ice Cream

Bolder InitiativesReinventing the light segment


We are focusing on§ fewer but bigger innovations§ faster, broader roll-outs§ challenging accepted business models

To deliver§ Market share gains§ Profitable growth§ Increased return on investment

Bigger, Better and Bolder innovations

A key contributor to our 5% - 6% annual growth target

Name of chairman

Nestlé Investor Seminar

Nestlé Investor Seminar - Vevey June 8-9, 2006

03 - nis 06 l. olofsson

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