Slide 1: Generating strong growth and returns in PetCare
CAGNY 2023 Generating strong growth and returns in PetCare François-Xavier Roger EVP, Chief Financial Officer
Slide 2: Disclaimer
Disclaimer 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.
Slide 3: Our business is global, balanced and diversified
Our business is global, balanced and diversified 2022 sales of CHF 94.4 bn, with an underlying TOP margin of 17.1% Where we sell What we sell Europe 24% Beverages PetCare Nutrition & Prepared dishes (incl. coffee) Health Science & cooking aids North America 35% 27% 19% 16% 13% Greater China 6% Milk
Slide 4: At a glance: our Purina PetCare business
At a glance: our Purina PetCare business Sales 2022 Where we sell What we sell CHF 18.1 bn Dry dog Wet cat Dry cat North Europe America 26% 60% Greater 30% 32% 19% China 1% Underlying Wet dog Others* TOP margin Latin America AOA 9% 4% 4% 15% 20.5% * Other refers to snacks, litter and therapeutic die
Slide 5: 6 billionaire brands
6 billionaire brands 2022 sales CHF 2.8 bn 2.6 bn 2.4 bn 1.8 bn 1.5 bn 1.4 bn Note: Pro Plan includes Veterinary Diets February 24, 2023 CAGNY 5
Slide 6: Successful track record in Purina PetCare
Successful track record in Purina PetCare Becoming a global leader in 2001 through the Ralston Purina acquisition Increasing contribution to Nestlé results Strong organic growth since acquisition, with recent step-up Sales Underlying TOP (average) PetCare CHF 9.0 bn* PetCare 16% 12% 2002 8.7% 6.2% P
Slide 7: Large global player, with further share opportunities
Large global player, with further share opportunities Strong global position Significant share opportunity in emerging markets Pet care: CHF 96 bn category Mars 21.9% 29% Others 23% 45.6% 21% Purina PetCare 10% 20.6% Hills 3% Private Label Blue 5.1% JM 9.6% Buffalo Smucker 3.3% North Latam Europe AO
Slide 8: Strong market positions in fast-growing segments
Strong market positions in fast-growing segments Dry dog Wet dog Dry cat Wet cat Snacks Market size 35 10 17 17 15 (CHF bn) Market growth 7.5% 7.1% 8.9% 7.5% 9.8% (CAGR ’17 - ’21) Market share 18.0% 11.7% 25.4% 36.3% 9.7% (2021) Source: Euromonitor February 24, 2023 CAGNY 8
Slide 9: Future pet care category growth drivers
Future pet care category growth drivers Expected pet care category CAGR, 2022-2025: 6% - 8% Pet population Calorific coverage in E-commerce Premiumization emerging markets 2013 2022 Online Speciality +31% 77% 79% +5% 2.4% 2.3x CAGR 41% faster 34% Grocery +5% Expected increase in global Pet care cate
Slide 10: Balanced growth supported by premiumization
Balanced growth supported by premiumization Well-balanced growth Broad portfolio of strong brands (Purina PetCare average 2020-2022) Therapeutic Volume 27% Mix 35% Premium Pricing 37% Mainstream February 24, 2023 CAGNY 10
Slide 11: Strong margin and returns while investing for growth
Strong margin and returns while investing for growth Purina PetCare underlying TOP margin Purina PetCare return on invested capital reflecting growth investments + 130 bps 20.3% 20.5% 2013 2022 2013 2022 February 24, 2023 CAGNY 11
Slide 12: Investing to meet higher demand
Investing to meet higher demand Selected Purina PetCare projects: ~ CHF 3 bn, 2022-2025 Dry Dry Wet Eden, NC, Williamsburg Wroclaw, Poland U.S. Township, OH, U.S. Dry & Wet Dry & Wet Wet Vargeão, Tianjin, China Rayong, Thailand Brazil February 24, 2023 CAGNY 12
Slide 13: United States: Pet care category overview & Purina PetCare strategy
United States: Pet care category overview & Purina PetCare strategy Nina Leigh Krueger President & CEO, Nestlé Purina, North America 13
Slide 14: Guinness Caffrey
Guinness Caffrey February 24, 2023 CAGNY 14
Slide 15: Enrich the lives of pets and the people that love them
OUR PURPOSE Enrich the lives of pets and the people that love them OUR BELIEF Pets and People are better together 15
Slide 16: Committed to leading the way in pet nutrition today and tomorrow
Committed to leading the way in pet nutrition today and tomorrow February 24, 2023 CAGNY 16
Slide 17: U.S. pet care category overview
U.S. pet care category overview February 24, 2023 CAGNY 17
Slide 18: U.S. is the largest pet care market globally
U.S. is the largest pet care market globally USD 46 bn pet care category pet care = dog & cat food, treats, supplements and litter 60% of U.S. households own a pet 185 m dog + cat population +4.7 m pets in last 2 years 2x total store (xAOC) growth xAOC = grocery, mass, club, dollar, drugstore, conve
Slide 19: Three key drivers fueling pet care category growth
Three key drivers fueling pet care category growth Additional USD 12.6 bn PREMIUMIZATION between ‘19-’22 (+11% CAGR) SCIENCE-BASED NUTRITION EXPANDABLE CONSUMPTION 78% of growth WET CAT TREATS EMERGING GROWTH AREAS 22% of growth FRESH SUPPLEMENTS Source: Based on NielsenIQ xAOC + Pet Retail + 1010da
Slide 20: Category growth led by e-commerce, with dog the largest segment
Category growth led by e-commerce, with dog the largest segment E-commerce 2x category growth Dog accounts for ~2/3 category Pet care category (sales by channel) Pet care category (sales by sub-category) Cat treats 3% Cat Pet retail E-commerce litter 30% 20% 9% Wet cat Dry dog 13% 37% Dry cat 12% We
Slide 21: Purina PetCare is market leader in U.S. pet care
Purina PetCare is market leader in U.S. pet care Others 25% Private Label 8% #1 in Blue Buffalo Purina PetCare Dry dog 6% 29% Total pet care + Dry cat Wet cat Hills Cat litter 7% JM Smucker 8% Mars 17% Market share 2022 Source: Calendar Year 2022 data for Nielsen xAOC + Pet retail (through 12/31/22)
Slide 22: Pet care category expected to continue delivering strong growth
Pet care category expected to continue delivering strong growth USD 6% - 8% > 57 bn CAGR USD 46 bn 2022 2025 forecast Source: Internal Estimates based on Nielsen xAOC + Pet Retail + 1010data e-commerce + Idexx Vet Clinics February 24, 2023 CAGNY 22
Slide 23: Purina PetCare U.S. key growth strategies & enablers
Purina PetCare U.S. key growth strategies & enablers February 24, 2023 CAGNY 23
Slide 24: Purina PetCare brands well-positioned to win
Purina PetCare brands well-positioned to win 56 m #1 company #1 #1 households 1 pet parents “trust completely” 2 household loyalty 1 share in e-commerce 3 Source: 1) NielsenIQ homescan panel, 52w/e Q3-22; 2) Dimensions research, 26w/e June 2022; 3) 1010data, 52w/e through November 2022 February 24,
Slide 25: Growth acceleration driven by strong brand portfolio
Growth acceleration driven by strong brand portfolio Purina PetCare sales growth Two billionaire brands added since 2018 15% 2018 2022 10% 9% 6% 3% 2018 2019 2020 2021 2022 February 24, 2023 CAGNY 25
Slide 26: Scaling and transforming supply to fuel growth
Scaling and transforming supply to fuel growth Commitment Digital Capex to quality & safety transformation to unlock capacity 100 000 Automation USD 2 bn safety & quality Artificial intelligence investment by 2025 checks conducted daily Robotic operations February 24, 2023 CAGNY 26
Slide 27: Key consumer trends shaping the future of the pet care category
Key consumer trends shaping the future of the pet care category • Evolving human food ideologies • Proactive health management • Social responsibility • Elevated & frictionless experience February 24, 2023 CAGNY 27
Slide 28: Purina PetCare key growth strategies
Purina PetCare key growth strategies Extend category leadership through 1 innovation and premiumization Strengthen consumer connection via 2 omni-channel and Purina ecosystem Create shared value via societal 3 contribution for pets, people and planet February 24, 2023 CAGNY 28
Slide 29: Extending leadership through innovation and premiumization
Extending leadership through innovation and premiumization Drive science-based Elevate feeding Increase presence in solutions experience emerging areas Source: NielsenIQ AOC + Pet retail + 1010data e-commerce + Idexx Vet Clinics (CY2019-2022) February 24, 2023 CAGNY 29
Slide 30: Driving strong growth via digitally-enabled sales
Driving strong growth via digitally-enabled sales Digitally-enabled sales expected to increase Purina PetCare digitally-enabled sales from 25% of pet care category in 2022 more than tripled over the last 4 years to 30% by 2025 USD 3.1 bn Pure play e-commerce > 3x Store-based 20% e-commerce 5% USD 0.
Slide 31: Delivering value for consumers via new business models
Delivering value for consumers via new business models Acquire Drive Deliver first-party data loyalty via App proactive health solutions February 24, 2023 CAGNY 31
Slide 32: Simplifying the pet parenting journey
Simplifying the pet parenting journey TRANSITION TO ADULT FOOD ESTABLISH EARLY FIND SUPPORT CARE NETWORK TRIAL FOOD & TREATS UNEXPECTED HEALTH EVENT PET PARENTING JOURNEY ACCLIMATION PROACTIVE CARE TRANSITION TO ACQUISITION SENIOR Notional representation of the pet care ecosystem February 24, 2023 C
Slide 33: Removing friction in pet parenting experience via Purina ecosystem
Removing friction in pet parenting experience via Purina ecosystem TRANSITION TO ADULT FOOD Petcare services FIND network ESTABLISH SUPPORT Community EARLY CARE NETWORK partners TRIAL Retail FOOD & UNEXPECTED partners TREATS HEALTH EVENT PET OWNERSHIP Veterinary JOURNEY partners ACCLIMATION PROACTIV
Slide 34: Creating shared value by addressing key consumer needs
Creating shared value by addressing key consumer needs Individuals Families Our planet through & communities sustainability Purina U.S. reputation score significantly ahead of pet care industry and U.S. average, reaching all-time high in 2022 Source: 2022 RepTrak survey, N=1065 PURINA RepTrack score
Slide 35: Purina PetCare well-positioned to continue winning in pet care
Purina PetCare well-positioned to continue winning in pet care • Operating in an attractive high-growth category • Portfolio of leading brands, built on deep consumer insights • Deep knowledge of pet nutrition to drive world–class innovation • Committed to continued profitable growth • Creating shar
Slide 36: Thank you
THANK YOU 36 36