Nestle India Ltd. · NSE:NESTLEIND
Nestle India — Investor Day (August 2019)
116 slides from Nestle India's investor day presentation, Aug 9, 2019
Slide 1: Nestlé India 29th Financial Analysts & Institutional Investors Meet
Nestlé India 29th Financial Analysts & Institutional Investors Meet 9th August 2019
Slide 2: Disclaimers
Disclaimers 1. This presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward looking statements. The future involves uncertainties and risks that could cause actual results to differ materially from the current views being expressed
Slide 3: Agenda
Building for a Healthier Future (15:30 hrs): Suresh Narayanan Sustained Growth, Value Creation Agenda (16:20 hrs): Shobinder Duggal Reaching out to Consumers – Route to Market (16:45 hrs): Ravi Ramchandran Q&A (17:00 – 17:30 hrs)
Slide 4: Key Takeaways From Last Time
Speed, Sharpness, Sustainability Innovations at the Core → Improvise but Act ! Growth dimension → Thrive not Survive Key Takeaways Manage for “Market Share” → Our growth > Category Growth From Last Time Clusters, Micro targeting, Resourcing for Action Key efficiency enhancement through Nestlé Busine
Slide 5: Building for a Healthier Future
Building for a Healthier Future Building Value Building Brands Building Capacity Building Society Building People
Slide 6: Building Value
Building Value
Slide 7: Building Value
Building Value What we have achieved Where we are today H1 2019 Highlights Creating Creating Strong Shareholder Growth Value Penetration Sustainable Led Volume Value & Mix Growth Growth
Slide 8: A History of Strong Growth
Sales of Products (INR Billion) CAGR on Comparable Basis A History of Strong 98 112 Growth 18 2001 2014 2018 Profit from Operations*(INR Billion) XX % Profit from Operations XX % Profit from Operations on 20.4 Comparable Basis 21.0 Figures from 2016 onwards are as per Ind AS. 18.3 Effective 1 July 2
Slide 9: A Record of Creating Value
Invested Capital* (INR Billion) XX % Return on Invested Capital 2001-2009: INR 12 Billion Capital Expenditure 2010-2018: INR 44 Billion A Record 35.5 73.8 33.4 63.9 of Creating 32 21 Value 5 9 2001 2009 2013 2018 Evolution of CEPS, EPS and DPS Rounded to Nearest INR XX CEPS 203 EPS 159 DPS 167 123 1
Slide 10: Created Significant Value For Investors
Created Significant Value For Investors Market Capitalization Total Shareholders Return 2,234% Annualized Return 19.3% INR 1,149 Billion INR 50 Billion 2001 2019* *Source : Bombay Stock Exchange, Dated 6th August 2019
Slide 11: H1 2019 Highlights
Continuing Our Momentum Reported Sales growth at Sustained profitable 10.2% growth Market leadership in H1 2019 Strong cash ~85% of Portfolio generation from Highlights operations Domestic Sales growth is 11.6% Increased Dividend Penetration led Volume & Payout and Sustained Mix Growth - 10.8% Value
Slide 12: 10 Quarters of Sustainable Volume & Mix Led Growth
10 Quarters of Sustainable Volume & Mix Led Growth RIG % - Real Internal Growth (Volume & Mix)
Slide 13: Leading to 10 Quarters of Sustainable Value Growth
Comparable Growth % Reported Growth % Leading to 10 quarters of Sustainable Value Growth Comparable Growths are on estimated basis *Reported growth rates are adversely impacted due to lower reported sales by the change in structure of indirect taxes and reduction in realisations to pass on the GST b
Slide 14: Building Brands
Building Brands
Slide 15: Building Brands – Delighting Consumers
Building Brands – Delighting Consumers What we have achieved What we are doing Innovation and Leveraging Renovation Journey to e-commerce Strong Market continue Reputation Leadership The Out of Harnessing Home ‘cluster’ opportunity opportunities
Slide 16: Strengthening our Trust with Consumers
Strengthening our Trust with Consumers 154 149 148 148 148 155 142 150 138 142 143 143 135 145 140 2017 140 135 2016 130 2015 125 Trust Taste & Health Recommend Helps Me Care 2015 2016 2017 Source – Relative Equity Index - Corporate Equity Monitor (Internal)
Slide 17: Leading With Strong Market Shares
Leading With Strong Market Shares Category Brand Market Share (Value) Nestlé India Position Infant Cereals 96.5 1 Infant Formula 66.6 1 Tea Creamer 44.1 1 Instant Noodles 59.2 1 Ketchups & 20.5 2 Sauces Instant Pasta 73.7 1 MAT JUN’19 White & Wafers 63.4 1 Source - Instant Coffee 50.5 1 Nielsen
Slide 18: Science and Consumer Driven Innovation and Renovation
Science and Consumer Driven Innovation and Renovation Health Comfort In Nutrition Between Meals Cooking Aid Indulgence Brought to Variety market faster Taste
Slide 19: And the Innovation Journey Continues This Year
3.7% Contribution to Domestic Sales in H1 2019 61 innovations since 2016 And the Innovation Journey Continues This Year…….. 9
Slide 20: Seizing The Out of Home Opportunity
Seizing The Out of Home Opportunity Where we Where we are were Entry into Premium beverages with Traditional Hot Liquid Milk Beverages Digital Payment based Vending Powder Based Solutions Leadership in Cold Vending Limited Category play - Coconut Milk Powder & Wider Portfolio Milkmaid
Slide 21: Harnessing The 'One Nestlé' Initiative
Harnessing The ‘One Nestlé’ Initiative Our Ambition: 1000 kiosks Our Goals - Accessing Target, Offering Variety, Enhancing Sampling Average 13.5 Employment million Over 400 Generated: footfall across kiosks 750+ People all kiosks/per annum
Slide 22: Leveraging E-Commerce
Leveraging E-Commerce Rapidly changing reality 350 million 400 million connected internet smartphone users Leading to users a Digital Revolution Average 40 million 200 million users e-commerce added shoppers annually
Slide 23: Leveraging E-Commerce
Leveraging E-Commerce Targeted Communication Capturing Our Opportunity Range Selling Consumer base for sampling
Slide 24: Growing Contribution Of E-Commerce To Domestic Sales
Leveraging E-Commerce Growing Contribution Of E- Commerce To Domestic Sales 2016 2017 2018 H1 2019 1.5 What have we 1.3 achieved 0.9 H1 2019 2018 0.6 2017 2016 Contribution
Slide 25: Harnessing the Consumer Opportunity in Clusters
Harnessing the Consumer Opportunity in Clusters
Slide 26: Building Capacity
Building Capacity
Slide 27: Building Capacity
Our Commitment Building Manufacturing Citadels to ‘Make in Capacity India’ continues Building Enduring Future Ready Partnerships organization and New Capabilities
Slide 28: Manufacturing Citadels
Moga (1961) Choladi (1967) Nanjangud (1989) Samalkha (1992) Instant Tea largely for exports Manufacturing Ponda (1995) Bicholim (1997) Pantnagar (2006) Tahliwal (2012) Citadels
Slide 29: Our Commitment to 'Make in India' Continues
Our Commitment to ‘Make in India’ Continues Construction to Sanand, Gujarat commence soon - our ‘navratna’ –a dedicated 98% of what we sell is MAGGI factory ‘Made in India’ State of the Art - reinforcing our sustainability journey Employment Generation around 400 people Our diversity Initial Investm
Slide 30: Build Enduring Relationships
Build Enduring Relationships 4600 suppliers and 1700 distributors 2500 coffee farmers 1200 spice farmers 100,000 dairy farmers
Slide 31: And Build New Capabilities
And Build New Capabilities Milk from Organic grains from Natural, real and Rajasthan from Develop a new Rajasthan, Andhra toxin-free organic Cows fed with sourcing mindset Pradesh and fruits 100% organic and Karnataka farm grown fodder 20 member India Organic, supplier Jaivik Bharat and development
Slide 32: Building a Future Ready Organization
Building a Future Ready Organization Support Demand Focused Organizations Center of Center of Provide World Class Scale Competence Business Services (CoS) (CoC) Optimize Global End-to-End Flows
Slide 33: Building Society
Building Society
Slide 34: Building Society
Building Society Commitment to Empowering a Healthier Consumers on Our Philosophy Our Initiatives Planet - Plastic Nutrition– Ask Waste Nestlé Management
Slide 35: Our Philosophy of Creating Shared Value and CSR
Our Philosophy of Creating Shared Value and CSR Programme relevant Focus on impact nationally and rather than just resonate with numbers. global objective. Each programme has Programmes are deliverables evolved over a that are period of time measurable.
Slide 36: Our Initiatives
Our Initiatives For Individuals and For Our Communities For the Planet Families Project Jagriti Encouraging Good Nutrition and Breastfeeding Practices Creating Access to Reducing Water use through Community Action Clean Drinking Water in Agriculture 4.6 Mio Beneficiaries Over 136,500 Students Helpin
Slide 37: Project Vriddhi: Enhancing the quality of life
Our Initiatives Project Vriddhi: Enhancing the quality of life for the people of Rohira Village (Nuh District, Haryana)
Slide 38: Before Intervention
Before Intervention School Work in Progress Water chamber
Slide 39: Commitment to a Healthier Planet – Plastic Waste Management
Commitment to a Healthier Planet – Plastic Waste Management Our ambition is to achieve 100% Pioneering recyclable or alternative reusable Drive new behaviour materials packaging by 2025. Shaping a waste free future
Slide 40: Mono-material Packaging roll-out and EPR
Mono-material Packaging roll-out EPR Roll out in 20 states in 2019 6000 MT of MLP Collected Map not and Recycled to scale in 2018
Slide 41: Integrated Media Campaign: Dehradun, Mussoorie & Kumbh 2019
Integrated Media Campaign : Dehradun, Mussoorie & Kumbh 2019
Slide 42: Establishing An End To End Solid Waste Management System In Mussoorie
Collective Change: Establishing An End To End Waste Solid Management System In Mussoorie 2019-21: To be taken forward in Dalhousie, Nainital, Darjeeling, Mahabaleshwar, Ooty, Goa Waste management programs specifically for the Hill states Plastic Express: In Dehradun & Mussoorie
Slide 43: Empowering and Respecting Waste Workers in Mussoorie
Empowering and Respecting Over 100 Waste Workers in Mussoorie Provision of protective Health camps for regular Regular Recognition gear check-ups.
Slide 44: Our Employees Walk The Talk
6 Tons of Waste 2000 Collected volunteers participate in clean up drives across India Our Employees Walk The Talk
Slide 45: Empowering Consumers on Nutrition - Ask Nestlé
Empowering Consumers on Nutrition - Ask Nestlé
Slide 46: Over 1 Million hits in 14 weeks of launch
Over 1 MILLION hits in 14 weeks of launch
Slide 47: Building People
S Building People »_
Slide 48: Gender Balance & Retention
Gender Balance & Retention % WOMEN RECRUITED AS TRAINEES % WOMAN EMPLOYEES 55% 57% 60% 44% 35% 25% 21% 40% 19% 20% 16% 17% 20% Cumulative % 15% 0% % Women Employees 2016 2017 2018 2019 10% 2016 2017 2018 2019 OVERALL ATTRITION 15% 11% 9.0% 8.3% 3.7% Attrition 2015 2016 2017 2018 2019
Slide 49: Key Practices & Positive Perception
Travel benefit for mothers till the Day Care Reimbursement child turns 2 Policy for kids up to 6 years Unconscious Bias: Breaking The Taboo: Awareness for employees Menstrual hygiene and for people managers sessions in factories Key Practices & Positive Perception Only FMCG In Top 10 Most- attractiv
Slide 50: Humbled By The Recognition
Humbled By The Recognition Forbes India Leadership Award for Best CEO – MNC ‘The Best CFO of a MNC – Large’ by YES BANK and Business World Leadership ET Brand Equity Survey Rankings Unmatched Quality 2017 2018 The Brands India LOVES Food Products 13 4 and TRUSTS Contribution to Society Hot 6 5 Bever
Slide 51: Key Takeaways From Today
Strong Value Creation Model Brands Built on Robust I&R In sync with the Consumer Key Takeaways Harnessing the Consumer opportunity in clusters From Today Being future ready with appropriate capacity creation Integrated with Society to build a healthier tomorrow Attracting and retaining the very best
Slide 52: Thank You
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Slide 53: Agenda: Market Momentum, Value Creation, Ind AS on Leases
Agenda 1 Market Momentum 2 Value Creation 3 Ind AS 116 on Leases Slide 1
Slide 54: In a nutshell…
In a nutshell… The market momentum somewhat moderates. Largely sustained market leadership. KITKAT gains market share. Organic growth broad based across regions driven by strong real internal growth aided by superior performance of premium products. KITKAT, MUNCH, NAN, MAGGI Noodles & Masala
Slide 55: Market momentum somewhat moderates
Market momentum somewhat moderates 2018 Market Size (USD) FMCG (57.8 bio) F&B (32.8 bio) Processed Food* (18.7 bio) Nestlé Categories (5.4 bio) CY’18: 13.5% CY’18: 14.7% CY’18: 13.9% CY’18: 11.5% 16.2 15.7 17.4 17.0 14.7 17.2 15.2 16.0 13.6 13.5 13.4 12.5 13.8 11.4 11.7 11.6 10.6 11.4 10.8 10.5 10.0
Slide 56: Product portfolio holding leading positions
Product portfolio holding leading positions Market Share (Value)¹ Category Brand H1 2019 Infant Cereals 96.7 Infant Formula2 66.3 Tea Creamer 43.8 Instant Noodles 59.6 Ketchups & Sauces 19.8 Instant Pasta 76.2 White & Wafers 64.1 Instant Coffee 50.9 Condensed Milk >70.03 Note: 1) Source A.C. Nielsen
Slide 57: Growth & Returns: Jan – June
Growth & Returns : Jan – June Total Sales RIG (%) OG (%) Profit from Operations Growth +10.2 % Margin -40 bps 16.0 15.5 15.0 22.1 21.7 25.0 11.7 14.5 10.8 14.0 20.0 9.9 13.5 13.0 12.5 7.3 /13.9 12.0 11.5 15.0 11.0 10.5 10.0 9.5 10.0 9.0 54.2 59.7 8.5 11.9 13.0 8.0 7.5 5.0 7.0 6.5 6.0 5.5 5.0 - Net P
Slide 58: A look at the last 6 quarters…
A look at the last 6 quarters… 10.7/13.8 10.2 % YoY Growth 6.3/ 8.5/ 16.8 11.2 9.0 11.4 Total 12.9 14.6 Sales Domestic Sales Growth W/o CSD & Ghee Q1’19 Q2’19 12.0% 12.0% INR Bio 27.4 26.8 29.2 28.8 29.8 29.8 Q1 Q2 Q3 Q4 Q1 Q2 2018 2019 21.0 21.7 % of Net Sales 22.7 21.4 21.8 18.0 22.5 21.0 Profit f
Slide 59: Domestic & Export sales
Domestic & Export sales Value Volume (INR Billion) (in ‘000 Tons) RIG 11.6% 10.8% Domestic Contribution: 95% 50.7 56.6 206.1 225.9 -11.4% Exports Contribution: 5% 3.5 3.1 11.6 10.6 Growth% H1’18 H1’19 Slide 7
Slide 60: Domestic sales - Value Growth
Domestic sales - Value Growth Growth (%) 11.6 Of Which: RIG (Volume & Mix) 10.8 Largely backed by secondary sales RIG% is based on Nestlé Internal Reporting Standards Slide 8
Slide 61: Balanced growth across regions
Balanced growth across regions % Contribution to Domestic Sales Growth% North H1’18 H1’19 27 North 7.9 / 14.6 12.2 West East 18 East 9.4 / 16.2 11.3 31 South South 3.9 / 10.4 11.4 24 West 6.9 / 13.6 11.8 Total 7.1 / 13.8 11.6 Figures in maroon colour represents comparable numbers Slide 9
Slide 62: Other growth enablers: E-Commerce and Premium Products
Other growth enablers E-Commerce Premium Products 1.1 1.5 10.9 11.7 7,00 0 2 1,20 0.00 2 1.8 6,50 0 1.8 1,10 0.00 1.6 1.6 6,00 0 1,00 0.00 1.4 1.4 5,50 0 900 .00 1.2 1.2 5,00 0 800 .00 1 1 4,50 0 700 .00 0.8 0.8 4,00 0 600 .00 0.6 0.6 3,50 0 500 .00 0.4 0.4 3,00 0 400 .00 0.2 0.2 2,50 0 0 300 .00 0
Slide 63: Category wise domestic performance
Category wise domestic performance Contribution (%) Products & Product Groups H1’19 Growth% 46.8 8.5 Milk Products & Nutrition 28.9 15.0 Prepared Dishes & Cooking Aids 13.9 22.5 Confectionery 10.4 4.2 Powdered & Liquid Beverages Domestic Growth 11.6 Domestic Sales: INR 56.6 Billion Slide 11
Slide 64: Milk products & nutrition - Domestic
Milk products & nutrition - Domestic 46.8% Value (INR Bio) OG and RIG Volume (000’ Tons) favourably impacted by higher RIG 8.5% sales of Surplus Fat 8.1% (+60 bps each) 24.4 26.5 65.4 66.8 Growth% H1’18 H1’19 Key products performed well Sustained performance of I&R : CEREGROW & NANGROW. Organic Cere
Slide 65: Prepared dishes & cooking aids - Domestic
Prepared dishes & cooking aids - Domestic 28.9% Value (INR Bio) Volume (000’ Tons) 15.0% RIG 12.9% 14.2 16.3 111.3 124.2 Growth% H1’18 H1’19 Strong growth in MAGGI Noodles & Masala–ae–Magic MAGGI Noodles surpass pre-crisis level of value & volume Slide 13
Slide 66: Confectionery - Domestic
Confectionery - Domestic 13.9% Value (INR Bio) Volume (000’ Tons) RIG 22.5% 22.8% 6.4 7.9 19.5 24.0 Growth% H1’18 H1’19 Strong Growth aided by market momentum. Kitkat gains market share. I&R : Kitkat Dessert Delight, Milkybar Moosha, limited editions yield good results Slide 14
Slide 67: Powdered & liquid beverages - Domestic
Powdered & liquid beverages - Domestic 10.4% Value (INR Bio) Volume (000’ Tons) RIG 4.2% 3.4% 5.7 5.9 10.0 11.0 Growth% H1’18 H1’19 Growth adversely impacted by lower sales of instant coffee to CSD (220 bps) Nescafe RTD continues to grow strongly Slide 15
Slide 68: Profit from Operations
Profit from Operations* - Dist. Cost : 20 - Power & Fuel : 20 - Impair. (2018) : 10 INR 11.9 Bio - Other costs : 40 INR 13.0 Bio 100 90 60 30 Commodities : 220 Realizations : 50 Channel Mix : 40 Including Scale Impact 22.1% 21.7% Materials Adv. & Sales Depreciation Other Jan-Jun’18 Promotion Jan-Jun
Slide 69: Tax expense and effective tax rate
Tax expense and effective tax rate 6.5 34.9 6.0 34.8 Cess increased from 3% to 35.0 4% w.e.f 1st April 2018 33.7 33.8 5.5 5.0 4.5 30.0 4.0 3.5 25.0 3.0 Tax Expense 4.2 4.6 2.5 (INR Billion) 2.0 20.0 H1' 18 H1' 19 Marginal Tax Rate (%) Effective Tax Rate (%) Effective tax rate remains stable “Samalkh
Slide 70: Net Profit margins sustained
Net Profit margins sustained INR 8.2 Bio INR 9.0 Bio 20 20 15.1% 15.1% Jan-Jun’18 Profit from Financial Jan-Jun’19 Operations Income Movement in Bps Adverse impact of operating margins offset by higher treasury income Future treasury income will be impacted by payout of special interim dividend % an
Slide 71: Healthy cash generation from operations
Healthy cash generation from operations 1.0 0.1 0.1 0.5 21.8% 23.5% 13.0 12.7 Incremental cash generated from Operations : INR 0.3 Bio (+2.5%) Jan - Jun ‘18 Profit from CSR & Depreciation & TNWC & OEWC# Jan - Jun ‘19 Operations Finance Impairment INR Bio Cost INR Bio #TNWC & OEWC – Trade Net Working
Slide 72: Consistently increased dividend per share post MAGGI issue
Consistently increased dividend per share post MAGGI issue Special Interim dividend of 115.0 INR 180 per share out of accumulated profits of previous 86.0 years 63.0 48.5 46.0 40.0 2015 2016 2017 2018 H1 '18 H1'19 Dividend Per Share (INR) Slide 20
Slide 73: Return on Equity will further improve after the special interim dividend
Return on Equity will further improve after the special interim dividend Post 71.8 special interim 50.7 dividend 40 49.2 39.7 34.3 19.9 35 30 25 20 15 10 5 28.2 30.1 31.5 33.8 37.3 16.4 0 2015* 2016 2017 2018 H1 2019 H1 2019 As per Ind AS Return on average Equity % #Shareholder’s Funds in INR Bio *I
Slide 74: Built back capital efficiency & value creation
Built back capital efficiency & value creation ROIC % Economic Profit % 83.2 70.0 46.4 69.5 38.5 57.2 18.9 34.2 24.6 5.0 Asset Turns 40 2.7 3.4 3.9 5.0 5.7 35 30 25 20 15 10 Invested Capital 5 30.4 27.5 26.0 22.3 20.9 (INR Billion) 0 2015 2016 2017 2018 H1'19 Invested capital : Basis average of 5 qu
Slide 75: Ind AS 116 on Leases
Ind AS 116 on Leases Slide 23
Slide 76: Ind AS 116 on Leases
Ind AS 116 on Leases Applicable for Nestlé India w.e.f. Jan 1, 2020 with comparatives being restated Removes distinction between Finance & Operating leases Balance Sheet All Leases will be recognized as “Right to Use” - Asset and as financial liability Income Statement Lease payments will be rec
Slide 77: Ind AS 116 – Estimated impact basis 2018
Ind AS 116 – Estimated impact basis 2018* Values in INR Mio Current Future Balance Current Future P&L Bps Ind AS 17 Ind AS 116 Sheet Ind AS 17 Ind AS 116 Revenue - - Assets - + 1,250 Depreciation - + 500 Liability - + 1,400 Other expenses + 580 - Equity - - 150 Operating Profit + 80 +6 Operating Fin
Slide 78: Thank You
THANK YOU Slide 26
Slide 79: Linked Slides
Linked Slides Slide 27
Slide 80: Gross margin evolution reflects strength of our business model
Gross margin evolution reflects strength of our business model Gross margin influenced by 59.1 59.1 57.6 57.3 58.1 • Pricing power of Brands • Positive mix 56.5 54.5 54.5 • Premiumization 53.9 52.0 • Commodity prices • Procurement efficiencies • SHARK cost reduction 2011 2012 2013 2014 2015 2016 201
Slide 81: Price index of our commodity basket
Price index of our commodity basket over the years 117 114 114 111 108 107 104 100 2012 2013 2014 2015 2016 2017 2018 H1'19 Indexed with base year 2012 Price index of our commodity basket over the quarters 100 95 95 96 98 98 100 - 4.6% - 0.8% + 1.4% + 2.0% + 0.5% + 1.2% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18
Slide 82: Price movement of key commodities
Price movement of key commodities H1’19 Vs H1’18 Milks 8% Wheat 12% Coffee 2% Palm Oil 5% Sugar 6% MSK 12% Palm Kernel 10% Slide 30
Slide 83: Price index: Milk
Price index : Milk Milks 42% 105 103 108 101 Current Price 100 100 94 92 90 89 87 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis Slide 31
Slide 84: Price index: Wheat Flour
Price index : Wheat Flour Wheat Flour 13% 105 107 108 Current Price 104 100 99 94 95 95 93 91 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis Slide 32
Slide 85: Price index: Green Coffee
Price index : Green Coffee Green Coffee 10% 111 110 102 100 100 Current Price 96 96 95 95 91 90 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis - Q3’17 onwards, rates are net of input taxes with the implementation of GST w.e.f. 1st July 2017 S
Slide 86: Price index: Palm Oil
Price index : Palm Oil Palm Oil 7% 117 129 128 Current Price 125 125 125 115 100 99 98 96 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis - Q3’17 onwards, rates are net of input taxes with the implementation of GST w.e.f. 1st July 2017 Slide 3
Slide 87: Price index: Sugar
Price index : Sugar Sugar 7% 101 100 99 98 91 89 89 87 85 86 78 Current Price Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis - Q3’17 onwards, rates are net of input taxes with the implementation of GST w.e.f. 1st July 2017 Slide 35
Slide 88: Price index: DWP
Price index : DWP DWP 5% 110 Current Price 111 108 105 105 102 100 101 100 100 96 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis - Q3’17 onwards, rates are net of input taxes with the implementation of GST w.e.f. 1st July 2017 Slide 36
Slide 89: Price index: MSK
Price index : MSK MSK 4% 140 116 Current Price 112 106 103 100 97 95 90 91 85 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis - Q3’17 onwards, rates are net of input taxes with the implementation of GST w.e.f. 1st July 2017 Slide 37
Slide 90: Price index: Palm Kernel Oil
Price index : Palm Kernel Oil Palm Kernel Oil 3% 103 100 80 84 83 81 Current Price 79 77 74 70 66 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 - Indexed with base Q1-17. Indices are on consumption basis - Q3’17 onwards, rates are net of input taxes with the implementation of GST w.e.f. 1st July 2017
Slide 91: Marketing spends
Marketing spends* % of Domestic Sales 7.3 7.8 INR Billion 3.9 4.7 H1' 18 H1' 19 Direct Marketing spends continued to grow faster Sustained investment behind I & R Digital Media spends growing at CAGR of ~ 45% for past 4 years (a)*Marketing Spends include: Advertisement & Sales Promotion, Marketing &
Slide 92: Reaching out to Consumers… Route to Market
Reaching out to Consumers… Route to Market
Slide 93: Presentation Outline
Presentation Outline 1 Distribution Infrastructure 2 Urban – Coverage, Channel, Shopper 3 Unlocking the Rural Opportunity 4 Delighting Consumer - Freshness 5 Leveraging Technology 6 Capability development 7 Enduring Partnerships
Slide 94: Reaching out… Distribution Infrastructure
Reaching out … … 29 Distribution Centers 1700 + Cash Distributors 7000+ Re-distributors 2600 + Wholesale Hubs 10000 + Feet on Street Map not to scale Distribution Centers
Slide 95: Total Reach (Outlets in Mio)
Total Reach (Outlets in Mio) Nestlé Total Reach Progression 10.2 9.3 Our Goal 5.5 to 6.0 Mio 5.0 4.6 3.5 4.5 4.2 4.0 Total FMCG Market Food Products 2014 2015 2016 2017 2018 2019 H1 Source : Nielsen Retail Update
Slide 96: Urban Town Reach & Coverage model
Urban Town Reach & Coverage model Covered by Cash Distributor & Re Distributor Towns : ~ 8000 Leveraging the Cluster approach 1. Split Coverage 2. Regular coverage Weighted outlets : By Category Regular outlets : All categories ~ 300 SKUs 3. Small Outlets coverage Ready Stock Units & Tele Callers *S
Slide 97: Channel specific programs to influence the Shopper
Channel specific programs to influence the Shopper Super Market Grocery Large & Bakery Grocery Small
Slide 98: Organized Trade
Organized Trade Total 27 customers, ~ 8400 stores 3 Constituents Chain Retail Cash n Carry Pharmacy Chain Pharmacy Outlet
Slide 99: Delighting the Consumer during Festivities
Delighting the Consumer during Festivities Our merchandising team’s core expertise
Slide 100: Delighting the Consumer during Festivities
Delighting the Consumer during Festivities
Slide 101: Delighting the Consumer during Festivities
Delighting the Consumer during Festivities
Slide 102: Delighting the Consumer during Festivities
Delighting the Consumer during Festivities
Slide 103: Unlocking Rural Market: Reaching Rural customer
Unlocking Rural Market : Reaching Rural customer Villages under direct No. of villages coverage ~ 600,000 52,000 + 1. Re Distributor Model 2. Whole sale Hub Model - 7000+ Redistributors - 2600+ Wholesale Hub’s *Source : census 2011
Slide 104: Reaching out to Rural customer
Reaching out to Rural customer
Slide 105: Reaching out to Rural consumer
Reaching out to Rural consumer Village Haat Activity
Slide 106: Our Promise of Freshness
Our Promise of Freshness .. Factories Indirect Reach Direct Reach Route DC Wholesalers Retailers to Market Cash Distributors Distribution Units Right Availability, Freshness, Quality - Competitive Advantage Distributor Sales Force Re-Distributors
Slide 107: The Process…
The Process… IDENTIFICATION ENLISTMENT Stores across Channels: -Select Towns Groceries, Supermarkets -Select SKUs Chemist, Bakery EXECUTION TECHNOLOGY -Field salesforce capture data InShelf App -Data Analysis • Nestlé Proprietary tool -Upstream & Downstream • Accessible to relevant stakeholders acti
Slide 108: Our Results…
Our Results .. Freshness Index 100 94 85 73 72 2015 2016 2017 2018 YTD 2019 UPSTREAM ACTIONS DOWNSTREAM ACTIONS • Minimum production run • Focused Generating Demand Activities • Production sequencing • Rationalization of SKU : Channel Region • Transit Time reduction with PIT STOP model • Statistical
Slide 109: Leveraging Technology & Analytics in Sales
Leveraging Technology & Analytics in Sales Retailer creation centrally : 100% accuracy of data Real Time Scheme / inputs execution : Zero time lag Efficient business transactions with Retailers Ease of Operations : Any device , any location access. More user friendly Performance dash board
Slide 110: Leveraging Technology & Analytics in Sales
Leveraging Technology & Analytics in Sales RD Automation Pilot Salesman uses HHT while working in RD Markets. Re-Distributor (RD) closing stock inventory captured RD Market outlet summary in application RD Automation RD Secondary Sales data availability Merchandisers are using one standard
Slide 111: Building Capability
Building Capability : Building Capability Our Approach Results 1 NEED ASSESSMENT Enablers 5 2 OUTCOME DESIGN EVALUATION STRATEGY SALES TRAINING People MODEL Engagement Enablement Capability 4 3 TRAINING MATERIAL EXECUTION DEVELOPMENT
Slide 112: Functional Capability Building of Employees & Distributor field force
Functional Capability Building of Employees & Distributor field force Need based intervention SME trainer Pool Localized content Lead by line manager Leverage global expertise Identified Training need Addressed * 94% of Nestle sales force 96% of Distributor field force * Annual Basis
Slide 113: #Winning Everyday @ Market Place enabled by NCE Ways of Working
#Winning Everyday @ Market Place enabled by NCE Ways of Working Daily Operation Reviews at Distributor Point Benefits Improved Collaboration: Distributor, Secondary Sales Force, Merchandiser, Sales Officer Clear Action Plan Escalate Concerns 360 Degree Evaluation – selling merchandising and coll
Slide 114: Nurturing partnership with Distributors over decades
Nurturing partnership with Distributors over decades. Business Partners meet.. Distributors Partners in progress for more than 75 years + : 07 CDs 50 years + : 31 CDs 25 years + : 241 CDs 10 years + : 511 CDs
Slide 115: Building on…
Building on ………. Strong Urban Distribution & Increased Focus on Rural Strong Activation & Leverage Regional Opportunities Our Promise of Product Freshness Use Technology for Efficient and Effective operations Focus on Capability Building Building Enduring Partnerships
Slide 116: Thank You
SOARES _ SSN Nestle \. Good Food, Good Life Thank You Fast.Focused.Flexible