NestléInvestor Seminar 2007 · Richard T. Laube Head of Nestl ... •Successful integration of...
Transcript of NestléInvestor Seminar 2007 · Richard T. Laube Head of Nestl ... •Successful integration of...
1 Name of chairmanNestlé Investor Seminar - Vevey June 7- 8, 2007
Accelerating Profitable Accelerating Profitable Growth at NestlGrowth at Nestléé NutritionNutrition
Richard T. LaubeHead of NestléNutrition
Nestlé Investor Seminar 2007
2 Name of chairmanNestlé Investor Seminar - Vevey June 7- 8, 2007
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.
Name of chairman
Accelerating Profitable Accelerating Profitable Growth at NestlGrowth at Nestléé NutritionNutrition
Nestlé Investor SeminarVevey - 7 June 2007
Richard T. Laube
Nestlé Investor Seminar - 7 June 2007 R.T. Laube - 4
Nestlé Nutrition 2005 -Before standalone
• Sales: CHF 5.2 billion
• Integrated with Nestlé in the market
• 2000-2005 organic growth ≈5%
Nestlé Investor Seminar - 7 June 2007 R.T. Laube - 5
Nestlé Nutrition's objectives
• Enhance consumers' lives by providing innovative and superior products & services
• Deliver sustainable organic growth of 10% and EBIT margin of 20% or more
• Successful integration of Gerber and Novartis Medical Nutrition to accelerate growth
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Nestlé Nutrition is changing dramatically
Medical Nutrition
0.8
2.3
1.20.5
10.0
5.2
Nestlé Nutrition2005
2007Full YearRun Rate
Salesgrowth
Salesin CHF billions
Transformational acquisitions with CHF 4bn sales announced in last 12 months
All acquisitions are strategically aligned with our mission to provide specific nutritional benefits to consumers
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Nestlé Nutrition in 2008: A CHF10bn business
44%
29%17%
7%
3%
Performance Nutrition
Weight Management
Infant Formula
Baby Food
HealthCareNutrition
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Nestlé Nutrition sales by geography
EUR 28%EUR39%
EUR28%
AMS55%
AMS34%
Nestlé Nutrition sales in US will grow from CHF 850 million to CHF 3.7 billion
Nestlé Nutrition sales in US will grow from CHF 850 million to CHF 3.7 billion
2005 2008
AOA27%
EUR39%
AMS34%
AOA17%
EUR28%
AMS55%
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Office locations - from 2 to 12
• 2005: Only two separate Nestlé Nutrition office locations – Powerbar – Berkeley (USA)– Powerbar – Munich (Germany)
• 12 office locations post acquisitions– PowerBar Europe – Munich (Germany) – Musashi – Melbourne (Australia)– Jenny Craig – Carlsbad (USA)– HealthCare Nutrition – Tokyo (Japan)– HealthCare Nutrition – Gland (Switzerland) – HealthCare Nutrition – Minneapolis (USA)– HealthCare Nutrition – Munich (Germany)– HealthCare Nutrition – Melbourne (Australia)– Gerber – Parsippany (USA)– Gerber Life – White Plains (USA)– Gerber – Queretaro (Mexico)– Gerber – Rzezow (Poland)
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Factories – from 20 to 30 Technical centres (PTC) – from 3 to 5
• Novartis Medical Nutrition – Minneapolis (USA) – PTC – Saint Louis Park (USA)– Osthofen (Germany)
• Gerber – Fremont, MI (USA) – PTC/Factory– Fort Smith, AR (USA)– Reedsburg, WI (USA) – Rzezow (Poland)– Queretaro (Mexico) – Valencia (Venezuela) – Cartego (Costa Rica)– Campo Grande (Brazil)
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People – from 10,000 to 20,000New business models including services
• Jenny Craig – 3800 employees– 2500 consultants – 600+ weight management centres
• Novartis Medical Nutrition– 2500 employees– 600 medical delegates– sales to nursing homes, hospitals, etc
• Gerber – 4380 employees– Gerber Life Insurance– Baby Care (non-food)
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Acquisition integration planning is on track
• Integration planning on track
• We expect to fully achieve synergies as communicated
• Deal closings anticipated in H2 2007
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Nestlé Nutrition faces three challenges in 2008
1. Integrate new businesses into Nestlé Nutrition and Nestlé, while accelerating their sales and profit growth
2. Accelerate existing business sales and profit growth, while integrating new businesses
3. Accelerate the rate of consumer-led innovation for all businesses – existing and new
7.1%5.1%OGH2 2006H1 2006
10.0%Q1 2007
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Accelerating growth in all businesses
• Superior understanding of the global consumer– Global consumer transparency
• Driving innovation based on consumer needs– Consumer-led innovation
• Fast execution and roll-out of innovation– Launch and success tracking
• Nestlé Nutrition is gaining competitive advantage as a newly formed global business by leveraging three competencies
• Nestlé Nutrition is gaining competitive advantage as a newly formed global business by leveraging three competencies
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Global consumer transparency –Major brand equity study in Infant Nutrition with 16,000 mothers in 17 countries
OPPORTUNITY
STAR
ISSUE ON TRACK
??
CanadaGood Start
MexicoNan
NigeriaNan
SpainNidinaNativa
FranceGuigozNidal
PhilippinesNanNestogen
GermanyAleteBeba
Saudi ArabiaNanGuigoz
PakistanLactogenNan
IndonesiaLactogenNan
ItalyNidinaGuigoz
USAGood Start
BrazilNanNestogeno
South AfricaNanLactogen
ThailandLactogenNan
RussiaNanNestogen
??
??
??
??
????
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Gerber: Exceptionally strong brand performance – one of best purchase brands among all funnels tested
Awareness TrialConsiderationCurrent
purchaseMost oftenpurchase
Regular purchase
–Gerber has an excellent purchase funnel while Beech Nut is far from it.
In %
82Superior significant difference at 90% vs brands meanBottle neck (Inferior significant difference at 90% vs brands mean)
95
99 92 80 77 5370
87 60 40 35 92468 36698768
94 87 95 91 76
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Consumer Segmentation Work:12,000 interviews in 8 countries
USAUSA
MexicoMexico
BrazilBrazil
South AfricaSouth Africa
FranceFranceGermanyGermany
ChinaChina
IndonesiaIndonesia
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Desired Benefits by Zones
Source: Global Infant Segmentation Study: Brazil, China, France, Germany, Indonesia, Mexico, South Africa, US; Monitor Analysis
Milks
l Relatively low average level of interest across benefits
l Disproportionately high levels of interest in small number of specific benefits
l Benefit delivery levels exceed or fall below interest levels depending on benefit in question
l Higher general level of interest across benefits
l Disproportionately high levels of interest around a number of benefit areas
l Benefit delivery levels typically fall below interest levels across benefits
l Relatively constant, low level of interest across benefits, with minor peaks around taste and physical development
l Benefit delivery levels typically exceed interest levels across benefits
Zone BZone B Zone CZone CZone AZone A
Prof
ile
Cha
ract
eris
tics
Prof
ile
Cha
ract
eris
tics
Ben
efit
Prof
ileB
enef
it Pr
ofile
Source: Global Infant Segmentation Study: Brazil, China, France, Germany, Indonesia, Mexico, South Africa, US; Monitor Analysis
Physical Dev.
Brain Dev.
Digestive Conve-nience
Physical Dev
Allergies
BrainDev.
Satisfies hunger
Immune system
Three profiles can be used to describe the differences in benefit interest
TastePhysical
Dev
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Consumer-led innovation
• Nestlé Nutrition is investing c. 2.1% of sales in R&D
• This is higher than the competition– Novartis Medical Nutrition: 1.8% of sales– Gerber: 1.3% of sales– Numico: 2.1% of sales
• The challenge is not R&D spendbut R&D productivity
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Nestlé Nutrition has developed a proprietary consumer technical model
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competitor sensitive information
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Nestlé Nutrition has developed a highly disciplined R&D process
From Idea To marketDiscoveryInvention Innovationbridging/transformation
Launch
Marketing to
consumers and payers
Industriali-sation
Registration(products& claims)
Consumer testingMarketing materialCompetitive insulation (patents, trademarks)
Framework dossierRegulatory assessmentClinical assessment & trialsProof of principle
Claimdevelopment
Functionalingredient
selectionConceptdevelopment
Ideagenerationandselection
Consumer TechnicalModel
Science pushdiscovery
Science pushdiscovery
Consumer pullspecific needs
Productdesign
Post-launchperformance
• Consumeracceptance
• ExpertSupport
Key deliverablesat checkpoints
Concept Brief(exploration)
Project Brief(execution)
FactbookManufacturing Dossier
Product BookProduct Profile (ISIS)
Audit File (learnings)
potentialbenefits
desirableclaims
We are creating a competitively advantaged process which translates consumer insights into improved products and services
We are creating a competitively advantaged process which translates consumer insights into improved products and services
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Nestlé Nutrition has created a significant innovation pipeline
Baby Food
Performance
Healthcare
Infant Formula
Size of Bubbles reflects R&D Resources
15 % 25 %
50
100
10
30 %
400
20
20 %EBITA Margin Year 3
Year 3 Incremental NPS (CHF Mio.)
5 % 35 %10 % 40 % 50 %45 %
Black Jack
HimalayaEverest
3 Stage Preemie
Pole Position
ClinutrenBottle
Lucy
Basic +IC*
Chains*
Caesar
MOM & Me
CIB RTDSmoothie
Surge*
Sinlac
Back to the Future IC
PeptamenSIRS / CARS
New Al 110
PeptamenJr Fibre
NewAlprem
EHP
CancerProtect
LongTerm Feed
HipperNordic Porridge
Dairy
RollingStones
Miranda
Magical Oz
Textured IC
Heidi EEUR (Captain)
Litmus*
Frontier*
Neo
JogolinoChampion
IC Poland*
Nestum / CerelacPakistan
Lance*
Good Start 2 Canada
No Added Sugars
Champion
PeptamenAF Junior
Model T*
Heidi II*
CIB RTD Bottle
Scoop
15 % 25 %
50
100
10
30 %
400
20
20 %EBITA Margin Year 3
Year 3 Incremental NPS (CHF Mio.)
5 % 35 %10 % 40 % 50 %45 %15 % 25 %
50
100
10
30 %
400
20
20 %EBITA Margin Year 3
Year 3 Incremental NPS (CHF Mio.)
5 % 35 %10 % 40 % 50 %45 %
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Premium
Roll Out IdeaExplorationDevelopmentLaunched
Mainstream
Specialities
Transversal
2006 2007 2008 2009 2010 2011+
Pipeline example: Infant Formula
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Nestlé Nutrition’s launch success based on a three-step process
• Launch success: three-step process– Launch preparation (Centre/market teamwork)– Launch execution (Market) – Launch tracking success (Centre/market)
• 50+ specific innovation projects are readying to be launched
– over 70 countries – creating over 500 specific launch opportunities to please
consumers
• Some markets are planning up to 12 new launches a year
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• Launch: more than 50 countries in 18 months
• Year 3 incremental sales: over CHF 300m
• Year 3 incremental EBIT: 370 bps
• Result: NAN is newest CHF 1 billion brand
We will make this systematicWe will make this systematic
Launch success – Bulllet
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Nestlé Nutrition is adding value to the Group beyond its standalone value
• Nestlé Nutrition R&D model is being applied to other businesses with appropriate modifications
• R&D investment in Nestlé Nutrition products (ingredients) are starting to enter other categories; e.g.
– Probiotics in Dairy– Low Glycemic Index fibres into cereals
• Nestlé Nutrition business model of +60/40 (nutritional benefits) is giving guidance to Nestlé’s 60/40+ concepts (e.g. growing up milks)
• Nestlé’s reputation as the world’s Nutrition company is enhanced– Deals with scientific community– Leading publisher of nutritional information for scientists– Becoming partner of choice for research institutions, over
70 projects under review
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Conclusions
• Off to a good start in 2006
• Being transformed through major acquisitions
• The outright leader in the industry
• Building competitive advantage throughout our business; consumers à innovation à execution
• Adding significant value to the Group beyond standalone value
28 Name of chairmanNestlé Investor Seminar - Vevey June 7- 8, 2007
Nestlé Investor Seminar 2007