Driving Value Creation in the New U.S. Reality Steve Presley Nestlé USA February 23 rd, 2017

Transcription

1 Driving Value Creation in the New U.S. Reality Steve Presley Nestlé USA February 23 rd, 2017

2 USA is a key contributor to Nestlé Global Food Beverage Ice Cream Baking C&S Global Foods % of Nestlé in the USA 14% 8% 7% 3% 3% 1% NUSA ~36% (scope of this presentation) Petcare Waters Nutrition (1) All Other 27% 16% 7% 14% Total USA: $27bn 2 (1) Includes Gerber Life

3 Competing in an ever evolving F&B landscape Low Growth Environment Evolving consumer expectations Profound Retail Channel Shifts Evolving Market Structure Rising Margin Expectations Packaged F&B (1) 2017F vs 2013 (2) 2017F vs 2013 (2) $ flat U 1.2% Aggressive industry-wide cost cutting in a low growth environment External disruption forcing internal Transformation 3 (1) Nielsen measured Retail Channels, excluding alcoholic beverage (2) Nestlé analysis based on Nielsen Syndicated Data, Homescan and industry estimates for F&B

4 Driving continuous Transformation STRATEGIC VIRTUOUS CIRCLE OVERHEADS Matrix organization model Frozen Foods Center of Excellence One Face to the Customer 2017 vs (1) -160 bps TOTAL DELIVERED COST (2) MARKETING & SALES DSD optimization Factory efficiency & footprint Procurement optimization Reduced complexity (-34% SKUs) Digital Center of Excellence Consolidated Media Buy Strategic Pricing -230 bps +9% Marketing expense 4 (1) excludes Confections & Snacks and businesses disposed between 2012 and 2017 (2) Total Delivered Cost includes fixed factory costs, cost of goods sold, and variable & fixed distribution

5 Driving continuous Transformation STRATEGIC VIRTUOUS CIRCLE HQ Repositioning (70% HiPo retention) Functional Operating Model redesign -150 bps (1) Lean Operations (starting in Ice Cream) NBE Simplify, Standardize, Share New Capabilities (e.g. ebusiness, Analytics) Strategic Revenue Management (price & promo optimization) 5 (1) 2020 estimate vs 2016 baseline

6 to expand margins while investing for growth Operating Margin enhancement Cover Input Cost Inflation I&R and Marketing Spend Growth enablement +280 bps (1) Margin Enhancement Pure Acceleration +1% (2) OG Margin expansion Versus a flat/declining 2017 vs USA Food & Beverage (+220 bps vs 2014) market 6 (1) Operating Margin excluding Confections & Snacks, businesses disposed between 2012 and 2017 and restructuring costs (2) excluding Confections & Snacks

7 Pursuing a hybrid growth model Strategically evolving our Portfolio Innovating our Brands to address key Consumer trends Exploring new Innovation Models Investing in High Growth Channels Deploying new growth-enabling Capabilities Unleashing Nestlé s 150 year old innovation heritage 7

8 Strategically evolving our Portfolio +820bps ROIC vs % Growth 2017 (1) ~11% of Total Sales Manage base portfolio to optimize value creation Acquire / Invest in high growth territories Divest businesses with low ability to win 8 (1) Aggregated full calendar year sales growth versus 2016

9 Innovating our brands to address key trends Fit Kitchen ~$45 M sales 60% of sales with Modern NHW benefits New category New category Active Lifestyle Organic / Natural Flavor Solutions & Speed Scratch Ready-to-Drink Craft Premium propositions Savory & Sweet portfolio >600 M sales New business model Super Premium Snacking High Protein ecommerce 9

10 Exploring new innovation models Internal Start-ups Strategic growth territories Intrapeneurs in residence Fast prototyping In-market testing New born-pure brands with Idea-to-Launch < 9 months External Incubation Coach selected startups Access to creativity & new thinking of startup cultures Support with Nestlé's capabilities Joint pilots with Startups Partnering with Vendors Shared opportunities Combined capabilities Engagement during innovation cycles Collaborative ideation and development 10

11 Investing in high-growth channels Brand Example Club CAGR (1) +8% Value $1 Right proposition for each channel (product pack assortment merchandising pricing) Focused Sales development teams 1 st mover with new Retailers Natural New platforms and business models (e.g. Freshly) Enhanced ecommerce fundamentals (search ratings & reviews econtent epacks ) ecom 2017 Sales vs X 11 (1) $ OG CAGR, excluding Confections & Snacks

12 Deploying new growth-enabling capabilities Digital CoE* and ebusiness Unit to accelerate new growth-enabling capabilities Sales analytics driving better promotion and assortment strategies Flexible manufacturing for smaller, faster launches and test & learn Transportation predictive analytics to optimize on-time deliveries and cost Digital Recruiting and analytics to improve hiring and candidates experiences * Center of Excellence empowering our entire workforce to innovate 12

13 In summary Change in the competitive landscape has never been this fast and will never be this slow again Driving a mindset of Continuous Transformation to fuel growth while expanding margins Pursuing a hybrid growth model, including internal and external innovation, to win in the new reality Building growth-enabling capabilities and empowering our workforce to innovate Enhancing margins and seeding growth 13