N E S T L É S.A.

2GS/NY/08.05.01

AGENDA

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

3GS/NY/08.05.01

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

4GS/NY/08.05.01

Food and drinkGlobal market size in 2000

Top 20 manufacturers

48

290

900

2275

3500

bio. US$

1.4%

8.3%

65%100%

26%

Worldall food & non-alcoholic drink

Nestlé

World processed food & drink

Manufacturing value-added

% of all food

5GS/NY/08.05.01

The leading processed food group

Source: Annual reports/ estimates

2000 food & beverage sales (alcoholic beverages excluded)

05 000

10 00015 00020 00025 00030 00035 00040 00045 00050 000

Uni

leve

r Q

uake

r O

ats

Gen

eral

Mill

sPi

llsbu

ry

Kee

bler

6GS/NY/08.05.01

Nestlé number one global market positions

Soluble coffeeMineral waterPet care*Chocolate drinksChocolate & confectionery

Powdered and condensed milkFrozen prepared dishesDehydrated seasoningsInfant nutrition

* with Ralston Purina

7GS/NY/08.05.01

Nestlé – some facts and figures

Food industry leader with sales of SFr 81.4 bio.

479 factories in 81 countries

30% of sales in emerging countries

Products sold in nearly every country

40% of sales are made by the Nestlé brand

8GS/NY/08.05.01

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

9GS/NY/08.05.01

Real internal growth target of 4% per annum (volume excluding impact of price)

Internal targets for ROIC and profit margin improvement

EVA and economic profit are key measuresof management performance

Managers are remunerated on delivery of performance targets

Nestlé - focused on performance

10GS/NY/08.05.01

Underperforming businesses

Working capital improvement

Global Business Excellence (Project Globe)

Portfolio pruning

Bolt-on acquisitions

The performance drivers

11GS/NY/08.05.01

Operational efficiencyThe drive for continuous improvement

MH97Target 2004

Globe

Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Annual 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 ? 3.0targetsaving

Cumul. 0.6 1.3 2.2 3.1 E3.7 E4.2 E4.7 E5.2 ? ? savingsCHF bio.

?

12GS/NY/08.05.01

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

13GS/NY/08.05.01

World population by age, 2000 and 2010(in billion)

0 - 14 years 15 - 64 years Over 65 years

2000 1.82 3.86 0.42

2010 1.87 5.15 0.83

% 2.7 33 98 Increase

The Nestlé worldProducts and people

New born Elderly

CerealsDairyIce creamConfectioneryCulinaryJuicesMilkPerformancenutrition

Clinical nutrition

FoodService

CoffeecreamersMineral watersRTD

Ophthalmic14

Infant cerealsIMF (Infant nutrition)Wet jar foods

15GS/NY/08.05.01

Share of 1st and 2nd transformation goods

0

250

500

750

1000

0 5000 10000 15000 20000 25000 30000

65% 1st transf.10% dairy 35% 1st transf. 10% 1st transf.

Food

man

ufac

turin

g va

lue-

adde

d pe

r cap

ita(in

US$

at m

arke

t x-r

ates

)

GNP per capita (in PPP$)

16GS/NY/08.05.01

Growth around the worldGDP per capita, 1950-95, and share of world population, 2000

Source: JEP Winter 2000

Increase GDP Share of population

More developed areas + 210% 20%

Less developed areas + 190% 80%

China + 400% 21%

India + 150% 17%

Rest of Asia + 360% 21%

Latin America + 90% 9%

Africa + 40% 13%

17GS/NY/08.05.01

0

250

500

750

5000 10000 15000 20000 25000 30000

Korea

Spain

Cyprus Sweden USA

NorwayJapan

Holland

Austria

China

MexicoCzechiaChile

Finland France

Iran

CroatiaThail.Peru

MalaysiaColombia

Israel ItalyCanada

AustraliaGermany

Bolivia

Food manufacturing value-added p.c.(US$)

GNP per capita ($ ppp)

Source: UN National Accounts

India

Belgium

Potential for the Processed Food Industry

18GS/NY/08.05.01

2455 2380 1970

1498 1953 2679

12931725

2167

0

1000

2000

3000

4000

5000

6000

7000

1990 2000 2010

million people

above PPP US$ 6,000

between

below PPP US$ 1,800

48003700

World population by income groups1990 - 2000 - 2010

The Nestlé worldProducts and markets

Industrialised markets

Emerging markets

MilksIMF

CreamersCoffeeMineral watersRTD

OphthalmicAdult nutritionNespresso

Wet culinaryRTD Bevs.Ice creamFrozen foods

ConfectioneryCereals

Coffee + BeveragesDry culinary

19

20GS/NY/08.05.01

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

21GS/NY/08.05.01

Nestlé - the virtuous circleImproving profit

margins

Increasing brandinvestment

Profit margin (EBIT) 16.6% 0.3% 11.8% 16.1% 11.0%Brand investment 10.3% 7.7% 6.7% 17.8% 10.5%Sales growth (RIG) 3.2% 3.3% 3.6% 4.4% 3.6%

Annual 1997 1998 1999 2000 CAGincrease 2000/1997

Growing sales

22GS/NY/08.05.01

We believe in brands

We believe in training - growing brand experts

We believe in investing - today's brands are the foundation of tomorrow's growth

Nestlé's fundamental brand principles

23GS/NY/08.05.01

Branding at Nestlé

Nestlé makes products products are consumed

Consumers make brands brands are believed in

Brands exist in Nestlé understands consumer' minds consumers

24GS/NY/08.05.01

Consumers make brands

Food consumers have local preferences fulfilled by local brands

Local brands will always have a place

Brands must be self supporting

Branding and consumers

25GS/NY/08.05.01

Nestlé focuses on brand priorities, not on numbers of brands

Strategic brands Regional

Corporate

Worldwide

Corporate

Local

Corporate

Range/ProductRange/Product Range/Product

26GS/NY/08.05.01

For Nestlé For the consumer

Trust

Quality

Safety

Affinity

Relationship

Security

The benefit of brands

Loyalty of consumer base

Price premium

Database /direct marketing

Future health of the company

27GS/NY/08.05.01

Nestlé - the virtuous circle

Improving profitmargins

Increasing brandinvestment

Growing sales

28GS/NY/08.05.01

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

Introduction

Operational efficiency & performance improvement

Products, markets and trends

Brands

Conclusion

29GS/NY/08.05.01

We will deliver shareholder value through the achievement of sustainable, capital efficient and profitable long term growth through

– our geographic spread– our product spread– new product development– our brand expertise– our factories– benefits of electronic age

We are fit for growth

Conclusion