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1 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Nestlé PTC Orbe
An IntroductionNestlé Investor Seminar 2003
Bringing Innovative Bringing Innovative Bringing Innovative Solutions to the consumerSolutions to the consumerSolutions to the consumer
2 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
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.
3 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Leadership in Science and Technology are vital for future growth and success of Nestlé
“Nestlé is not just a “creating demand” and “ensuring supply” company.
R&D, as well as proprietary technologies and manufacturing skills, are vital elements of our long-term success”
P. Brabeck
4 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
PTC Orbe’s Role PTC Orbe’s Role & Organisation& Organisation
Nestlé R&DNestlé R&DSuccessSuccess--Stories Stories
PTC Orbe’s ActivitiesPTC Orbe’s Activities
PTC Orbe - An Overview
5 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
The PTC is an R&D centre which,
• Product and process development• Industrialization• Technical assistance
in one location, has the critical mass of technical experts to contribute to long term growth of sustainable economic profit by:
6 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Key staff at PTC Orbe are experienced leaders in their fields
Management Services Pilot Plant
Coffee
soluble coffeemixtures
R&G coffeemanufacturing
support
Scientific Support
Electricity & Automation
Engineering Packaging
Beverages
mixescocoa, malt bev. manufacturing
support
Cerealsinfant cereals
all family cerealscereal bars
CPWmanufacturing
support
7 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Our operating spirit will help us meet the challenges of a fast changing industry: focused, fast and flexible
Ensure that the ConsumerConsumer and the ProductProduct are in the center of our activities
Ensure that we addadd and create Valuecreate Value
Ensure we are part ofpart of the Business System, aligned toaligned tothe Business strategy and understandunderstand the Business we work with.
Ensure Quality AssuranceQuality Assurance and Consumer PreferenceConsumer Preferenceare our priorities
Treat the Operating Companies as clientsOperating Companies as clients and provide them with an unparalleled level of service
Develop people and competenciesDevelop people and competencies at all levels
8 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
PTC Orbe supports an important part of Nestlé business
6%• Pharmaceuticals
12%
• Chocolate• Confectionery• Biscuits
18%
• Cooking Aids• Prepared Dishes
• Milk Products• Nutrition• Ice Cream
26%
• Beverages
26%
• PetCare
12%
Sales by product group
9 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Innovation and renovation are priorities for the entire company
"Innovation and renovation require collective efforts of the entire company, Marketing, Commercial, Production and R&D, driven by an output orientated aspiration for product and process development and commercialisation".
(P. Brabeck)
10 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Innovation and Renovation is strategic to Nestlé’s sustainable competitiveness
ProprietaryProprietaryProducts and ProcessesProducts and Processes
Innovation/Renovation
Consumer Consumer InsightInsight60/40+
Product Product CostCost--StructureStructure
Target 2004+, HPF
Business Input
Competitive Advantage
11 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
EngineeringEngineering
PackagingPackaging
E&AE&A
Scientific Scientific SupportSupport
Management Management ServicesServices
Pilot Pilot PlantPlant
PTC Orbe’s Organisation
CoffeeCoffee
CerealsCereals
BeveragesBeverages
12 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
PTC Orbe is a leading centre within the R&D network
Largest PTC~300 permanent R&D employees CHF 80 Mio Operating Budget Truly international environment, 27 nations
Privileged geographical position with respect to NRC, Nestec, CPW and Nespresso
13 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Knowledge creation in NRC supports product development in the PTCs
“ As with all centers, the underlying scientific research to support the health, nutrition, quality, and social health, nutrition, quality, and social satisfaction of productssatisfaction of products is derived from work done at the Nestlé Research Centre”
Rupert Gasser
14 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Universities
PTC/R&Ds Products andTechnologies
PTC/R&Ds Products andTechnologies
SBUs MarketsSBUs Markets
Knowledgebuilding
Product development and business supportOutside
Nestlé
Research Groups
Consultants
etc
Specialists
•
•
•NRC DepartmentsNRC Departments
....and in turn support to business
15 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Knowledge creation in NRC drives product development…...
BUSINESSBUSINESSSUPPORTSUPPORT
B U S I N E S S E SB U S I N E S S E S
BASICBASICRESEARCHRESEARCH
NRCNRC Bio and Analytical Science Food and Consumer Interaction Plant Science Quality & Safety Assurance Food Science Pet Basic Research Nutrition & Health
DEVELOPMENTDEVELOPMENTPILLARSPILLARS
PTC ORBEPTC ORBE
• Soluble Coffee• Beverage Mixes• Milo• Cocoa Beverages• Coffee Mixtures• NN products/R&G Coffees• Foodservice Beverages
R&D OHIOR&D OHIO
• Soluble Coffee• RTD Coffee• Coffee Concentrates• Tea• Juices• Non Dairy Creamers for Beverages
PTC KONOLFINGENPTC KONOLFINGEN
• Aseptic Milk BasedBeverages
• Beverage Creamers
16 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
R&D balances global and local needs in an Innovation / Renovation Partnership
R&DPTCs
R&D CentresNRC
CENTRESBUCT UnitsZones
MARKETSMarketing
ProductionApplication
GroupsDriverDriver ImplementerImplementer
ProviderProvider
17 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
...and is bridging ....
R&DPTCs
R&D CentresNRC
CENTRESBUCT UnitsZones
MARKETSMarketing
ProductionApplication
Groups
DriverDriver ImplementerImplementerProviderProvider
GLOBALGLOBALSTRATEGICSTRATEGIC
LOCALLOCALTACTICALTACTICAL
18 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Operating companies, joint ventures, etc, are clients of Nestlé R&D
R&DPTCs
R&D CentresNRC
Globallylinked
through SBUCulinary
Ice cream
Joint ventures
CPWBPW
Regional organisations
NICEetc.
Global operating
businessesNestlé waters
Nespresso
19 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
In today's business Nestlé integrates outside partners
R&DPTCs
R&D CentresNRC
CENTRESBUCT UnitsZones
MARKETSMarketing
ProductionApplication
Groups
Universities
Governmental Bodies
Suppliers
AssociationsConsultants
Consumer agencies
Copackers
Other companies
20 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
ConsumerInsight
The R&D working program is defined together with the SBUs, Markets and Zones
Deliver SupportExplore
ScientificResearch
IdeaGeneration
Defined by strategic areas of interest
Defined byspecific projects
Defined byspecific issues
Technology
CompetitiveSituation
IntellectualProperty
Regulatory Situation
Gate1 Gate
2
21 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
PTC Orbe - An Overview
SuccessSuccess--Stories Stories
PTC Orbe’s Role & Organisation
PTC Orbe’s ActivitiesPTC Orbe’s Activities
22 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Key Product area Coffee at PTC Orbe
Coffee
23 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
NESCAFÉ Building Blocks are the starting point for new developments
Building blocksGreen coffee quality
Decaf.Blend / Roasting
Grinding
Aroma technologies
Aroma stability
ExtractionCentrifugation
Extract HandlingEvaporation
Freeze-dryingSpray-drying
AgglomerationNew Textures
Green coffee Processing
Aroma/Flavour Technology
Extraction
Texturisation
Packaging and delivery
Qua
lity
Impr
ovem
ent /
C
onsi
sten
cyC
ost I
mpr
ovem
ent
COMPETITIVE
ADVANTAGE
2003 2004 2005
Key development axes
24 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
NESCAFÉ 1952-2003
1952
19652002
PTC Orbe continuously renovates and innovates, strong established brands
2001
25 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Key product area beveragesat PTC Orbe
Beverages
26 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Core competence
areas
Product Attributes
Competitive AdvantageCompetitive Advantage
Structure, Process, Flavor, Sensory, Enzymology, Nutrition
Gas entrapment
&foam
formation
Foam Flavor Texture Nutrition
Concentrationdrying
structurisation
Aroma generation
in-corporation
& protection
New technology
& technology
transfer
Beverages -providing market leadership opportunities
ProprietaryProcesses
+Components
Branded active
benefits BAB
27 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Nestlé offers a broad range of Nescafé Coffee Mixes
3 in 1'sCafé au lait/con leche
Non Foaming
'Fun' rangeFrothé, Latte
Cappuccino
Foaming
Soluble Coffee Mixes
28 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Delivering a competitive edge for Coffee Mixes
Building blocks Development
Foam
Whitecomponent
Coffee
COMPETITIVE ADVANTAGE
Quality Improvement
Quality Consistency
CostImprovement
BAB
29 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Milo and NESQUIK
PTC Orbe continuously renovates and innovates, strong established brands
30 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Delivering a competitive edge for MILO, NESQUIK
Building blocks Development
Nutrition
COMPETITIVE ADVANTAGE
Quality Improvement
Quality Consistency
CostImprovement
Flavour
Texture
Convenience& Novelty
31 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Key product area Cereals at PTC Orbe
Cereals
32 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Technology and product developmentare driving our cereal business
• Infant, Junior & All Family Cereals
• Breakfast Cereals (CPW)
• Cereal and Performance Bars : CPW, PowerBar, Nestum, Nesvita, etc.
33 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
DevelopmentPillars
Consumerbenefits
Competitive AdvantageCompetitive Advantage
Intrinsic cereal
nutrition
Technical support
60/40 Support
Various technologies
SHAPE FORM
TEXTURE FLAVOUR
WELL BEING NUTRITION
Nutrition & Health Flavour & TextureNRCRESEARCH
Cereals -providing market leadership opportunities
34 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Packaging
Packaging at PTC Orbe
Beverages
Cereals
Coffee
35 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Packaging research
Consumerbenefits
Competitive AdvantageCompetitive Advantage
Suppliers / NRC / Universities /CT-QM / Legal / Patent / Benchmarking
Product / Packaging interaction
Brand awareness / Packaging solution / Product quality
Packaging equipment
Design Packaging material
DevelopmentPillars
Packaging -providing market leadership opportunities
36 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Nestlé R&DSuccess-Stories
PTC Orbe’s Role & Organisation
PTC Orbe’s ActivitiesPTC Orbe’s Activities
PTC Orbe - An Overview
37 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
The success of R&D reflects in 60/40 + tests and growing product volumes
Consumer Insight
6040
Development
Deployment
Product
Basic Research
+
38 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Foam Booster is creating a new beverage generation
Good foam quality
Pleasure
Solid gasphase interaction
60 40
Industrialisation in several markets
FrotheCappuccino
Technology & product development,
Product
Deployment
Development
Basic Research
ConsumerInsight
39 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Market DateSweet Cappuccino France 9/00
France 1/01Germany 9/00United Kingdom 12/00
Unsweet Cappuccino United Kingdom 12/00Spain 9/00
Frothé Mocha United States 1/01Frothé Vanilla United States 7/02
Cappuccino and Frothé with Foam Booster achieve clear consumer preference
☺☺
☺☺
☺☺
☺☺
Preference
40 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
….and show high volume increase after product innovation
0
100
120
140
160
180
200
Switzerland
before after
%
+20% +30% +27% +25% +76%
Italy Portugal Spain Belgium
12 months before and after the launch
+93%
Japan
before after before after before after before after before after
41 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
In Home Premium Espresso Quality
and Convenience
NESPRESSO, high quality coffee system is satisfying our consumers
System developmentProduct development
New factory
ClassicProfessional
Rapid growing business, ~30%/Year
Material Science, packaging, physical properties of coffee, foam structure
Product
Deployment
Development
Basic Research
ConsumerInsight
42 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
100
200
300
400
500
600
•1940 92 94 96 98 00 •'00
000 Mio capsules
Nespresso coffeedevelopment1990 - 2002
NESPRESSO PROFESSIONAL
1990 2002
Continuous Technical Evolution...
700
800
900
1000
NEW FACTORY IN ORBE
CONCEPT MACHINE
LIMITED EDITION PRODUCT RANGE
RISTRETTO PRODUCT
SPECIAL CLUB PRODUCT RANGE
43 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Growing market share
Technology and product development are driving our cereal bar business
on the go, energy, nutrition, performance
Technology development,Bar binder
Industrialisation
SveltessePowerBar
Active ingredients, nutrition
Product
Deployment
Development
Basic Research
ConsumerInsight
60 40 +
44 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
General preference before product launch in France
achieved ☺
SVELTESSE cereal bars achieve a clear preference before product launch
45 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
POWERBAR is growing its business through new product launches
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002p
Revenue ($MM)
PowerBar Performance
Power Gel
HarvestPria
ProteinPlus
Dipped Harvest
Acquisition of PowerBar by Nestlé
46 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
Introducing new aroma technologies keeps NESCAFÉ a successful product
Improved cup quality, brew like
60 40
Industrialisation in several markets
NESCAFÉ
Aroma technology development
Aroma stability, coffee aroma key compounds, aroma release kinetics
Product
Deployment
Development
Basic Research
ConsumerInsight
47 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
NESCAFÉ keeps clear preference with introduction of new aroma technology
These technologies allow us to achieve clear
consumer preference
☺
48 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
50
100
150
200
250
300
•1940 50 60 70 80 90 •'00
000 tons
Nestlé soluble coffeedevelopment1938 - 2001
PURE WITHOUT MALTODEXTRINS
BATCH FREEZE DRIED GERMANY
AGGLOMERATION
SEMI -FAST ROASTING
EDEN JAR; NIRVANA JAR
CONTINUOUS FREEZE DRYING FOR TASTERS CHOICE USA
GLASS JARS AND INERT GAS PROTECTION
NEW EXTRACTION
CONTINUOUS DECAFFEINATION
PROCESS ELIMINATES PROCESS FLAVOURSCAPPUCCINO INTRODUCTION ITALY
FOAMING CAPPUCCINO INTRODUCTION GERMANY
1938 2001
REDESIGNED JAR
GREEN COFFEE UTILIZATION OPTIMISATION
COFFEE CONCENTRATE JAPAN
WATER DECAF SWITZERLAND
Continuous Technical Evolution...NEW AROMA
TECHNOLOGY
49 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
In conclusion
Our R&D program/project portfolio is > aligned to the business, > based on consumer insight and > focused on products and brands, to achieve> incremental earnings and> sustainable sales growth.
50 Name of chairmanCORPORATE TECHNICAL PRODUCTION AND R&D PTC ORBE
PTC ORBEPTC ORBEBeveragesBeveragesCoffeeCoffee
CerealsCereals