frits van dijk and kim jeffery - nestle
TRANSCRIPT
Nestlé Investor Seminar
Nestlé Waters Frits van Dijk and Kim Jeffery
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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.
Nestlé Investor Seminar
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Nestlé Waters 2001 key figures
2001 Key Figures
Sales (CHF) 7.5 bio
RIG 9.1 %
Organic Growth 11.7 %
Profit Margin 8.3 %
Market share (value) 16.3 %
Employees
Local
Brands
76%
Nestlé
Brands
2%
International
Brands
22%
Out-of-
Home
30%
Take
Home
54%
HOD
16%
Europe
45% North
America
48%
Latin
America
3%
Asia &
ME
4%
By region By channel By brand
21,300
Nestlé Investor Seminar : Frits van Dijk
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Nestlé Waters Jan-Jun 2002 key figures
Europe
44%North
America
49%
Latin
America
2%
Asia &
ME
5%
Out-of-
Home
30%
Take
Home
53%
HOD
17%
Local
Brands
77%
Nestlé
Brands
2%
International
Brands
21%
By region By channel By brand
Jan-Jun 2002 Key Figures
Sales (CHF) 3.9 bio
RIG 8.7 %
Organic Growth 8.2 %
Profit Margin 9.4 %
Nestlé Investor Seminar : Frits van Dijk
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Nestlé Waters objectives
Annual growth higher than total water market: 6 to 8% p.a.
- Achieve market share growth and value creation
- Reinforce worldwide leadership
Improve profitability to the Nestlé Group average
- Profitable volume growth
- Productivity / efficiency improvements in:
- Production
- Distribution
- Structures
- GLOBE implementation
Nestlé Investor Seminar : Frits van Dijk
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Nestlé Waters strategy (I)
Growth
Strengthen position in existing NW markets through
- internal growth with innovation & renovation
- priority to markets delivering margin opportunities
before volume (North America, Europe, Middle East)
Enter selected emerging markets through
- launching Nestlé Pure Life
- strategic acquisitions
HOD development in Europe, Middle East and selected
emerging markets (emphasis on acquisitions, with some
greenfield approaches)
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Nestlé Waters strategy (II)
Brands
Three axis (international premium brands, Nestlé brands and local
brands) enabling
- to compete in all market segments
- with a wide variety of price levels
- in all distribution channels (TH / OOH / HOD)
Channel distribution Penetrate all possible beverage channels, particularly in the
expanding on-the-go market
Expand in HOD
Expand regional and worldwide supply agreements with
international customers (airlines, theme parks, hotels groups)
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Nestlé Waters North America
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North America position within Nestlé Waters
% of revenue (2001)
48%
NWNA
More profitable than the Nestlé Waters average
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Complete market coverage as competitive
advantage
• Channels
All retail
Home & office
• Package segments
Pet
5 Gallon (H&O)
Bulk
Glass
• Brand segments
Premium
Popular
Value
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Complete package offering
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High revenue growth
15.8%
19.8%
14.9%
8.8%
1.7%
0.7%
1.0% 7.9%
0.5%
1998 1999 2000 2001
Acq.
Price
RIG
(0.9%)
14.9%
20.8%
11.0%
23.5%
Revenues
Nestlé Investor Seminar : Kim Jeffery
$1.3B $1.5B $1.7B $2.1B
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% profit versus revenue growth
11%
24%
22%
29%
2000 2001
% Revenue growth
% Reported profit growth
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26.4% 27.9%
28.4% 29.4%
20%
21%
22%
23%
24%
25%
26%
27%
28%
29%
30%
31%
1998 1999 2000 2001
NWNA market share evolution
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Total bottled water market Market share
1998
Market share
2001
All Others
55.8%
NWNA
26.4%
Danone
14.2%
Aquafina
3.6%
All Others
39.8%
NWNA
29.4%
Danone
13%
Aquafina
9.5%
Dasani
8.3%
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Total 2001 revenues $2.1 billion
Home & office
(tap water replacement)
31%
69%
Retail channels
(refreshment)
$648 million
$1,455 million
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Route delivery
Deliver water to 1.4 million customers
Over 1,800 of our own vehicles
From 70 branch locations
Make 18mm deliveries annually
Receive 5.5mm phone calls
Logistically challenging
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US bottled water industry
Nestlé Investor Seminar : Kim Jeffery
2.3%
32.9%
23.4% 11.0%
28.5%
76.6%
22.6%
2.7%
PET +30.0%
Bulk +4.5%
3/5/6 Gallon +4.1%
All Other
Vending +1.6%
Dom Sparkling - 0.1%
2001 % 2001 Source of Industry Growth 2001
Make Up by Growth Package
Imports - 10.1%
PET
100% 100%
Source: Beverage Marketing - Volume Basis - 2001
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NWNA revenues ($bn)
0
0.5
1.0
1.5
2.0
2.5
1998 1999 2000 2001
PET
5 Gal. / H&O
Bulk
Glass
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All price points
Premium: Perrier, San Pellegrino
Popular: Poland Spring
Zephyrhills
Deer Park
Arrowhead
Ozarka
Ice Mountain
Value: Aberfoyle
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Go to market strategy is low cost and
advantaged
• Lower manufacturing costs
Vertical integration
Lower weight water specific packaging
High speed dedicated lines
• Lower cost to market
Warehouse delivered
Hybrid broker/direct sales
Club stores act as value added distribution outlets
• Retailer margins nearly double DSD trade margins
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Brands do matter #1 Southeast U.S. #1 Northeast U.S.
#1 Pacific U.S.
#2 Sparkling Water U.S.
#1 Southwest U.S.
#1 MidAtlantic U.S.
#2 Northeast U.S.
#1 Midwest U.S.
#1 Sparkling Water U.S.
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Brands have strong consumer appeal
• Spring water makes us different
- Naturalness
- Authenticity
- Heritage
- Taste
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Repositioning Aberfoyle
• Converting Aberfoyle over next 18 months to Nestlé Pure Life
• # 1 brand in mass merchandise channel
• # 3 brand nationally in measured channels
• 40 million case brand
• Growing 40% per year
• Extremely low cost high margin business model
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2002 initiatives
• $115 million incremental spend to defend and expand
market position in all channels while expanding margins
(funded by productivity / efficiency improvements)
Increased media spend by 100%
Increased selling coverage
- Availability team
- Move to direct coverage
Increased merchandising
- PET share of shelf +1.9 points
- End aisle racks +65%
- Increased c-store space +21% vs year ago
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Promotion spend
• Increased % promoted 12 points
• Increased promotion efficiency by 20%
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Summary of competitive advantages
• Ubiquity:
Participating in all channels, packages, and price points
• 70% market share in club channel = excellent path to market
• Low cost manufacturer and distributor
• Brands with heritage and spring water product platform
• Higher retailer margins and retailer consolidation makes
warehouse distribution preferred model
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Share of evolution to date
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All Retail Channel PET Market Share Results (Jan-September 8)
Share +/- Change
Nestlé Waters NA 34.4 3.8
Aquafina 16.5 2.2
Dasani 11.0 1.0
Group Danone 8.0 (4.1)
RIG Nestlé Waters NA (Jan - Jun 02) +13.7%
Source: IRI & A.C. Nielsen - Total U.S. F/D/M/C
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Conclusion
• NWNA is a high growth business
• Share growth has been excellent
• Its EBITA margins are high and growing
• NWNA has the competitive advantage, strategies and
organization to continue these trends
Nestlé Investor Seminar : Kim Jeffery
Nestlé Investor Seminar
Nestlé Waters