Popularly Positioned Products 2011 Affordable and Nutritious 2 Ppp - Affordable and Nutritious

POPULARLY POSITIONED PRODUCTS 2011 AFFORDABLE AND NUTRITIOUS 2 PPP - AFFORDABLE AND NUTRITIOUS

AFFORDABLE AND NUTRITIOUS

Popularly Positioned Products (PPP) The PPP Business

3 Billion Consumers and Growing 3 Nestlé’s Popularly Positioned Products (PPP) are one of the main growth drivers for Nestlé in the years to come. Projects we monitor showed Science at the Service of PPPs 12.9% organic growth and sales of over CHF 11 bio in 2010. PPPs unite five fundamentals of Harvesting Nestlé’s Heritage 4 Nestlé’s vision: Nutrition, Health and Wellness; Affordable Nutrition 4 creating shared value; meeting consumer needs; Building Nutrition In through Food Technology 5 R&D innovation; and lean operations.

Nestlé Research ensures that our PPP innovations for our consumers Meeting the Need for Healthy Growth in both emerging and developed economies focus on their specific wants and needs, through nutritious, high-quality and affordable PPP Infant Formula – For Complete Nutrition 6 products. NIDO Bunyad – Unleashing PPP Potential for Kids 6 Paul Bulcke LACTOGEN Recover – Fighting Infant Diarrhœa 7 Chief Executive Officer Nestlé PPPs in Indonesia – Profile of an Emerging Market 7

PPPs are high-quality food products that From Neuroscience to Product provide nutritional value at an affordable cost and in appropriate formats to address The Quest for Umami Taste 8 the needs of some 3 billion lower-income consumers worldwide. They involve much more Taste and Pleasure than simply modifying existing products and packaging. 75 Million Every Day 8

They start with a deep understanding of target consumer needs NESCAFÉ Coffee for All 9 market by market. There is no ‘one-size-fits-all’ solution. Today, Nutritious Pleasure 9 Nestlé has grown to be the world’s biggest food and beverage PPP African Delight 9 Company in both the developed and emerging worlds. Our current PPPs spread from culinary products to beverages, to dairy and confectionery: with over 4000 products overall, sold under a number Packaging and Distribution of major global brands including MAGGI, NIDO and NESCAFÉ. The Package 10 Our PPP focus aims to accelerate and capitalise on this evolving NESTLÉ PURE LIFE Water – Simply Efficient 10 opportunity. In face of competition, the strength of Nestle Research behind our markets, our Strategic Business Units and brands gives us an edge to win with consumers and customers. Our global Nestlé The Nestlé Research Contribution to PPPs R&D Network of Research, R&D and Product Technology Centres works closely with application groups in Nestle factories to ensure Know Your Consumer Deeply 11 continuous PPP innovation across a range of Nestlé product sectors. Localise the Opportunity 11 This brochure outlines the Nestlé Research effort behind our Group- Nestlé Research – Driving PPP Innovation 11 wide PPP activity. Global R&D Network abbreviations: Werner Bauer NRC Nestlé Research Centre Chief Technology Officer PTC Nestlé Product Technology Centre R&DC Nestlé Research & Development Centre PPP - AFFORDABLE AND NUTRITIOUS 3

“For PPPs, there is no one-size-fits-all solution” The PPP Business 3 Billion Consumers and Growing

products for pure budgetary considerations. They may be pensioners/seniors; youths/students; migrants; unemployed; single parents; large families. Nestlé has long known that understanding our For these consumers, value for money is often linked consumers is vital to making products that meet their to low price. There is active competition from private real needs. The famous MAGGI Cube seasoning, now labels, store brands, discounters and market traders. 100 years old, was always such a product: affordable; Estimates suggest there are 0.5 bio less-affluent nutritious; bringing taste and pleasure to consumers. consumers in developed markets, plus those who consciously spend less on food to the benefit of other activities. Over the years, Nestlé has had many such examples. So what’s new in Popularly Positioned Products? In Source of Business brief, Nestlé decided to bring a coordinated focus PPP products address a constantly growing consumer to PPPs through a structured and global business base, already in excess of 3 billion people worldwide. approach, so as to build on and accelerate excellent local Nestlé market initiatives. Premium

PPPs target less affluent consumers in emerging Mainstream Developed markets markets (UN/World Bank definition – those with an Less affluent consumers annual purchasing power parity between US$ 3 000 Trading down and 22 000 per-capita) as well as low food spenders in developed economies. Together, they represent PPP Developing & some 50% of the world’s population. Hence, PPPs Developed markets target the biggest and fastest growing consumer Emerging consumers Trading up base in emerging markets as well as important sub- Non branded world groups in developed markets.

In addition, mainstream and premium brands can be sold in affordable The PPP consumer in emerging markets mainly formats targeted to the Emerging & Less Afﬂuent Consumer. comes from the lower tiers of the socio-economic The PPP approach is essentially market driven. Each pyramid. The buying power in many emerging market is closest to its own consumers: to know markets is increasing their individual and social needs and to be aware that with the steady the less-affluent consumers are just as varied as the growth of local more wealthy. This is true not only from market to In brief, PPP is a business economies. However, market, but also from urban to rural areas within a strategy that: food price inflation country or, in bigger markets, from region to region. has a strong impact We need to know our consumers, and look beyond on PPP consumers for their income situation to understand their real and √√Starts with strong consumer whom food accounts perceived needs and to determine what type of understanding for a major part of products or services they value. their spending. Our √√Provides nutrition and great taste focus is this big group Affordability is only one of the goals. Our PPP range with no compromise on quality of consumers, who caters foremost for nutritional needs at all ages and and safety are able to afford stages of life, as well as for local consumer tastes basic packaged food and habits. It is a paradoxically simple but complex √√Is perceived as good value for but whose needs are business model; one aligned to Nestlé’s vision as the money still unsatisfied. leading Nutrition, Health and Wellness Company and its approach of creating shared value. √√Creates financial value In developed markets, our consumer tends Focussed in the markets, the PPP strategy is √√Promotes shared value to come from one of supported by all our business functions: our several groups that Strategic Business Units, Operations, Research & buy more affordable Development, Distribution, and many others. 4 PPP - AFFORDABLE AND NUTRITIOUS

Science at the Service of PPPs

Harvesting Nestlé’s Heritage

Peter van products, packages and services. This absorption of nutrients into the body Bladeren resource is complemented by the new once they’ve been consumed. Director, Nestlé Nestlé Institute of Health Sciences. Research Centre Around this nucleus, our science Knowing our consumers deeply provides tools to understand and responding to their needs has consumers expressed and unexpressed always been the Nestlé way. Henri needs, through epidemiological, Nestlé’s baby food aimed to reduce sociological and behavioural studies “Nestlé has been putting science into high rates of infant mortality. Julius of local populations. Our R&D and products for nearly 150 years. Our Maggi’s soups and seasonings helped business colleagues throughout research on food and nutrition drives women to feed their families. Both the globe use these tools to measure this heritage forwards, outpacing our men created science-based products consumer health status and needs. competition. Our Nestlé Research offering affordable nutrition, health and These needs vary from one market Centre near Lausanne, Switzerland, wellness. and region to another, so we have along with satellites in the US, China to adapt our response accordingly. and Japan, forms the Nestlé Science The Nestlé Research Centre today Our PPP capability draws on Nestlé’s & Research network. Partnerships unites two essential pillars for success decades of experience in all aspects with top specialists in high-profile in the PPP initiative – Nutrition Science of food and beverage science. We universities, research institutes, and Food Science. The former identifies find solutions to real consumer needs hospitals and start-ups worldwide which macro- and micronutrients are through nutritious, safe and affordable ensure that our full resource is brought needed, and in what quantities. The products that can make a genuine to bear for the benefit of our PPP latter devises ways of optimising the difference for health.”

Affordable Nutrition Identifying the nutritional needs of groups of PPP consumers is important. Consider pregnant and From top lactating mothers and their infants. An infant’s early to bottom: millet,okra years are critical for normal growth and development. (or gumbo), Chronic infantile nutritional deficiencies can have a cassava root, All consumers need the same basic nutrients for lifelong impact. For the child, mother’s milk or infant yam, quinoa, mung beans. healthy growth and development, and to live an formula is their only food. So infant formulas must active life. This said, individual requirements for deliver optimum nutrition. While foods for mum must specific nutrients vary and evolve with age, physical cater for her nutritional status. Another example is activity and state of health. helping active people get through the day, where foods must provide the right level of energy. Nutrients fall into two principal categories: macronutrients, namely proteins, carbohydrates A complex picture builds up. With crops and their and lipids; and micronutrients, namely vitamins, nutrients varying on a regional, seasonal and harvest minerals and trace elements. It seems obvious that basis, and the consumer’s basic needs differing consumers get their nutrients from their food and according to local and life-style factors. Nestlé drink. Less obviously, the amounts of nutrients in Research Nutritionists must handle this complexity food crops vary according to where they are grown, to help develop nutritious and affordable products: and to climatic change from year to year or even from by understanding the global nutrient composition season to season. So, for example, the composition of local crops and by selectively fortifying products of milk differs from summer to winter. with region-specific micronutrients. 5 “Consumers in both emerging and developed markets have the same basic nutrient needs”

Building Nutrition In through Food Technology

No product, however nutritious, will be successful natural food preservation, taste and if consumers don’t like it. When manufacturing texture going back thousands of years. a product, the ingredients, their formulation, the Today, we have many ways to use it to technology and processing used must ensure safety, develop safe, convenient and nutritious nutritional value, shelf life and consumer preference. products with tastes and textures PPP products are no different. They must be tasty, crafted to give consumers what they like. high-quality and safe, as well as affordable. Beyond the sensory aspects, technology provides One route to affordability is the use of locally solutions to ensure that micronutrients are not available staple raw materials. For example: in South destroyed by processing America, corn and quinoa; in South East Asia, rice or during storage. This and mung bean; in Africa, manioc, yam, sorghum, is important for PPPs, and amaranth. We must adapt our technologies to because one of their their different compositions and processing needs. roles is to help prevent nutrient deficiencies. Fermentation is a key technology for PPP products With no ‘one-size- in emerging markets. It is a traditional process for fits-all’ solution, local deficiencies relate to different micronutrients and vary regionally. Several decades of scientific research have gone into fortification technology to develop Pierre Akely (right) from R&D Abidjan working on fermentation of cereals commonly consumed in West-Africa with Edwin Ananta (centre) and Carl Erik solutions that ensure Hansen (left) from NRC. Carl says, “We are using our extensive knowledge good uptake of any on fermentation with microorganisms from the Nestlé Culture Collection to added micronutrients. create safe, nutritious products that satisfy local tastes. Matching local taste preference is a major challenge”. Among other solutions, Micronutrient deficiencies vary regionally as shown here for zinc (Food micro-encapsulation of sensitive micronutrients and Nutrition Bulletin, 2004). In developing PPPs, Nestlé Research uses ensures that, after ingestion of the food, they pass Micronutrient Deficiency Maps from WHO, FAO and other official agencies to pinpoint specific deficiencies market by market and provide appropriate through the stomach and reach the small intestine nutritional solutions through fortified products where they can be absorbed.

One part of the challenge The ‘Big 4’ micronutrient deficiencies worldwide

Iron Zinc Iodine Vitamin A

Affects 1.6 bio people, 20% of world Affects 2 bio people Affects 190 mio including 600 mio population at risk including 285 mio pre-school children children and 500 mio school-age children and 19 mio pregnant women women

The ‘Big 4’ are considered by WHO to be the main micronutrients affecting global public health. Others May cause mental May lead to retarded May cause mental May cause blindness, like calcium, vitamin D, vitamin B12, folic acid are also impairment in growth, mortality in impairment (affects 18 impaired immunity, concerned. Micronutrient deficiency is also referred children, maternal children (diarrhœa, mio infants annually) child mortality to as ‘hidden hunger’. It often goes unnoticed until symptoms become severe. Fortified products help mortality, physical respiratory infections) prevent deficiencies. weakness 6 PPP - AFFORDABLE AND NUTRITIOUS

Meeting the Need for Healthy Growth

PPP Infant Formula – NIDO Bunyad – Unleashing PPP Potential for Kids For Complete Nutrition

In the first months of life, infants rely Pakistani consumers link the NIDO situation, my children get the very on a single food, milk. Breast milk is brand to nutrition. But in a country best in life so that they are not left best but, when children need infant where milk is delivered fresh every behind anyone else”. The consumer formula, this must provide them with day, only 4% of the 21 million children wanted more than just a product they all the nutrients they need for healthy in urban Pakistan were consuming could afford. They had an emotional growth and development. At this time NIDO milk products, mostly in the need in their hope for a better future. of rapid growth, the brain, nervous higher income families. Nestlé saw system and eyes develop, along with the opportunity to address NIDO Working with PTC Konolfingen and other internal organs. So breast milk milks to less affluent consumers. the Dairy Strategic Business Unit, and infant formulas must both provide the application group in the the right nutrients at the right time. Any The question was how to provide Kabiriwala factory developed an chronic nutritional deficiencies during the right nutrition. The National affordable iron-fortified milk powder this period may be irreversible. Nutritional Survey of Pakistan recipe for NIDO Bunyad milk – which revealed that over 30% of children means NIDO Foundation. It has the Mothers in South East Asia said, “I want are iron deficient. This is more right taste and right nutrition at the to ensure my baby receives the best prevalent in lower income areas right price. It provides a reliable and nutrition when I don’t breastfeed, where the general diet is low in iron wholesome solution for kids at risk but I can’t afford current infant formula and health awareness is poor. of iron deficiency, in line with local regularly”. requirements and needs. To know the consumer, a detailed Nestlé Nutrition asked PTC Konolfingen study was run with lower income The product reaches out to milk product experts to develop an mothers. Mothers said, “I will ensure consumers through interactive infant formula providing optimal that, in spite of our difficult financial education on iron deficiency and the nutrition that is affordable every day, offering the consumer a choice.

NESTOGEN Classic in the Philippines was the result. A formula for infants that LACTOGEN Recover – Fighting Infant Diarrhœa are not or are no longer breastfed: that provides for the basic nutritional needs of the Many babies risk suffering from milk, including breast milk; the result growing child; is fully compliant diarrhœa. This is especially true is more diarrhœa. In this downward with all national legislations; and in the low socio-economic segment spiral, the digestive system no longer is manufactured locally – in the of emerging markets where the functions correctly, which can lead to Cabuyao factory, Philipines for condition is widespread. weight loss and dehydration, and can South East Asia and in Ocotlan, be life-threatening. Mexico for Central America. Most cases of diarrhœa result from acute gastrointestinal In these severe Sold in 135 g aluminium infection. The ensuing cases, health sachets at a 15‑20% lower price inflammation damages the professionals than mainstream products, it intestinal lining: frequently provides appropriate, affordable this reduces recommend nutrition for less affluent consumers. secretion of the a lactose-free The PPP infant formula is now selling enzyme lactase; infant formula well in the first wave markets: in the the baby can such as Nestlé’s Philippines; in Indonesia as LACTOGEN no longer AL 110. However, Klasik; in Indochina as LACTOGEN completely lactose-free formula Complete; and in Mexico under the digest lactose is expensive and NIDAL brand. Rollout to other markets – the main complex to make. So is planned. sugar present in AL 110 is made in a highly PPP - AFFORDABLE AND NUTRITIOUS 7

“Chronic nutritional deficiencies in infancy can have a lifelong impact”

Nestlé PPPs in Indonesia – Profile of an Emerging Market

effect of iron fortification on health, price produced splendid results, PPP sales represent over 30% of all Nestlé sales in all backed up with TV advertising. making NIDO Bunyad milk another Indonesia. PPPs make a difference. Better nutrition NIDO Bunyad milk sales took off and promising star positively impacts consumer health, development 2009 closed at 936 tons. The volume in the NIDO and education. in 2010 was 5 times more than in house. 2009, surpassing RIG, OG and market Local products address two of the main share targets. micronutrient deficiencies: iron and vitamin A. 40% and 35% of the population respectively consume Focussed research, based on the less than half the recommended daily amount of right taste, right nutrition and right iron and vitamin A, mainly among school children and pregnant women. Nestlé’s product range in Indonesia includes: MILO Choco Blazz cereal pillows fortified with iron; KOKO KRUNCH cereal with iron, 8 vitamins, calcium and whole grains; and IDEAL DANCOW milk with iron, calcium and proteins.

Indonesia is a key PPP market with many growth opportunities. About two thirds of the total food expenditure of these emerging consumers – from $2.00 to $8.00 a day – is spent on packaged food.

Products are manufactured locally at the Keyajan factory in East Java. As part of the policy of sharing value, Nestlé Indonesia assists over 30,000 milk farmers who supply the factory with milk.

LACTOGEN Recover – Fighting Infant Diarrhœa

specialized Nestlé Nutrition factory in effective solution for the nutritional Switzerland and exported. management of infants and children with diarrhœa, mal-digestion and Less affluent consumers often turn slow weight gain. to ‘traditional cures’ like home-made rice-based feeds or diluting regular Paediatricians want a choice for infant formula or cow’s milk with different patient needs so LACTOGEN water to lower the lactose content. Recover and AL 110 infant formulas These options are nutritionally are positioned to co-exist. inadequate. They do not deliver enough energy and nutrients, The new product is the lowest resulting in malnutrition. priced on the market compared to competitors’ infant formulas and is This is why Nestlé Nutrition and PTC about 40% less than Nestlé AL 110. Nestlé Indonesia also has a programme to educate Konolfingen developed LACTOGEN Since its launch in 2010 in Pakistan emerging consumers on Nutrition, Health and Recover infant formula with a low It has increased Nestlé Nutrition’s Wellness so they can make better-informed food lactose content. The process is business substantially in a short time. choices. This includes a DANCOW parenting centre simpler, so the product can be We aim to become market leader and the sponsorship of MILO Sports activities manufactured locally avoiding import in the low-lactose and lactose-free for kids through the National Badminton Schools costs. It offers an affordable and segment by 2015. Championship. 8 PPP - AFFORDABLE AND NUTRITIOUS

Neuroscience to Product Taste and Pleasure

The Quest for Umami Taste 75 Million Every Day

Johannes le Coutre is a neuroscientist. When he joined the Nestlé Nestlé’s oldest PPP is the Research Centre, he asked, “What is the neurological pathway that MAGGI Cube seasoning. For allows consumers to taste food?” He continues, “In 2001, genes a hundred years, cubes have for the receptor of umami taste – linked to meat flavour – were fulfilled consumer needs discovered. Working with an external partner, we used these genes for taste and nutrition. The to identify flavour components that interact with the umami taste scenario behind their creation receptor. Two components were of particular interest. Then came parallels day-to-day life for the key question. Would they really have a clean umami taste? Or many PPP consumers today. Most PPP would they also activate other taste receptors like ‘bitter’ or ‘acid’? consumers in The only way to know was to try them with tasters! Taste tests at Julius Maggi was a miller. He started Africa buy one NRC, R&D Singapore, PTC Singen, R&D Shanghai and R&D Solon making seasonings and soups in the MAGGI Cube gave excellent results. Our fundamental science had given a clear 1880s when the health authorities per day winner”. in Zurich, Switzerland, asked him to help resolve a public health problem. For economic reasons, many women were going out to work and had no time to cook wholesome meals. The nutritional status and health of families was declining.

Maggi used his mill to grind peas, beans and lentils into vegetable flours that cooked quickly to make nutritious soups. But there was something missing. Taste. He knew that most people could not afford meat but craved for the meat taste – a heritage from our carnivore ancestors. This was his starting point for his legendary MAGGI Liquid Seasoning made from vegetable protein, then, in 1908 for his MAGGI Cube seasoning, now sold worldwide.

PPP consumers in Africa buy the famous cube on open markets. The stall holders – the Mamas – build up pyramids of individual cubes, eye-catching even in a crowd. They get their supplies from local independent traders and distributors, who buy in bulk from the factories, repack the cubes in smaller boxes and sell them on to the Mamas.

With each cube individually After approval by food legislation authorities, the Food Business wrapped, most PPP Unit in Vevey pushed for this innovative flavour to be incorporated consumers buy into MAGGI products where the meat taste is important. After six just one a day, years of research followed by development of new recipes, the contributing first products with the new flavour were launched in Singapore in to astonishing 2007. The innovation has since been rolled out to 15 other markets global sales of in Asia, Africa and Latin America. The MAGGI brand is carrying the more than 75 fruits of science and technology to consumers in both developing million cubes and developed economies by bringing the pleasure of great flavour every day in to both worlds. Africa alone. PPP - AFFORDABLE AND NUTRITIOUS 9

“PPP consumers enjoy the sensory indulgence Taste and Pleasure they get from the simple pleasure of great taste”

NESCAFÉ Coffee for All Nutritious Pleasure

NESCAFÉ Mixtures, MILO is an immensely popular brand such as SUNRISE, among kids and mothers. Nestlé saw an delight consumers opportunity to extend the brand into the from India to South fast growing sweet snacking segment Africa by combining in Indonesia, through an affordable, the sensory benefits nutritious, light snacking product for of coffee and school children. chicory. A dedicated R&D continuous The sweet snacking segment is highly improvement competitive, with many popular local programme aims at brands at very low prices, but not always making this affordable, high on nutrition. high quality product even better. Our challenge was to make a product, easy to afford but with a high nutritional value, aligned with the essence of the MILO brand. It builds on plant science research for coffee and chicory quality at Nestlé R&D Tours, and process We identified extrusion as the key technology to get the right balance innovation at PTC Orbe for improved extraction and between price and nutrition, using whole grains and low saturated lower raw material use. This support has helped fats. Extrusion can process high volumes at relatively low capital NESCAFÉ SUNRISE to about CHF 50 mio sales in expenditure. Consumer tests showed a clear consumer preference for 2010, with over 5 mio the MILO product compared to local competitors’ products. cups drunk every day. We started producing MILO Choco Blazz in Indonesia as bite-sized NESCAFÉ 3in1, soluble cereal pillows: coated with MILO; filled with chocolate cream; fortified coffee perfectly blended with iron and vitamin C. They were launched in February 2010 at a price with creamer and sugar, equivalent to 12 US Cents for 14 grams. is proving an ever greater hit with our PPP The product is very popular. Volumes are growing strongly, so Nestlé consumers. They find it has a good profit margin despite the low price. A ‘win-win’ situation for convenient as it offers PPP consumers and Nestlé alike. the ingredients for their favourite coffee beverage in one product. The single serve formats, the sticks or sachets, African Delight really fit their needs. The NESTLÉ CHOCOLIM instant hot Large packs can cocoa product is a popular breakfast be too expensive drink in Africa. Apart from the and difficult to keep fresh, so single packs are a pleasing chocolate taste, it contains good answer. Displayed individually or in chains sweet whey powder, which offers the in traditional outlets, singles play a critical role in benefit of soluble whey protein. helping these consumers enjoy their coffee. We manufacture it in the Tema factory Our R&D programme keeps the quality ingredients in Ghana using vacuum oven drying. intact but ensures affordability via more efficient Oven drying is a relatively low cost and processing and lower packaging costs. More robust batch-processing technology, affordable laminates protect the product, while well adapted to the production volumes improved machines lower manufacturing costs, required. This, along with using a minimize packaging use, reduce weight variation plastic pouch package, contributes to and improve operational reliability. affordability. 10 PPP - AFFORDABLE AND NUTRITIOUS

Packaging and Distribution

The Package NESTLÉ PURE LIFE Water – Simply Efficient

Packaging innovation revolves around consumer satisfaction. We must provide quality packaging that delivers not only on price, but also protection, convenient use and minimal impact on the environment. N E S T L É brand established a name for quality PURE LIFE and value. It became US market leader Consumer communication demands water was in 2008/09, contributing some 10% that we design visually attractive launched in of NESTLÉ WATERS’ global turnover packages. These must clearly show 1998 in the in 2009. It now sells in 40 countries Nestlé branding through packaging e m e r g i n g - across five continents, as NESTLÉ systems that are easy for retailers to c o n s u m e r PUREZA VITAL water in Latin America, display in their shops and markets. e n v i r o n m e n t as NESTLÉ AQUAREL water in most of Pakistan to of Europe, as NESTLÉ VERA water in The package is much more than a provide healthy family hydration with Italy and as NESTLÉ PURE LIFE water container. It must protect from heat, great taste. But PPP low food-spend elsewhere. light, humidity, contaminants and consumers in developed markets form microorganisms. It must maintain an ever-growing segment in developed Turkey provides a recent example of a product quality and safety right up to economies and have the same needs. local PPP water, ALACAM, launched the moment of consumption. It must in 2010 and offering its economic, be as light as possible. Yet be resistant The product was created based on smooth tasting and healthy image. enough to withstand mechanical PPP thinking: take a local water supply; ALACAM water is sold through forces in packaging machines, and remove impurities; microorganisms 143 Water Shops, owned by our shocks and abrasion during handling. and off-flavours; and add minerals distributors or by Nestlé, in 19 Turkish to the pure water for nutrition and a cities. The shops are like warehouses Nestlé Research packaging designers locally adapted taste profile. Getting with a reception desk. They sell water develop novel solutions that provide the right taste was the hardest part. in 20 litre bottles, which are delivered aesthetic and functional benefits for Different geographical regions have to offices and homes or collected the PPP retailer and consumer. different tastes, so Nestlé Research by customers at the reception desk: Packaging engineers and scientists flavour scientists had to tailor waters to simple, efficient, and with a high- look for alternative materials that suit regional tastes. quality, affordable product. do everything existing packages do, but with less cost and lower Launched in the US in 2003 as 0.5 environmental impact. litre bottles at about half the price of NESTLÉ international brands it quickly A package is more than what carved a place in the PPP segment. you see. It is a world in itself. Local production, lightweight bottles Nestlé Research is part of and limited secondary packaging that world. ensured a competitive price as the PPP - AFFORDABLE AND NUTRITIOUS 11

The Nestlé Research Contribution to PPPs

Know Your Consumer Deeply

Nestlé Research – Driving PPP innovation Nestlé Research works closely with our partners in our businesses and markets to build an ever clearer of picture of our ‘PPP/low food spender consumers’ and their specific Remaining the world‘s leading needs. We have developed tools to chart consumer Nutrition, Health and Wellness behaviour: their expressed and unimagined needs; their Company demands that we offer micronutrient status; how they shop; what they buy; how products our consumers want and they use products. This input gives us a strong basis for love all around the globe. creating innovative ideas and concepts. For decades to come, major growth Great concepts need to be validated before development potential lies in the emerging markets begins. For this, we have other tools to measure consumer and affordable products. For Nestlé response, such as assessing their preferences and Research this means a significant part of our innovation measuring their nutritional status. drive throughout our R&D Network must favour emerging consumers. We recognised this long ago. Our PPP strategy We must develop recipes meeting regional tastes and support is strongly complemented by our R&D Centres in textures, whilst delivering solutions providing for the Abidjan, Beijing, Queretaro, Santiago and Shanghai. nutritional status of a population in specific nutrients. All geared to local circumstances and affordability. Our centres in China focus on the world’s second largest and most rapidly growing economy. They work on bringing With a constantly growing world population, especially in innovative science to traditional Chinese remedies and emerging markets, Nestlé Research is also concerned with translating Chinese approaches to nutrition and cuisine into macronutrient security linked to water availability. Water is benefits and delights for consumers worldwide. Through often a major issue in the ability to grow crops and process them, we can also benefit from the long reputation of China products. Micronutrients prevent the ravages of hidden as a reliable source of affordable machinery and materials. hunger. Macronutrients provide the proteins, carbohydrates and lipids people need for growth and as the fuel for their To accentuate our drive, we are now building a new R&D daily activities. Centre in India dedicated to PPP innovation in culinary, beverage, dairy and cereal products. It will work with other Nestlé R&D centres to create relevant innovations and disseminate know-how. India offers a great diversity Localise the Opportunity of consumer demand with over 14 different major cuisines and a variety of nutritional needs. It has excellent universities and research institutes for strategic alliances and to provide local scientists and engineers. It offers raw material expertise in spices, cereals, vegetables, tea and Often an imperative part of PPP success is moving Ayurverdic ingredients. In a fast-growing economy that processing closer to the consumer by using simple, easy to will soon be more urban than rural, its food consumption operate, transportable manufacturing and packaging lines. market today is a massive $300 billion annually. Then we can do as much processing as possible with local raw materials and packaging solutions close to where the We have so many reasons to be confident in Nestlé product will be sold. Research, its range of R&D facilities and their ability to make the difference in meeting the highly specific needs of We are working with thousands of local farmers on Good emerging and low-food spend consumers. Farming Practices, e.g. with East African farmers who lose up to 40% of their wheat crop due to fungal plant diseases. Johannes Baensch Nestlé Research’s plant scientists in Tours, France are world Senior Vice-President, Head of R&D leaders in plant selection, breeding and multiplication. They provide valuable support in Nestlé’s coffee and cocoa plans, but also to farmers of root and grain staple crops. “Our Nestlé Markets have created innovative approaches to reaching their consumers”

Whilst innovative science & technology are vital building blocks in PPP innovations; the business opportunity is realised market by market .

Our Markets must have the right organisational set-up for success. This involves not just product and package, but also lean operations, branding and communication, pricing, and great routes to market.

Our technical innovations are matched by creativity in manufacturing, marketing and sales, and making our products available to our valued consumers.

Frits van Dijk Executive Vice President for Zone Asia, Oceania and Africa

Editorial References Direction and editing: Clive Barnes Texts: Ian Horman, Visualising Complexity, Blonay Graphics: Danielle Wulliemier, Printing: Just4You, Pully Presses Centrales Lausanne, Renens