3 PL summit 2009

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Brussels, Nov. 24th 09

1. The bottled water market

2. Nestlé Waters at a glance

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2. Nestlé Waters at a glance

3. The origin of the crisis

4. Nestlé Waters answer

The bottled water market

� A competitive category

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� Global differences

Average annual growth

2003 to 2008

Consumptionper capita

in litres

Breakdown

(%)

Billion

litres

Total refreshment beverages 565 100 83 105

Carbonates (colas, lemonades, …) 203 36 30 102

Bottled water (including HOD) 200 35 30 106.5

A competitive category

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Bottled water (including HOD) 200 35 30 106.5

Fruit juices / still drinks 61 11 9 105

Dilutables (powder/liquid concentrates) 46 8 7 104

Ready to drink tea 24 4 4 108

Sport drinks / energy drinks 14 2.5 2 109

Flavoured water / functional water 9 1.6 1 119

Source: Zenith International 2008 for bottled water,

Euromonitor 2008 for all other beverages

Global differences

Growth2007/2008

(%)

Populationbreakdown

(%)

Breakdown(%)

Billionlitres

Total bottled water 198 100 100 + 4.3

Western Europe 46 24 6 - 0.2

in volume

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Eastern Europe 15 7 6 + 6.9

North America 33 17 5 - 2.7

Latin America 34 17 9 + 5.5

Asia / Oceania 52 26 56 + 9.6

Africa / Middle East 18 9 19 + 11.4

Source: Zenith International 2008-

Early estimates

Nestlé Waters at a glance

� Key figures

� Brand portfolio

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� Brand portfolio

Key figures 2008

Sales CHF 9.6 billion (9% of Nestlé Group sales)

Organic growth -1.6%

RIG -3,9%

EBIT CHF 573 million

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EBIT CHF 573 million

Market share* 18%

Employees 31,500

Factories 103

Producing countries 36

Brands 64

*Internal estimate in value terms

EBIT: earnings before interests & taxes

RIG: Real Internal Growth

Key positions 2008*

N°1in North American°1 in Canada,

in the United States

N°1in Europen°1 in Belgium, France, Germany, Hungary,

Italy, Switzerland

n°2 in Poland, the United Kingdom

n°3 in Greece, Russia, Spain

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*In value (including HOD)bottled water company worldwideN°1

Latin America

N°1in Africa / Middle East

in Asia

n°1 in Cuba

n°2 in Argentina

n°1 in Bahrain, Egypt, Jordan,

Lebanon, Qatar, Saudi Arabia,

Turkey, Uzbekistan

n°2 in South Africa

n°1 in Pakistan, Vietnam

n°3 in Thailand, South Korea

A showcase of 64 brands

56 Local brands

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5 International brands

3 Nestlé brands

Breakdown of sales by brand

18.5% Nestlébrands

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Internationalbrands

Localbrands

In value terms (2008)

21.2% 60.3%

Every brand has its market

� Almost two-thirds of sales

� Present on every continent

� Key for access to local markets

� Providing a real competitive edge

� Essential to the development of Nestlé Waters

Local brands

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� Essential to the development of Nestlé Waters

A quintet of international stars

� Natural mineral waters from protected sites,

located in France and Italy

� At the origin of growth on the bottled water market

� Strong identities

5 international brands

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� Distributed worldwide

� Umbrella brands meeting different needs

� At the forefront of innovation

What’’’’s in the Nestlé name

� 1st driver for growth

� Unique multi-site production model

� A family positioning at an affordable price,

adapted to local needs

The Nestlé brand

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adapted to local needs

� Over 5 billion litres

� Present in 39 countries on every continent

brand of bottled water in 2008N°1

The origin of the crisis

� 2 drivers for a category crisis

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� 2 drivers for a category crisis

2 drivers for a severe category issue

� Crisis started in 2007�Western Europe: Sales decrease

�North America: Growth stopped

� First driver was prices�Move to private label

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�Move to private label

� Low cost production models

� Second was environmental impact� Tap water versus bottled water

�Negative image of the bottle

�CO² emissions in transport

Nestlé Waters answer

� Safeguarding resources

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� Safeguarding resources

� Produce more with less

� Optimising logistics

Safeguarding resources

� Protecting water quality

� Creating protective perimeters

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� Constant monitoring of the quality and quantity of resources

� Improving environmental performances at factories

Produce more with less

� Reducing the weight of packagingIn 1992: 90 grams of PET to produce two 1.5 L bottlesIn 2007: 90 grams of PET to produce more than three 1.5 L bottles

Anticipating the impact of packaging on the environment

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� Using recyclable or reusable materials

� Reducing energy consumption (by 17% since 2004 for every litre produced)

� Taking part in the setup of waste collection and sorting systems

Optimising logistics

� Constantly seeking solutions to reduce the impact of logistics on the environment

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� Optimising transport policy by:

- reducing the number of trucks

- developing road-rail transport

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