Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Food Nestlé USA
J. Hamilton - Prepared Foods President
J. Carmichael - ...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston1
Disclaimer
This presentation contains forward looking statements
which...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Frozen meals is not an homogeneous category
2 Source: Nielsen
8.4%
6.4%...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Nestlé leads share position across all key segments
3
43.2%
42.6%
40.9%...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston4
Negative consumer perception
of freshness and quality of
frozen foods
...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston5
Attitudes to DIETING have significantly changed
”Consumers want to eat...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston6
Yet, frozen food remains very relevant for consumers…
67% +3.9%
Nestlé...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston7
Provides simple management
of portion control
Perfect preservation –
f...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Nestlé Competitor 1 Competitor 2 Competitor 3
Nestlé will lead the way ...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
We have the core competitive strengths to win
Leading
where we
iconic
b...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
A robust strategic plan is in place to win in the USA
10
 Disciplined ...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Brand portfolio aligned with evolving consumer needs…
11
Historic stron...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
…and with clear business priorities
12
 Strengthen
brand equity
 Driv...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston13
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
-11%
in 2013
Consumer is moving from “dieting” to “healthy eating”
14
N...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
“
Consumer expectations are changing
15
Personalized SolutionsFood is e...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
However, modern eating has some unhealthy effects
16
Overweight
or obes...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
17
Our Challenge:
Very relevant consumer need …
… but outdated brand ...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
 18
Our Opportunity:
Healthy
Lifestyle=
Very relevant consumer need …...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Modernize positioning from Diet to Healthy Lifestyle
19
GraspingOpportu...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Innovate and expand into growing categories
20
GraspingOpportunities
Br...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston21
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Stouffers is well positioned for growth
22
Leading
Brand
30% $ share
(+...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Helping America enjoy a ‘Real Dinner’ every night
23
Strengthen brand
e...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Strengthening brand equity, a new voice
24
CONNECTING with the
Hispanic...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Driving our core
25
DELIVERING reassurance
through NHW
Sodium in
2013
I...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Innovating for new occasions and users
26
Snacking
48%
of eating
occasi...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston27
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Hot Pockets is well positioned for long term success
28
Strong Business...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Continue to elevate the brand beyond convenience
29
Heat up brand equit...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Heat up brand equity
30
GraspingOpportunities-NHW
DRIVE perceptions thr...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Innovating for extra occasions
31
GraspingOpportunities–B3Innovation
Et...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
-50
Winning at retail
32
GraspingOpportunities
Optimized portfolio Deli...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston33
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Recognizing the challenges
Private label
growth since
2009
The most
ico...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Strategic pillars for growth & profit
35
35
Elevating the
consumer prop...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Elevating the consumer proposition
36
GraspingOpportunities&EmbracingDi...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Breakthrough innovation & renovation
37
GraspingOpportunities
INCREASE ...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Portfolio optimization
38
MakingChoices
Clear & distinct brand
proposit...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Integrated path to purchase
39
GraspingOpportunities
Embracing OPPORTUN...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Clear business priorities to win in the new reality
40
 Strengthen
bra...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
Driving cost optimization and business simplification
41
Valuingwhatcon...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston
2011 2012 2013
A revitalized strategy to turnaround current performance...
Nestlé Investor Seminar 2014June 3rd & 4th, Boston43
In summary…
 Frozen Foods remain an attractive category,
despite the...
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Food, Nestlé USA

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Jeff Hamilton, President of Nestlé Prepared Foods Division, Nestlé USA and John Carmichael, President, Pizza and Hot Pockets Division, Nestlé USA, introduce the food business of Nestlé USA

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Food, Nestlé USA

  1. 1. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Food Nestlé USA J. Hamilton - Prepared Foods President J. Carmichael - Pizza President June 3rd & 4th, Liberty Hotel, Boston, USA Nestlé Investor Seminar 2014
  2. 2. Nestlé Investor Seminar 2014June 3rd & 4th, Boston1 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. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Frozen meals is not an homogeneous category 2 Source: Nielsen 8.4% 6.4% 1.7% 1.0% 0.9% 0.3% -0.5% -1.8% -3.9% -7.0% -9.5% 2 Year $ CAGR: -1.8% SSNatural/Organic $0.3bn Breakfast Components MSEntree Sandwich Snacks SSRegular Pizza SSEconomy SSDiet MealKits $2.9bn $4.2bn $1.1bn $2.2bn $2.6bn $1.9bn $4.1bn $1.0bn $2.1bn $0.9bn
  4. 4. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Nestlé leads share position across all key segments 3 43.2% 42.6% 40.9% 2011 2012 2013 Source: Nielsen, December Last 52 weeks 28.8% 29.5% 30.0% 2011 2012 2013 19.4% 19.0% 18.5% 2011 2012 2013 44.3% 44.1% 43.7% 2011 2012 2013 2013 Sales of $4.1bn with -2% CAGR2011-2013 MarketShare MarketShare
  5. 5. Nestlé Investor Seminar 2014June 3rd & 4th, Boston4 Negative consumer perception of freshness and quality of frozen foods Rapid expansion of snacking over the last years Falling consumption as government subsidies shrink Rising demand for products to support speed scratch cooking Consumers want to associate with healthy weight not hard diet Increasing competitive intensity both in and out of aisle The consumer landscape is ever evolving Rise of pure, natural and better-for-you products
  6. 6. Nestlé Investor Seminar 2014June 3rd & 4th, Boston5 Attitudes to DIETING have significantly changed ”Consumers want to eat healthily not diet Sales of products with names 2010 2011 2012 2013 diet / light / low / reduced -2.7% -8.9% -0.5% -0.5% -1.5% +0.2% -6.6% -11.2% Source: Nielsen All Outlet Total Store 2010-2013 Dec Last 52 weeks Dollar Units
  7. 7. Nestlé Investor Seminar 2014June 3rd & 4th, Boston6 Yet, frozen food remains very relevant for consumers… 67% +3.9% Nestlé household penetration in Frozen Foods Euromonitor growth forecast 2013-2018* Frozen Foods household penetration * Includes Frozen Ready Meals and Frozen Pizza 97%
  8. 8. Nestlé Investor Seminar 2014June 3rd & 4th, Boston7 Provides simple management of portion control Perfect preservation – frozen at the peak of freshness … as it delivers on fundamental consumer needs Supports controlled intake of sodium and calories Increases convenience and eases hectic lifestyles Reduces food waste Helps consumers understand and ensure nutritional balance
  9. 9. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Nestlé Competitor 1 Competitor 2 Competitor 3 Nestlé will lead the way as the largest frozen player 8 Source: Nielsen (excludes Liquor, Vitamins and Ice) 12% Frozen Department 2.5x US Food & Beverage Pizza Ice Cream Frozen Meals $394bn bigger than the nearest competitor
  10. 10. Nestlé Investor Seminar 2014June 3rd & 4th, Boston We have the core competitive strengths to win Leading where we iconic brands 9 8Big Kitchens “Cooking the way youcook” sell it make it leveraging the largest frozen supply chain in the USA largest frozen centre of excellence in America based in Solon, OH
  11. 11. Nestlé Investor Seminar 2014June 3rd & 4th, Boston A robust strategic plan is in place to win in the USA 10  Disciplined portfolio management  Invest in strategic growth drivers  Fix or divest underperformers Make choices  Nutrition, Health & Wellness  B3 Innovation  New channels & integrated P2P  Remove waste to reinvest  Operate as ONE Nestlé in NA  Master complexity Grasp opportunities Value what consumers value  Embodying Nestlé in Society  Create Shared Value  Strengthen Nestlé brand equity  Reflect our Consumer diversity  Best-in-class new capabilities  Accelerating career development  Best-in-class Digital capabilities  Step up on Digital Media  Leverage e-commerce Embrace digital Have the best people Engage with the community and stakeholders
  12. 12. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Brand portfolio aligned with evolving consumer needs… 11 Historic strongholds New territory Core Consumer Needs Breakfast Snacking Meals Making healthful choices Good Food, Good Times Easy, tasteful food that allows you to relax and spend time with others Convenient, reliable, fun Snacking / Immediate energy            
  13. 13. Nestlé Investor Seminar 2014June 3rd & 4th, Boston …and with clear business priorities 12  Strengthen brand equity  Drive the core  Innovate for new users & occasions  Heat up brand equity  Innovate for incremental occasions  Winning at retail  Elevate the consumer proposition  Breakthrough I&R  Optimize portfolio strategy Drive cost structure optimization and business simplification  Modernize positioning from diet to healthy lifestyle  Contemporize brand architecture  Expand into new growing categories
  14. 14. Nestlé Investor Seminar 2014June 3rd & 4th, Boston13
  15. 15. Nestlé Investor Seminar 2014June 3rd & 4th, Boston -11% in 2013 Consumer is moving from “dieting” to “healthy eating” 14 New Health, balance and maintaining weight Healthy eating for holistic health From: Dieting for weight loss and Low calorie Low fat diet/light/ low/reduced product with To: claims
  16. 16. Nestlé Investor Seminar 2014June 3rd & 4th, Boston “ Consumer expectations are changing 15 Personalized SolutionsFood is enjoyable my ownI control personal diet wearers by 2017 48M feel goodI eat foods I about eating And that don’t deny me the pleasure of eating
  17. 17. Nestlé Investor Seminar 2014June 3rd & 4th, Boston However, modern eating has some unhealthy effects 16 Overweight or obese US adults (23% increase since 1960) (more than double since 1960) Child Obesity prevalence (nearly triple since 1980) 17%36%69% Adult Obesity prevalence
  18. 18. Nestlé Investor Seminar 2014June 3rd & 4th, Boston 17 Our Challenge: Very relevant consumer need … … but outdated brand positioning Diet=
  19. 19. Nestlé Investor Seminar 2014June 3rd & 4th, Boston  18 Our Opportunity: Healthy Lifestyle= Very relevant consumer need … … and on-trend brand positioning
  20. 20. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Modernize positioning from Diet to Healthy Lifestyle 19 GraspingOpportunities Diet Food Expert for weight loss Modern Wellness Partner for a healthy lifestyle Deprivation Food (Low Fat, Low Cal) “80s” brand Functional Satisfying Cuisine On-trend and talking to today’s Modern Woman Her Supportive Partner, leveraging technology From: To:
  21. 21. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Innovate and expand into growing categories 20 GraspingOpportunities Breakfast 86% of snackers trying to find +20% BFY Breakfast growth Latest 52 Weeks healthier snacking options Snacking
  22. 22. Nestlé Investor Seminar 2014June 3rd & 4th, Boston21
  23. 23. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Stouffers is well positioned for growth 22 Leading Brand 30% $ share (+120 bps 2011-2013) Extending the brand beyond its core >1% brand $ growth 2011-2013 with high margins Leading NHW credentials Brand Heritage synonymous of quality comfort food since 1922
  24. 24. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Helping America enjoy a ‘Real Dinner’ every night 23 Strengthen brand equity Drive the core Innovate for new users & occasions “ ” Working to enhance and expand our voice Delivering relevance & reassurance Servicing the “untapped” spaces 1 2 3
  25. 25. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Strengthening brand equity, a new voice 24 CONNECTING with the Hispanic consumer Hispanic consumers are looking for for everyday use $1.5tn Hispanics’ spending power in 2015 American Brands Made for you to LOVE Great ingredients and care Real dinners and family & friendship connections GraspingOpportunities 1
  26. 26. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Driving our core 25 DELIVERING reassurance through NHW Sodium in 2013 Improving relevance through QUALITY -6.4% SKUs free of artificial flavors Recipe evolution for new generations Quality ingredients Expansion of flavor profiles GraspingOpportunities 100% 2
  27. 27. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Innovating for new occasions and users 26 Snacking 48% of eating occasions are now snacking Breakfast GraspingOpportunities Expanding into new occasions 3 * Frozen Breakfast segment CAGR 2009 – 2013 +12% Frozen breakfast growth*
  28. 28. Nestlé Investor Seminar 2014June 3rd & 4th, Boston27
  29. 29. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Hot Pockets is well positioned for long term success 28 Strong Business Fundamentals 48% &Hispanic index snack 2x or more per day Millennial lifestyle Significant profit pools are available Short Term Hurdles
  30. 30. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Continue to elevate the brand beyond convenience 29 Heat up brand equity Innovating for incremental occasions Winning at retail 1 2 3 2013: sales & penetration growth behind new campaign Snacking Breakfast &
  31. 31. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Heat up brand equity 30 GraspingOpportunities-NHW DRIVE perceptions through Quality & Nutrition Improvements INCREASE share of voice impact 23% of business done with fastest growing consumer 30% of marketing dedicated to digital, better targeting 1 Millennials HispanicsCleaner Label Premium Ingredients (e.g. 100% Angus Beef in Philly Steak SKU) Sodium Reduction
  32. 32. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Innovating for extra occasions 31 GraspingOpportunities–B3Innovation Ethnic opportunities Snacking Breakfast 2 * Segment CAGR 2011 – 2013 within Frozen 7.4%* Leveraging flavor trends to capture Millennials 8.1%* “manage my hunger” need state 3.2%* Build off current business
  33. 33. Nestlé Investor Seminar 2014June 3rd & 4th, Boston -50 Winning at retail 32 GraspingOpportunities Optimized portfolio Delivering value +2 Through larger packs Help struggling customers SKUs* % Sales growth* % 3 * During 2013 Modern path to purchase Digitally Savvy Consumer Pre-store In- Store Aisle Checkout 23% 29% 13%And targeted promotions
  34. 34. Nestlé Investor Seminar 2014June 3rd & 4th, Boston33
  35. 35. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Recognizing the challenges Private label growth since 2009 The most iconic non-holiday eating occasion relevance Facing the CHALLENGES Embracing the OPPORTUNITIES Eat pizza once per month 93% Growth in last two decades 41% CO/D growth since 2009 +3% +24% Nestlé pizza offers superior taste & nutrition 2.3% 7.8% 7.6% 10.5% 0.8% 1.4% -3.9% 0.4% 2006 2007 2008 2009 2010 2011 2012 2013 Frozen pizza $ % change vs. competitive options ? 34
  36. 36. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Strategic pillars for growth & profit 35 35 Elevating the consumer proposition Portfolio strategy Breakthrough innovation & renovation optimizing the consumer message bringing continued added value to the category increasing incrementality while optimizing margin structure 1 2 3
  37. 37. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Elevating the consumer proposition 36 GraspingOpportunities&EmbracingDigital 1 Adding emotive true value Connect with consumers Grow with growing cohorts Increase the emotional connection and role in consumer lives Millenials dedicated hispanic communication through mobile Working media in digital Increasing
  38. 38. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Breakthrough innovation & renovation 37 GraspingOpportunities INCREASE preference through taste DEVELOP platforms for growth & new occasions New, consumer-preferred more flavorful sauce. Preservative Free Crust & No Artificial Flavors 1st Customizable pizza in category history $100m Gross Sales in Year 1 2 10% Sodium reduction in Rising Crust CHANGE consumer perception of frozen pizza
  39. 39. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Portfolio optimization 38 MakingChoices Clear & distinct brand propositions Strategically manage the portfolio Improving shelf productivity 3 SKUs since 2009 -50% Implementing the Nestlé strategic pricing model… …combined with distinct merchandizing strategies Shaping the value proposition and brand role to optimize the portfolio A C D A B C D
  40. 40. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Integrated path to purchase 39 GraspingOpportunities Embracing OPPORTUNITIES WINNING in-store Increase in value channel sales 51% Market share increase during Super Bowl week+6% Dominate the drive times for this iconic american food Build compelling stories and invest in growing channels and
  41. 41. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Clear business priorities to win in the new reality 40  Strengthen brand equity  Drive the core  Innovate for new users & occasions  Heat up brand equity  Innovate for incremental occasions  Winning at retail  Elevate the consumer proposition  Breakthrough I&R  Optimize portfolio strategy Drive cost structure optimization and business simplification  Modernize positioning from diet to healthy lifestyle  Contemporize brand architecture  Expand into new growing categories
  42. 42. Nestlé Investor Seminar 2014June 3rd & 4th, Boston Driving cost optimization and business simplification 41 Valuingwhatconsumersvalue Driving value chain efficiency Creation of the largest Frozen Center of Excellence Optimizing the shelf and eradicating waste Pizza’s Bad Goods -31bps SKU count(2) 2013 vs 2012 -39% (1): Includes Factory Fixed Overheads and Depreciation for Meals and Hot Pockets (2): Includes Hot Pockets, Lean Cuisine, Stouffers, Buitoni and Pizza Reduction in fixed manufacturing costs(1) “Make it where we sell it” o Meals: Stouffers, Lean Cuisine, Buitoni o Hot Pockets (relocated from Denver) o Pizza (relocated from Chicago) o Baking o Nestlé Professional o Product Technology Center SOLON, OH Implementing continuous runs -7% 2014E vs 2011
  43. 43. Nestlé Investor Seminar 2014June 3rd & 4th, Boston 2011 2012 2013 A revitalized strategy to turnaround current performance 42 Sales (in USD) -2%CAGR(1) Trading Operating Profit (in USD) -7%CAGR(1) 2011 2012 2013 (1): 2011 to 2013 change -1% excluding Lean Cuisine impact +4% excluding Lean Cuisine impact +1%
  44. 44. Nestlé Investor Seminar 2014June 3rd & 4th, Boston43 In summary…  Frozen Foods remain an attractive category, despite the challenges experienced in the last years  A robust strategic plan has been designed to win in the new reality, capitalizing on leading iconic brands  The portfolio strategy is aligned with evolving consumer trends and focuses on enhancing margins and ROIC  Nestlé has world-class capabilities to drive innovation and create competitive gaps  A leading edge Frozen Center of Excellence was created in Solon, Ohio
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