Nestlé Investor Seminar 2008

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1 Nestlé Investor Seminar 2008 Creating Value from Investment in Science and Technology Werner Bauer Chief Technology Officer

2 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. 2

Our competitive advantage is our strong innovation heritage 140 Years Success Story in Research 2007 2006 1867 1938

3 Our competitive advantage is our strong innovation heritage 140 Years Success Story in Research The world s leading Nutrition, Health and Wellness innovation network 3

Innovation is the driving force of the Nestlé business model Intellectual Property Packaging & Design Standardized Raw Material & Recipe Management What is needed by consumers?

4 Innovation is the driving force of the Nestlé business model Intellectual Property Packaging & Design Standardized Raw Material & Recipe Management What is needed by consumers? What is commercially achievable? What is technically and scientifically possible? Regulatory Claim Development Fast Deployment 5-6% Organic Growth Sustainable increase in EBIT margin and ROIC Bolder initiatives Bigger opportunities Better execution 4

5 We drive innovations from consumer benefit platforms to fast deployment Consumer Benefit Platforms 5-Generation Pipelines Fast Deployment RU CA DE PL FR UA ES TR CH MX ME IN TH CO BR AU ICEQ -launch 2008 ICEQ-launch Receiving markets Nestlé R&D resources 25% 50% 25% 5 Basic science and research Idea creation Conceptualization Competence building and process development Flawless industrialisation Fast deployment via the Innovation Acceleration Team

6 Consumer benefit platforms drive innovation for all businesses Health Protection Skin Health & Beauty Growth & Development Weight Management Performance Healthy Recovery Digestive Comfort Healthy Ageing Taste, Texture & Convenience Consumer sensory & perception Attractive product attributes Quality & Safety safety compliance consistency 6

Consumer sensory & perception PROTECT, instant coffee naturally rich in polyphenols from green coffee First Growing-Up

7 Consumer benefit platforms leverage R&D across our businesses Health Protection Skin Health & Beauty Growth & Development Weight Management Performance Reinforcing the body s natural protection Taste, Texture & Convenience Consumer sensory & perception PROTECT, instant coffee naturally rich in polyphenols from green coffee First Growing-Up Milk with immune enhancing properties A probiotics supplement for dietary management of dogs and cats with diarrhea Quality & Safety safety 7

Performance HealthCare Nutrition Performance Nutrition Energy-releasing micronutrients Taste &

an energetic lifestyle A specialized carbohydrate blend for optimum and sustained energy delivery

8 Consumer benefit platforms leverage R&D across our businesses Health Protection Skin Health & Beauty Growth & Development Weight Management Optimizing the use of energy and body regeneration Performance HealthCare Nutrition Performance Nutrition Energy-releasing micronutrients Taste & Texture Consumer sensory & perception Balanced proteins, vitamins, minerals and Antioxidants for an energetic lifestyle A specialized carbohydrate blend for optimum and sustained energy delivery Water soluble B- vitamins, Vitamin C, Iron, Calcium, Magnesium, Phosphorus Quality & Safety safety C2-MAX 8

Digestive Comfort Healthy Ageing Taste, Texture & Convenience Consumer sensory &

Digestion is central to the quality of life Gentle, highly digestible nutrition for

of soluble fibers, attributes antioxidants and calcium that supports regularity and

9 Consumer benefit platforms leverage R&D across our businesses Health Protection Skin Health & Beauty Growth & Development Weight Management Performance Healthy Recovery Digestive Comfort Healthy Ageing Taste, Texture & Convenience Consumer sensory & Functional infant perception cereals to help solve slight digestive disturbances Digestion is central to the quality of life Gentle, highly digestible nutrition for cats and dogs with slight gastrointestinal disorders Attractive product A combination of soluble fibers, attributes antioxidants and calcium that supports regularity and immune function and reduces bloating & discomfort Quality & Safety safety compliance consistency 9

Consumer benefit platforms leverage R&D into JVs Health Protection Skin Health &

the inside Skin Anti Ageing Healthy Hair Recovery Quality Skin Balance Digestive

Convenience Quality & Safety TODAY safety Consumer sensory & perception Lactolycopene

Lacto-lycopene compliance Attractive product attributes Skin probiotic (La1)

10 Consumer benefit platforms leverage R&D into JVs Health Protection Skin Health & Beauty Growth & Development Weight Management Performance Nourish skin and hair from the inside Skin Anti Ageing Healthy Hair Recovery Quality Skin Balance Digestive Comfort UV Protection Healthy Cellulite Ageing treatment 10 Taste, Texture & Convenience Quality & Safety TODAY safety Consumer sensory & perception Lactolycopene Vitamin C Soy Isoflavone Taurine Catechins Zinc Omega 3 & 6 Vitamins C & E Lacto-lycopene compliance Attractive product attributes Skin probiotic (La1) β-carotene Lycopene From Nestlé and L Oréal proprietary research Calcium Green tea extract Glucosamine consistency Pine bark extract

11 Health benefit platforms lead to new product generation Health Protection Skin Health & Beauty Growth & Development Weight Management Performance Healthy Recovery Health Care Nutrition Clinutren Protect: First product to decrease side effects Healthy of chemo/radiotherapy: Ageing erosive and ulcerative lesions of oral and intestinal mucosa (Mucositis) Digestive Comfort Taste, Texture & Convenience Consumer sensory & perception Quality & Safety safety compliance consistency 11

Weight management platform leverages R&D into different business solutions Health

Weight Management Dairy Taste, Texture & Convenience Performance Long-lasting satiety

Worldwide (BPW) Consumer sensory & perception Healthy Recovery A low-calorie drink with

product attributes Healthy Ageing Personalized nutrition concepts for overweight consumers

12 Weight management platform leverages R&D into different business solutions Health Protection Science-based concepts Skin Health & Beauty Growth & Development Services Weight Management Dairy Taste, Texture & Convenience Performance Long-lasting satiety through a low-fat drinking yoghurt enriched with high amount of fibres Beverage Partners Worldwide (BPW) Consumer sensory & perception Healthy Recovery A low-calorie drink with green tea extract and caffeine to increase energy expenditure Digestive Comfort Attractive product attributes Healthy Ageing Personalized nutrition concepts for overweight consumers based on personal advisory services addressing food, body and mind Quality & Safety safety compliance consistency 12

R&D activities in packaging as a key driver to deliver attractive product attributes Health Protection Consumer acceptance Skin Health & Beauty Growth & Development Weight Management Performance Icon

13 R&D activities in packaging as a key driver to deliver attractive product attributes Health Protection Consumer acceptance Skin Health & Beauty Growth & Development Weight Management Performance Icon jar Australia +12% in premium coffee Healthy Recovery MÖVENPICK sales increase +11% in CH +30% international Digestive Comfort Healthy Ageing Taste, Texture & Convenience Sustainability Consumer sensory & perception Attractive product attributes Quality & Safety 0.5l water bottle in USA (Q4 2007) safety Estimated reduction in 2008: tns ion: 25% less energy compliance consistency 13

safety platform leverages R&D for all our businesses Health Protection Skin Health & Beauty Growth & Development Weight Management 850 analytical standards developed Our standards are used in our

14 safety platform leverages R&D for all our businesses Health Protection Skin Health & Beauty Growth & Development Weight Management 850 analytical standards developed Our standards are used in our factories Performance times per day for product release times per day to monitor materials and products Taste, Texture & Convenience Consumer sensory & perception Science helps to develop faster release methods multiscreening methods: e.g. 300 pesticides in one test Quality & Safety safety compliance consistency 14

15 We build our core technologies via expert networks across all our business categories Local products 280 Application Groups Global Science & Technology 23 Research and Development Centres 1 Research Centre Quality & Safety Sensory & Consumer Preference Nutrition and Health Food Science & Technology Raw Materials & Ingredients Packaging & Design 15

16 The Nestlé Innovation Network Business Partners Venture Capital (> 80 investments) ETH Zurich Start-Ups Universities 16

17 The Nestlé Innovation Network Business Partners Nestlé Research and GE collaborate to explore new frontiers in diagnostics for health and nutrition May 2008 Venture Capital (> 80 investments) Start-Ups Nestlé Research has formed an alliance with the brain mind institute of EPFL in the area of brain development and brain deterioration May 2006 ETH Zurich Universities 17

18 Patent Fortresses protect our core technologies Published probiotics related patents * 18 Nestlé Yakult Snow Brand Alimentary Health Danone Elan Pharma P&G Probionic Mars Morinaga Probi AB Meiji Milk s Kraft * -Extracted from Derwent worldwide patent database (includes Japan)

NESPRESSO Fortress with 105 patent families Nespresso creates a formidable protection fortress with 105 patent families along with registered designs and trademarks Capsules 37 Patents

19 NESPRESSO Fortress with 105 patent families Nespresso creates a formidable protection fortress with 105 patent families along with registered designs and trademarks Capsules 37 Patents Machines 68 Patents Designs 1000 Registered Designs NESPRESSO Patenting Activity Manufacturing 6 Patents Extraction 22 Patents Trademarks 2500 Marks 19

Increasing regulatory support for claims development France Belgium Switzerland (w/o MU) Mexico USA UK Finland/Denmark The Netherlands Poland Germany China Spain Greece Italy Bangladesh Thailand

20 Increasing regulatory support for claims development France Belgium Switzerland (w/o MU) Mexico USA UK Finland/Denmark The Netherlands Poland Germany China Spain Greece Italy Bangladesh Thailand Indonesia Brazil South Africa Australia Chile New Zealand Since 2005: Doubled number of clinical trials Doubled number of projects with Regulatory Affairs involvement Doubled number of projects with health claims Tripled number of Regulatory dossiers 20

21 We drive innovations from consumer benefit platforms to market deployment Consumer Benefit Platforms 5-Generation Pipelines Fast Deployment RU CA DE PL FR UA ES TR CH MX ME IN TH CO BR AU ICEQ -launch 2008 ICEQ-launch Receiving markets Nestlé R&D resources 25% 50% 25% Basic science and research Idea creation Conceptualization Competence building and process development Flawless industrialisation Fast deployment via the Innovation Acceleration Team 21

22 The "5-Generation" innovation pipeline continuously fed by R&D Time horizon Today In next months In next months Generation 3 In 3-4 years Generation 4 In 5+ years Generation 5 generation Generation 1 Launched Generation 2 Launch preparation development Early stage research Research with innovation partners Contribution Markets Technology Centers Nestlé Research Center & External partners 22

23 Innovation pipelines are applied to all businesses Global I&R pipeline I&R pipeline aligned in cluster Example Clusters 5 generations Regional 5 generations Global 5 generations 23

5-Generation pipelines are developed for all business models NIDO: 5 Generation Pipeline Benefit Platform Consumer Benefit Advanced Protection for Growth and Development Gen 1 2004 Healthy digestive

24 5-Generation pipelines are developed for all business models NIDO: 5 Generation Pipeline Benefit Platform Consumer Benefit Advanced Protection for Growth and Development Gen Healthy digestive system Gen Strengthened child s natural defenses Gen Improved child's immune response Gen New protection territory Allergy mitigation Others Gen Consumer benefit Nurturing aspirational maternal love Attribute PREBIO 1 soluble fibers L. PROTECTUS probiotic strain L. PROTECTUS Clinically Proven PROBIOTICS (live or inactivated) + Other scientific routes under evaluation R&D strategy PTC NRC Prebiotics Project ADDITION of Probiotics ST11 + Bifidus Longum (BB536) In-house production of BL999 Clinical Trial in Brazil In House stability improvement of ST11 Project MCA Project Ghost Future routes via new clinical trials IP strategy NAN: 5 - Generation Pipeline PREBIO 1 Trademark Proprietary strain ST11 PROTECTUS + 'Shield Device' trademarks Know-How in Probiotic Manufacturing Werner Bauer April Long term Generation 5 Consumer benefit Mothers want the best possible protection for their babies 2005 Generation 1 Immune protection & allergy prevention 2010 Generation 4 Generation Decrease risk of ear infection of infants aged Generation 2 Further enhance 8 months +, & going to immune protection & day care centre Enhanced immune allergy prevention protection for all newborns but esp. for caesareans PROPLAN: 5 - Generation Pipeline Bifidogeniceffect in IF. Probiotics in starter Probiotics + first "human Prebioticsin FUF IF milk like" prebiotics Follow up formula with new probiotic strain to fight otitis media Protection of infants against infectious deseases including otitis media, & enhancement of innate immunity Milk closer to breast milk Formula with "human milk" oligosaccharides Werner Bauer April Long term Generation Generation 4 COGNIPLUS II for Dogs an exclusive blend of 2004 Generation 3 nutrients proven to COGNIPLUS for Cats sustain mental acuity an exclusive blend of through adult life stage Generation 2 COGNIPLUS for Dogs nutrients that is proven an exclusive blend of to help enhance brain nutrients to enhance function of ageing cats. Generation 1 LONGEVIS brain function of ageing an exclusive blend of dogs by improving Life Plan nutrients to help cats ability to learn Help extend live healthier for remember & healthy life of dogs longer understand as they age Stroke protective blend with Enhanced level of Vitamin E and betacarotene (Patent Application) (Patent Application) Medium Chain Triglycerides Medium Chain Triglycerides arginine, fish oil, antioxidants, antioxidants B-Vitamins (Patent Application) Werner Bauer April Consumer need Security and optimism for a long and rich life together

We drive innovations from consumer benefit platforms to market deployment Consumer Benefit Platforms 5-Generation Pipelines Fast Deployment RU CA DE PL FR UA ES TR CH MX ME IN TH CO BR AU ICEQ

25 We drive innovations from consumer benefit platforms to market deployment Consumer Benefit Platforms 5-Generation Pipelines Fast Deployment RU CA DE PL FR UA ES TR CH MX ME IN TH CO BR AU ICEQ -launch 2008 ICEQ-launch Receiving markets Nestlé R&D resources 25% 50% 25% 25 Basic science and research Idea creation Conceptualization Competence building and process development Flawless industrialisation Fast deployment via the Innovation Acceleration Team

Innovation Acceleration Teams support top priority multi-market launches Multi-discipline, multi-cultural, mobile teams: Accelerate roll-out of top priority multi-market innovations

26 Innovation Acceleration Teams support top priority multi-market launches Multi-discipline, multi-cultural, mobile teams: Accelerate roll-out of top priority multi-market innovations Ensure flawless execution Link global strategies to local deployment Transfer innovation insights Support local recruitment strategies and staff training innovation acceleration team 26

Baby Nutrition: Multi-market innovation and deployment From Multi-discipline, emulating

flawless execution... superior natural taste Link global strategies to local deployment.

27 Baby Nutrition: Multi-market innovation and deployment From Multi-discipline, emulating multi-cultural, To science-based home-made baby nutrition mobile teams: Accelerate roll-out of top priority... optimal development of body, multi-market innovations mind & immune system Ensure flawless execution... superior natural taste Link global strategies to local deployment... convenient modern bowl Transfer innovation insights Support local recruitment strategies and staff training innovation acceleration team Roll-out phase in 2008: France Spain 27

28 Leveraging Clusters to accelerate deployment Nestlé Professional Aligned roll-out 12 countries One business model One factory in Chile Nestlé Professional created with NESCAFÉ the Cappuccino consumption moment in Latin America mio cups CHF 95 mio Sales Markets launched 28

Leveraging Clusters to accelerate innovations NIDO 2007 Results: Sales + 18% 2006-07: AOA 2008-09: AMS NME:

29 Leveraging Clusters to accelerate innovations NIDO 2007 Results: Sales + 18% : AOA : AMS NME: Feb 07 TH: Sep 06 MY: May 07 ID: Jul 06 GCR: Jul 07 PH: Jun 06 VT:Aug 07 CL: Q MX: Q BR: Q

30 Leveraging Clusters to accelerate innovations DOLCE GUSTO Launch 06 Roll-out 07 Sold machines Germany UK Switzerland France Spain Portugal Italy Austria Czech Republic Slovakia Japan 130' % 670'

31 Key criteria to drive R&D I) Projects aligned with consumer benefits II) Category enhancing financials Margin enhancing Maximum return on R&D investment Short payback period Bolder initiatives Bigger opportunities Better execution For sustainable profitable growth III) Thorough project risk assessment 31

32 Nestlé Investor Seminar 2008

Nestlé Investor Seminar 2007

Nestlé Investor Seminar 2007 Nestlé Research The Engine for Nutrition, Health and Wellness Prof. Dr-Ing. Werner Bauer Chief Technology Officer 1 Nestlé Investor Seminar - Vevey June 7-8, 2007 Name of chairman