The Year in Review 2013 1 Group Highlights

The year Contents in review 2 Group highlights Accompanying reports 4 Our business context Perspective for change 5 The Nestlé Roadmap to Good Food, Good Life Annual 2013 Report 6 Growth drivers 2013 14 Competitive advantages 22 Operational pillars 30 Building for the future 36 Partnerships

Annual Report 2013 Nestlé in society 2013 society in Nestlé Nestlé in society

Creating Shared Value and meeting our commitments 2013

Nestlé in society Creating Shared Value and meeting our commitments 2013

All sections should be read in connection with the Consolidated Financial Statements of the Nestlé Group 2013. All 2012 ﬁgures have been restated following the accounting changes described in Note 1 – Accounting policies (page 89), and adjusted following the ﬁnal valuation of the Wyeth Nutrition acquisition (page 140). The year Contents in review 2 Group highlights Accompanying reports 4 Our business context Perspective for change 5 The Nestlé Roadmap to Good Food, Good Life Annual 2013 Report 6 Growth drivers 2013 14 Competitive advantages 22 Operational pillars 30 Building for the future 36 Partnerships

Annual Report 2013 Nestlé in society 2013 society in Nestlé Nestlé in society

Creating Shared Value and meeting our commitments 2013

Nestlé in society Creating Shared Value and meeting our commitments 2013

10 7789 Policy FTSE4Good The year in review report contains forward looking statements which +8.2% +6.8% We have added 10 new We renovated 7789 products We remain the only infant reflect Management’s current views and estimates. The forward looking organic growth; organic growth; commitments in nutrition, for nutrition or health formula manufacturer statements involve certain risks and uncertainties that could cause actual water, rural development, considerations changes included in FTSE’s responsible We have renewed our results to differ materially from those contained in the forward looking sustainability and compliance investment index, based statements. Potential risks and uncertainties include such factors as Wyeth Nutrition double-digit growth in nutritional policies to drive on our performance in the further reduction of salt, general economic conditions, foreign exchange fluctuations, competitive successfully integrated emerging markets human rights, labour rights, product and pricing pressures and regulatory developments. sugars, saturated fats and responsible marketing trans fats in our products of breast-milk substitutes The brands in italics are registred trademarks of the Nestlé Group. and more Nescafé Dolce Gusto KitKat Visual concept and design No1 chocolate brand in Japan, Nestec Ltd., Corporate Identity & Design with messi&schmidt Present in roll-out continues in Brazil Photography 73 countries +8.9% Interlinks Image – cover, Nestlé S.A. Production new machines, new flavours organic growth 167 billion Leader – 33% Top 3 Genoud Entreprise d’arts graphiques SA (Switzerland) We provided over 167 billion We were ranked number We reduced overall water In March 2013, we were Paper servings of fortified products one by the charity Oxfam in withdrawals per tonne ranked one of the top 3 This report is printed on Lessebo Smooth White, a paper produced its 2013 scorecard, Behind of product by one-third global food and beverage from well-managed forests and other controlled sources certified Western Europe Africa the Brands. The survey since 2005 manufacturers in the Access by the Forest Stewardship Council® (FSC). North America recorded scored 10 food and beverage to Nutrition Index Swiss Climate companies on their efforts to climateneutral both regions double-digit improve food security printing SC2014020702 • www.swissclimate.ch grew real internal growth organic growth in challenging environments

Nestlé Pure Life India 300 000 Number 1 66 594 –7.4% double-digit Maggi We trained 300 000 farmers We achieved leadership We reduced 66 594 tonnes We achieved an absolute growth in emerging markets 2-minute noodles bring through capacity-building for our industry group in the of packaging material, reduction in direct GHG increased good taste, but programmes Dow Jones Sustainability saving CHF 158 million emissions of 7.4% since 2005 reduced salt, MSG and Index 2013, and achieved trans fats to millions the maximum score in the of consumers CDP Climate Performance Leadership Index

Dairy S.Pellegrino near 30% dynamic share of senior milks sector global growth in China Nestlé in 2013 – some highlights Nestlé in society

Dairy S.Pellegrino near 30% dynamic share of senior milks sector global growth in China Nestlé in 2013 – ﬁgures

Group sales Organic growth CHF 92.2 billion 4.6%

+2.7% Real Internal Growth 3.1%

Trading operating proﬁt Trading operating proﬁt margin CHF 14.0 billion 15.2% +20 basis points

Earnings per share Underlying earnings per share CHF 3.14 +11.0 % constant currencies

Operating cash ﬂow Working capital improvement CHF 15.0 billion +CHF 1.4 billion

Proposed dividend Proposed dividend increase CHF 2.15 +4.9%

Outlook Last year was challenging and 2014 will likely be the to last year and again weighted to the second half, same. We will continue to be disciplined in driving outperforming the market, with growth around 5% our performance in line with the Nestlé Model and improvements in margins, underlying earnings of profitable growth and resource efficiency. We per share in constant currencies and capital efficiency. therefore expect our 2014 performance to be similar

The year in review 2013 1 Group highlights

February March April A survey by the that all companies The new Access provide consumers Nestlé Health and promotes Oxfam charity need to improve, to Nutrition Index, with access to Science acquired evidence which scored us No. 1 something we are supported by the nutritious products. Pamlab, a US-based can directly out of 10 food working towards Bill and Melinda The top three company that offers affect disease and beverage through our rural Gates Foundation companies are medical foods, by management companies on their development and the Wellcome separated by 0.2 on prescription, for the for brain health efforts to improve framework. Trust, scored us 3rd a 10-pt scale, with a nutritional support (depression and food security and among 25 global large gap before the of patients with memory loss) sustainability. The companies on how 4th company. speciﬁc medical and metabolic scorecard says effectively we conditions. Pamlab conditions investigates (peripheral nutritional science neuropathy).

March March May Our System systems. The STC Nestlé research described the We signed up which has seven Technology Centre unites 120 experts scientists in metabolic to the Women’s steps that business opened in Orbe, from 25 countries Switzerland in phenotype of Empowerment can take to promote Switzerland, to to work on design, collaboration with healthy human Principles, a gender equality and bring together technology, Bologna University, ageing and partnership empower women the expertise packaging, Italy, discovered longevity. Further initiative of UN to participate fully behind the Nestlé engineering, the metabolic clues work is needed, but Women and the UN in all levels of Nespresso, Nescafé electronics and for living longer it is an exciting step Global Compact economic activity. Dolce Gusto and robotics. and healthier. A in understanding Nestlé BabyNes study of nearly the biological 400 volunteers, mechanisms of including ageing. centenarians,

2 The year in review 2013 June October November Perrier celebrated with Warhol in the Mapping nutritional including iodine, We launched Nestlé 10 000 apprentice 150 years in 80s. Last year we gaps is helping us iron, zinc and Needs YOUth in and traineeship 2013 with a pop produced more than fight micronutrient vitamin A. The Athens, Greece, positions by art collection in a billion bottles, the deficiencies in the UN estimates two to offer 20 000 job 2016. On top, we homage to the first time in over developing world. billion people suffer opportunities for will mobilise our brand’s partnership 20 years. The nutritional from micronutrient young people in 60 000 suppliers to landscaping shows deficiencies – Europe. We will build up an Alliance there is need for hidden hunger. offer jobs to 10 000 for Youth and have micronutrients under the age a greater impact. of 30 and create

September October December We achieved top We also got the The 5th Nestlé Cartagena. More We were the ﬁrst and what we are rank in the Dow maximum score Creating Shared than 350 people major company to doing to address Jones Sustainability for the 2nd year in Value forum was took part and publish a paper on it. The paper was Index among the CDP Climate opened by Juan thousands followed our human rights welcomed as a food products Disclosure Indices. Manuel Santos, the webcasts. impact in seven breakthrough by companies, with a Colombian countries in the the Danish Institute score double the President, in developing world of Human Rights. industry average.

The year in review 2013 3 Our business context Perspective for change

How to describe the environment in which we have been Technological challenges and opportunities operating these last few years? Turbulent, challenging, Technology is changing behaviour, whether in populations, unpredictable? Fast-changing, uncertain, dynamic? governments, opinion leaders, consumers, companies, or Many of the world’s economies have been impacted even within families. Technology is creating more choice, by the global economic slowdown. At the same time, more openness and more speed. It is giving voice to more populations have benefited from fundamental, irreversible people, more democratically. It is creating new businesses, changes driven by new technologies, by increased new ways of doing business, new opportunities to reach transparency and faster, less controlled communication. consumers. It is fostering a closer level of engagement And populations have found their own voices, often inspired, between brands and consumers, and is creating an encouraged or mobilised by digital communication. increased ability for consumers to hold brand owners to account. Our brands are part of that engagement and we Economic challenges and opportunities understand our accountability and welcome the demands The business environment is characterised by greater that this makes on our behaviour, our quality levels and on volatility, whether of currencies, of raw materials, or of the relationships with our business partners. sentiment. There are beacons of hope, as the middle class grows in emerging economies and millions of people at all Not so New Reality income levels strive for a better life. There are pits of despair, In past years, we have described this environment as the especially in the developed world where economic crises, New Reality. Today, it is no longer new, but it is certainly rising unemployment, rising taxes and retrenchment of the reality in which we will be operating for some time to government spending linked to austerity programmes have come. Many of today’s challenges are also opportunities. combined to engender a feeling of insecurity. For example, the shift of wealth creation from the West to The fact that the emerging markets are actually emerging the East or the ability of consumers anywhere to link up with is bringing opportunities as incomes rise and consumers consumers anywhere else to discuss, praise or criticise a have more choice. But there are challenges too as local brand. The opportunity is for a global company to be part and regional competitors spring up with their own cost of that shift, part of that discussion. structures, financial objectives and standards of behaviour and communication. This requires that we challenge our How can Nestlé do this? established norms, rethink our business models and find By being aligned globally behind a clear set of priorities. new ways to differentiate our products and provide value to We have pulled these priorities together in our ‘Roadmap’, our consumers. reproduced on the facing page. In the next section, we have There has been a renewed focus on health: positively, as looked at each aspect of this roadmap and have discussed people become more and more aware of their own ability its importance in the context of the challenges outlined on to influence their health through better diets and lifestyles; this page and faced by our consumers and us today and in but also less positively, as governments face up to the reality the years to come. of ageing populations and the likelihood of unmanageable healthcare costs. The challenge of non-communicable diseases is particularly great; not just obesity and its attendant problems, but all conditions in which bad or wrong nutrition plays a part.

4 The year in review 2013 The Nestlé Roadmap to Good Food, Good Life

Operational Growth pillars drivers

Nutrition, Health and Wellness Emerging markets and Innovation Popularly and renovation Positioned Products

Whenever, ty ili C Out-of-home wherever, b re a a consumption however n t i in ta g s u S S h a – r e e d c

n V

a a i l l u p

Operational o

C Premiumisation efficiency Our objective is to be the leader in Nutrition Health and Wellness, and the industry reference for ﬁnancial performance, trusted by all stakeholders Unmatched Consumer product N s engagement es le and brand tlé ip c inc portfolio ultu pr re, values and

Unmatched People, research culture, values and development and attitude Unmatched capability geographic presence

Competitive advantages

The year in review 2013 5 The Nestlé Roadmap: Growth drivers Nutrition, Health and Wellness throughout Nestlé Nutrition, Health and Wellness

Leadership in Working together with We continue driving healthcare professionals and reductions of sugar and salt Nutrition, Health and stakeholders, we aim to be part in our products – in 2013 we Wellness means of the solution to help families set further ambitions with improve their Nutrition, Health updated policies on sugar and enhancing the quality and Wellness (NHW). The first salt, as well as saturated fat step to doing this is best taste and partially-hydrogenated oils. of consumers’ lives as this will ensure that the 93% of our products display the by offering tastier and family chooses our product Nestlé Nutritional Compass to over a competitor’s. The guide consumers into making healthier food and second is to combine best taste healthier choices. We are with best nutritional value. also rolling out guideline daily beverage choices Our extensive research and amount references and portion to consumers at development helps us to do this guidance on packs worldwide. on a continual basis. We are We fortify Nestlé foods, every consumption reducing sugar, salt, saturated particularly our Popularly fats and trans fats, and adding Positioned Products, targeted occasion; it means wholegrain and vegetables at low-income consumers, responding to specific 2 wherever possible. We are with micronutrients: we increasing the nutritional provide more than 150 billion nutritional needs content of our affordable food micronutrient-fortified servings ranges to ensure that high- per year, contributing to the through Nestlé quality food reaches families on solution to malnutrition. Nutrition, and it modest incomes. And we are We educate mothers, doing this whilst committing caregivers and healthcare means pioneering to achieving taste preference professionals about the with our consumers. importance of good nutrition ways to address Worldwide, the World in the crucial first 1000 days chronic medical Health Organization estimates (from conception to the second (2011) that 265 million children birthday). We support exclusive conditions through under five are affected by breastfeeding during the first severe malnutrition. The cost six months after birth and nutrition at Nestlé of managing people at risk apply WHO standards or our Health Science. 1 of disease- or age-related own (whichever are stricter) in Maggi interaction in Sri Lanka malnutrition in Europe is each of our markets. (top), spreading the NHW word estimated at CHF 210 billion. to consumers in an open-air At the same time, some market setting. 43 million children under five 2 are overweight or obese. This The Nutritional Compass is part of the 1.4 billion people bringing additional information globally who are overweight. to consumers, including the consumer services telephone number for even more knowledge if needed. 3 Leading the healthy hydration journey, Nestlé Pure Life contributes to making next generation healthier by offering an affordable, quality water brand to families.

6 The year in review 2013 3

The year in review 2013 7 The Nestlé Roadmap: Growth drivers

Leveraging our almost 1 150 years of expertise in Infant Exercises to promote bone Nutrition we offer proven health at a rehabilitation solutions to meet the specific hospital in Osaka, Japan, nutritional needs of pregnant a supplement to the health women and babies. We provide benefits of our products rich in the most nutritionally advanced protein, vitamin D and calcium formulas when breastfeeding for elderly patients (top). is not possible. We provide Lower pictures: R&D in the nutritionally appropriate foods pursuit of NHW. for babies to meet their needs 2 when complementary foods Scenes from the Nestlé Global need to be introduced to their Healthy Kids Programme: in diets. Europe at the Nestlé HQ in Our intention is to enable Vevey, Switzerland (top left), everyone to have a healthy Nigeria, Indonesia and Ecuador start to life and to stay healthy. (main picture). Of course, people do get ill, and we have nutritional therapies designed to provide clinical benefits and health economic advantages. These address dietary needs related to illnesses, disease and the challenges of different life stages, from paediatric to ageing. We are involved in advancing pioneering biomedical knowledge and technologies to understand the relationship between food, lifestyle, genetics and the metabolism of individuals. This is supporting our efforts to further develop our nutritional solutions for increasingly prevalent chronic conditions, such as cognitive decline, gastrointestinal and metabolic disorders. ■

8 The year in review 2013 THE NESTLÉ HEALTHY KIDS GLOBAL PROGRAMME PROMOTES A HEALTHY LIFESTYLE AMONG CHILDREN

In the Nestlé Healthy Kids Global Programme we partner with more than 250 NGOs, governments, nutrition institutes and sports federations. We have programmes in 68 countries and reached 6.9 million children in 2013. We have made speciﬁc commitments in our 2012 and 2013 Nestlé in society Report for which we can be held accountable. ■

The year in review 2013 9 The Nestlé Roadmap: Growth drivers Maggi bringing beneﬁ ts

Emerging markets and Popularly Positioned Products

We created our We sell 100 million Maggi The chain of benefi ts cubes a day in CWAR. Each is continues in the Agbara and Popularly Positioned a small contribution to beating Douala factories, where water Products for emerging malnutrition and micronutrient consumption and waste are defi ciencies in iron and iodine. minimised. Drinking water is consumers with low The success of Maggi in the distributed to communities region has also enabled us to near the factories (5000 litres / incomes, bringing build communication initiatives community / day at the Douala them our nutritional focused on health and nutrition, factory). Our distribution such as the Maggi cooking network ensures availability know-how, our caravans and the Maggi Star of our products when and Kitchen programmes. These where they are needed, again brand promise and help families to improve their at the lowest possible cost and quality, as well as 1 diets, by demonstrating for greatest possible effi ciency. A key to the effectiveness of example the importance of And this gets to the heart of the extra plus – the nutritional benefi ts of our iron and iodine, and cooking what a PPP is. It is not just a such as fortifi cation PPP products in the CWAR healthy by reducing salt. The product, but it is a business and other regions is their participants are probably not model designed from start to against nutritional widespread availability in aware that they represent fi nish to get the best possible small shops and kiosks, easily just one link in a chain of products to our consumers at defi ciencies. accessible to local consumers. benefi ts. This starts with the most affordable price, and One example is Maggi 2 local raw material sourcing; bringing health and economic Maggi single-serving cubes cassava from Côte d’Ivoire benefi ts from farm to fork. in our Central and with consumer information is used instead of imported Many other products are showing the added nutritional corn starch, for example. fortifi ed with micronutrients West Africa Region. benefi ts. The farmers are trained and such a vitamin A and zinc to It demonstrates 3 helped with high-yield cassava fi ght against defi ciencies. Other Maggi on the road in Côte varieties: the programme PPPs sold in CWAR include how we can bring d’Ivoire, reaching out to began with 100 women from Nutripak 14 g (pack of Nido consumers with the nutritional four villages and today reaches Essentia, fortifi ed milk sold in our consumers benefi ts message. about 4000 farmers (mostly small, accessible servings), affordable Nutrition, Middle row, centre and right: women). Maggi bouillons (cubes 4 g, Maggi production in Nigeria for tablet 10 g with various Health and Wellness the local Market. recipes), Milo 15 g sachet, Ideal 4 Value Creamer, Nescafé Classic benefi ts at the same Farmer instruction: training in single serving 2 g sachets, time as bringing women cassava farmers in Côte and Cerelac 50 g. ■ d’Ivoire to get the best harvests economic benefi ts to provide local ingredients for to all those involved the CWAR region. in our supply chain, including hundreds of thousands of small farmers.

10 The year in review 2013 3

The year in review 2013 11 The Nestlé Roadmap: Growth drivers The barista solution

Out-of-home consumption

Out-of-home Nescafé Milano Lounge was fats and carbohydrates in their launched in Britain in early drink, and can make a personal consumption is a fast 2013 as part of an international selection, adjusting the coffee growing part of our roll-out. It delivers a range strength, the amount of milk, of premium speciality drinks skimmed or semi-skimmed, industry. This covers for shops and ofﬁces, made and cup size. to genuine barista class from This is an example of how leisure, from roadside premium ingredients. even in a coffee machine, we kiosks in Asia to The solution provides include Nutrition, Health and customers with a range of Wellness (NHW) in our OOH gourmet restaurants 400 varieties of hot and cold strategy. beverages. Consumers can It goes much further when in the capitals of the customise their preferred we help chefs design menus, world, and institutional beverage through an or when we prepare products interactive touch screen. for restaurants from the best, catering, from schools The touch screen includes a healthiest ingredients. ■ nutrition tab so the consumer to hospitals. can see the calories, protein, Our focus here is on added-value branded food and beverage solutions and services. We highlight Nescafé Milano Lounge.

1 Attention to detail from the chef, attention to NHW from Nestlé Professional in the preparation of all products. 2 The Nescafé Milano Lounge machine, bringing NHW information to the point of sale for consumers.

12 The year in review 2013 Dairy-based Nutrition, Health & Wellness Premiumisation propositions

When consumers Meeting consumers’ desire Nestlé Nesquik, with its for indulgence is just one bunny, is known as a fun want an indulgent successful premiumisation brand, but its mission is moment of pleasure, strategy; another is to to help parents encourage meet consumers’ needs for their children to drink more an everyday reward, enhanced nutrition from milk, so they benefit from everyday food and drink. the additional goodness that they turn to premium Adult health problems, such Nestlé Nesquik brings. A key food and drinks. as high cholesterol and heart challenge for our R&D team has and bone health, are common been to protect the delicious Our premiumisation across different continents. Nestlé Nesquik flavour whilst In China, where it has long reducing sugar and to look at strategy, incorporating been understood that the best how to further enhance the systems, services treatment of disease is to product's nutritional qualities. prevent illness, and that food is Late in 2013, Nestlé Nesquik and products, the first medicine, dairy-based was relaunched in Europe with nutrition, addressing such 10% less sugar and fortified is enhancing conditions, is growing fast. We with Optistart. Optistart is a consumers’ lives, have a near 30% share of the new branded active benefit senior milks sector. Our brands containing vitamins and whilst creating include YiYang protein powder minerals to complement milk with probiotic, for increased and provide an optimal mix of additional value resistance and vitality, Ange nutrients to support growth per consumption for bone health, JianXin Double and development. The launch Care heart and bone health. started in France and covered moment: many Outside China, Nestlé most of Europe by the end ActiCol, which is clinically 2013. The Middle East and consumers are not proven to lower cholesterol, is North and Latin America will looking to eat and being rolled out. It is already follow during 2014. ■ available in Brazil, Chile and drink more; they are Malaysia in powder, liquid milk looking to eat and and yoghurt formats. drink better and they 1 A selection of Nestlé dairy are willing to pay a bit products with improved more for the pleasure. performance – Nestlé ActiCol, Nestlé Nesquik, which provides the best nutritional complement to milk, Ange for bone health (bottom left) and JianXin Double Care heart and bone health.

The year in review 2013 13 The Nestlé Roadmap: Competitive advantages It all starts with a Nescafé…

Unmatched product and brand portfolio

Our product and Nescafé was launched in Consumers are perhaps Switzerland in 1938, as an not even aware of the second brand portfolio ranges innovative and technical facet of our innovation, though from global icons solution to a genuine need, you benefit from it with every an oversupply of green coffee cup; technical innovation. The to local favourites. in Brazil. And innovation has focus is to improve the quality been at the core of the Nescafé and taste of Nescafé so we There is perhaps story ever since. It has evolved can build on long-standing no other brand that into the world’s largest coffee favourites such as Nescafé brand, available in almost every Gold and Nescafé Original. encompasses this so country, with a consumer sales This incorporates leading edge value of over CHF 10 billion. It technical development in our well as the world’s is hard to imagine, but about factories, but also ground- favourite coffee brand 5500 cups of Nescafé are drunk breaking work with coffee every second of every day. plantlets in our R&D centre – Nescafé. Our innovation takes two in Tours, to create higher forms. The first is that which yielding, disease tolerant is visible to consumers. plants to distribute in farming Examples include being the communities. first to launch a soluble coffee- based cappuccino and latte macchiato, the systems breakthrough with Nescafé Dolce Gusto, and marketing Nescafé 3 in 1 to help take Nescafé into countries that had no tradition of drinking coffee. Innovation has taken Nescafé into new 1 segments, like Nescafé Nescafé marked 75 years in Smoovlatté in China, which 2013 with a celebration of opened up the ready-to-drink its heritage, traditions, and segment in the country. continuous innovation. 2 The Nescafé Dolce Gusto system – a recent innovation built on the brand’s tradition and strengths.

14 The year in review 2013 The year in review 2013 15 The Nestlé Roadmap: Competitive advantages

Our suppliers and the quality of their crops are fundamental to the success of Nescafé. Crop quality can vary, but every time a consumer opens a jar of Nescafé, it must bring the exact same taste and pleasure. The Nescafé Plan begins with farmers; through our network of agronomists and our global partner the Rainforest Alliance Inc., we work with them to improve the quality and quantity of green coffee around the world. We buy directly from farmers or their associations, and our commitment to responsible sourcing continues through production, packaging, transport and even consumption – see Nescafé has had a life more in our Nestlé in society that would be the envy report. ■ of many. Just two of its adventures were joining the ﬁrst successful expedition to climb Mount Everest and accompanying astronauts to the moon. Now, it is celebrating its 75th birthday with that same sense of adventure by totally refreshing its identity and its relationship 1 with its consumers. Pictures from the hinterland of That relationship is as Nescafé: working the plants immediate and engaging in Colombia and Thailand as its consumers: positive, (bottom right). The black-and- engaged and open-minded white picture (top right) shows people who are determined Nescafé reaching the heights. to get the most out of every It accompanied the ﬁrst moment. ■ successful Everest expedition in 1953. 2 To celebrate 75 years, Nescafé has completely refreshed its identity: the redvolution has begun.

16 The year in review 2013 THE NESCAFÉ REDVOLUTION HAS BEGUN... KEEP AN EYE OPEN FOR THE NEW RED ACCENT ON THE NESCAFÉ BRANDMARK

The year in review 2013 17 The Nestlé Roadmap: Competitive advantages Research and

Unmatched development capabilities research and development capability

Our global Innovation, Our global R&D network of Taste 34 R&D facilities was further Our scientific and technological Technology, Research strengthened in 2013 with capabilities must always serve and Development investment in centres in Solon, consumer needs and reducing USA (frozen and chilled foods), sugar, salt and saturated capacity supports our Orbe, Switzerland (System fat, without compromising Technology Centre), Singapore on taste, is a key part of our product and brand (coffee mix expertise) and activities. We aim to develop portfolio with clear Abidjan, Côte d’Ivoire balanced and pleasurable (experimental farm for plant products for our consumers priorities. We focus science research). and their families – from Nestlé We organise our science Nesquik, with reduced sugar on driving innovation and technology in building and micronutrient fortification, and renovation that is blocks of knowledge that we to Maggi So Tender, to promote combine in different ways to healthier cooking options. relevant and attractive deliver innovative solutions for the benefit of our consumers. Food Safety for consumers and Systems are a good example. Behind every Nestlé product is that advances our In 2013, we opened our System a team of scientists dedicated Technology Centre where to earning consumers’ trust leadership in Nutrition, we use building blocks from with safe products. To stay at Nespresso and other systems the forefront in food safety, Health and Wellness. to develop proprietary new we opened the most advanced solutions, like Nescafé Alegria laboratories of their kind in and Nescafé Milano Lounge. the industry to study food- borne pathogens. Research Leadership in Nutrition, here will be of great benefit Health and Wellness for Nestlé, the wider scientific We strive to promote health community and, ultimately, for and find solutions to nutrition our consumers. and health issues, including In summary – one R&D for malnutrition, obesity and one journey: to be the leading ageing related challenges. Nutrition, Health and Wellness 1 In 2013, our fundamental Company. ■ R&D in frozen and chilled foods research produced more than in Solon, USA (top); plant R&D 500 patents and scientific in Abidjan, Côte d’Ivoire. publications, including the 2 identification of biomarkers Laboratory work at the R&D for obesity related diseases, as centre in Abidjan, Côte d’Ivoire. well as important supporting 3 clinical results related to low The System Technology Centre protein and hypoallergenic in Orbe, Switzerland, opened infant formulas. Many in 2013 – machine and capsule publications resulted from technologies. our growing collaborations with academic partners and institutions, and we were proud to receive the Shokumon Award from Tokyo University, acknowledging our continued support for their research and education programmes.

18 The year in review 2013 2

The year in review 2013 19 The Nestlé Roadmap: Competitive advantages Nestlé in India Celebrating a century Unmatched geographic presence

Our Group has While some companies have and help farmers in a variety rushed recently to the high- of aspects. From increasing an unmatched growth, newly-industrialising the milk yield of their cows geographic presence, countries in the hope of through improved dairy exploiting the growing farming methods, to irrigation, due to the depth purchasing power of a huge scientific crop management and expanding middle-class, practices and helping with the of our roots in we have grown along with the procurement of bank loans. countries all over the countries. In India, for example, Nestlé’s consistent work we have had trading contacts with the farmers has developed world, which often since 1912. We have been the milk industry in the region present through India’s times which is now flourishing. stretch back many as a British colony, through In 1961, on our first day of generations. This independence, and we fully collection, we collected 511 kg intend to share India’s future. of milk from 180 farmers. has created strong Nestlé India was first listed Today, we touch the lives on the stock exchanges in of more than 110 000 milk relationships between 1968. Today it is one of the farmers, and collect more than our brands and their most respected companies 300 million kg of high-quality in the country. It has eight milk each year, to the benefit consumers, as well factories that have increased of our consumers, the farmers capacities or are planning to and of course Nestlé. This as an unrivalled increase capacities in most enables us to ensure quality understanding of product categories, employs milk and nutrition for our more than 7000 people, and is consumers whilst our direct consumers, enabling supported with a research and sourcing benefits the farming development centre. Over the community. This sourcing us to anticipate their years, all through the journey, of high-quality milk is also needs and improve we have provided products integral to our infant nutrition with global excellence to business, which is the market the quality of their suit the changing lifestyles leader in India. Our key brands and to provide nutrition, in India include Nestlé NAN, lives. India, where we health and wellness to Indian Cerelac, Nescafé, Maggi, have been present 1 consumers. In 2012, we Milkybar, KitKat, Milkmaid Nestlé in India: from milk celebrated a century of Nestlé and Nestea, as well as dairy since the beginning collection to one of the many India – one of a number of products such as Nestlé Milk, of the 20th century, is consumer outlets in the countries where we have been Nestlé Slim Milk, Nestlé country, Nestlé continues to established as a company for Dahi and Nestlé Jeera Raita just one example. share the country’s destiny. more than 100 years. Our first (yoghurt-based condiments). headquarters were in present- Much of our raw materials are day Kolkata. locally sourced, and almost In 1961, the headquarters all our sales are manufactured moved to Delhi; the same locally. ■ year, our first production unit started commercial production at Moga, Punjab. Progress in Moga required the introduction of Nestlé’s Agricultural Services to educate, advise

20 The year in review 2013 People, culture, values and attitude – based on respect People, culture, values and attitude above all

Our people are every Our culture combines a long- Respect for others allows term mindset with short- us to take the long-term view. day building on our term action. It encompasses We respect laws; we are culture, values and a passion for quality – in strict in our compliance with products, in relationships, in laws and norms where we attitude that date everything we do. It is focused operate. Respecting others on competitiveness, calculated means of course that we back nearly 150 years, risk-taking and an unswerving respect consumers as well as and they are a determination to deliver our ourselves. We have a respect goals, while creating value for for traditions and the past; this major competitive society as a whole. is a foundation on which we In Nestlé, respect is the build for the future, based on advantage. The basis for everything we respect for future generations, Nestlé culture, with do. Respect for the people, which is a central part of communities and cultures sustainability. its natural openness where we operate has been the We have a rigorous cornerstone of our business recruitment process to ensure to and respect for and has driven our decision that we pick people not just diversity, binds our making ever since we began. with the right capabilities, In many countries today, where but also the right values and people together we have been present for many attitude to spend many years generations, we are considered with us, evolving and learning, all over the world a local company and our brands teaching and mentoring, with a shared set of are perceived as local. These and bringing value to the relationships, both between organisation. That process is behaviours and values our company and its local governed by respect – without communities, and our brands restriction. into a single way of and their consumers, are of We further understand doing business. great value, as food choices that respect is given to others and taste, traditions and culture as a matter of course, not are all local. something to be earned, This sense of belonging has whether in our personal or never been taken for granted. business lives and activities. 1 We have always endeavoured Respect is recognising that People and respect, at Nestlé to use our development and other opinions exist and are India (top) and at the Product capabilities not just for our own often valid, even if we may Technology Centre in Orbe, beneﬁt but also to create value differ. ■ Switzerland, during a guided for everyone in the value chain, visit for staff from other Nestlé from farmer to consumer, and Markets. to bring broader economic beneﬁts to the regions where we are present. We know that by doing this we will create more value for ourselves, and set in place a potential virtuous circle of shared value creation.

The year in review 2013 21 The Nestlé Roadmap: Operational pillars KitKat – a model of consumer engagement Consumer engagement

We need to engage The opportunities and Digital is a key component methods of communication of the KitKat integrated with our consumers have changed dramatically consumer engagement in a dynamic way: in recent years. Look no platform, and it has a further than digital media vibrant relationship with its both to keep them and social networks, but consumers, demonstrated by the fundamentals of good over 20 million highly engaged abreast of all that is communication remain the Facebook fans around the new and exciting, same: to be engaging and world. The global response to to listen, to be a part of the unique partnership with but also to learn consumers’ lives in a way Google, which saw the launch which is relevant, respectful of the Android KitKat mobile from them, so that and refreshing. KitKat is just operating system, created a we can bring their one example of a brand that fervour of activity. The brands continues to take advantage of trended on Twitter, generating experiences to bear the new opportunities to build three billion impressions. loyalty and drive growth. There were over 12 million on our new and 2013 was another views of a video celebrating updated products. exceptional year for the iconic the official naming, as well KitKat brand, one of the biggest as one million people visiting confectionery brands in the www.kitkat.com. In Brazil world. Its continued high a fun and surprising digital growth reflects its ability to media campaign helped delight consumers globally double Facebook fans, whilst and to satisfy their desire for in India an innovative mobile a lighter chocolate bar, whilst app, linking digital and encouraging them to have a traditional media, drove record break. The growth also reflects engagement in the market. the success KitKat has enjoyed in breaking into emerging markets including, since 2012, an extremely successful launch in Brazil, where the brand 1 continues to build critical mass. KitKat welcomed the launch of the Google Android mobile operating system with special editions and events. 2 The Android Robot took a KitKat break, while in Brazil (right) there was an opportunity to win 1000 Android tablet PCs. Everything was designed 2 to reinforce the consumer’s pleasure with KitKat and the break. 3 2013 was another great year for KitKat, our iconic confectionery brand – Have a Break, Have a KitKat.

22 The year in review 2013 3

The year in review 2013 23 The Nestlé Roadmap: Operational pillars

Digital is also being leveraged 1 for Creating Shared Value: for The presence of KitKat is example, KitKat two finger in well-established in digital and the UK has a QR code on the is accessible to consumers packaging with additional everywhere with mobile information about the Nestlé devices which bring the Cocoa Plan. nutrition and pleasure message The KitKat global in an appropriate form: tablet, development is characterised mini tablet and smart phone. by a focus on getting the 2 fundamentals right: great The Nestlé Cocoa Plan plays product quality and freshness, an integral part in the life of excellence in distribution KitKat – as well as for other and at point of sale, but Nestlé confectionery brands, also by an ability to adapt to of course – supporting cocoa different consumer needs or farmers as here in Ecuador. preferences. These might be In 2013, we bought more than the flavoured KitKat in Japan, 16 000 tonnes of cocoa under green tea amongst them, which the auspices of the plan – 15% 2 have helped make it the No1 of the total cocoa we use. brand in the Market. Two finger KitKat available in In all this, KitKat provides a Britain have full details of the clear example of how a 79 year plan and its scope. old brand can remain young and relevant by continually keeping consumer engagement at the heart of its existence. ■

24 The year in review 2013 DIGITAL IS A KEY COMPONENT OF THE KITKAT INTEGRATED PLATFORM, IT HAS A VIBRANT RELATIONSHIP WITH ITS CONSUMERS

Personalised KitKat is available in Japan via a website (www.chocollabo. com); it is a favourite for weddings, with the picture of the married couple as a souvenir for guests, as a memento of schooldays or a university class, or to mark the birth of a new addition to a family. ■

The year in review 2013 25 The Nestlé Roadmap: Operational pillars Efﬁciency in all operations

Operational efﬁciency

We must have the Operational efficiency at Nestlé It requires enhancing our own starts at the farms that supply capabilities and skillsets to most efficient supply our raw materials and runs create a lean mind-set in our chain – from farm to along our value chain to how factories and activities, and we supply our products and achieving zero waste. fork and beyond – to brands and engage with our It means reducing packaging consumers. As populations and working with our ensure that we have grow and standards of customers to achieve on- the best raw materials, living improve, Nestlé’s time, in-full service levels manufacturing volumes and optimised on-shelf the best processes increase every year. Our aim, merchandising. It also simply, is to produce more with means excellence in sales and the freshest, less – less water, less energy, and marketing. Operational safest, highest-quality less waste, less complexity, efficiency is much, much more less cost per tonne of product than just well-run factories. products on our – but to the same or an even It touches every part of our higher quality. We can use business. It is an up- and customers’ shelves. our expertise to help farmers downstream integrated value Nestlé Continuous become leaner, optimising their chain that creates benefit for 1 irrigation and use of water and all who participate in it. ■ Excellence, enabled Efficiency being planned-in at a fertilizer. We can help them meeting at the Nescafé factory to achieve the virtuous circle by GLOBE, is in Dongguan, China. that combines a sustainable our approach to 2 living with an ability to invest Attention to detail in the in improving the quality and operational efficiency, field at the Mossel Bay dairy yield of their crops so that factory in South Africa (top their incomes further increase. with its objectives left); testing milk at the Lagos It means working with our of eliminating waste de Moreno ice cream factory partners on optimal distribution in Mexico; and a production methods and routing. and errors, increasing line conversation at the dairy factory in Osorno, Chile. efficiency and The end result is consumer delight, here a young person effectiveness, and enjoying Nestlé Nespray in improving quality Sri Lanka (main picture). and safety in all operations.

26 The year in review 2013 2

The year in review 2013 27 The Nestlé Roadmap: Operational pillars Nespresso on demand

Whenever, wherever, however

It is not enough, just Travellers through Barcelona Nestlé Professional launched airport are among the first to the MYOWBU (My Own to make the most be able to use a unique retail Business) initiative in Central innovative products concept, the Nespresso Cube, and West Africa in 2012. an innovative automated The idea was to make Nescafé in the most efficient boutique. It offers Nespresso’s available within arm’s reach Grands Crus or Limited to consumers out of home – way; we also need Edition coffees within and in the streets of cities – to ensure that our seconds. The Cube arose by training entrepreneurs to out of engagement with the treat street selling as their products are available Nespresso Club Members: own business. MYOWBU the new experience fits their quickly expanded from the sustainably whenever, lifestyles, and the system will original countries of Burkina wherever and allow Nespresso to expand into Faso, Cameroon, Côte 2 new premium locations. The d’Ivoire, Ghana, Nigeria and however consumers cube contains 25 000 capsules Senegal to South Africa, in 2500 sleeves, and the Angola, Mozambique, Kenya, want them. This system can process an order Zambia, Democratic Republic might be in traditional of 10 sleeves in 20 seconds, of Congo, as well as the all visible through a window. Maghreb region. retail, it might be in Club Members can buy using The programme has created their Nespresso Club card, 3768 jobs and has sold e-commerce. Or it other consumers with credit 70 million cups of Nescafé, might be even more cards. Nespresso has 320 retail bringing a refreshing cup boutiques worldwide, which of coffee to a whole new type innovative, such as are at the heart of the brand’s of consumer. ■ strategy, supported by the these two examples, consumer relationship centres, at different ends of the the on-line boutiques at www.nespresso.com, and now coffee spectrum, one also by the Nespresso Cube. ■ in Europe, the other in Africa. 1 The innovative Nespresso Cube at Barcelona airport, Spain – especially for returning travellers. 2 Interior view of the Nespresso Boutique in San Francisco, USA.

28 The year in review 2013 Innovating and renovating in the wet catfood segment Innovation and renovation

We want to be the Nestlé Purina PetCare is well- Recently, new humanisation positioned in the fast-growing trends around real ingredients leader in innovation super premium segment. Its have emerged. Nestlé Purina and renovation, innovation and renovation PetCare has met those with has been driven by deep more innovation, notably whether of products, understanding of consumer with Fancy Feast Appetizers and customer insights, (2009), one of the first brands systems or processes. proprietary technology and to deliver chunks of premium Some products will also identification of trends fish in a delicate sauce for the important to pet owners: US market. Also with Gourmet be entirely new, some starting with health and Fisherman’s Delights (2013) in wellness for their pets, then Europe, which is a proprietary will have a refreshed convenience, indulgence and sustainable wet cat food aspect. Regardless, and ‘humanisation’. This with premium ingredients for journey of innovation and maximum health and wellness. we focus on on-going renovation began in 1980, Innovation has also touched when Fancy Feast was packaging with, for example, renewal to keep our introduced in a single-serving the move from cans to more consumers excited can – consumers did not want convenient, lighter easy to opened multi-serve cans in open pouches. ■ about our brands. their refrigerators next to human food. New concepts This is just as true continued the momentum over for their pets as it is the years: restaurant inspired Elegant Medleys (USA), with for themselves; one vegetables, rice and tomatoes, Gourmet-Perle (Europe), with perfect example is the look of grilled meat, and Fancy Feast/Gourmet/ Mon Petit soups concept (Japan), with pieces of fish and Mon Petit available garnishes. in the United States, Europe and Japan 1 Three examples of Nestlé respectively. Purina PetCare’s innovative premium products in the wet catfood segment: Elegant Medleys, Gourmet-Perle 2 (bottom left) and Mon Petit. 2 A satisfied pet owner and her equally satisfied pet.

The year in review 2013 29 Building for the future

Our history stretches back nearly 150 years, and our story has been characterised from the earliest days by a forward thinking, even pioneering approach. In part this was because our home country, Switzerland, is relatively small and did not provide the scale of opportunity that our predecessors were looking for. But rather than just move into neighbouring countries, they also went further afield to countries which, even more than 100 years after our arrival, are still considered emerging. This needed particular skills and capabilities. Our pioneering approach was also scientific, as we created new products, and even new categories, soluble coffee among them. Today, we continue to evolve and lay foundations for long-term growth. We continue to invest in our people and in the changing capabilities that we need. We continue to pioneer new products and categories. The most recent example is Nestlé Health Science and the Nestlé Institute of Health Sciences, which were established in response to our belief that there is a role for nutrition to play in addressing chronic medical conditions. Nestlé Health Science, created in 2011, offers nutritional solutions for people with specific dietary needs related to illnesses, disease states or the special challenges of different life stages. The Nestlé Institute of Health Sciences (also founded in 2011) does biomedical research to better understand human health and ageing as influenced by 1 metabolism, genetics and environment; it develops science- Smartflex (top) is the first ready-to-use, aseptically-filled, based nutritional solutions to address chronic medical collapsible tube feeding bottle conditions. with an innovative cap on the The two companies work very closely with our research market; it is unbreakable, easy to store, very convenient to and development network, the largest in the food and handle and manipulate for the beverage industry. We have 5000 people working in R&D. nurses. This is a major benefit Last year, we spent CHF 1.5 billion. We have 34 R&D for customers, while offering increased safety. It can be used facilities. In May 2013, we opened the most advanced for enteral and oral feeding. laboratories in the industry to study food-borne pathogens The design of the label enables that are harmful to health. The new labs are at the Nestlé both patient and caregiver to know how much is left in Research Centre near Lausanne, Switzerland. the bottle. 2 A member of staff at the Nestlé R&D Centre in Abidjan, Côte d’Ivoire.

30 The year in review 2013 2

The year in review 2013 31 Building for the future

In April 2013, Nestlé Health Science acquired Pamlab, Vitaflo, a company founded 15 years ago and that we a US-based company that offers medical foods, by acquired in 2010, addresses the needs of patients with prescription, for the nutritional support of patients with genetic disorders (inborn errors of metabolism) that affect specific medical conditions. Pamlab investigates nutritional how food is processed in the body. They are infrequent but science and promotes evidence which can directly persist into adulthood and represent a significant proportion affect disease management for brain health (depression of genetic disorders detected in newborns. The most and memory loss) and metabolic conditions (peripheral common of these disorders is Phenylketonuria (quite rare – neuropathy). Also in April, Nutrition Science Partners, a 1:10 000). These patients lack an enzyme needed to properly 50/50 joint venture between NHSc and Chi-Med began metabolise protein, which – if not addressed – can damage enrolling patients for a treatment for mild-to-moderate organ development and lead to severe mental retardation. ulcerative colitis. Screening of newborns with a simple blood or urine test can detect the disease and it can be addressed with a special Science-based nutritional solutions diet. Nutritional solutions play a key role in improving outcomes: Impact, a global product, is a clinically proven specialised immunonutritional substance (for oral and enteral use) for surgical and trauma patients. Impact has been proven in numerous randomised clinical trials and meta-analyses to reduce post-operative complications, infections, and length of hospital stay in patients undergoing major surgery. Clinical studies showed that the use of Impact by patients undergoing elective gastrointestinal cancer surgery reduced post-surgical infections by 36% and cut the average length of hospital stays by 2.6 days. In Switzerland, for example, this supports cost savings of CHF 1638 to CHF 2488 per patient. Meritene, available in key European markets, is an oral nutritional supplement with proteins, vitamins and minerals for adults needing special nutritional support due to ageing, illness or lack of appetite which could lead to malnutrition. The nutritional value of Meritene has proven popular with patients. In Spain, for example, in a survey conducted during 2008, almost 70% of successive consumption sales were derived from patient-driven choices. We interpret this as a high degree of customer satisfaction with the product.

Meritene, an oral nutritional supplement available in Europe. Its value has been recognised in a medical publication.

32 The year in review 2013 TODAY, NOTHING HAS CHANGED. WE CONTINUE TO LAY FOUNDATIONS FOR LONG-TERM GROWTH

Capital investments The year was another one in which capital investment ran at a relatively high level. That level will come down in 2014. We expanded capacities both in developed and emerging markets to position ourselves well for the opportunities that lie ahead. One of our biggest investments was the Nescafé Dolce Gusto Factory in Germany. Angela Merkel, German Chancellor, joined Paul Bulcke to mark our CHF 270 million investment. It is designed to process 60 tonnes of coffee 1 daily and produce approximately two billion capsules a year Angela Merkel, German – 450 new jobs are due to be created. Also in Germany, we Chancellor, joins Paul Bulcke, Nestlé CEO, for a cup of coffee extended our Wagner factory. Pizzas made there include after laying the foundation reduced fat, wholegrain, lactose-free and organic varieties, stone for a new Nescafé Dolce produced without ﬂavourings or additives. Gusto factory in Germany. 2 Other factory investments in Europe included a Maggi More coffee in evidence at the factory in Vladimir, Russia, and a new Nestlé Purina PetCare opening of the Nescafé factory factory and distribution centre near Wroclaw. It will be in Shandong province, China. This time, Paul Bulcke is joined our 10th factory in Poland and create 200 jobs. We are by Nandu Nandkishore (left), extending the Davigel factory in Noyal-Pontivy, France, as EVP for Asia, Oceania, Africa we further develop nutritionally balanced meals for hospital and the Middle East, as well as Roland Decorvet, Chairman patients. and CEO of Nestlé Greater We opened two new factories in China, with a combined China (right) and other investment of about CHF 500 million: one for Nescafé members of staff. in Shandong Province and one for Yinlu Foods in Anhui Province. This demonstrates our conﬁdence in the Chinese market and our commitment to the country and its consumers. Also in Asia, we announced a ready-to-drink beverage 2 factory in Malaysia for brands such as Nescafé, Milo and Nestlé Low Fat Milk, and inaugurated a Nescafé factory in Vietnam. We opened a coffee centre of excellence in the Philippines aimed at improving the quantity and quality of the coffee crop in a country where demand outstrips supply. It is designed as a one-stop facility to give farmers access to the best of our coffee farming technology and training.

The year in review 2013 33 Building for the future

In the Americas, we began the expansion of a dairy Greater China Region; one demonstration of collaboration factory in San Francisco de Marcorís, Dominican Republic, between our Markets and a unified approach to identifying and announced an investment in R&D facilities in Solon, talent and creating talent pipelines. USA, aimed at delivering innovations in frozen and chilled Still in Asia, our ASEAN region Market heads are running products. a programme to accelerate talent development. Designed There was little M&A activity in 2013. We sold Jenny as a complement to the existing international talent Craig, having decided that it would fare better under development programme, the STAR programme facilitates different ownership. Nestlé Purina PetCare bought and accelerates training and assignments between www.petfinder.com, the leading online site for pet adoption China, Indochina, Indonesia, Malaysia, Singapore and in the USA. Petfinder has helped find homes for 23 million the Philippines, taking advantage of a regional synergy to pets and is visited by more than 100 million pet-lovers identify, promote and develop local talent for the region. each year.

People – our future The future of our company depends on people, especially young people. In Europe, as an example of our world-wide commitment to this belief, we launched the Nestlé needs YOUth Initiative with a conference in Athens, Greece, in November. The scheme will offer jobs to 10 000 people under the age of 30 in Europe and create 10 000 apprentice positions and traineeships by 2016. We have pledged to create 20 000 positions for young people across Europe over the next three years. One in four young people in Europe does not have a job. In 2011, we founded the International Dual Career Network Association. It is growing in an impressive way: there are now more than 60 international company members, with eight network locations across Europe, Latin America and the United States. In 2014, the network will expand into Asia. To date, more than 100 spouses of mobile employees have found a job either with or through the support of member companies. This enables people to move, who would not do so if their spouse could not work. In traineeship vacancies, we want to attract a diverse candidate base. Our employer brand proposition is as an approachable and human company that recruits our future leaders on the basis of merit and qualiﬁcations while searching for the best cultural ﬁt. In the United Kingdom, we saw that a large number of Chinese students were graduating from its universities, Rapt attention: two predominantly in London. This represents a rich pool of participants at a training course at the Nestlé talent that we have begun attracting back to work for Nestlé training centre Rive-Reine, Switzerland.

34 The year in review 2013 2013 investments for growth

2 4 3 2 1 5

R&D and science-based nutritional solutions Capital investments

34 1 1 4 The orange dots mark the In April 2013, Nestlé Health In July 2013, we opened the In July 2013, a new Maggi locations of our 34 global R&D Science was strengthened expansion of a milk factory factory was opened in Vladimir, facilities. by the acquisition of Pamlab, in the Dominican Republic. Its Russia. An investment of based in Louisiana, USA. main product will be Nestlé CHF 73 million. It will produce Carnation evaporated milk. about 30 000 tonnes of Maggi 2 products a year. In June 2013, we announced 2 a signiﬁcant investment in our A new Nescafé Dolce Gusto 5 R&D facility in Solon, USA, factory was begun In China, we opened two aimed at innovation in frozen in Germany, an investment new factories, at a combined and chilled products. of CHF 270 million. investment of CHF 500 million. One, for Nescafé, was in 3 Shandong province, and the Nestlé Purina PetCare other was in Anhui province for announced a new factory Yinlu Foods. in Wroclaw, Poland, which will be built at a cost of 6 CHF 93 million and create We inaugurated a new 200 jobs. CHF 230 million Nescafé factory in Dong Nai province in Vietnam.

The year in review 2013 35 Partnerships

Nestlé is a big company, but not so big that we think we In China, our two newest partnerships are with Hsu Fu can do everything ourselves. We partner with companies Chi in confectionery and the Yinlu Foods Group in foods, that bring added benefi ts to our pursuit of excellence, either specifi cally peanut milk and rice porridge, (both 60% owned geographically or with product expertise. The following are by Nestlé). our main partnerships and joint ventures: Osem (63.7% owned by Nestlé) markets our products We have had a stake in L’Oréal for nearly 40 years – in Israel. since 1974. Until the beginning of 2014, we had a 29.7% We set up Dairy Partners Americas to combine our holding. On 11th February, 2014 , we announced the sale of abilities in the dairy market in Latin America with those 8% of our shareholding in L’Oréal back to the company. of Fonterra. This was partly to fi nance the acquisition from L’Oréal of Lactalis Nestlé Produits Frais is a fresh dairy product the 50% of Galderma, the dermatological company, that joint venture with Lactalis Group (40% owned by Nestlé). we did not already own. We will set up a new enterprise, Nutrition Science Partners Limited is a 50/50 joint venture Nestlé Skin Health S.A. between Nestlé Health Science and the pharmaceutical We also have a 50/50 stake in Laboratoires innéov, and healthcare group Chi-Med. NSP has been established another joint venture we set up with L’Oréal to produce to research, develop, manufacture and market innovative concentrated nutritional beauty supplements. nutritional and medicinal botanically-derived products with Cereal Partners Worldwide is a 50/50 joint venture access to one of the world’s leading Traditional Chinese with General Mills, which produces and sells ready-to-eat Medicine libraries. breakfast cereals outside the USA and Canada (General Mills We also have partnerships in research and development. sells inside the two countries). CPW has been building on These range from traditional partnerships with suppliers, its commitment to make whole grains the main ingredient universities and others with specifi c know-how, to the of its products and to reduce both salt and sugar. creation of our own venture funds, set up to invest in early Beverage Partners Worldwide is a 50/50 joint venture stage technologies and companies that have relevance with Coca-Cola, based on the ready-to-drink tea sector. to our Nutrition, Health and Wellness strategy. BPW focuses on Europe and Canada.

36 The year in review 2013 Nestlé in 2013 – some highlights Nestlé in society

10 7789 Policy FTSE4Good The year in review report contains forward looking statements which +8.2% +6.8% We have added 10 new We renovated 7789 products We remain the only infant reflect Management’s current views and estimates. The forward looking organic growth; organic growth; commitments in nutrition, for nutrition or health formula manufacturer statements involve certain risks and uncertainties that could cause actual water, rural development, considerations changes included in FTSE’s responsible We have renewed our results to differ materially from those contained in the forward looking sustainability and compliance investment index, based statements. Potential risks and uncertainties include such factors as Wyeth Nutrition double-digit growth in nutritional policies to drive on our performance in the further reduction of salt, general economic conditions, foreign exchange fluctuations, competitive successfully integrated emerging markets human rights, labour rights, product and pricing pressures and regulatory developments. sugars, saturated fats and responsible marketing trans fats in our products of breast-milk substitutes The brands in italics are registred trademarks of the Nestlé Group. and more Nescafé Dolce Gusto KitKat Visual concept and design No1 chocolate brand in Japan, Nestec Ltd., Corporate Identity & Design with messi&schmidt Present in roll-out continues in Brazil Photography 73 countries +8.9% Interlinks Image – cover, Nestlé S.A. Production new machines, new flavours organic growth 167 billion Leader – 33% Top 3 Genoud Entreprise d’arts graphiques SA (Switzerland) We provided over 167 billion We were ranked number We reduced overall water In March 2013, we were Paper servings of fortified products one by the charity Oxfam in withdrawals per tonne ranked one of the top 3 This report is printed on Lessebo Smooth White, a paper produced its 2013 scorecard, Behind of product by one-third global food and beverage from well-managed forests and other controlled sources certified Western Europe Africa the Brands. The survey since 2005 manufacturers in the Access by the Forest Stewardship Council® (FSC). North America recorded scored 10 food and beverage to Nutrition Index companies on their efforts to both regions double-digit improve food security grew real internal growth organic growth in challenging environments

Dairy S.Pellegrino near 30% dynamic share of senior milks sector global growth in China