Peter Vogt, Halal-A Key Compenent of Nestle's Business Model_IHMC 2010, Day 1

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5th INTERNATIONAL HALAL MARKET CONFERENCE: BRUNEI DARUSSALAM

5 June, 2010

Peter R. VogtRegion Head for

Nestlé Malaysia / Singapore / Brunei

HALAL – A KEY COMPONENT OF NESTLE’S BUSINESS MODEL

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AGENDA

1. Introduction to Nestlé

2. The Nestle HALAL Assurance System

3. HALAL – an Excellent Growth Opportunity

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... captures the very essence of Nestlé and the promise we commit ourselves to everyday, everywhereas the leading Nutrition, Healthand Wellness Company

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Introduction: Nestlé Group

• Founded in 1866 by Henri Nestlé

• Employs over 280,000 people worldwide

• 456 factories in 84 countries

• Sales of approx. USD 100 bn in 2009

• World’s largest food manufacturer, headquartered in Switzerland

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Nestlé Group

Competitive Advantages

1. Products & brands

2. R&D capabilities

3. Global presence

4. People, culture and values

Competitive Advantages

1. Products & brands

2. R&D capabilities

3. Global presence

4. People, culture and values

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1. Product and Brand Portfolio

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2. The industry's leading R&D capability

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R&D Global Network – 2009

MinneapolisSolon

St. Louis + NRCSt. JosephMarysville

VittelAmiensLisieux

BeauvaisTours

YorkSingen

ShanghaiSingapore

SderotCasa BuitoniKonolfingenOrbeBev. Centre Orbe

NRC Lausanne

Beijing + NRC

Queretaro

Fremont Rzezsow

CPW - Welwyn Garden City

1 Science & Research Centre 27 PTC and R&D Centres280 Application Groups

CPW – Rutherglen

Abidjan

Broc CCENRC Tokyo

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3. Global Presence

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4. People, Culture, Values, Attitude

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• Established in Penang (Malaya) in 1912

• Employs over 5,000 people with 7 factories

• RM3.7 billion in turnover in 2009

• Public-listed on Bursa Malaysia since 1989

• Leading HALAL food manufacturer

Introduction: Nestlé (Malaysia) Berhad

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OUR MISSION

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Our Business StrategyCreating Shared Value

Creating Shared ValueNutrition | Water | Rural Development

Compliance

Sustainability

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Our Focus - Consumers

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Our vision of Nutrition, Health and Wellness

Pleasure Balance

Understanding

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Nestlé Malaysia’s HALAL Facts

• 1980: Established internal Halal committee• 1992: Formal implementation of Halal policy• 1994: Halal certification by JAKIM• 1997: Established Nestlé Halal Guidelines for

inter-market supply for the Nestlé Group• 2004: Contributed towards the Malaysia Halal

Food Standards• 2009: Halal exports to >50 countries worth RM689 million• 2010: Biggest Halal producer in the Nestlé world

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Pillars for Effective HALAL Implementation

POLICY& STANDARDS

COMMITMENT& DISCIPLINE

CONTROLS& MONITORING

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Nestlé Malaysia HALAL Policy

As a responsible corporate citizen of Malaysia,we are mindful of our obligations to the countryand its consumers.

Nestlé Malaysia manufactures, imports and distributes only products which have been Certified “HALAL” by authorized certification bodies.

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Our Internal Controls to Monitor Strict Compliance of HALAL

The Nestlé Malaysia HALAL Committee• comprises of senior Muslim executives from multi disciplines &from various work locations• the role of the committee is to advise the Company on matterspertaining to HALAL compliance and certification

HALAL Audit• members of the Halal committee audits suppliers, distributors, warehouses, customers, etc to ensure strict compliance of HALALstandards and practices

Internal Guidelines• working with the Halal committee, the brand teams must meet internal Halal guidelines on all products

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Our Internal Controls to Monitor Strict Compliance of HALAL

HALAL Inspections• Nestlé premises are subject to surprise checks by the authoritieswho monitors and enforces HALAL compliance• All imported products by NESTLÉ Malaysia are certified HALAL by the relevant certification bodies and this will involve traveling to Nestlé factories worldwide for Halal inspections, accompanied bya Halal Committee representative• All locally manufactured products are certified HALAL by JAKIM

HALAL Communication• All NESTLÉ Malaysia employees are well-informed about the Company’s Halal Policy through various internal communication channels• Our Consumer Services Team is also ready to respond to Halal queries from consumers who contact us at 1-800-88-3433 orvia our website.

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Our Internal Controls to Monitor Strict Compliance of HALAL

HALAL Implementation & Monitoring of:• raw materials/ingredients• suppliers• abattoirs• equipment & utensils• HACCP• quality management• sanitation & hygiene• storage• transporters• vending machines• packaging materials• business practices

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The key messages:

Halal Integrity: No compromise

Halal is hygiene & food safety

A great demand

Good for everyone

Social responsibility

Nestlé Internal Controls Monitor Strict Compliance of HALAL

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Nestlé Business in the main Islamic countries

Number of factories 50

Companies/representative offices 62

Turnover 2008 in billion USD 5.2

Number of people 31,305

Gross fixed assets in billion USD 1.7

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85 Halal-certified factories worldwide majority are in Asia-Oceania-Africa :

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85 Halal-certified factories worldwide: 19 factories are certified in Europe

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Strong Market Position in Asia, Oceania, Africa & the Middle East

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Nestlé Worldwide … an extensive range of Halal products

Popularly sought for as “Halal certified Food”: Culinary products

Halal certification extends into Other Food and Beverage Categories

Increase awareness

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Europe – emerging market for HALAL

Muslim migrants in EU countries (around 50 million) bring cultural diversity & popularity of ethnic foods with greater Halal awareness

Growth in Halal food manufacturing & retailing,food service sector and the travel trade

Higher demand of Halal convenience food aslifestyles evolve

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The European HALAL food industry is worth USD 66.5 billion

The biggest markets are France, Germany and the UK

Halal range is sold through:Specialised wholesalersSmall ethnic shopsModern trade - Carrefour, Tesco & Auchan

Nestlé business is CHF 55 millionGrowing at 12 % per annumReaching 10,000 shops with 150 products

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HALAL Makes Good Business Sense

Opportunities:

1. Wins consumer trust & confidence

2. Appreciated by non-Muslims for quality & safety

3. Export potential as Nestlé Malaysia continues to expand its export business to over 50 countries worldwide with export sales of RM689 million in 2009

4. Improves innovation in product development

5. Gives a competitive advantage over competitors who are not Halal certified (Halal certification is voluntary, not mandatory)

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Challenges to Promote HALAL

Challenges:

1. Harmonization of global Halal standards to ensure consistency and build trust among the global Muslim population

2. Establish global accreditation of Halal logo to enhance credibility and recognition among consumers

3. Surveillance and enforcement to weed out products displaying unauthorized Halal logos

4. Encourage SMEs in the food industry to be strictly Halal compliant to produce more and tap the global food market

5. Improve positive communication on HALAL practices for better understanding of its benefits, particularly on quality and safety.

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THE END

Contact Nestlé Malaysia at:

www.nestle.com.my

TERIMA KASIH