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Hilary ParsonsNestlé SA

ETHICAL SOURCING

The ResponsibleBusiness Summit May 14th 2008

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Disclaimer

This presentation contains forward looking statements which reflect Nestlé’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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COMPLIANCELaws, Business Principles, codes of conduct

SUSTAINABILITYProtect the future

Shared Value definitionHierarchy of Corporate Social Responsibility

CREATESHARED VALUEReduce poverty, Improve health

Empower people

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Shared Value is applied across Nestlé's Value Chain

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HELPING FARMERS IMPROVE EARNINGS AND ASSURING OUR SUPPLY OF QUALITY RAW MATERIALS

Performance Highlights from The Nestlé Creating Shared Value Report

IMPROVING WORKERS’ EARNING CAPACITY AND CREATING A SKILLED WORKFORCE

EXPANDING LOWER INCOME SEGMENT’S ACCESS TO NUTRITION ANDBROADENING OUR CUSTOMER BASE

IMPROVED NUTRITION FOR THE CONSUMER AND INCREASING SALES/PROFITABILITY FOR NESTLÉ

REDUCING OUR ENVIRONMENTAL FOOTPRINT AND REDUCING OPERATIONAL COSTS

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Founded 1866 in Switzerland as an infant nutrition company, Creating the Nestlé Nest Brand

480 factories; about half in developing countries

276 050 employees worldwide

Strong portfolio of brands and innovations driving growth

Transforming further into Nutrition, Health & Wellness company CHF 107.6 bn sales in 2007, +9.2%

Consistent long term growth in both sales and profit (EBIT) margin: the proven Nestlé Model

Facts about Nestlé: World’s Largest Food & Beverage Company

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Shared Value and agriculture/sourcing

Value for Society: knowledge sharing, improved agricultural & water management practicesValue for Nestlé: quality supplies from motivated, enabled farmers

•CHF 13 billion of agricultural commodities, much from emerging economies Milk: Coffee: Cocoa:11.8 million tonnes 750 000 tonnes 370 000 tonnes CHF 4000 million CHF 1600 million CHF 930 million

610 000 farmers supply Nestlé directly and receive technical assistance3 400 audits of suppliers’ facilities for food safety. Expectations with regard to social conditions of farmers we buy from: child labour, employee health and safety high priorities.

Nestlé-sponsored sustainable cassava project in Côte d'Ivoire

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Creating Shared Value with milk farmers

Value for Society: rural economic growth and development, higher agricultural standardsValue for Nestlé: quality supplies from motivated, enabled farmers

• Milk districts in 30 countries• Growing between 2-5% each year

More than 4 000 women in Pakistan are learning new agricultural skills, such as raising livestock and managing water resources, through training provided by Nestlé and UNDP

Zhengjun Wang, who owns 9 cows and 6 calves, has been supplying milk to the Nestlé plant in Shuangcheng, north-east China, since 1990

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Creating Shared Value with cocoa farmers

Value for Society: more sustainable cocoa farming practices, including on child labourValue for Nestlé: quality supplies from motivated, enabled farmers

• Funding 3-year sustainable cocoa project:with 3000 farmers in Côte d’Ivoire• Founding participant in the International Cocoa Initiative (ICI)• Working closely with West African governments, labour experts and other industry

partners to improve the lives of children and families on cocoa farms

Nestlé-sponsored farmers’ field school in Côte d’Ivoire. Cocoa from farms like this will be used in leading Nestléchocolate brands manufactured at York in the UK

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Creating Shared Value with coffee farmers

Value for Society: coffee farmers grow income, farm more sustainablyValue for Nestlé: quality supplies from motivated, enabled farmers

Direct purchasing: 13% Nestlé green coffee purchased direct = largest direct purchaserNespresso AAA: 35% of total purchase from the AAA Sustainable Quality™ Programme

increase from 25% in 2006, commit to increase to 50% by 20104C: 360 000 tonnes) of coffee, (6% of world supply), 4C-verified by end 07.

In Nestlé plants from Q1 08

4C coffee farmers harvesting, drying coffee and acquiring sustainable farming techniques

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China

Philippines

ThailandCôte d'Ivoire

Mexico

Indonesia

Vietnam

Guatemala

Direct procurement :Other Sustainable Projects :

Nicaragua

El Salvador

Brazil

Colombia

Costa Rica

Ethiopia

GREEN COFFEE SCHEMES AND PROJECTS IN 14 PRODUCING COUNTRIES

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• 27 NESCAFÉ factories.

• Six of these NESCAFÉ factories provide farmers with technical assistance, based on sustainable approach, including green coffee quality and DIVERSIFICATION, etc.

• 55 % of NESCAFÉ is produced in Developing Countries. Provide jobs to thousands of people. The added value is brought on the spot.

Nescafé Factories

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An All Stakeholders Association : includes farmers, civil society, manufacturers & traders. Nestlé is one of the founding members.

Initiative started in 2002. Mainstream approach. Objective : implementing sustainable practices at farm level and along supply chain. Principles defined by a code based on the 3 pillars of Sustainability.

"COMMON CODE FOR THE COFFEE COMMUNITY" or "4C"

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• Worldwide, there are 5 coffee verification / certification schemes :

– one verification system, 4C

– 4 NGOs' certification bodies, FairTrade,

Rainforest Alliance, Utz Certified & Organic.

Certification Schemes

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PARTNERS' BLEND® launched on October 2005."A sustainable end-product where, in addition, the social pillar is guaranteed by a Fairtrade certification".

Manufactured with green coffee from growers assisted by Nestlé through sustainable coffee projects in Ethiopia & El Salvador.

Partners' Blend : Began in UK and has now spread to other European countries

NESCAFÉ Partners' Blend

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Denmark

NorwayFinland

Sweden

Zoégas Kaffe launched its first Fairtrade coffee– Hazienda -in 2006, based on the same originas Partners Blend;El Salvador and Ethiopia

In the beginning of 2008, NESCAFÉPartners Blendwas launched in all Nordic countries

In May 2008, Hazienda will beRe-launced in two dark roastedVersions, Hazienda andEstanzia – both Fairtrade andOrganic certified

Fairtrade Coffee in the Nordic Region

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The Netherlands:March 2008, Launched to the “Out of home” market:

NESCAFÉ Partners' Blend The Movie:

Brochure:

Website:

Play

Read

Visit

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PRINCIPLESWhy AAA ?

Approach identical to Partners' Blend : helping farmers at source to be sustainable. Collaboration with suppliers (co-ops, traders) and with Rainforest Alliance (TASQ)

Aim towards full traceability.

Adapted to specific consumers' segment. AAA is a long term vision: with market development, availability for specialty coffee is decreasing. AAA ensures adequate supply in long-term.

Nespresso AAA : to offer a cup of coffee associating sustainable production and supply with the highest possible cup quality

Nespresso

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Other Nestlé certified coffees

• Rainforest Alliance certified coffee launched in Portugal for Mcdonalds

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Thank you !