1 Nestlé : MAGGI progressing ahead of expectations

Brand Trust increasing Accelerated Market Share Recovery

79%

53% 51% 98 48% 44% 79 81 83 35%

3 11% 0%

Pre Crisis Crisis Jan 16 Mar 16 Apr 16

5,500 8,700

11,100

10,600 13,000 12,800 19,200 Pre Crisis Crisis Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16 Apr 15 Launch

*Instant Retail Track -AC Nielsen Market size estimate

34 35 1 Nestlé India: MAGGI progressing ahead of expectations

36 2 China: Reigniting growth by meeting consumer needs

Slow down, but still a great consumer story

Evolving consumer needs

Channel dynamics

Implications for Nestlé

37 CHINA’S “NEW NORMAL” IMPACT TO FUTURE BUSINESS

China New Normal

Speed (速度) • Lower FMCG growth caused by softer economy • Slower GDP growth rate Topline impact • Traditional channels facing competition from eComm

Structure (结构)

• Consumption as key lever to replace export • Manage cost inflation (logistics, labor, etc)

Cost • Embrace new technologies to improve efficiency Steering (动力) impact • Building talent and organization capabilities required • Innovation-driven to replace resource/ investment-driven for this new business environment

Source: Chinese Government Report at NPC & CPPCC 2015; APEC CEO Summit 2014; Bain

38 Overall FMCG growth continues to slow down

Total FMCG Food and beverage Personal and home care

Note: Data covers 106 FMCG categories (includes ambient and chilled food and beverages, and personal care and household products; excludes fresh food, white goods and electronics); Q1, Q2 and Q3 are always 12 weeks; Q4 is 16 weeks Source: Kantar Worldpanel; Bain

39 ChinaOne of remains the best one consumer of the best stories consumer in the world stories .. in the world

Fast growth of middle class and Disposable income growth still upper middle class growing well above inflation

Household distribution Growth of China’s per capita disposable income By annual disposable income (2011-2015) 14 12.6 12 Inflation

10 9.0 8.2 8 7.7

6

4 2.6% 2.6% 2 2.0% 1.4% 0 2011-12 2012-13 2013-14 2014-15 >$65K $25K-65K $10K-25K $5K-10K <$5K

Source: Euromonitor; Global Demographics; Lit Research; Bain Analysis Source: CEIC, Euromonitor, Bain

40 Chinese urban shoppers affected by multiple factors

A new generation Digital / of Chinese ecommerce consumers

Premiumization Price transparency and sensitivity

Lifestyle categories vs. Overseas purchase & daily necessities cross-border

41 Source: Bain Consumers in China are embracing digital much faster

DISCOVER DISCUSS >75% >700M users of customers use active monthly users internet for browse or combined on purchase WeChat = Weibo

SHARE ENGAGE ~80% 2X of shoppers give more satisfied on reviews online e-channel vs. offline channels

PURCHASE SELECT >12T RMB >50% of online / mobile payment of purchase decisions (total of transactions) are made online

42 Source: Bain “BAT” ecosystem affecting both consumer & trade dynamics

Discover & Research Decide & Transact Feedback 1 Lead generation 2 E-transaction 3 Customer engagement

- Shopping platform directing traffic to

own own E-commerce sites Self Search engine Map Social forum

Payment cross-border cross-border Group-

Buy Video streaming Travel-booking processing e-commerce e-commerce App download buying Rise-sharing own own - C2C B2C Payment Direct sales

Travel booking E-commerce E-commerce processing E-commerce Instant messaging Group buying Self

WiFi Travel marketing booking

Buy Department Electronics Micro- Instant Web browser Map Video

streaming store retailer blogging Taxi hauling messaging

own own - Instant Instant Social

Web portal messaging messaging C2C E-commerce App store network Taxi hauling Self

Buy C2C Local deals / Group- O2O laundry Classified site Travel-booking B2C Ecommerce Mobile E-commerce E-commerce shop reviews buying service

Independent Online travel Online “hypermarket” Online “category killer” Cross-border e-commerce players*

43 Note: *Independent players refers to startups which didn’t receive equity investment from “BAT” Source: Capital IQ; CV Source; Lit search; Bain Trade model shifting from “Push” to “Pull”

Successful channel push model for the last 20 years

Coverage Penetration

Demand creation pull model for the future

Product In-store Brand power portfolio execution

44 Nestlé GCR: Competing across ~10 major categories

Nestlé GCR Sales (CHF 7.1Bn)

Globally Managed Businesses 42%

58% Nestlé F&B

Number 1 or number 2 position in most categories

45 Source: Company data Nestlé GCR: Majority of F&B businesses are stabilizing

Nestlé F&B 2015 Sales CHF 4.1 billion

OG Trend OG Trend

Coffee Peanut Milk Confectionery Other Categories Congee Culinary RTD Coffee Dairy & Ice Cream

46 Source: Company data Reconnecting with consumers through premiumization

Nescafé Confectionery

Kit Kat Premium Sachima

Candy Thick cut Premium shopping shortcake experience

• Thick cut shortcake grew >10% Q1 2016 • 85% growth in 2015 • KitKat launched prior to Chinese New Year

47 Winning back consumers with new and renovated products

NESCAFE SHARK & TOTOLE

NHW Chicken Bouillon Halal Bouillon Shark Caomijuan Sachima

Cooking Sauce Oil and Herbs

Target young Target mid-aged people people

• #1 with 74% market share in 2015 • Shark #1 with 32% market share in • 50% Market Share • 100% - 60/40 win 2015

48 Deeper penetration and wider coverage across various channels

NESCAFE TOTOLE

• #1 with 47% market share in 2015 • Growing presence in out-of-home • 10% increase in Numeric Dist. in 2015 • Penetrate lower tier markets

49 eCommerce: Nestlé China eComm sales more than doubled in 2015

Leverage strategic partnerships, global brands and capabilities

+289% vs LY +68% vs LY +67% vs LY +20% vs LY Chocolate Coffee Adult Milk Powder Biscuit

50 Note: online category growth is the sales growth rate of all Nestlé products sold online e-Commerce: Celebrating Nestlé’s 150th Anniversary with Alibaba

June 2016 kick-off Planet of Wonder campaign to delight Chinese consumers with more than 150 local and global products

2015 ZAOA online sales NiM scope

51 YINLU: Main area of challenge

Nestlé F&B 2015 Sales CHF 4.1 billion

OG Trend OG Trend

Coffee Peanut Milk Confectionery Congee Culinary RTD Coffee Dairy & Ice Cream

52 Source: Company data Yinlu: business in transition

Yinlu had a winning, … but in turbulence traditional model under “New Normal”

• Track record of strong, profitable growth • Yinlu Core Range declining

• #1 in Plant Protein Drink • Consumers shifting rapidly to more premium products • Nationwide distribution with ~2K Tier 1 distributors • Strong dairy competition due to low prices

• Extensive store coverage through a • Deteriorating distribution quality, coverage multi-layer, push model and in-store execution.

53 A comprehensive turnaround plan is in place

• Upgrade existing products to meet the trend of Upgrade existing premiumization and provide healthier products choices to consumers

Accelerate new • Focus on successful launch of Shakissimo and product in 2016 development • Explore opportunities in new RTD products

• Improve Move towards brand building and POS execution by leveraging Nestle expertise and working closely “pull model” with distributors HQ Frontline Consumers

• Empower turnaround taskforces with Steering Committee Ensure strong best-of-class experts to ensure fast and Project Management Office execution practical execution for results TF1 TF2 TF3 TF4 TF5 TF6 TF7 TF8 TF9

Yinlu turnaround will TAKE TIME but we will BRING YINLU BACK ON TRACK

54 4 Key Takeaways

1 CHINA STILL A GREAT CONSUMER STORY

PRODUCT PORTFOLIO HAS TO BE RELEVANT TO FAST EVOLVING 2 CHINESE CONSUMERS

3 ACCELERATE DIGITAL AND COMMERCE

4 YINLU TURNAROUND:GET IT RIGHT

55 Reigniting Growth: Market Presentations

3 4 5

Japan: Vietnam: 5 : • Innovation beyond • Establishing Brands • PPP products • Building Capabilities • RTM • Premiumization

Kohzoh Takaoka Ganesan R Ampalavanar Dharnesh Gordhon CEO Nestlé Japan CEO Nestlé Vietnam CEO Nestlé Nigeria

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