September 30th, 2013 Nestlé Investor Seminar 20131
Wyeth Nutrition and Nestlé Nutrition
Greater China Region
John Cheung
R...
September 30th, 2013 Nestlé Investor Seminar 20132
Disclaimer
This presentation contains forward looking
statements which ...
September 30th, 2013 Nestlé Investor Seminar 2013
AGENDA
I The China IF / GUM Market
II Wyeth Nutrition & Nestlé Nutrition...
September 30th, 2013 Nestlé Investor Seminar 2013
0.3
0.4
5.1
0.3
1.8
7.8
Strong market growth in the Greater China Region...
September 30th, 2013 Nestlé Investor Seminar 2013
Rapid urbanisation and household incomes increase
2012
52%
2011
51%
2010...
September 30th, 2013 Nestlé Investor Seminar 2013
China city tier at a glance
City
tier
# of city
Population
(million)
% o...
September 30th, 2013 Nestlé Investor Seminar 2013
IF segment value importance
%, 2008-13E
CAGR
%, 2008-13E
Premium and sup...
September 30th, 2013 Nestlé Investor Seminar 2013
Unique attitude of Chinese moms towards IF / GUM
First time mom Food saf...
September 30th, 2013 Nestlé Investor Seminar 2013
Latest directives by State Council poised to change
China IF / GUM lands...
September 30th, 2013 Nestlé Investor Seminar 2013
Wyeth Nutrition and Nestlé Nutrition well-positioned to
capture market o...
September 30th, 2013 Nestlé Investor Seminar 2013
Commitment to WHO Code and FTSE4Good
Our Commitments
• To support breast...
September 30th, 2013 Nestlé Investor Seminar 2013
IF / GUM
Brain
development
Allergy
Upper mid
Premium
Super
premium
illum...
September 30th, 2013 Nestlé Investor Seminar 2013
Nestlé NutritionWyeth Nutrition
Wyeth Nutrition and Nestlé Nutrition bot...
September 30th, 2013 Nestlé Investor Seminar 2013
Premium focused portfolio growing strongly y-o-y
High growth trajectory
...
September 30th, 2013 Nestlé Investor Seminar 2013
Strong brand equities built on effective marketing model
illuma leading ...
September 30th, 2013 Nestlé Investor Seminar 2013
Comprehensive quality management to support
highest quality image
Reliab...
September 30th, 2013 Nestlé Investor Seminar 2013
# of cities
# of outlets
2005 2013
45 300+
5,000 30,000+
Disciplined geo...
September 30th, 2013 Nestlé Investor Seminar 2013
Nestlé sales office
opened in Shanghai
Nestle launched
LACTOGEN.
The fir...
September 30th, 2013 Nestlé Investor Seminar 2013
ProtectionHealthy Growth
Comprehensive portfolio covering different pric...
September 30th, 2013 Nestlé Investor Seminar 2013
Multiple milk sources
&
single world-class
standard
Superior science &
r...
September 30th, 2013 Nestlé Investor Seminar 2013
Driving sustainable growth in China:
Align with the Chinese government t...
September 30th, 2013 Nestlé Investor Seminar 2013
Enlightenment Research
partners
4000 infants
Identify nutrition
gap
Deve...
September 30th, 2013 Nestlé Investor Seminar 2013
Wyeth Nutrition & Nestlé Nutrition: 1+1=3
A highly complementary combina...
September 30th, 2013 Nestlé Investor Seminar 201324
Wyeth Nutrition and Nestlé Nutrition
Greater China Region
John Cheung
...
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John Cheung, James Chiu, Wyeth Nutrition and Nestlé Nurtition in Greater China

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John Cheung, James Chiu, Wyeth Nutrition and Nestlé Nurtition in Greater China

  1. 1. September 30th, 2013 Nestlé Investor Seminar 20131 Wyeth Nutrition and Nestlé Nutrition Greater China Region John Cheung Regional President GCR Wyeth Nutrition James Chiu Regional Business Head GCR Nestlé Infant Nutrition
  2. 2. September 30th, 2013 Nestlé Investor Seminar 20132 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.
  3. 3. September 30th, 2013 Nestlé Investor Seminar 2013 AGENDA I The China IF / GUM Market II Wyeth Nutrition & Nestlé Nutrition: 1+1=3 III Winning strategies of Wyeth Nutrition & Nestlé Nutrition 3
  4. 4. September 30th, 2013 Nestlé Investor Seminar 2013 0.3 0.4 5.1 0.3 1.8 7.8 Strong market growth in the Greater China Region 4 GCR IF / GUM Market Size Bio CHF, %, 2008-2013E 2008 2013E 5.7 9.9 Mainland China Hongkong Taiwan Key Growth Drivers • Mainland China: - 15~17 mio newborns; one-child policy - Urbanisation - Premiumisation • Hong Kong / Taiwan: - HK benefits from mainland shoppers and mainland babies born in HK - TW is stagnant due to declining births Source: Nielsen, China Statistic Bureau 4
  5. 5. September 30th, 2013 Nestlé Investor Seminar 2013 Rapid urbanisation and household incomes increase 2012 52% 2011 51% 2010 50% 2009 47% 2008 46% 2018E 57% China Urbanisation Trend %, 2008-2018E More working mothers with growing income Source: China Statistic Bureau, Economist, McKinsey Disposable income per capita USD 5,477 2,691 2,321 1,887 1,6421,455 2018E20122011201020092008 5
  6. 6. September 30th, 2013 Nestlé Investor Seminar 2013 China city tier at a glance City tier # of city Population (million) % of national city population GDP/Capita (CHF) IF market value size (weight%) Key 4 10 – 19 4% 12,034 15% A 27 1.5~9 12% 7,989 21% B 282 0.2~4 32% 4,538 31% C/D 1,633 0.2~1.5 27% 1,387 33% Town 32,608 0.02~0.07 25% Source: Nielsen and China Statistics Bureau of 2011 data Lots of room for growth 6
  7. 7. September 30th, 2013 Nestlé Investor Seminar 2013 IF segment value importance %, 2008-13E CAGR %, 2008-13E Premium and super premium segments growing rapidly Note: Segment definition (RMB price/per kg), Stage 1 as example: Super premium: > RMB 290; Premium: (190,290); Upper-mid: (125,190); Mid: <125 2013E20102008 -32% Mid -10% Upper-Mid 18% Premium 99% Super premium Premium and super premium the two largest segments Source: Nielsen, team analysis 3% 7
  8. 8. September 30th, 2013 Nestlé Investor Seminar 2013 Unique attitude of Chinese moms towards IF / GUM First time mom Food safety concerns Internet generation Chinese moms’ psychology / behaviour • Safety / reliability brand choice pre-requisite • Willing to pay premium • Do extensive brand research - Internet / social media / retail shopkeeper • Quick to adopt new technologies High expectation Chinese moms insecure about food safety and always look for latest innovations 8
  9. 9. September 30th, 2013 Nestlé Investor Seminar 2013 Latest directives by State Council poised to change China IF / GUM landscape Channel Self controlled / own milk source Pharma GMP; 3rd party manufacturing discouraged New factory certification and registration requirements Electronic tracking system, drug store channel pilot From 128 to 50 companies with sales of RMB 5 bio by 2018 Import 9 Milk Farm/ Source Manufacturing Industry Consolidation Source: Ministry of Industry and Information Technology
  10. 10. September 30th, 2013 Nestlé Investor Seminar 2013 Wyeth Nutrition and Nestlé Nutrition well-positioned to capture market opportunities Commitment to WHO Code and FTSE4Good standards Comprehensive product offerings Strong brand image: advanced science, quality Strong share position in urban markets Dedicated channel resources and capabilities 10
  11. 11. September 30th, 2013 Nestlé Investor Seminar 2013 Commitment to WHO Code and FTSE4Good Our Commitments • To support breastfeeding with specific programs • Nestlé policies: - no public promotion - no samples to mothers • Wyeth Nutrition is implementing Nestlé policies • Dedicated resources on compliance Pre-natal consumer education Nestlé instructions Perinatal nursing supports Breastfeeding promotion Breastfeeding support activities 11
  12. 12. September 30th, 2013 Nestlé Investor Seminar 2013 IF / GUM Brain development Allergy Upper mid Premium Super premium illuma NANWyeth S-26 Gold Easy absorption gut comfort Lactogen Portfolios of Wyeth Nutrition and Nestlé Nutrition highly complementary - covering the First 1,000 Days Immunity Mid Maternal WN Mama Wyeth Mama DHA Materna NAN HA immunity Infant cereal Gerber Nestlé Nestlé NN Mama 12
  13. 13. September 30th, 2013 Nestlé Investor Seminar 2013 Nestlé NutritionWyeth Nutrition Wyeth Nutrition and Nestlé Nutrition both steadily growing market share China market value share % Source: Nielsen July, 2013 2011 2012 2013 YTD July 2012 2013 YTD July 2011 China market value share % 13
  14. 14. September 30th, 2013 Nestlé Investor Seminar 2013 Premium focused portfolio growing strongly y-o-y High growth trajectory GCR Sales Super Premium illuma Premium S-26 Gold IF / GUM Special Feeder Maternal 07 100906 08 110504 12 illuma S-26 Gold 14
  15. 15. September 30th, 2013 Nestlé Investor Seminar 2013 Strong brand equities built on effective marketing model illuma leading image attributesS-26 Gold leading image attributes • Brain & eye development, helps learning • Complete nutrition • Reliable / high quality • Latest science • Gut health and absorption • Imported / super premium quality Source: BHT report 2013 MOH cooperation CRM services Key account management Frequent product innovation Consumer marketing *MOH: Ministry of Health * 15
  16. 16. September 30th, 2013 Nestlé Investor Seminar 2013 Comprehensive quality management to support highest quality image Reliable and 100% traceable milk source Highly automated process “Pharma” practice quality assurance Wyeth Nutrition quality management Source: BHT 2013 GMP standard Wet blending mixing process Professional CRM system Consumer perception on brand with good quality (% of total respondents) 16 21 48 41 42 50 Competitor 4 Competitor 3 Competitor 2 Competitor 1 Wyeth Gold Competitor 5 Average of leading brands: 36 16
  17. 17. September 30th, 2013 Nestlé Investor Seminar 2013 # of cities # of outlets 2005 2013 45 300+ 5,000 30,000+ Disciplined geographic expansion drove our strong position in the key / A cities Source: Nielsen 2008 180 20,000 Expansion prioritisation considering resources, capability and return • Sustainable growth • Top 3 position in important cities Tianjin Beijing Nanjing ShanghaiWuhan Chengdu Changsha Shenzhen Guangzhou Shantou 17
  18. 18. September 30th, 2013 Nestlé Investor Seminar 2013 Nestlé sales office opened in Shanghai Nestle launched LACTOGEN. The first international IMF brand sold in China Launched NAN Nestlé Shuangcheng factory started production Launched Gerber Launched NAN HA Started construction of the Dairy Farming Institute Deeply rooted in China Since 1908 18
  19. 19. September 30th, 2013 Nestlé Investor Seminar 2013 ProtectionHealthy Growth Comprehensive portfolio covering different price tiers and life stages 19
  20. 20. September 30th, 2013 Nestlé Investor Seminar 2013 Multiple milk sources & single world-class standard Superior science & research Zero tolerance on quality Modernised field force (E-detailing, mobile solutions) Nationwide coverage & route to market Ethical business conduct 07 08 09 10 11 12 GCR Sales Solid growth delivered by Nestlé Nutrition Key success factors driving business growth 20
  21. 21. September 30th, 2013 Nestlé Investor Seminar 2013 Driving sustainable growth in China: Align with the Chinese government to address key issues 21 Under 5 mortality rate Maternal mortality rate Infant mortality rate Under 5 underweight Obesity
  22. 22. September 30th, 2013 Nestlé Investor Seminar 2013 Enlightenment Research partners 4000 infants Identify nutrition gap Develop products for China Start Healthy, Stay Healthy Maternal & Infant Nutrition Growth Study mission: platform to empower the health of China’s future generation 22
  23. 23. September 30th, 2013 Nestlé Investor Seminar 2013 Wyeth Nutrition & Nestlé Nutrition: 1+1=3 A highly complementary combination Strong fit Strategic fit Cultural fit Financial fit 23
  24. 24. September 30th, 2013 Nestlé Investor Seminar 201324 Wyeth Nutrition and Nestlé Nutrition Greater China Region John Cheung Regional President GCR Wyeth Nutrition James Chiu Regional Business Head GCR Nestlé Infant Nutrition
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