Leading in Pet Care
Patrice Bula EVP, Strategic Business Units, Marketing & Sales
Bernard Meunier CEO, Nestlé Purina Pet Care Europe, Middle East & North Africa
Fernando Merce President, Nestlé Purina Pet Care Latin America and Caribbean
Nestlé Investor Seminar 24 – 25 May, 2016 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 The Global PetCare Category Expected to Grow at 5.2%
Latam 11.2% CHF 7.5 bn +11.8% EMENA 33.7% North America CHF 22.5 bn 43.0% +3.4% CHF 28.7 bn +3.7% AOA 12.1% CHF 8.0 bn +5.1%
Total CHF 67 bn
3 Source: Euromonitor 2016 edition PetCare Category Expected Growth 2015-20
5.6% 4.0%
11.0%
4.4% 86.1
66.7
2015 NA LATAM EMENA AOA 2020
4 Leading in Pet Care
Bernard Meunier CEO, Nestlé Purina Pet Care Europe, Middle East & North Africa
Nestlé Investor Seminar 24 – 25 May, 2016 The EMENA Market: Key Numbers
Market 14.7 bn in Grocery NPP EMENA Market Share +98bps vs. Last Year 22.5 bn 7.8 bn in Specialist 22.5% (Grocery only)
203m Cats & Dogs
113m 90m Cats 1.5% Dogs 0.6% Last 10 year Last 10 year CAGR CAGR
Source: Nielsen
6 Calorific coverage is still a major growth opportunity
Calorific Coverage %
From 3% in Egypt to 93% in Belgium 90 77 79 58 31
France Germany UK Russia Italy
7 Accelerated growth and strong profit improvement
RIG EVOLUTION 9.0
8.0
7.0 TOP
6.0 5.0 +480 bps 4.0
3.0
2.0 (last 10 years)
1.0
0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
8 Operational savings reinvested in our brands and profit
Total Delivered Cost SG&A -30 -15 bps/yr bps/yr
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
Marketing Spend TOP +30 +40 bps/yr bps/yr
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
9 European Share Growth: Leadership now a realistic goal
44 Last period 40
36 Competitor
32 2070bps 30.4
28 430bps
24 26.7
20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 DJ16
Total Cat & Dog Food incl Snacks - Europe Grocery: Value % share
10 2015: NPP taking leadership in Western Europe
44
Last 40 period
36
32 2070bps Competitor -80bps 27.7 28
24 26.5
20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 DJ16
Total Pet Food incl. Snacks - Western Europe Grocery: Value % share
11 Russia: critical for our European leadership ambition
90 Competitor Last period 80
70 65.9
60
50 7450bps 4640bps 40
30 20 26.9 10
0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 DJ16 Total Cat & Dog Food incl. Snacks - Russia Grocery: Value % share
12 Portfolio transformation : Key Drivers
Simplification & Portfolio 5 Power Brands Premiumization
~12000 26% 80+ % SKU Count 72% 3.1 OthersOthers 43%
Sales/kg 24% 31% 5500 1.3 4% 2002 2015
Accelerate Defend Fix 2002 2015
13 FELIX has become our largest European brand
24 Competitor 1990 2010 22
20
18 -890bps +380bps
16
14
12
10 2010 2011 2012 2013 2014 2015 WCSS Value MS
Pre 2005 2010 2011 2013 / 2014 2015
Sources: Nielsen GTC, 28 markets, JJ’15 update & Nielsen IDB database
14 A FELIX campaign
15 16 24 May 2016 Nestlé Investor Seminar Portfolio Transformation in Milestones
Today
2000 2001 2003 2008 2010 2012 2016 Focus on Exit of Snacks Accessories
Roll Out Felix Clean up Spillers Move from Multi Portfolio Reduction in Eco Dry Serve to Single Exit of and Focus on SP Dry Serve Private Label & Grill Technology
Growth Acceleration OG CAGR 6.4%
3.1% 1.7%
17 Innovations bringing strong incremental value
Innovation-driven Incremental Sales in CHF m
18 Premiumising innovation accelerates value growth
Gourmet – premiumisation within the brand Each innovation builds greater consumer value
Purina ONE – moving consumers towards more premium offers
Branded Activated Pet Appeal Recruitment 2.87/kg Benefit (high Palatability) Program 2015 350 m CHF
1.49/kg
19 Digital acceleration as a competitive advantage
UK Market share Online vs Offline
39.0
37.0
35.0
620 bps 33.0
31.0
29.0
27.0
Competitor.com Competitor offline Purina.com Purina offline
20 Strong Innovation Pipeline Based on Health Benefit Platforms
Challenge Insights Solutions
Pets play strong role with Proprietary ingredient / Almost 50% of pets classified as elderly people with physical active brain protection aging (7yr+). Cognitive functions activity, socialization & blend for enhancing start to diminish. mental functions. pet alertness & Brain Health mental sharpness
% of Over-weight Dogs in UK Pet weight-control Proprietary weight 50% is compromising management program 21% 25% emotional connection. with visible weight loss Obesity 2005 2009 2020
Cat owners can’t ‘see’ an Proprietary NRM Cats are highly sensitive immunity deficit but do witness (functional bacteria) animals. Compromised immune the visible impact via digestive with proven enhanced system can lead to impaired issues immune benefits Immunity quality of life
21 Our Natural Approach: 4 Pillars
Purina Brand Natural cues Natural Customized as a competitive in existing Brands natural foods advantage Portfolio
22 Building trust in Purina through our commitments
We believe that when people and pets bond, life becomes richer.
Our Environment Pet Pet Role Products & Society Wellbeing in Society
Lead the industry Create job Promote pet Champion pets in in pet nutrition and for young people adoption through the workplace via health research below 30 years collaboration and 'Pets at Work' partnerships initiatives Deliver accessible Implement product information responsible Help reduce pet & pet care advice sourcing obesity risk through Promote collaborative responsible pet Remove artificial Improve environ- prevention ownership via our colours from our mental performance programmes 'Pets at Schools' products of our packaging initiatives
23 First BETTER WITH PETS Forum in Brussels
24 We are starting a movement on social networks
#WEAREBETTERWITHPETS
25 26 24 May 2016 Nestlé Investor Seminar 4 Key Takeaways
20 YEARS OF SUCCESS 1 20 Years of profitable growth and continuous market share gains.
NHW COMPANY 2 Purina is a strong contributor to the Nestlé NHW ambition and to the Group’s Premiumisation strategy.
OUR AMBITION 3 is to be the most trusted name in Petcare, become a Market Leader in Grocery and continue to be a strong growth contributor.
FUTURE GROWTH 4 will come from engaging pet owners with health enhancing solutions, underpinned by deeper corporate trust.
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