Slide 1: Prepared Foods USA
Prepared Foods USA Stephen Cunliffe Nestlé Investor Seminar
Slide 2: Forward looking statements
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
Slide 3: Nestlé Global Food SBU
Nestlé Global Food SBU RIG 1999 12.0% 2000 9.1% Nestlé USA 27% 2001 8.8% CAGR 10.3% 2001 Sales: $1.8MM 3 Nestlé Investor Seminar: Stephen Cunliffe
Slide 4: Prepared Foods product portfolio
Single Serve Multi Serve Single Serve Multi Serve Pastas Sauces Taco Night Chiles Salsa Side Dish Side Dish Everyday Family Recipes Fettuccine Marinara Taco Shells HomeStyle Entrees Family Recipes Favorites Skillet Sensations Angel Hair Alfredo Dinner Kits HomeStyle Dinners Family Recipes— Café Clas
Slide 5: Stouffer's & Lean sales growth
1,800 Stouffer’s & Lean growth 1,735 1,600 1,629 1,400 1,456 1,200 1,302 $ SALES NPS 1,147 1,000 ($MM) 1,057 1,020 973 913 800 832 770 786 735 600 678 400 200 0 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 (‘02 Est.) 5 Nestlé Investor Seminar: Stephen Cunliffe
Slide 6: Dollar share
Dollar share 52 wk % Chg Nestlé $1.9MM 30.3 2.1 ConAgra $1.4MM 21.5 -1.0 Heinz $618M 9.9 0.6 Pinnacle $378M 6.0 -0.9 Mars $169M 2.7 -0.2 Source: AC Nielsen ending 8/24/02 6 Nestlé Investor Seminar: Stephen Cunliffe
Slide 7: Competitive environment: regular dinner/entrée
$1,000 $999 Competitive environment $800 Regular dinner/entrée = $3.5BN +1.6% $ SALES ($MM) $600 $406 $400 $368 $308 $200 $167 $161 $131 $0 Stouffer's Banquet Swanson Marie Uncle Ben's Michelina's Boston Callender Market P52W Chg +8.9 -0.9 -10.2 -7.6 -6.1 -16.3 +16.4 Source: AC Nielsen P52W & P13W e
Slide 8: Competitive environment: nutritional dinner/entrée
$1,000 Competitive environment $800 $730 Nutritional Dinner/Entrée = $1.9BN + 6.2% $ SALES ($MM) $600 $463 $389 $400 $200 $54 $0 Lean Cuisine Healthy Choice Weight Watchers Budget Gourmet (Nutritional) P52W Chg +16.9% -4.5% +11.9% -17.8% Source: A.C. Nielsen P52w & P13w ending 8/24/02 -- grocery onl
Slide 9: Buitoni share dominance
Buitoni Buitoni share dominance 70 60.6% +3.4 pts 60 50 Share % 40 DiGiorno 30 17.8% Private Label -4.7 pts 12.9% 20 +1.9 pts Other 8.7% 10 0 Buitoni DiGiorno Private Label Other P52W Chg +5.9% -20.9% +23.8% -10.8% Source: AC Nielsen YTD dollar sales thru 8/10/02 9 Nestlé Investor Seminar: Stephen C
Slide 10: Manufacturing - assets
Manufacturing - assets Year $ Output Location Products Employees Opened (Millions) 1968 Solon, OH Frozen 1,300 660 1970 Stoughton, WI Shelf Stable 109 45 1980 Gaffney, SC Frozen 1,520 645 1987 Springville, UT Frozen 1,560 744 1988 Danville, VA Refrigerated 480 201 10 Nestlé Investor Seminar: Stephen
Slide 11: Fourth frozen food factory
Fourth frozen food factory Location: Jonesboro, AR Projected opening: June 2003 Initial production lines: - Single serve entrees - Bowls - Family size meals Ultimate size: 10 lines 1000+ employees $ output (millions): $800 + 11 Nestlé Investor Seminar: Stephen Cunliffe
Slide 12: Prepared Foods mission
Prepared Foods mission To profitably deliver the Very Best branded meal solutions. 12 Nestlé Investor Seminar: Stephen Cunliffe
Slide 13: Nestlé Investor Seminar: Stephen Cunliffe
13 Nestlé Investor Seminar: Stephen Cunliffe
Slide 14: Chef America: What is a Pocket?
Chef America What is a “Pocket”? • A hand-held entrée • Substantial snacks for “on the go” consumption • Microwaveable dough with a wide variety of fillings • Prepared in 1-2 minutes • 50% of frozen hand-held category 14 Nestlé Investor Seminar: Stephen Cunliffe
Slide 15: Chef America: Nestlé bought
Chef America Nestlé bought: • A strong position in another growing category • Younger users and new usage occasions • Excellent record of renovation and innovation • Manufacturing scale, proprietary knowledge • and experience • Outstanding margins and growth record • A strong plan for future growth
Slide 16: Chef America: Nestlé will add
Chef America Nestlé will add: • Increased rate of investment in • manufacturing capacity and automation • new product launches • brand building • New channels of distribution • Supply chain efficiencies • New geographic markets 16 Nestlé Investor Seminar: Stephen Cunliffe
Slide 17: Key objectives
Key objectives • Continue to strengthen leadership of frozen meals into Stouffer’s and Lean Cuisine • Benefit from consumer trends to remain key component of Nestlé USA’s RIG • Drive profitable volume to secure planned return on Jonesboro plant investment • Establish Buitoni – global strategic brand
Slide 18: Key strategies
Key strategies Leveraging our core competitive competencies Renovation / Innovation • Innovation in process, products and platforms • Continuous renovation • Focus on quality Product Availability • Trade category leadership • Refrigerated channel competence Consumer Communications • Leveraging consu
Slide 19: Innovation in process, products and platforms
Innovation in process, products and platforms • Frozen R&D center recently relocated to Solon campus • Focus on: - proprietary process technologies - global product concepts • State of the art technologies for Jonesboro factory • “Target 2004” cost reductions • Support for 60/40 initiative 19 Nestlé
Slide 20: Continuous renovation
Continuous renovation Dedicated product development group leads recipe & process development, concept through commercialization Key competencies: – Food technology & processing – Culinary – Project management – Consumer understanding 20 Nestlé Investor Seminar: Stephen Cunliffe
Slide 21: Commitment to quality
Commitment to quality • Continuously monitor frozen category product quality – 7,500 consumers a year purchase retail product & evaluate – Nestle and key competition – Stouffer’s top quality in industry – Lean Cuisine significantly better than Healthy Choice • 60/40 testing 21 Nestlé Investor Semina
Slide 22: Bringing category leadership to retailers
Bringing category leadership to retailers • Stouffer’s category expertise allows retailers to make informed decisions that lead to optimizing category growth and profits • Stouffer’s continues to partner with retailers to develop and test category leading solutions to drive growth • Voted Frozen Foo
Slide 23: Refrigerated channel competence
Refrigerated channel competence • Short shelf-life supply chain competence originally created for fresh pastas and sauces • Allows extension of other Nestlé brands into refrigerated channel – e.g., Nestlé Toll House Cookie Dough 23 Nestlé Investor Seminar: Stephen Cunliffe
Slide 24: Leveraging consumer insights: Stouffer's Family Style Recipes
Leveraging consumer insights: Stouffer’s Family Style Recipes • Identified target consumer as “Time-Crunched Jugglers” – Meal planning and preparation is not a priority and she often resorts to last minute meal solutions like fast food or pizza delivery • Insight – “I’d like to serve a home-cooked m
Slide 25: Quality of marketing support
Quality of marketing support Nestlé ConAgra Heinz Pinnacle Mars $ Share 30.3 21.5 9.9 6.0 2.7 % Trade promo share 26.8 26.3 11.8 5.5 2.5 Trade promo share 88 123 120 92 93 index SOV% 61 12 6 8 12 SOV Index 203 55 61 132 400 Support strategies differ by company Source: AC Nielsen P52W ending 8/24/02
Slide 26: Manufacturing – importance of scale
Manufacturing – importance of scale • 3 very large frozen manufacturing plants • Average 1,400 - 1,700 employees • Produce over 3 million packages daily • Produce over 1 billion servings per year • Manufactures 99+% of all Stouffer and Lean Cuisine retail and FoodServices products sold in North Amer
Slide 27: Currently
Currently • Leadership position in the frozen meals, the largest frozen food category • Excellent record of profitable growth • Recent acquisition of leadership in strategic hand- held category • Focused businesses with strong consumer trusted brands 27 Nestlé Investor Seminar: Stephen Cunliffe
Slide 28: Three years out
Three years out • Minimum 33% share of frozen meals • Development of Chef America • Focus on key brands • Continued high levels of RIG • Improved EBITA% 28 Nestlé Investor Seminar: Stephen Cunliffe
Slide 29: Prepared Foods USA
Prepared Foods USA Nestlé Investor Seminar