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AcceleratingGrowth throughInnovation and Premiumization

Kohzoh Takaoka

Chief Executive Officer

Nestlé Japan

60

70

80

90

100

110

120

0

100

200

300

400

500

600

1980 1985 1990 1995 2000 2005 2010 2015

58

Sources: IMF, Cabinet Office

GDP (JPY Tri.)

GDP

GDP deflator

(index: 2005=100)

GDP deflator

Population (mio.)< 65 yrs.

Population

0%

5%

10%

15%

20%

25%

30%

110

115

120

125

130

1980 1985 1990 1995 2000 2005 2010 2015

% <65 yrs people

Nestlé Japan: Delivering growth in aging and shrinking developed market

59

2011 2012 2013 2014 2015

Nestlé Japan: Food and Beverages delivering solid growth

CAGR (11-15) + 3.4%

2011 2012 2013 2014 2015

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Nestlé Japan: Strong Improvement of profitability in Food and Beverages

+44% vs. 2011

19.8 23.1 27.6 32.4 34.4 36.512.5

15.518.9

19.8 20.8 2142.1 31.3

31.9 27.9 26 24.1

25.6 30.121.6 19.9 18.8 18.4

1980 1990 2000 2010 2020 2030

Increasing single / couple households (% of households)

Single Couple Parent+child(ren) Others

61

Japan: Aging population / changing lifestyles driving shift to single households

Sources: Statistics Bureau, Ministry of Internal Affairs and Communication

62

18

32

Single

household

General

household

(excl. single)

% of total household food expenditure

Eating-out expenditure (¥K/year/ person)50 161

Japan: Single households driving shift from family to individual consumption

Traditional

Family

In-home cooking

Now and Future

Single

Prepared OOH

General vs. single household

eating expenditure

Total household

Source: Nikkei Business, MIC

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Nestlé Japan: Accelerating growth in the 21st century

New Reality New Customer Problem Solution

Individual coffee

consumption

Shift to Out-of-home

Preparation for

each cup of coffee

is troublesome

Non-availability of

good-quality coffee in offices

at affordable price

System solution

Nescafé

Ambassador

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NESCAFÉ single serve systems: Solving single household problems

NESCAFÉ Gold Blend Barista NESCAFÉ Dolce Gusto

To provide coffee in offices with

affordable price per cup

To energize communication in many

communities

To co-create new values with

NESCAFÉ Ambassador

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NESCAFÉ Ambassador: Innovating how we work with consumers OOH

Nestlé Investor Seminar 201666

250’000 ambassadors

Serving 2.5 mio people every day

1 billion cups served in 2015

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NESCAFÉ Ambassador: Innovating how we work with consumers OOH

VS

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The New Reality in Japan: Price polarization in the FMCG Market

Chocolatier National Brand

New Reality New Customer Problem Solution

Kit Kat STUDiO in

collaboration

with local

chocolatier

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Nestlé Japan: Accelerating growth in the 21st century

Luxury chocolatier

chocolates are

booming

National brands

being commoditized

having no

craftsmanship

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x20

Kit Kat Chocolatory: Introducing craftsmanship to national brands

1,500JPY/kg

28,600JPY/kg

71 Nestlé Investor Seminar 2016

• Gift wrapping, message card

• Multiple flavour assortment gift box

• Packaging engraving service

• Laser engraved chocolate

Kit Kat Chocolatory: Enhanced availability through e-Commerce

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• New business model

(beyond products)

• Digital

Innovation & Renovation offer customers new solutions

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Further Innovation & Renovation to come

NESCAFÉ Dolce Gusto matcha Green Tea

New System Solution by IoT

“Real” Japanese product using traditional techniques available in single serve

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NESCAFÉ Dolce Gusto Matcha Green Tea

EC Purchase support

Tama II 2016 launch Maintenance support

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New System Solution by IoT

IBM Watson powered

Big Data & Analytics Artificial Intelligence Cognitive Knowledge

Connecting people

Connection hub to enrich NESCAFÉ Experience In Home & OOH

EC Purchase support

Connection hub to enrich NESCAFÉ experience In-home and Out-of-home

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4 Key Takeaways

NEW REALITY – CHANGE IN CONSUMERS PROBLEMSNew reality changes the problems of our consumers and offers the possibility to develop

true innovations through delivering of new solutions

2INNOVATION BEYOND PRODUCTS – INTERNET & AIInternet and Artificial Intelligence allows us to solve our consumers new problems and

delivers growth opportunity

3INNOVATION BEYOND PRODUCTS – NEW BUSINESS MODELNESCAFÉ Ambassador: Bringing good-quality coffee, in a convenient way and at

affordable prices into the office environment

4PREMIUMIZATION – CHOCOLATORYThe combination of national brands and craftsmanship offers new opportunities to deliver

more value to our consumers