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Nestle in Russia:10 Years of Growth

Bernard MeunierCEO, Nestl Food LLC

Russian Economic and FinancialForum in Switzerland

Fifth Session13 March 2006

Zurich, Switzerland

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Which country has experienced the fastest growth in premium positioned food andbeverages in the last 5 years?

DO YOU KNOW?DO YOU KNOW?

Which country has the largest consumptionof soluble coffee in the world?

Which is the second largest consumption market of chocolate and confectionery after USA

To all 3 questions the answer is -RUSSIA

Bernard Meunier, Russian Economic and Financial Forum in SwitzerlandMarch 13, 2006

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2006 IS A MILESTONE YEAR FOR2006 IS A MILESTONE YEAR FORNESTLE RUSSIANESTLE RUSSIA


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10 YEARS ANNIVERSARY OF OUR10 YEARS ANNIVERSARY OF OUROPERATING COMPANY NESTLOPERATING COMPANY NESTLFOOD LLCFOOD LLC

Foundation of Nestl Food LLC

1996 2006

12 ProductionFacilities

12 RegionalOffices

9.500Employees

600 billion CHFinvestments

1.4 billion CHFSales FUTURE


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LIFECYCLES OF NESTLE RUSSIALIFECYCLES OF NESTLE RUSSIA

1992Opening years:

Nestl starts exportof Nuts and Nescafe to Russia

1994Nestl opens first

representative office in Moscow

Acquisition of Rossia factoryin Samara 1995

1996 Foundation of Nestl Food LLC

1998

Acquisition of Kamskayaand Altay confectionery factories

Economical crisis in Russia

2002Nestl in Russia turnover

1 billion CHF

2003Infant cereals factory

In Vologda was acquired

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OTHER IMPORTANT STEPSOTHER IMPORTANT STEPS

And shortly after ( in February 2003 ), ClearWater , a leader in home and office water delivery.

LIFECYCLES OF NESTLE RUSSIALIFECYCLES OF NESTLE RUSSIA

In 2001 , Cereal Partners Worldwide, Nestl s

joint venture with General Mills, acquired abreakfast cereal plant in Perm.

In 2002 Nestl Waters acquired the Kostroma based

Saint Springs bottled water company

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$120 million investment Only 18 months of construction works12,000 tons of NESCAFE Classic production planfor 2006 - 18,000 for 2007Increase of market share from the current 40%to a target of 50%.

NNOVEMBER 2005: NESTL OPENSTHE 1ST FULL CYCLE COFFEE FACTORYIN SOUTH RUSSIA


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Nestl in RussiaOUR OPERATIONS COVER MOSTOUR OPERATIONS COVER MOSTREGIONS OF RUSSIAREGIONS OF RUSSIA

Kemerovo

Moscow

St.Peterburg

Novosibirsk

Rostov - Don

N. NovgorodPerm

Vladivostok DC

10,000 km

Timashevsk

Zhukovsky

Lviv

Ekaterinburg

Samara

Barnaul

Irkutsk

Voronezh

Vologda

Factory + DC + Sal es Offic eFactory + DCFactory

Regional Sal es Offic es

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NESTL IS NOW IN RUSSIA:NESTL IS NOW IN RUSSIA:

#1 in soluble coffee market with#1 in chocolate market with and

#1 in infant nutrition with#1 in culinary aids with#1 in breakfast cereals with#1 in mineral water with#2 in ice Cream with#2 in pet food with

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TASTE, BRAND AND HEALTHTASTE, BRAND AND HEALTHARE MOST IMPORTANTARE MOST IMPORTANTFOR RUSSIAN CONSUMERSFOR RUSSIAN CONSUMERS

0 20 40 60 80

Taste 67,3%Product Brand 5 9 %

Health 54

%Price 52%Labels/Packaging 3 9 %Convenience 27%Other 6%

Health becomes a major factor in product choice....Source: Nestl Consumer ServicesSurvey of nearly 3,000 consumers

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Nestl strives to meet consumers needs in all 3 factors

Brands: by building strong brands relevant for the Russian consumer


CONSUMER AT THE CENTER OF OURCONSUMER AT THE CENTER OF OURATTENTIONSATTENTIONS

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Taste: by developing the best tasting products

with a preference over our competitors


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Health: by developing healthier and morenutritious recipes



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NESTLE AND THE COMMUNITYNESTLE AND THE COMMUNITY

To us, Corporate Social Responsibility is not something that is imposed from the outside,

but is an inherent part of the Nestl businessstrategy and Nestl business principles, which

guide the way we operate .

P.Brabeck-LetmatheCEO Nestl S.A.


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Since 1996 Nestl is the main sponsor of the Russian version of Sesame Street

Since 2000 together with Russian Instituteof Nutrition Nestl develops and publishesGood Nutrition Program

NESTLE AND THE COMMUNITYNESTLE AND THE COMMUNITY

27 Russian regions,5.000 schools

$2 million investmentin next 4 years

1.2 million childrenSince 5 years


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NESTL IS A RELIABLE PARTNERNESTL IS A RELIABLE PARTNERFOR THE AUTHORITIESFOR THE AUTHORITIES

In a nutshell, our constructive dialogue withthe Russian Government and Russian

society has clear and undisputable benefitsfor both sides.


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To be the best and most admired Food, Beverage,Nutrition, Health and Wellness company in Russia

OUR VISIONOUR VISION


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Thank you for your attention!


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Nestle - Zaka (86)