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Nestlé in India winning in the new reality
 

Nestlé in India winning in the new reality

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Presentation to the 2012 Nestlé Investor Seminar, September 25, Shanghai, China

Presentation to the 2012 Nestlé Investor Seminar, September 25, Shanghai, China

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    Nestlé in India winning in the new reality Nestlé in India winning in the new reality Presentation Transcript

    • Nestlé in India:Winning in theNew RealityHelio WaszykChairman and Managing DirectorNestlé IndiaNestlé Investor Seminar, ShanghaiSeptember 25th, 2012
    • Agenda1. Introducing Nestlé India2. Winning in The New Reality3. Performance2 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • South Asia is a large, Diverse and Complex Region INDIA NEPAL Population: 1210 million Population: 30 million GDP 1,800 US$ bn GDP 19 US$ bn BHUTAN GDP 1,522 US$ p.c. GDP 622 US$ p.c. Population: 1 million GDP 1 US$ bn GDP 2076 US$ p.c. SAR Population: 1.42 bn 20% of world population (33% of world poor) BANGLADESH Area: 3.7 million km2 Literacy 74% Population: 161 million GDP 113 US$ bn Rural 73% GDP 701 US$ p.c. GDP 1990 US$ bn 2% of world GDP GDP 1400 US$ p.c. MALDIVES SRI LANKA Population: 0.4 million Population: 21 million GDP 2 US$ bn GDP 59 US$ bn GDP 4928 US$ p.c. GDP 2751 US$ p.c. • Huge diversity (Literacy, Urbanization, Wealth, Climate, Languages….) • Growth driven market but volatility & macro-economic concerns recently • India accounts for 85% of South Asia’s Population3 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Nestlé India part of India Inc. • Nestlé India is a public listed company • Nestlé SA holds 62.76% share • Market Capitalization INR 402 bn (7.1 bn CHF) Market Capitalization end 2011 Exchange rate end 2011: 1 CHF = INR 56.704 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Balanced Portfolio with Leading Brands Milk Products Prepared Dishes 2011 Nestlé India: & Nutrition & Cooking Aids Sales of INR 74.9 bn* 8% of Zone AOA Sales 45% 29% 13% 13% Chocolate Beverages & Confectionery*Exchange rate (Avg.2011): 1 CHF = INR 52.595 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • The Multi-faceted Opportunity & Demographic Dividend Young Population an Asset Urban-Rural Tiers • 54% population below • 69% population is Rural 24 years • 53 cities with 1 million+, • Net growth +1.3% p.a. 8 cities with 5 million+ population Increasing Awareness & Digitalization GDP Growth and the New Reality GDP per capita $1500+ • 900 million mobiles Consumer Confidence Index 119 (-4) • 84% reach of TV in Urban 9.5 8.5 7.4 7.7 • 125 million internet users 7.1 5.4 % 2007 2008 2009 2010 2011 YTD 20126 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • The New RealityInflation, rising commodity costs & weakened Rupee Inflation Trends Nestlé India Commodity Basket USD : INR (Price Index) Average Exchange Rate 148 17.7 138 52.3 7.3% 12.7 12.0 123 48.4 9.5 12.1% 10.9 9.6 9.1 9.5 1129.3 8.7 110 46.6 8.4 8.9 8.3 10.4% 7.3 7.4 1.6%6.4 45.7 43.6 100 4.9 10% 41.3 2.4 Closing Exchange Rate at 30/Jun/2012 1USD = 56.21 INR2007 2008 2009 2010 2011 H1 2007 2008 2009 2010 2011 H1 2007 2008 2009 2010 2011 H1 2012 2012 2012 Inflation (WPI) Inflation (Food)7 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • The Multi-tier Income Pyramid offers scope acrossPremium, Mainstream, PPP Population distribution Income distribution 2005 2015 2005 2015 Global India CONSUMER BASE Seeking & Striving India Aspiring India Deprived India Source: NCAER, Projections Income pyramid will move from a triangle to a diamond… …generating additional genuine inclusive growth… …equally distributed across income tiers8 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • The Double BurdenMicronutrient deficiencies and health issues Micronutrient deficiencies Overweight Iron • 60 million overweight/ obese (BMI>25) • 60 million children under 3 years • 90 million urban Women Diabetes Vitamin A • From 50 million to 80 million diabetics • 95 million children under 6 years in India by 2030 Heart health Iodine • 30 million Coronary Heart Disease • 7 million children born p.a. • 120 million hypertension, 60% of cardiac unprotected from mental impairment patients in the world are Indians Health issues9 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Agenda1. Introducing Nestlé India2. Winning in The New Reality3. Performance10 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • The Nestlé Strategic Roadmap toWin in The New Reality11 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Our Overall Strategy SOURCES OF SALES GROWTHOUR STRATEGY> We will accelerate penetration AND increase frequency AND develop winning concepts> We will focus on both growth AND margins NEW PRODUCTS & PENETRATION FREQUENCY BUSINESS (sell same (sell more (sell new to same to new) to same) & sell new to new) * does not include new opportunities12 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • EmergingValue Creation with a Multi-tier portfolio markets and Popularly Premiumisation Positioned Products Premium Mainstream PPP13 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Driving Nutrition, Health and Wellness Nutrition Health and Wellness Engagement with Consumers14 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Out of Home Opportunities abound Out-of-home consumption Driving Vending NESCAFE Corners Building Food Channels15 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Winning with Distribution and Route to Market Whenever, wherever, however Distribution Reach - Million Outlets General Trade & Organized Trade 3.7 +490K 3.2 +380K 2.8 +290K 2.5 2008 2009 2010 201116 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Milk Products & Nutrition Innovation & renovation Consumer communicationEnhancing the Quality of life and Delighting consumers, building on thegoodness of milk Market Position Enhancing the Quality of life • No. 1 in Dairy Whitener • No. 1 in Baby Food • No. 1 in Infant Formula Tea Creaming Delighting consumers Health Care Nutrition Maternal Nutrition17 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Prepared Dishes & Cooking Aids Innovation & renovation Consumer communicationTasty & Balanced food everyday Market Position Noodles/ Light Meals • No. 1 in Instant Noodles, Sauces & Pasta Fortification/ Goodness of grains • No. 2 in Soups Retail and Brand Activation Among Top 10 Most Trusted Brands in India Source: Economic Times, 201118 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • 19 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Beverages Innovation & renovation Consumer communicationValue Leadership in Instant Coffee & Building the new category of Iced Tea Market Position Driving NESCAFÉ • No. 1 in Instant Coffee • Strong presence in Vending • Leading Iced Tea Innovation 1.5 Million NESCAFÉ Facebook Fans Building a new category20 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Confectionery Innovation ConsumerDelight in every bite – meeting consumer needs for pleasure & renovation communication Market Position Winning at point of purchase • No. 1 in Wafers & Whites Innovation Impactful Communication21 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • KITKAT ad – Squirrel22 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Global R&D center in India strategically placed to Unmatched research & developmentleverage local insight and global technology capability Popularly Positioned Products Indian Cuisine Mastership Noodle Technology Localized Cereals/ Chocolates23 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Goal Alignment and People Engagement People, culture, values & attitude • Goal Alignment and People Engagement • Instill the “Desire to Win” • Healthy Industrial Relations • War for Talent • Leadership Development 6960 6630 5570 4980 Dec-09 Dec-10 Dec-11 Jun-12 No. of Employees24 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Developing Moga milk district • Nestlé quality collection centers • Milk Chillers installed at the villages • Transparency in rates • Regular payments to ~50,000 farmers • Better quality & better price for both the farmer & Nestlé 1+ million liters/day ! Win Win Model !25 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Creating Shared Value Nutrition Water Rural DevelopmentNestlé Healthy Kids Programme Clean Drinking Water Projects Milk Farmers• In collaboration with Universities • Technical assistance and training to farmers • Access to clean drinking water in village schools • Village Women Dairy Development Programme across SAR factoriesNestlé Healthy Kids for Delhi Water Awareness Programme Chicory farmers • Creating awareness among village school students • Training, Improve chicory quality and productivityHealth Camp: Micronutrient awareness• In collaboration with Drishtee Foundation International Water management Institute The NESCAFÉ Plan • Study on the water footprint of Milk, rice and wheat • Launched on 5th Jan 2012 in the Moga region • Water Awareness Programme for milk farmers Sanitation facilities • Sanitation projects benefitting girl students26 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Agenda1. Introducing Nestlé India2. Winning in The New Reality3. Performance27 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Nestlé India doubled sales in the last 4 years Sales Growth - India Index 2011 Sales= INR 74.9 bn CAGR 2007-2011= 20.9% • Doubled sales in the last 4 years 214 • Operating Profit 18.5% in 2011 178 • ROIC 50% in 2011 146 • 500 million CHF Capex in 2010-12 123 100 • Healthy working capital 4.7% in 2011 Exchange Rate (Avg 2011) 1CHF= 52.59 INR 2007 2008 2009 2010 201128 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Low & further improving operating working capital 2007 2008 2009 2010 2011 TNWC as % of sales (indexed 2007 = 100)Basis Nestlé Internal Reporting Standards29 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Nestlé India earnings per share multiplied 5.5 times in10 years Nestlé India EPS Nestlé India Share Price Movement 2001 X 1.8 2006 X 3.0 2011 INR per Share 5000 X 5.5 99.7 84.9 4000 67.9EPS (INR) 55.4 3000 42.9 32.7 2000 32.1 27.3 26.1 18 20.9 1000 - Year 2002 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Nestlé India Share Price CAGR 38% CAGR 18.7% (BSE SENSEX CAGR 4%) 30 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Nestlé India ranks among the top companies in IndiaDun & Bradstreet Business Insight 2011 Total Income Net Profit Market Cap RONW Rank among Top 500 companies 97 90 43 1 across industries RONW: Return on Net Worth or Return on average equity is computed as follows NET PROFIT FOR THE YEAR / AVERAGE OF OPENING AND CLOSING SHAREHOLDER FUNDS FOR THE YEAR31 September 25th, 2012 Nestlé Investor Seminar, Shanghai
    • Nestlé India continues to unlock opportunities andinvest for the future • Strong profitable growth • Taking into account the new reality • Investing for the future • Well poised to capture the opportunities32 September 25th, 2012 Nestlé Investor Seminar, Shanghai