Nestlé Autumn Press Conference Presentation, Vevey, Switzerland, 22 October 2009 Paul Bulcke, CEO Slide Good morning Ladies and Gentlemen, and welcome to our autumn press conference of 2009. I’d like to thank you for your interest and your presence today, and I also extend a warm welcome to all of your colleagues and investors who are fol- lowing this press conference through the webcast. You will have seen the figures for the 9 months sales of 2009 that went out this morning and you can find full details in the press release in your folder and online. I will comment on our business in a moment, with my collea- gues from the Executive Board. But first, let me, in good tradi- tion, introduce them to you. Slide To my right, Jim Singh, Chief Financial Officer. On his right Frits van Dijk, who is running Zone AOA. Next to him Luis Cantarell, Head of Zone Americas and on his right, Laurent Freixe, Head of Zone Europe. Then you have John Harris, in charge of Nestlé Waters. Next to him is Ri- chard Laube, who leads the global Nestlé Nutrition business. Slide To my left, Robin Tickle, Head of Corporate Media Relations. Next to him Francisco Castañer, in charge of Pharma & Cos- metics and Human Resources. On his left, Werner Bauer, our Chief Technology Officer, then José Lopez, in charge of Operations. Next to José is Petraea Heynike, Head of Marketing and Sales. And on Petraea’s left is Marc Caira, who runs Nestlé Professio- nal. So, before I start my comments, I give the floor to Jim Singh, who will take you through the progress for the first 9 months of 2009. Jim ************** Jim Singh, CFO Slide Thank you Paul. Once again, I am pleased to report on another period of solid broad based sales performance with increasing momentum in Real Internal Growth, driven mainly by our Food and Beverage businesses. Slide For the Total Group, 9 months year to date, Organic Growth was 3.6%, with Real Internal Growth now up to 1%. Price growth was 2.6% with acquisitions net of divestitures at nega- tive 0.6%. Therefore in constant currency, total sales growth for the 9 months was 3.0%. However, the negative currency effect remained significant at 5.2% reflecting the weakness of several major currencies against the Swiss Franc. Slide With respect to Food and Beverages, for the first 9 months, Organic Growth was 3.5%, with Real Internal Growth at 0.7%, acquisitions net of divestitures was negative 0.7%, resulting in growth of 2.8% in constant currency. The exchange effects were negative 5.5%. Nestlé’s growth performance reflects the successful outcomes of actions coherent with our strategy and build on our growth drivers as set out in our Strategic and Performance Fra- mework. This performance must be considered in the context of a decade of achievement of an annual average Organic Growth and Real Internal Growth of 6.1% and 3.6% respecti- vely – therefore the Company is achieving growth this year on top of consistent growth performance in the past. Slide Real Internal Growth is gathering momentum. The Total Growth is driven primarily by the acceleration in real internal growth as the effects of pricing taken in 2008 gradually phases. The upper line on this chart shows Real Internal Growth for the Group reached 1% for the first 9 months influenced by Q3 Real Internal Growth of 2%; for Food and Beverage, 3rd Quar- ter Real Internal Growth of 1.6% enabled the achievement of year-to-date 9 months performance of 0.7%. The 3rd quarter figures are disclosed primarily to demonstrate the acceleration in Real Internal Growth, as promised at the half year. Slide Looking at our large brands, we have about 30 Brands each with annualized sales in excess of 1 billion Swiss Francs, representing 75% of our total F&B business; virtually all are de- livering improvement in performance as the year progresses, with 63% growing above the total F&B average year-to-date performance. Programs are in place to improve the perfor- mance of all brands and, in particular, those in slower growth mode. In general, our brands, global and local, continue to win with consumers around the world. The majority of our Brands are gaining shares in their respective markets. Slide With respect to Nutrition, Health and Wellness, several of our larger brands benefit from an elaborate program of incorpora- ting Branded Active Benefits, building on 8 benefit platforms. Brands which incorporate these benefits are growing at a rate above the Group’s performance. Slide Our Popularly Positioned Product business model is now firmly established in the emerging markets, and continues to be expanded to the developed world. This model will be dis- cussed further this morning, but I am pleased to report that the PPP activities that are being monitored have experienced 12% Organic Growth for the 9 months year to date. Slide Looking now at Premiumization, our single portion luxury coffee execution, Nespresso, continues its impressive growth trajectory, with year to date at 28%. The business continues to drive growth with innovative technologies and design, and the roll-out to new markets. Nespresso sales in 2008 reached 2.2 billion Swiss Francs. With the current growth momentum, it will soon be approaching another milestone performance of 3 billion Swiss Francs. Slide Nescafé Dolce Gusto continues its growth momentum, having only been introduced in selective markets three years ago. At growth rates in excess of 50%, now in 20 markets, with close to 3 million machines sold, Nescafé Dolce Gusto is on track to achieve close to 300 million Swiss Francs in 2009. Slide Although Nestlé businesses are in growth around the world, our performance in the emerging markets - 33% of total F+B - has accelerated to 7.5% organic growth for the first 9 months. Within these markets, the BRIC markets which represent 10% of our F+B sales, are experiencing growth of 9.9%, year-to- date September. Slide Let me now go through each of our Zones. Zone AMS has delivered solid growth throughout the year with excellent performances in both North America and Latin Ame- rica and the Caribbean. In the USA, all divisions delivered both positive Real Internal Growth and Organic Growth with outstan- ding achievements in PetCare and Beverages. In Latin America and the Caribbean, strong performances in the larger markets of Mexico and Brazil more than compensa- ted for weakness in the Bolivarian Region and the Caribbean. All categories performed well particularly Petcare, Beverages and Ambient Dairy. In Zone Europe, business conditions and the environment in general, remain very challenging. In spite of these conditions, UK, France, Poland and the Ukraine continue to deliver good performance. Product categories such as Petcare, Soluble Coffee, Chilled Culinary and Powdered Beverages also delive- red strong growth. However, there is evidence of an improving trend across the region as the general economic conditions stabilize. Zone AOA organic growth remained consistent during the year at 5.8% but Real Internal Growth momentum accelerates from 0.8% in Q1 to 3.0% year-to-date September; all key product categories are contributing positively. The large emerging markets of China, In- dia and Africa - Central West Africa and the Equatorial Africa - have experienced strong growth sufficient to over compensate for weaker growth in Oceania, Japan and Malaysia. We expect the Zone to accelerate Real Internal Growth, especially in Dairy, based on com- parison to last year when the melamine crisis in China had a significant impact on growth in this product category. With respect to Nestlé Waters, the story on water is about sustained improvement, espe- cially during the last quarter enabled by excellent growth in the emerging markets - ap- proximately 13% Organic Growth - , and in France and Belgium resulting from several initiatives around key brands. Nestlé Waters have improved market shares in its major markets in Western Europe, and also in the United States where the beverage category remains weak. In Nestlé Nutrition, good improvement in Real Internal Growth and Organic Growth based on acceleration in Infant Nutrition and Healthcare in all three Zones driven by several inno- vations; NaturNes recently launched in France continues to gain momentum there and the product range is being introduced in key Western European markets with good success. Healthcare Nutrition is now on a growth trajectory which has had to overcome the effects of nearly 20% of SKU rationalization and the termination of several less profitable supply contracts. Jenny Craig is beginning to reflect some improvement but the business continues to be affected by lower demand influenced by the absence of any improvement in the level of discretionary spending. Performance Nutrition continues to enjoy high single digit RIG after refocusing the business to satisfy the needs of its growing its base of athletic consumers. When we talk about Other Food and Beverage, this category includes Nestlé Professional, Nespresso, Cereal Partners Worldwide (with General Mills) and Beverage Partners World- wide - with Coca-Cola. These businesses achieved acceleration in both Real Internal Growth and Organic Growth for the first 9 months. Nestlé Professional operates in the Out-of-Home industry, which has been severely affec- ted by the economic down turn symbolised by factory closures, high unemployment, signi- ficant reduction in Out-of-Home consumption and travel. In spite of the current business environment, we have seen sustained improvement during the last few months resulting in a year-to-date positive Organic Growth. CPW continues to deliver mid single digit organic growth while BPW is positive, but slightly lower.