2010.06.21 - 06 - Chocolate Presentation (M.Melchior)

Marcelo Melchior
Head of Confectionery SBU
Nestlé Investor Seminar
June 2010
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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June 2010
Marcelo Melchior NIS Presentation - Confectionery
Nestlé position in the face of consolidation
rd parties’
3rd
acquisition rationale
A growth category
Leverage distribution
Leverage scale
Address portfolio mix
Emerging markets
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June 2010
Marcelo Melchior NIS Presentation - Confectionery
Confectionery competitive landscape
Confectionery global market share
16.0
14.9
Nestlé Confectionery Growth v Category
CAGR 2006 -09
14.5
16.0%
14.0
13.4%
14.0%
12.0
12.0%
10.0
10.0%
8.1%
7.9
8.0
8.0%
6.1%
6.0%
6.0
4.6
4.5
4.0
4.0%
3.0
2.8%
1.4%
2.0%
2.0
2.0
0.0%
World
0.0
Kraft / Cadbury
Mars
Source: Euromonitor
Nestlé
Hershey
Ferrero
Perfetti
Lindt
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June 2010
Established
Confectionery
Source: Euromonitor and internal records
Nestlé is growing faster than the category
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5.0%
Marcelo Melchior NIS Presentation - Confectionery
Nestlé
Emerging
Confectionery
Chocolate faster growing than Sugar & Gum in emerging markets
Confectionery Category RSV 2009 CHF
120'000
100'000
Chocolate
80'000
The biggest category overall and in the
emerging markets
60'000
40'000
20'000
0
World
Established
Chocolate
Sugar
Emerging
Gum
CAGR 2006-09
12.0%
The fastest growing category in the
emerging markets
10.8%
10.0%
8.0%
6.0%
4.0%
5.8%
5.8%
5.3%
5.1%
3.9%
2.7%
6.5%
Nestlé well-positioned as the leader in
chocolate in emerging markets
2.1%
2.0%
0.0%
World
Established
Chocolate
Sugar
Emerging
Gum
Source: Euromonitor: RSV is Retail Sales Value
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Marcelo Melchior NIS Presentation - Confectionery
Key trends in chocolate
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Marcelo Melchior NIS Presentation - Confectionery
Creating Shared Value in Chocolate
A holistic approach
Nutrition, Health
& Wellness
What’s in
my food?
Consumer
preference
Sustainable
Sourcing
Where does it
come from?
How was
it made?
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Marcelo Melchior NIS Presentation - Confectionery
Environmental
Sustainability
Chocolate competitive landscape
Chocolate global market share
Nestlé Chocolate Growth v Category
CAGR 2006-09
18.0
14.0%
16.0
13.1%
15.5
14.6
14.0
12.0%
10.8%
12.8
10.0%
12.0
8.0%
10.0
7.4
8.0
6.0%
6.0%
5.3%
6.7
4.0%
6.0
2.7%
3.6
4.0
2.0
1.8%
2.0%
0.0%
World
0.0
Kraft / Cadbury
Mars
Source: Euromonitor
Nestlé
Ferrero
Hershey
Lindt
Established
Chocolate
Emerging
Nestlé
Source: Euromonitor and internal records
Nestlé Chocolate growing faster than the category
Chocolate is 80% of Nestlé Confectionery and has 44% of sales in
Emerging Markets
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Marcelo Melchior NIS Presentation - Confectionery
Nestlé: the leader in Chocolate in emerging
markets
ü Emerging markets are 44% of our
business
Chocolate market share in Emerging Markets
20.0%
ü High growth (13.1% CAGR versus
17.9%
18.0%
category 10.8% in EMs) with above
average profit margins
15.5%
16.0%
14.0%
12.0%
10.0%
8.6%
ü No 1 or 2 positions in 24 emerging
markets
8.0%
6.0%
4.0%
ü Lighter eating focus with wafer and
2.0%
extruded snacks plays to Nestlé strength
0.0%
Nestlé
Source: Euromonitor
Kraft / Cadbury
Mars
ü Portfolio focus on affordability with
CHF 700 million sales in PPP format
ü Strong local brands
ü Strong distribution
Nestlé well positioned in emerging markets to benefit from economic growth
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Marcelo Melchior NIS Presentation - Confectionery
Growing affluence & retail development will drive
consumption in emerging markets
At or approaching
1 kg per head
At approx.
0.1 kg per head
ü Nestlé well positioned in emerging markets to benefit from economic growth
ü Chocolate consumption grows with purchasing power
ü Affordable treat for emerging consumers
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Marcelo Melchior NIS Presentation - Confectionery
Light eating in India and China:
MUNCH and Nestlé “Shark” Wafer
Shark Sales growth
Munch Sales growth
2001
2002
2003
2004
2005
2006
2007
Sales value CAGR 2001-09
value increased 4x
2008
2009
18.0%
2001
2002
2003
2002
2003
2004
2005
2006
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2007
2008
2009
Volume increased 3x
June 2010
2006
2007
2008
2009
19.9%
value increased 4.7x
SHARK Volume
Volume CAGR 2001-09 15.3%
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2005
Sales value CAGR 2001-09
Munch Volume growth
2001
2004
Marcelo Melchior NIS Presentation - Confectionery
2001
2002
2003
2004
2005
2006
2007
2008
Volume CAGR 2001-09 21.1%
Volume increased 4.5x
2009
Strengthening position in established markets
Profitability improved by 210bps in last 3 years
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Marcelo Melchior NIS Presentation - Confectionery
KIT KAT – innovation driving growth of CHF1.4 billion
brand
BACK TO BASICS APPROACH AND LAUNCH OF SENSES
Re-focused on core of the brand
Strong consumer promotion programme
Light eating unique positioning
PPP formats launched 2009
CAGR 2007-09: Volume +4% pa
CAGR 2007-09: Value
+7.4% pa
Growing market share year on year
Global No 2 Confectionery countline
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Marcelo Melchior NIS Presentation - Confectionery
Significant improvement in profitability
EBIT% Comparision
Nestlé Confectionery EBIT%
21.0%
13.1%
11.2%
11.3%
11.5%
13.6%
11.6%
19.0%
17.0%
15.0%
13.0%
11.0%
9.0%
7.0%
2006
2004
2005
2006
2007
2008
Kraft
2009
Driven by strong margin improvement
in established markets
(2006-2009 210bps)
June 2010
Cadburys
Hershey's
2008
Lindt
2009
Nestlé Confectionery
Our performance is favourably
comparable to our competitors
(Chart not adjusted for differences in accounting)
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2007
Marcelo Melchior NIS Presentation - Confectionery
Nestlé strengths in the face of consolidation
rd parties’
3rd
acquisition rationale
A growth category
Leverage distribution
Leverage scale
Address portfolio mix
Emerging markets
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June 2010
Marcelo Melchior NIS Presentation - Confectionery
Nestlé strengths in the face of consolidation
rd parties’
3rd
acquisition rationale
Nestlé’s Position Today
A growth category
Nestlé is achieving above category growth
Leverage distribution
Nestlé already has global reach
Leverage scale
Leveraging Nestlé in the Market (scale of total
Nestlé F&B)
Address portfolio mix
Nestlé’s balanced portfolio, countlines, tablets,
gifting
Emerging markets
Nestlé has most global coverage & leadership
in Emerging Markets
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Marcelo Melchior NIS Presentation - Confectionery
Conclusion: Nestlé Confectionery
Scale
Sales of CHF 12 billion
Access to emerging markets
44% sales, above average EBIT
Established markets
Solid business with improving
performance
Growth
Faster than category especially
in emerging markets
Well-positioned to drive market shares and
continue to improve performance
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Marcelo Melchior NIS Presentation - Confectionery
Marcelo Melchior
Head of Confectionery SBU
Nestlé Investor Seminar
June 2010