MEGA TRENDS

Challenges for the

packaging Industry

Mega Trends

• The changing consumer

• The changing retail environment

• The digital world

• Concerns on food safety

• Market polarisation

• Sustainability

Nestlé at a glance

CHF 83.6 billion in sales in 2011

328,000 employees

461 factories

10,000 brands

1 billion Nestlé products sold every day

A product for every moment of every day, from morning to night and from birth to old age

The Changing consumer…….

60 Million Population

47+ Half Adults

10 Million Disabled

8.5 Million Arthritis

9 Million Hearing loss

2 Million Visual Loss

11 Million Children

14 Million Grandparents

1 in 10 Left Handed

8% Men

0.4% Women Colour Blind

3.4 Million Asthma

1.5 Million Diabetes

50 : 50 Gender

Age band

Even today, half the UK

adult population are aged

47 or over.

Cambridge University (UK)

Inclusive Inclusive

Population Change

Put yourself into the shoes of the shopper/consumer

CO

NC

ENTR

ATI

ON

To

p 5

Ret

aile

rs S

ha

re o

f G

roce

ry S

ale

s

Exploration Concentration Penetration Maturity

Value of Top5 in EUR Billion

USA, 307.0

Germany, 113.5

France, 138.3

UK, 122.1

Italy, 40.8

Spain, 44.8

Mexico, 28.3

China, 19.1

Japan, 79.5 Brazil, 21.9

0%

20%

40%

60%

80%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Data sources: MVI research

High and increasing Trade Concentration

3

Alternative business models

Control over total value chain & direct consumer contact

Direct consumers contact (category shop, shop in shop)

Dolce Gusto

Nespresso

Brand channel exclusivity

13

Controlled delivery chain (street vending, home delivery)

Purina Channel

New channels

Fully integrated value chain

Dis-tribution model

…

MAISON CAILLER / 2012 (Switzerland, and global roll out) MAISON CAILLER®, the prestigious inventor of milk chocolate in Switzerland, offers the most intimate exploration of chocolate for the perfect gift or your own personal treat. Branding, Product and packaging design have been developed internally.

Maison Cailler

BabyNes – Advanced Nutrition System (Switzerland)

NUTRITION INFORMATION

LOGO / BRANDING

INGREDIENT LIST

Scanning QR and barcodes

• Code takes you to website or application

• Technology very strong in Japan, and is expanding to many other markets

Augmented reality

Chocapic France Launch

The very first augmented reality consumer good product launched on the

Market !

Nestlé cereal boxes has an “integrated 3D animation” function that encourages consumers to log onto brand

websites

Internet connections

www.chocapic.com website : Total Visits

Pac

ks o

n s

he

lf

X 15 average connections We decided to focus the buzz campaign on one

of the two brands (CHOCAPIC) to compare the buzz effect on visits and sales.

Choose a product Start the app Film the barcode Be located Get sorting advices

Choose a product Start the app & be located

Like or Suggest Film the barcode Tell more by adding video, picture or text.

Concerns about Food safety

A complex supply chain

Resin Manufacturer

Converter

Food Packer

Trade

Consumer Pigment

Manufacturer

Printing Ink Manufacturer

Upstream

Downstream

Adhesive Manufacturer

It is in the interest of all partners of the packaging value chain to have a full knowledge of the

products they sell, including the raw materials they purchase.

Ann. 2 Vade-Mecum for Vendors

Ann. 1 CoC Template

Ann. 2 CoC Example

Ann. 3 Confidentiality

Must be shared with suppliers

List of substances

Abstract Guidance Note on

Packaging Inks

Overview on packaging safety and compliance

GI-80.008

Nestlé Standards

on Materials in Contact with Food

GI-80.103-1

Certificate of Compliance

GI-80.104

Monitoring/ Surveillance

GI-80.100-1

The Packaging Safety Process

GI-80.105-2

Packaging Supplier Audit

GI-80.002-1

Specifications

Polarisation of the market

Premiumization

PPP

Polarisation of the market

PPP

Polarisation of the market

Premiumisation

Mainstream

Emerging

30

>30,000

22,000-30,000

14,000-22,000

3,000-14,000

< 3,000

Emerging Consumers

30

Increase in people who can afford to buy Nestlé products regularly

• Meet nutritional needs in developing countries - low price - high nutritional value - smaller, more affordable, pack sizes

• Different business model, different types of advertising, micro distributors

Products for emerging markets – Popularly Positioned Products

Cost Challenge

Hurdles: - Down size = More packaging / kg

- Product requires same protection.

- Added fortifications might require better protection.

PM over-cost

> 20%

Equivalent price /kg

PPP PPP

Polarisation of the market

Premiumization

Premium and luxury products

• More than just products – the complete experience

• Nestlé Nespresso

• Premium chocolate: Centre of Chocolate Excellence

• Luxury ice creams

• Pet foods

• Waters

Premiumization

1. Eco Design based on Life Cycle Assessment

2. Promote recycling & recovery & use of

recycled materials 3. Materials from sustainably managed

renewable resources 4. Lightweighting

Sustainability by Design

Holistic approach to reducing environmental impact

Recovery

Disposal DOWNSTREAM IMPACT

UPSTREAM IMPACT

Raw material

production Processing Filling

Distribution

Packaging Use

Eco Design

Packaging lightweighting Eco-Shape® bottle Nestlé Waters

Purina Project Density : Reduction of 144’000 pallets

640 Tonnes less packaging material

• product development

• packaging development

• logistics

• marketing & communication.

Excellent feedback from consumers & press -

Contains over 92% renewable materials: PLA & paper

Certified Sustainable Forestry Initiative (SFI) paper.

Soy based printing inks.

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