Procurement - Nestle

Procurement f Mr. Kevin Petrie Head of Procurement

These slides differ to those shown at the Nestlé Investor Seminar 2011 7 June, 2011

Nestlé Investor Seminar

Disclaimer This presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.

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Agenda   

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Procurement objectives and Nestlé spend Changing environment and managing commodity price trends Value chain and Procurement impact Accelerating leverage Responsible Sourcing Building on our People’s Capabilities

7 June, 2011


Nestlé Spend 2010

l

CHF 60 Billion S&IM others including Marketing, Sales, Contract Manufacturing

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The Changing Environment and Price Trends 

Global Growth (IMF) – 4.4% 2011 – +/- 4.5% through 2014

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Investment funds Currency Political Crisis Weather (El Niño/La Niña) Biofuel Increased Volatility

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Agricultural Feedstock to Biofuel is Significant

Share of Feedstock Used Globally in 2010 for Biofuel %

45.0 40.0 35.0 30.0 25.0 20.0 15.0

40.8

21.4

18.4

13.1

10.0 5.0

2.9

0.5

0.0

Feedstock Sources: OECD, FAO, EIA

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Unprecedented Price Increases in Nominal Terms

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Inflation adjusted: In 5th Commodity Boom Cycle

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Commodity Market Volatility has Increased Nestlé Monthly Commodities Index and Volatility % Nestlé weighted price index*

Monthly high-low change %

High Low Volatility

Period

* Market price, not price paid by Nestlé

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% Average Volatility and Range

CHF Value (Bil)*

2000 - 2005

12.4 (8 - 22)

(0.8 - 2.2)

2006 - 2010

16.4 (8 - 35)

(0.8 - 3.5)


Responsible Sourcing

For high risk spend categories

Direct engagement with 556,000 farmers

Audit Programme vs. NSC

E.g. coffee, cocoa, Milk

2010/2011: 1735 3rd party audits of key suppliers

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Nestlé Responsible Sourcing

Traceability Programme

Summary - Anticipating the Changing Environment and Creating Competitive Gaps  

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Provide forward looking information by business & commodity Dynamic Forecast 6 quarters forward and annual 3 year view – Nestlé began managing 2011 in Summer 2010 Risk management strategies – futures and options Total Cost Optimization - Procurement with technical, with R&D specifications, yields, recipes,… Strategic Sourcing enables the delivery of competitive gaps in the value chain Accelerating Leverage – GLOBE, Procurement Best Practices, and NCE.

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Responsible Sourcing Building on the Capabilities of our People 7 June, 2011


Procurement f Mr. Kevin Petrie Head of Procurement

7 June, 2011
