ICO World Coffee Conference

A Global Brand 'Opening Up' New and Increasing Coffee Demand

Presented by

Gordon GillettSenior Vice President Nestec Ltd

1

• 2000 105.5 Mn bags = 760 Bn Cups

2

World Coffee Consumption (Mn's Bags and Billions of Cups)

70

75

80

85

90

95

100

105

110

1980 1990 2000 1993 1994 1995 1996 1997 1998 1999 2000

Mil

lion

s of

60

Kg

Bag

s

500

550

600

650

700

750

800

Bil

lion

s of

Cup

s

Millions of Bags Billions of Cups

• 1-2% Long Term Growth

% Change in Coffee Demand (yr-yr) and Real Price Index Long Term Average 1.5%

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

6 6 /6 7 6 8 /6 9 7 0 /7 1 7 2 /7 3 7 4 /7 5 7 6 /7 7 7 8 /7 9 8 0 /8 1 8 2 /8 3 8 4 /8 5 8 6 /8 7 8 8 /8 9 9 0 /9 1 9 2 /93 9 4 /9 5 9 6 /9 7 9 8 /99 0 0 /0 1

% C

hang

e in

Dem

and

0.0

50.0

100.0

150.0

200.0

250.0

Pric

e In

dex

Annual % Change Historical AverageReal Coffee Price Index

3

• Nestlé– 1980 Green Usage = 6.5m bags– 2000 Green Usage = 12.2m bags

• World– 1980 Green Usage = 80m bags– 2000 Green Usage = 105.5m bags +32%

4

• In-Home 72% and Out of Home 28%

Consumption By Location

0

20

40

60

80

100

Soluble R&G RTD Total

%

In Home (Retail) Out of Home (Food Service)

Roast and Ground 69%, Soluble 29% and Ready to Drink (RTD) 2%

5

World Coffee Market % Volume Growth (1990-1999)

• Soluble in Producing/Emerging Markets and Eastern Europe is leading the way.

R&G Soluble TotalProd/Emerging 24 47 30E Europe 3 417 70Tea Culture 17 -3 1N America -3 -24 -8Cont Europe -4 13 -1Total 6 23 10

6

• Producing/Emerging Markets now the largest share

7

1980

28%

4%

8%25%

35%

Prod/Emerging E Europe Tea Culture

N America Cont Europe

2000

34%

9%10%

17%

30%

Prod/Emerging E Europe Tea Culture

N America Cont Europe

U.KUSAJapanRussiaMexicoSouth AfricaPhilippinesFranceSouth KoreaGermany

• Top 10 Account for 60% of Sales

8

• Lower Retail Prices Follow the Green Decline

Green Coffee Prices and UK Retail Soluble Prices(Adjusted for Inflation)

80

90

100

110

120

130

140

150

160

Mar.86

Mar.87

Mar.88

Mar.89

Mar.90

Mar.91

Mar.92

Mar.93

Mar.94

Mar.95

Mar.96

Mar.97

Mar.98

Mar.99

Mar.00

UK

Ret

ail S

olub

le P

rice

Inde

x

0.00

50.00

100.00

150.00

200.00

250.00

Com

posi

te C

offe

e Pr

ice

(c/lb

)

UK Retail Coffee Price Index (Real Terms) Composite Coffee Price (c/lb)

9

• World p.c Consumption room for Growth

Coffee Consumption and Income Per Capita(World Average 1kg pc, $6,800)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

0 5'000 10'000 15'000 20'000 25'000 30'000 35'000 40'000

Income $ p.c

Cof

fee

Kg

p.c

Finland

USA

World

10

• The Mature Markets– Opening Up the Young Consumer– UK

• Eastern Europe– Opening up Accessibility– Russia

• Producing and Emerging Markets– Opening Up Opportunity– Philippines to China

11

• Appealing to the Younger Generation in the UK

12

• Increasing Availability in Russia

13

• Affordability and Convenience for China and the Far East

14

(Mil 60 KgBags)

• World Demand at least 115m bags in 2005

Region/Group 2000 2005ConsumersN & S America 22.2 23.0W Europe 37.0 38.0E Europe 7.8 10.0Asia/Oceania 9.8 12.0Africa 3.3 3.5Total 80.4 86.5Producers 25.1 28.5World 105.5 115.0

15