Richard T.

Laube
Head of Nestlé Nutrition
May 22 2006
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Disclaimer

This presentation contains forward looking

statements which reflect 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 and uncertainties
include such factors as general economic
conditions, foreign exchange fluctuations,
competitive product and pricing pressures and
regulatory developments.

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• Why Nestlé has created Nestlé
Nutrition as a separate business

• What competitive advantage will be

gained

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 The Territory: “Nutrition first”

Nutrition First, Healthy Taste First,

Taste as a value Nutrition as a
Performance
Performance
added value added
Nutrition
Nutrition Nestlé Food &
Beverages and
Infant
Infant Water
Nutrition Business
Nutrition
Nutrition first Taste first

HealthCare
Nutrition

Sick
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 The Market

Market
Product Category Est. Size Nestlé
Growth Presence
(CHF bio)
1. Products for specific needs
- Infant nutrition 21 3 - 4% Yes
- Healthcare nutrition 12 6 - 7% Yes
2. Food - functional (*) 65 8 - 9% Yes
3. Food - healthy options (**) 65 2 - 3% Yes
4. Dietary supplements 50 4% No

* Foods with added positive functionality ( e.g. with probiotics, extra calcium, balanced fats)
** Foods with less negative characteristics ( e.g. fat-free, sugar-free, low cholesterol, low salt)
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 Our Businesses

Infant Nutrition

Infant Formula Baby Food

HealthCare Nutrition Performance Nutrition

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Our Business

Categories Geographical split

Total Sales of Nutrition Business in 2005:

CHF 5.2 billion growing at 5.5% p.a (2000-2005)
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Our Competitive Position

Strong #1 in Infant Formula with 24% market

share. Source of trust for consumers and a partner
of the medical profession

Strong # 2 in Baby Food. #1 brand in Infant

Cereals with only distant followers, #2 in Europe for
Meals & Drinks and #3 in Premium Growing-up
milks

#4 position in Healthcare Nutrition worldwide

but with strong growing position in oral and enteral
formats
#1 Brand in Performance Nutrition (solid
formats) weak presence in Europe and ROW

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 Our consumers are 'extremes'

Infant Milk, Specialty Energy Bars, Specialty Enteral and Oral

Formulas, Cereals, Meals Liquids, Proteins and Supplements for
and Drinks and Growing- Training Nutrition Malnourishment, Crohn's
Up Milks Disease, Diabetes

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Require specific nutrition solutions

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 Factors defining a new business
model
Food &
Nutritio Pharma
Beverage
n

Driver of innovation Consumer pull Science push

< 1 year, market +/-10 years, wide

Time horizon and risk adoption risk range of risks

Consumer needs matching Local Global

Speciality, expert
Selling channels Mass Consumer
prescribed

Source of competitive
Patents and
advantage Brand
claims
(superior margins)

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 Nestlé Nutrition Response

• Focused, stand alone organization since

01.01.05

• Globally aligned

• Yet benefiting from scale of Nestlé in the

Market

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 Designed to meet different
routes to market

• Medical detailing and

role of healthcare
professional

• Sales to specialty
channels

• Regulatory environment

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 Delivering innovations that are
big and meaningful
• Scientifically based and
with global applications

• Rapid multi-market
rollouts

• Focused on sharply
defined benefit
segments

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Separate but integrated

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With Global Reach

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Speed to market

H1
H1 2005
2005 H2
H2 2005
2005 2006
2006 Jan.
Jan. 2007
2007

Global Roll-out within 18-24 months

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 Where are we today

• A stand alone business organization is forming

• No material disruption in the transition

• New structures in place, positions established

• R&D processes redefined and coming on stream

• Product pipelines being strengthened for future value

• On course for accelerating growth in the future by

accelerating marketing support already in 2006

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Long term vision

10% Organic growth

20% EBITA margins

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