This presentation contains certain “forward-looking” statements.

These statements
are based on the current expectations of the management of Nestlé S.A. and its
subsidiaries as of the date of this presentation and are naturally subject to
uncertainty and changes in circumstances. Actual results may vary materially from
the expectations contained herein. When used herein, the words “anticipate,”
“believe,” “estimate” and “expect” and similar expressions are intended to identify
such forward-looking statements. Such forward-looking statements are subject to
risks, uncertainties, assumptions and other factors that may cause the actual results
of Nestlé S.A. and its subsidiaries to be materially different from those reflected in
such forward-looking statements. Important factors that could cause actual results
to differ materially from those indicated by such forward-looking statements include,
among others, the following: general economic factors affecting the industries in
which Nestlé S.A. and its subsidiaries operate, as well as currency fluctuations; costs
of raw materials and components used by Nestlé S.A. and its subsidiaries in their
operations; competition within the industries in which Nestlé S.A. and its subsidiaries
operate; changes in consumer preferences; regulatory changes; economic conditions
in key markets in which Nestlé S.A. and its subsidiaries operate; and risks and
costs related to the integration of acquisitions. Except to the extent required by
applicable securities laws, Nestlé S.A. and its subsidiaries are not under any
obligation to (and expressly disclaim any such obligation to) update or alter their
forward-looking statements, whether as a result of new information, future events,
or otherwise. All statements contained in this presentation are made only as of the
date of this presentation.
 Coffee At Nestlé

Presentation by Olle B. Tegstam, Head of Coffee & Beverages

Strategic Business Unit

AGENDA

• Starting point: the beverage category at Nestlé

• Coffee market size and trends

• Competitive situation

• Nescafé objectives

• Nescafé strategies
• Conclusions
 The Beverage Category within Nestlé

CHF 7.4 billion Water

Total sales ('00) CHF 23.0 billion

CHF 15.6 billion "the rest"

The rest : 83 % on the strategic brands

17 % in foodservice, 83 % retail

~ 2/3 coffee

86 % soluble coffee
 Coffee - An Interesting Market In Terms Of Consumer Spending

From 3¢ for a cup prepared at home to $3 for a trendy cup in a café...

Rough estimates ('00)

551 billion in-home cups

at 5¢/cup = $ 28 billion

205 billion OOH cups

for free in offices/canteens, 50¢ in vending machines
$ 1,50 traditional cafés, $ 3,00 trendy cafés ...

say at 25¢/cup = $ 50 billion

total: ~ $ 80 billion
 Coffee - An Interesting Market In Terms of Consumer Habits
2000 PER CAPITA COFFEE CONSUMPTION
S WE D E N 9 % 109
7
S WIT Z E R LA N D 3 5 % 85
73 5
GER M A N Y 1 2 %
5
FRANCE 29% 65
8
S P A IN 3 3 % 51
7
IT A LY 4 % 47

B R A Z IL 9 % 46
8 STANDARD
A US T R A LIA 9 3 %
3
45 CUPS
439
CANADA 41%
8
42
UN IT E D S T A T E S 2 1 %
4 SOLUBLE CUPS/CAP
42
UN IT E D KIN G D O M 9 2 %
4
36 R&G CUPS/CAP
JAP AN 56%
0
28
KO R E A 9 7 %
6
S O UT H A F R IC A 9 4 %
28 RTD CUPS/PER CAP
6
M E XIC O 8 3 % 18
1 OUT OF HOME CUPS/CAP
C H ILE 9 9 % 15
9
P H ILIP P IN E S 1 0 0 % 14
2
R US S IA 9 2 % 12
9
T H A ILA N D 9 1 % 9
6
C H IN A 9 7 % 1

soluble % of retail 0 200 400 600 800 1000 1200

 Global All Channel Coffee Consumption ('00)

756 billion cups

+ 12%

In-home consumption (73%) Out-of-home consumption (27%)

551 billion cups 205 billion cups
+ 10% + 19%

Soluble (36%) Roast & Ground (64%) Soluble (17%) Roast & Ground (83%)
196 billion cups 355 billion cups 35 billion cups 170 billion cups
+ 25% + 3% + 46% + 15%
 Cups per cap Coffee Consumption vs. GDP
10'000

Finland
Estonia Sw eden Holland Denmark
1'000 Costa Rica Norw ay
Lithuania YougoslaviaGreece Austria Sw itzerland
Germany
Brazil Poland Malta Spain France Belgium/Luxembourg Singapore
Latvia Italy
Hungary NZ Australia Canada USA
Panama Portugal Israel U.K.
360 El Salvador Guatemala
Honduras South AfricaCzech & Slovak. Rep
South Korea Japan
Nicaragua Colombia Puerto Rico Ireland
Bulgaria Mexico Argentina
Russia Philippines Chile Malaysia
Tunisia Venezuela Hong Kong
Ukraine Rep. Dom Uruguay
100 Roumania ME Region Mauritius
Bolivia Equador Thailand
Morocco
Indonesia Trinidad and Tobago
50 Vietnam
Peru
Jamaica Turkey
Kazakhstan
Egypt

10 Uzbekistan Sri Lanka

W&C AfricaIndia Zimbabw e
Pakistan China
Bangladesh

0 2'000 10'000 20'000 GDP per cap ($) 30'000

Trinomial Regression Curve

 Coffee Growth Opportunities

World Population World Coffee Consumption Nescafé Sales

"Sophisticated" 17% 65% 42%

(1cup/day plus)

"Intermediary"
(1cup/week- 24% 29% 54%
1cup/day)

"Starting"
(1cup/week 57% 2% 4%
and less) _________________________________________
98% 96% 100%

(source: internal statistics from 95 markets/regions)

 2000 Shares Of World In Home Coffee Market
196 bil cups 355 bil cups 559 bil cups
Nestlé 3%
P.Morris 15% Nestlé 22%
P&G 5%
Nestlé 59% S.Lee 10%
Tchibo/Ed 4%
Lavazza 2% P.Morris 14%
Melitta 2%
P&G 5%
Other Brands 8% S.Lee 6%
Tchibo/Ed 3%
Other Brands 12%

P.Morris 13%
P&G 3% Balance 51%
Other Brands 11% Balance 38%
Balance 14%

SOLUBLE R&G TOTAL COFFEE

(incl. RTD)
Other Soluble Brands (<2%) : Frisco/Koffiehuis 1.3%,Unilever 0.4%, Pele 1%, Tchibo/Ed. 0.6%, Sara Lee 0.8%, DEK 0.9% etc
 Nestlé Versus Philip Morris
In Home Coffee Brand Shares 2000

•Total Nestlé 22%

Nescafé 20%
•Total Philip Morris 14%

Of Which :
Maxwell House 4.1%
Maxim 1.3%
Jacobs 3.1%
Grand’Mère 0.5%
Carte Noire 0.7%
Gevalia 0.4%
Splendid 0.4%
Nabob 0.4%
Saimaza 0.3%
Yuban 0.2%
GF International 0.2%
ETC,ETC....
 Nescafé Global Objectives

1. More growth out of Nescafé - not only in emerging markets,

but also from developed markets

2. Strengthen Nescafé relevance to youth, add strong position in

"immediate consumption"

3. Establish Nescafé as the first World Brand for Nestlé - a

leading beverage brand world-wide
 Nescafé Global Objectives

1. To achieve these objectives

• Change Total Brand Behaviour

• New energy/new focus

2. Long-term theme: Nescafé Project Ambition

• Relates to 3 of the 4 pillars

(Consumer Communication, Product Availability,
Renovation/Innovation)

• Already well underway on the 4th pillar (Low Cost/Efficient

Operations)
Innovations/Renovations - Continuous Improvements

• In the product cup quality to ensure 60/40 blind winner

- Both in the traditional "black cup"

Major Premium Product Improvements
Major Mainstream Product Improvements
 Innovations/Renovations - Continuous Improvements

• In the product cup quality to ensure 60/40 blind winner

- Both in the traditional "black cup"

- And in the "new white cup"

European Cappuccinos
 Innovations/Renovations - Continuous Improvements

• In the product cup quality to ensure 60/40 blind winner

- Both in the traditional "black cup"

- And in the "new white cup"

• And in the way we present the product to be more distinctive

and relevant

- Following "Eden" now "Dawn"

Eden Dawn
 Innovations/Renovations - Continuous Improvements

• In the product cup quality to ensure 60/40 blind winner

- Both in the traditional "black cup"

- And in the "new white cup"

• And in the way we present the product to be more distinctive

and relevant

- Following "Eden" now "Dawn"

- Single-serve sticks
Single-Serve Examples
 Innovations/Renovations - Continuous Improvements

• In the product cup quality to ensure 60/40 blind winner

- Both in the traditional "black cup"

- And in the "new white cup"

• And in the way we present the product to be more distinctive

and relevant

- Following "Eden" now "Dawn"

- Single-serve sticks

- Lower out-of-pocket cost/re-fills

 Availability - Wherever, Whenever, However

Two key directions to strengthen "immediate consumption"

• Acceleration in OOH focus on beverages and coffee in particular

- Cup-vending machines featuring "the new cups"
- Many more locations - carts, kiosks, corners, implants, cafés
- Strong Nescafé branding, particularly at young venues
 Availability - Wherever, Whenever, However

Two key directions to strengthen "immediate consumption"

• Acceleration in OOH focus on beverages and coffee in particular

- Cup-vending machines featuring "the new cups"
- Many more locations - carts, kiosks, corners, implants, cafés
- Strong Nescafé branding, particularly at young venues

• New initiatives on RTD coffee within our JV with Coca-Cola

(Beverage Partners Worldwide)
- Regrouping the brand, the R&D and the route-to-market in one
organisation
 Consumer Communications - Breaking New Ground

• Global initiative focused on youth (16-24)

"Tool-box" containing:

- Global spot campaign in MTV plus VMA sponsorship

- Print/out-door/ambient
- Affinity adjustable internet site (NescaféLive.com) with up-to-date feed

• Incites the markets to "add-on"

- Embellish global campaign with local tie-ins, cinema etc.

- Clearly establish the "recruiter product" in the range
- Add new, specifically youth focused products
- "One Brand Plan"
 Coffee At Nestlé - Conclusions

• Solid foundation

• Proven ability to gain new users to coffee

• Clear opportunities to continue to grow faster than market

• No end in sight to continuous improvements

• Solid contributor to sustainable profitable growth