BUSINESS RESEARCH

OUR RICH HISTORY

The America's favorite flavored milk.

Nesquik began as a chocolate powdered flavoring mix in the United States in

1948, as Nestl Quik. In the 1950s, it was launched in Europe as Nesquik. In
countries with the Quik term (including the USA, Canada, Mexico, and Australia,
where it was originally marketed under the name Nestl's Quik), the name was
changed to the worldwide brand Nesquik in 1999. The same year, Cereal Partners
introduced Nesquik Cereal, a breakfast cereal that "turns milk into chocolate
milk," which is similar to Coco Pops. Nesquik syrup products were introduced in
1981. Ready-to-do products were introduced in 1984.

On November 8, 2012, Nestl USA issued a voluntary recall of limited quantities

of Nesquik Chocolate Powder made and sold in the United States. These that
were recalled were of the 10.9, 21.8, and 40.7 ounce tins. This recall only affected
the chocolate variety; it did not affect the other varieties of the mix or any other
products by Nesquik. This was the first known recall of a Nesquik product.

These tins were taken off the market after Nestl was informed via a supplier,
Omya Inc. that it had issued a recall of certain lots of one of its own products,
calcium carbonate for Salmonella contamination.

The affected Nesquik chocolate mix was produced during early October 2012. All
affected products have an expiration date of Best Before Oct 2014.

Nestl issued a statement on the recall stating: We apologize to our consumer

and sincerely regret this incident.

On April 1, 2013, the official Facebook page of Nesquik USA posted a photo on
their page depicting a broccoli-flavored ready-to-drink flavour of Nesquik. Many
believed it to be true and were shocked. However, if one looked closer at the
photo, there was a notice in the lower-left corner that it was not an actual Nestl
product. Nesquik USA announced later in the same day that it was an April Fool's
joke.
In January 2017, Nestl food scientists outlined a strategy to reformulate their
drink mix to remove over half of the sugar content, citing consumer backlash
against sweetened mixes and beverages.

1940's

"MOMS REJOICE" in 1948, Nestle's "Quik" Chocolate powder hits the shelves,
giving moms a fast and easy way to create a delicious glass of chocolate milk.

1950's

A WORLD FAMOUS JINGLE "N-E-S-T-L-E-S, Nestle's makes the very best!

performed by a ventriloquist, this jingle takes the world by storm of the next 10
years!

A FLAVOR IS BORN The new, delicious strawberry powder is introduced,

delighting taste buds across the nation!

1970's

BUNNY TAKES THE STAGE In 1973, an animated version of the bunny hops onto
the scene, appearing in his first commercial.

1980's

ON THE GO GOODNESS The yummy goodness of Quick powder now comes in

ready to drink bottles and syrups.

1990's

HELLO, NESQUIK We change names from Quik to Nesquik across the globe.

2000's
SERIOUSLY NUTRITIOUS Now with 7 essential vitamins and minerals, NESQUIK
gives kids a delicious and nutritious boost to take on the day ahead.

* For NESQUIK Powder, as prepared with 8 fl. oz. (1 cup) of low-fat milk or not-fat
milk

2010's

EVEN MORE GOODNESS Today, NESQUIK comes in even more irresistible

flavors, and proudly has 45% less sugar*. Which is why, 60 years later, moms are
still rejoicing.

*Than the leading syrup brand - 11 g vs. 20 g sugar/svg. This product contains 23
g sugar when mixed with 1 cup low fat milk.

Nestl

Nesquik is a brand of products made by Nestl. In 1948, Nestl launched a mix for
chocolate-flavored milk called Nestle Quik. This was released in Europe during
the 1950s as Nesquik.

Henri Nestl is the owner of nestle

A German born researcher who sought an economical alternative to

breastfeeding to combat infant malnutrition, Henri Nestl was born on 10th
August 1814 in Frankfurt as one of 14 children.

After having finished his 4 year apprenticeship as a pharmacist he moved to

Vevey in 1839, where he passed his exam to work at a pharmacy.

He started work as an assistant to a pharmacist, Marc Nicollier in Vevey. Henri

Nestl cared a lot about health problems and a high baby death rate because of
weak baby food.

With the help of the chemist Justus Liebig, Henri Nestl invented a mixture called
Kindermehl in 1867.
He named his product Farine Lactee (milk cereal); it was manufactured in Vevey,
Switzerland.

The Nestl Corporation was born when the resultant formula went into production
in Switzerland.

By 1873, Nestls company was reporting sales of half a million boxes of Nestle
Milk Food in Europe, America, Australia, Argentina, the Dutch East Indies and
Mexico.

He died on 7th July 1890 at the age of 76 years.

The Nestl company history

The pioneer years

Our history begins in 1866, with the foundation of the Anglo-Swiss Condensed
Milk Company. Henri Nestl develops a breakthrough infant food in 1867, and in
1905 the company he founded merges with Anglo-Swiss, to form what is now
known as the Nestl Group. During this period cities grow and railways and
steamships bring down commodity costs, spurring international trade in
consumer goods.
Highlights

1866
US brothers Charles and George Page help establish Anglo-Swiss Condensed
Milk Company. Using abundant supplies of fresh milk in Switzerland, they apply
knowledge gained in their homeland to establish Europes first production facility
for condensed milk in Cham. They start supplying Europes industrial towns with
the product under the Milkmaid brand, marketing it as a safe, long-life alternative
to fresh milk.

1867
Nestls founder, German-born pharmacist Henri Nestl, launches his farine
lacte (flour with milk) in Vevey, Switzerland. It combines cows milk, wheat
flour and sugar, and Nestl develops it for consumption by infants who cannot be
breastfed, to tackle high mortality rates. Around this time he starts using the now
iconic Nest logo.

1875
Henri Nestl sells his company and factory in Vevey to three local businessmen.
They employ chemists and skilled workers to help expand production and sales.

1878
Fierce competition develops between Nestl and Anglo-Swiss, when both
companies start selling rival versions of the others original products: condensed
milk and infant cereal. Both firms expand sales and production abroad.

1882-1902
In 1882 Anglo-Swiss expands into the US, but the death of George Page frustrates
its plans. In 1902 it sells its US-based operations, which paves the way for an
eventual merger with Nestl.

1904
Nestl begins selling chocolate for the first time when it takes over export sales
for Peter & Kohler. Henri Nestl himself plays a key role in the development of
milk chocolate from 1875, when he supplies his Vevey neighbour Daniel Peter
with condensed milk, which Peter uses to develop the first such commercial
product in the 1880s.

The Belle poque

In 1905, Nestl & Anglo Swiss has more than 20 factories, and starts using
overseas subsidiaries to establish a sales network that spans Africa, Asia, Latin
America and Australia. As World War One approaches, the firm benefits from the
period of prosperity known as the Belle poque or Beautiful Age, and becomes
a global dairy company.
Highlight

1905
Anglo-Swiss and Nestl merge to form the Nestl & Anglo-Swiss Milk Company.
The company has two head offices, in Vevey and Cham, and opens a third office
in London to drive dairy export sales. Over several years the company expands
its range to include unsweetened condensed milk and sterilised milk.

Survival during wartime

The outbreak of war in 1914 leads to increased demand for condensed milk and
chocolate, but a shortage of raw materials and limits on cross-border trade
hamper production for Nestl & Anglo-Swiss. To solve this problem, the company
acquires processing facilities in the US and Australia, and by the end of the war it
has 40 factories.
Highlights

1914
War breaks out across Europe and disrupts production for the company, but
hostilities also drive demand for Nestl dairy products, in the form of large
government contracts.

1915
Condensed milk is long-lasting and easy to transport, which makes it popular
with armed forces. For example, in 1915 the British Army starts issuing Nestl
canned milk to soldiers in their emergency rations. Strong demand for the
product means that the companys milk refineries are working flat out.

1916
Nestl & Anglo-Swiss acquires Norwegian dairy company Egron, which has
patented a spray-drying process for producing milk powder a product its new
owner starts selling.

1917-1918
Milk shortages in Switzerland mean that Nestl & Anglo-Swiss has to surrender
fresh milk supplies to help people in towns and cities. To meet demand for
condensed milk from the warring nations, the company buys US refineries and
signs supply agreements with Australian companies, which it later acquires.

Crisis and opportunity

After the war military demand for canned milk declines, causing a major crisis for
Nestl & Anglo-Swiss in 1921. The company recovers, but is rocked again by the
Wall Street Crash in 1929, which reduces consumer purchasing power. However,
the era carries many positives: the companys management corps is
professionalised, research is centralised and pioneering products such as
Nescaf coffee are launched.
1921-1922
Falling prices and high stock levels lead to the first, and only ever, financial loss
for Nestl & Anglo-Swiss in 1921. Banker Louis Dapples joins as Crisis Manager,
and encourages the company to appoint professional managers for the first time.
Administration is centralised, and research is consolidated at one laboratory in
Vevey, Switzerland.

1929
The company buys Switzerlands largest chocolate company Peter-Cailler-Kohler,
the origins of which date back to 1819 when Franois Louis Cailler creates one of
the countrys first chocolate brands Cailler. Chocolate now becomes an integral
part of the Nestl & Anglo-Swiss business.

1934
Malted chocolate drink Milo is launched in Australia, and its success means it is
later exported for sale in other markets. The company continues to develop baby
and infant foods in this inter-war period, and launches Pelargon in 1934, a full-
milk powder for babies enriched with lactic acid bacteria, to improve its
digestibility.

A competitive market for chocolate in Switzerland encourages Nestl-Peter-

Cailler-Kohler to innovate by launching Galak white chocolate and Rayon, a
chocolate with honey and air bubbles, the next year. Vitamins are a major selling
point for healthy products in the 1930s, and Nestl launches vitamin supplement
Nestrovit in 1936.

1938
Nescaf is launched as a powdered extract of pure coffee that retains coffees
natural flavour, but can be prepared by simply adding hot water. The product is
the brainchild of Max Morgenthaler, who begins work on it in 1929, when the
Brazilian government asks Nestl & Anglo-Swiss to find an outlet for its huge
coffee surplus.

Riding out the storm

The outbreak of World War Two in 1939 affects virtually every market, but Nestl
& Anglo-Swiss continues to operate in difficult circumstances, supplying both
civilians and armed forces. In 1947, the company adds Maggi soups and
seasonings to its product range, and adopts the name Nestl Alimentana.
Highlights

1939
Fearing that the Axis powers could occupy Switzerland, Nestl & Anglo-Swiss
relocates some managers to a new office in Stamford in the US, which operates
as the companys second headquarters during the war. The fighting in Europe
makes it impossible for Nestl to export milk from there, so the company supplies
Africa and Asia from the US and Australia, and expands production in Latin
America.

World War Two initially slows sales of Nescaf, but they pick up as hostilities
continue. After the US enters the war, Nestl brands rapidly gain popularity
among American service personnel. At the end of the war, Nescaf is also
included in CARE aid supplies in Japan and Europe. Nestea is launched in the
late 1940s.

1947
Nestl & Anglo Swiss merges with Swiss company Alimentana, which produces
Maggi soups, bouillons and seasonings, and is renamed Nestl Alimentana.
Alimentanas history dates back to 1884, when Julius Maggi developed a protein-
rich dried soup to tackle malnutrition.

Greater consumer convenience

The post-war period is marked by growing prosperity, and people in the US and
Europe spend money on machines that make life easier, such as refrigerators and
freezers. They also favour convenience foods, and Nestl Alimentana meets this
need with new products including Nesquik and Maggi ready meals.

1948
In the US Nestl Alimentana launches a soluble tea, Nestea, which is
manufactured using the same method as Nescaf, and can be served both hot or
cold. Nesquik, which dissolves easily in cold milk, is also launched in the US and
becomes a top seller.

Nestl infant cereal has been available since 1948 as a powdered product, but it is
now rebranded as Cerelac. Originally only sold as a bouillon cube, Maggi
seasoning brand Fondor is launched as a powder. Packaged in a convenient
shaker, it can now be used as a condiment in the dining room, as well as in the
kitchen.
1957
Canned ravioli is launched under the Maggi brand. Its huge success prompts
Nestl to launch more canned, prepared foods, which become a new growth
segment.

Frozen foods to pharmaceuticals

Acquisitions enable Nestl to enter fast-growing new areas such as frozen foods,
and to expand its traditional businesses in milk, coffee and canned foods. In the
1970s the company diversifies into pharmaceuticals and cosmetics. It starts to
attract criticism from activist groups that allege its marketing of infant food is
unethical. Nestl later becomes one the first companies to apply the WHO code
on breast-milk substitutes across its business.
Highlights

1960
With increasing numbers of households buying freezers, demand for ice cream is
rising. Nestl buys German producer Jopa and French manufacture Heudebert-
Gervais to capitalise on this growth, and adds Swiss brand Frisco in 1962. The
company also buys UK canned foods company Crosse & Blackwell.
1962

Nestl buys the Findus frozen food brand from Swedish manufacturer Marabou,
and extends the brand to international markets. Findus is one of the first
companies to sell frozen foods in Europe, from 1945.

1968
Chilled dairy products are increasingly popular, Nestl buys French yogurt
producer Chambourcy. In the early 1970s the latter launches the Sveltesse range
of yoghurts, aimed at health- and weight-conscious consumers.

1969
Nestl enters mineral waters by buying a stake in French waters brand
Vittel.

1973
Keen to bolster its canned foods and frozen portfolio in Anglo-Saxon markets,
Nestl takes over the US frozen foods company Stouffer Corporation, and buys
canned foods producer Libby, McNeill & Libby in 1976.
1974
For the first time, Nestl diversifies beyond food and drink, becoming a minority
shareholder in global cosmetics company LOral.

1977
Renamed Nestl S.A, the company continues its diversification strategy, buying
US pharmaceutical and ophthalmic products manufacturer Alcon Laboratories.
Declining breast-feeding rates lead some activists to question the baby food
marketing strategies of companies including Nestl. In 1977 they call on people to
boycott Nestl products.

Towards Nutrition, Health and Wellness

Following years of growth, Nestl disposes of unprofitable brands and promotes

those that satisfy increasingly health conscious consumers, in line with its new
Nutrition, Health and Wellness ambition. The company expands in the US,
Eastern Europe and Asia, and targets for global leadership in water, ice cream
and animal food.
Highlights

1981
Stouffers Lean Cuisine frozen meals are launched on a low-fat, low-calorie
platform, and the brand posts impressive sales. Nestl and LOreal establish
Galderma as a joint venture active in dermatology. The World Health Assembly
adopts the WHO code on breast-milk substitutes, and Nestl is one of the first
companies to develop policies based on it and apply them across its business.

1985
By acquiring US-based Carnation Company for USD 3 billion, Nestl adds brands
such as Carnation and Coffee-Mate to its portfolio. It also enters the pet food
business when it buys the Friskies brand.

1986
The Nespresso story begins with a simple idea: enable anyone to create a perfect
cup of coffee, just like a skilled barrista.
Read more: Calling coffee pilgrims everywhere! Nespresso
1988
Nestl buys UK confectionery company Rowntree Mackintosh, adding brands
including KitKat, After Eight and Smarties to its portfolio. It also acquires Italian
pasta, sauce and confectionery group Buitoni-Perugina.

1991
Nestl establishes a joint venture with General Mills, Cereal Partners Worldwide,
to produce and market breakfast cereals globally. The company also creates a
joint venture with The Coca-Cola Company to form Beverage Partners Worldwide,
to manufacture and market brands including Nestea.

1992
Nestl develops its position in mineral waters by acquiring Frances Perrier
Group. Nestl Sources Internationales is created as a separate waters business in
1993, and is renamed Nestl Waters in 2002.

1997
New CEO Peter Brabeck-Letmathe sees growth potential in personalised
nutrition. He articulates Nestls position as the leader in Nutrition, Health and
Wellness, as the millennium approaches.

1998
Nestl buys Italian mineral waters business Sanpellegrino Group. Nestl Pure Life
is launched in developing countries, to guarantee clean and healthy drinking
water, and Aquarel is launched in Europe two years later.

2000
The Sustainable Agricultural Initiative Nestl (SAIN) is launched to promote
collaboration with local farmers. It aims to improve their living standards and
ensure a sustainable supply of commodities.

2001
Nestl buys US pet food business Ralston Purina, and merges it with Nestl
Friskies Petcare to establish the new market leader in pet care, Nestl Purina
Petcare.

2002
After expanding its ice-cream business in the 1990s, Nestl acquires the licensing
rights to premium producer Hagen-Dazs in the US and Canada, and buys
Mvenpick and Dreyers Grand Ice Cream in 2003. It also acquires frozen foods
business Chef America for USD 2.6 billlion.

LATEST FINANCIAL STATEMENT

Annual Report 2016

The Annual Report contains Nestls Annual Review (pdf, 10 Mb), the Corporate
Governance Report (pdf, 2 Mb) and Financial Statements (pdf, 1 Mb). It is
published alongside the summary report Nestl in society: Creating Shared Value
and meeting our commitments (pdf, 6 Mb).
Letter to our shareholders

2016 was an exceptional year in exceptional times. We reached a milestone, our

150th anniversary, a celebration of a century and a half of passion for nutrition
and for quality. But this achievement comes as our industry is at a crossroads.
Expectations of Nestl are changing substantially as consumers embrace new
trends, habits and lifestyles. We see a reshaping of the competitive environment.
We are on the brink of a fourth industrial revolution; a transformation of society
that will be unlike anything we have experienced before, presenting us with
challenges but also great opportunities. We are responding by sharpening our
focus and strengthening our efforts to create value. We are investing in science
and innovation, and building new capabilities and platforms to secure our long-
term prospects while at the same time delivering the sustainable, profitable
growth you expect from us.

Corporate Governance
Our Board of Directors sets our long-term strategy and provides oversight on the
basis of strong principles and an appropriate tone from the top. It ensures the
long-term success of our company based on a clear strategy and good corporate
governance.

Strategy

Nutrition plays a profound role in everyones life. Our strategy focuses on

delivering distinct benefits to people through the food and beverages, products
and services we provide. Over 150 years we have built a successful business by
understanding and anticipating the needs of society, and continuously adapting
ourselves to seize the opportunities presented to us.

Financial review

Our 2016 organic growth was at the high end of the industry but at the lower end
of our expectations. We saw a solid trading operating profit margin improvement
and our cash flow grew significantly.
The highlights
Ever since Nestl was founded we have provided quality products and services
that help shape a better world. Henri Nestl created an infant cereal that saved
the life of a child. We share his belief that through innovation we can enable
healthier and happier lives. We share his passion for creating the tastiest and
healthiest products, building, sharing and applying our nutritional knowledge,
enhancing quality of life and contributing to a healthier future.

Nestl Health Science

Nestl Skin Health
Nestl Nutrition
Milk products and Ice Cream
PetCare
Prepared dishes and Cooking aids
Confectionery
Powdered and Liquid Beverages
water

150 years

Our 150th anniversary celebrations were an opportunity to honour the vision of

our founders: a better world through nutrition. That passion for nutrition is
echoed today in the efforts of our employees, working with our partners, to create
products and services that enhance quality of life and contribute to a healthier
future.