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Management Report 2000<br />
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
The strength of <strong>Nestlé</strong>’s br<strong>and</strong>s has given the company an unparalleled position on a<br />
global basis across a wide range of product categories. Six worldwide corporate<br />
br<strong>and</strong>s, <strong>Nestlé</strong>, Nescafé, Nestea, Maggi, Buitoni <strong>and</strong> Friskies contribute about 70% of<br />
the group's total sales, with the <strong>Nestlé</strong> br<strong>and</strong> itself contributing 40%. These br<strong>and</strong>s<br />
are the first choice of consumers around the world, whether as st<strong>and</strong> alone br<strong>and</strong>s or<br />
in combination with product br<strong>and</strong>s such as KitKat <strong>and</strong> LC1. <strong>Nestlé</strong> also owns regional <strong>and</strong> national br<strong>and</strong>s with which consumers have a close<br />
<strong>and</strong> often longst<strong>and</strong>ing familiarity. These br<strong>and</strong>s enable consumers to express their<br />
individuality <strong>and</strong> to respect their traditions whilst still enjoying the quality of a <strong>Nestlé</strong><br />
product <strong>and</strong>, as such, are key elements of the <strong>Nestlé</strong> portfolio.<br />
<strong>Nestlé</strong>’s br<strong>and</strong>s <strong>and</strong> products are the focus of continual innovation <strong>and</strong> renovation so<br />
that they will be relevant <strong>and</strong> appealing to today’s <strong>and</strong> tomorrow’s consumers. As<br />
important as ensuring that our br<strong>and</strong>s meet <strong>and</strong> beat our consumers’ expectations is<br />
ensuring that they are available whenever, wherever <strong>and</strong> however our consumers<br />
want them.<br />
The terms in italics are registered trademarks of the <strong>Nestlé</strong> Group.<br />
27
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Beverages<br />
With well over 3000 cups drunk every second, sales of Nescafé have been growing<br />
ever since 1938 when <strong>Nestlé</strong> launched the first commercially successful soluble<br />
coffee. Nescafé, which today includes ready-to-drink varieties, is by far the world’s<br />
most popular br<strong>and</strong> of coffee. The Group markets traditional roasted coffees in<br />
several European countries, as well as espresso coffee in capsules through Nespresso.<br />
<strong>Nestlé</strong> is also the worldwide leader in chocolate/malt beverages, with br<strong>and</strong>s such as<br />
Nesquik, Milo <strong>and</strong> Nescau. <strong>Nestlé</strong> is present in fruit juices, where its most important<br />
br<strong>and</strong> is Libby’s in the United States, <strong>and</strong> in tea-based drinks, particularly soluble <strong>and</strong><br />
ready-to-drink Nestea. <strong>Nestlé</strong> is the world leader in mineral <strong>and</strong> spring water through<br />
br<strong>and</strong>s such as Vittel, Contrex, Perrier, S.Pellegrino, Levissima, Vera, Panna, Fürst<br />
Bismarck <strong>and</strong> Naleczowianka in Europe <strong>and</strong> Arrowhead, Pol<strong>and</strong> Spring, Zephyrhills,<br />
Deer Park <strong>and</strong> Ozarka in the United States. The roll out of the <strong>Nestlé</strong> Pure Life br<strong>and</strong>,<br />
successfully launched in Pakistan in 1998 <strong>and</strong> in Brazil in 1999, has continued in Asia<br />
<strong>and</strong> Latin America in 2000 <strong>and</strong> will spread rapidly into other emerging markets.<br />
A spring water under the <strong>Nestlé</strong> Aquarel br<strong>and</strong> was launched in five European<br />
countries in 2000.<br />
2000 1999 1998<br />
Sales 23 044 20 859 19 879<br />
Trading profit 4 318 3 764 3 253<br />
Capital expenditure 936 618 593<br />
In millions of CHF<br />
28
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
The finest quality coffee<br />
<strong>Nestlé</strong> has ever produced<br />
(Japan).<br />
Sales Nescafé sales continued to grow strongly,<br />
particularly due to the economic rebound in Eastern<br />
Europe <strong>and</strong> the success of complete coffee mixes<br />
in the developing markets of South East Asia.<br />
2000 was also marked by vigorous innovation <strong>and</strong><br />
renovation of the Nescafé portfolio, which delivered<br />
new product launches across all continents.<br />
Our proprietary research into coffee extraction <strong>and</strong><br />
aroma development created a milestone in the history<br />
of Nescafé through a quantum leap in quality for<br />
Nescafé Gold Blend. The result is the best soluble<br />
coffee ever produced by <strong>Nestlé</strong>. It has gained massive<br />
approval by consumers following its launch in the<br />
UK <strong>and</strong> Japan, two of our biggest markets for coffee.<br />
Meanwhile, Eastern Europe is the focus of a major<br />
marketing effort to make Nescafé part of the daily way<br />
of life in those countries. The superior quality of<br />
Nescafé Classic in Russia, for example, is now matched<br />
by new packaging with high on shelf visual impact.<br />
30<br />
Complete coffee mix<br />
for a refreshing cold drink<br />
(Korea).<br />
Different types of Nescafé<br />
for younger consumers<br />
(the Netherl<strong>and</strong>s).<br />
A key challenge is to develop tomorrow’s coffee<br />
drinkers by attracting today’s young consumers to<br />
Nescafé. We are continually creating Nescafé<br />
variations to build a following within this target group.<br />
Examples include Nescafé Nes in France, Nescafé<br />
for you in the Netherl<strong>and</strong>s, which is a range of<br />
flavoured coffees in convenient single serve sticks, <strong>and</strong><br />
Nescafé Ice, a bottled ready to drink beverage<br />
successfully tested in the UK.<br />
We upgraded the packaging <strong>and</strong> product quality of<br />
the Nescafé portfolio in Mexico with, for example, the<br />
introduction of a new coffee aroma in the premium<br />
range. The result has been record volume growth.<br />
Nespresso improved upon last year’s strong<br />
performance, driven by exciting new colour machine<br />
variants, additional customer services from Nespresso<br />
Club <strong>and</strong> the addition to its web site of a new online<br />
order service that has immediately achieved a high
The Nespresso system for a<br />
perfect espresso every time.<br />
level of consumer acceptance <strong>and</strong> has become an<br />
important business channel. Visibility has been<br />
enhanced <strong>and</strong> sales stimulated by the creation of<br />
shop-in-shops, a proven route to market for luxury<br />
br<strong>and</strong>s, in major European department stores <strong>and</strong><br />
by its first boutique store in Paris.<br />
<strong>Nestlé</strong>’s major chocolate/malt beverage br<strong>and</strong>s,<br />
especially Nesquik <strong>and</strong> Milo, have been given<br />
a heightened visual impact. This has led to greater<br />
competitiveness <strong>and</strong> br<strong>and</strong> loyalty. The combination<br />
of worldwide promotional activity <strong>and</strong> availability<br />
in out of home through chilled <strong>and</strong> shelf stable ready<br />
to drink packs ensured increasing numbers of regular<br />
consumers <strong>and</strong> generated increased awareness of<br />
the intrinsic quality of our br<strong>and</strong>s.<br />
In the iced tea category, sales of Nestea continued<br />
to make progress though our joint venture with<br />
Coca-Cola, with market share growth achieved in the<br />
key markets of North America <strong>and</strong> Europe.<br />
New dynamic pack designs to<br />
attract young consumers.<br />
Water Sales saw continued growth in 2000 as Perrier<br />
Vittel responded to European consumers’ dem<strong>and</strong><br />
for a lower priced spring water with the launch<br />
in Spain, Portugal, France, Belgium <strong>and</strong> Germany of<br />
the low mineral content <strong>Nestlé</strong> Aquarel. In the year<br />
ahead, we will exp<strong>and</strong> it to other European countries.<br />
Meanwhile, product innovations such as “Contrex<br />
Beauty Water” <strong>and</strong> “Vittel Fruits”, a mineral<br />
water enriched with fruit juices <strong>and</strong> natural flavours,<br />
stimulated dem<strong>and</strong> for the existing br<strong>and</strong>s.<br />
Our water business continued to exp<strong>and</strong> rapidly in<br />
the United States, particularly in the fast-growing PET<br />
segment. Our leading position was reinforced through<br />
innovative packaging such as the “32oz wide mouth”<br />
bottle, aimed specifically at the younger “on the go”<br />
segment. In the Home <strong>and</strong> Office channel, sales were<br />
stimulated by the launch of a new 5 gallon bottle,<br />
incorporating a h<strong>and</strong>le, <strong>and</strong> by improved distribution.<br />
31<br />
Launched in 2000,<br />
in Europe.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Beauty Water<br />
with enriched<br />
flavours.<br />
The launch of <strong>Nestlé</strong> Pure Life has been the catalyst<br />
for the continued development of our position<br />
in emerging markets, particularly China, Mexico,<br />
Philippines, Thail<strong>and</strong> <strong>and</strong> Argentina. This br<strong>and</strong><br />
will be rolled out rapidly in other emerging markets.<br />
The Group has also developed a Home <strong>and</strong> Office<br />
business in Argentina, Pakistan <strong>and</strong> China, as well as,<br />
at the end of the year, our first European Home<br />
<strong>and</strong> Office business in the UK. We will take this sector<br />
into other countries in the years ahead.<br />
Profit<br />
Trading profit increased by 15% <strong>and</strong> margins<br />
improved thanks to favourable commodity prices<br />
<strong>and</strong> to a strong sales progression. The profitability<br />
of Water continues its progression despite a<br />
sharp PET cost increase, due to volume growth,<br />
<strong>and</strong> productivity improvements, as well as some<br />
non-recurring items.<br />
32<br />
Pure <strong>and</strong> safe<br />
for emerging<br />
markets.<br />
Perrier special edition<br />
for Wimbledon.<br />
The new “wide<br />
mouth” bottle.<br />
Capital expenditure Capital expenditure increased<br />
from CHF 618 million to CHF 936 million. We installed<br />
the new manufacturing process for Nescafé Gold Blend<br />
in Japan <strong>and</strong> invested in new vending machines<br />
following the acquisition of the vending part of UCC<br />
Ueshima Coffee Co. Ltd. We also continued to invest in<br />
our water business, supporting the launch of <strong>Nestlé</strong><br />
Pure Life in Argentina, China, Mexico, the Philippines<br />
<strong>and</strong> Thail<strong>and</strong>, increasing our PET capacity in the US,<br />
as well as building a new factory for Pol<strong>and</strong> Spring.<br />
Acquisitions We acquired the vending part<br />
of UCC Ueshima Coffee Co. Ltd. in Japan, which<br />
has considerably reinforced <strong>Nestlé</strong>’s position in the<br />
massive ready to drink coffee sector; Nescafé is now<br />
available anytime, anywhere in ready to drink form<br />
from over 300 000 vending machines in Japan.<br />
We also made a number of acquisitions in water<br />
over the year, including Kekkuti in Hungary, Aberfoyle<br />
in Canada <strong>and</strong> Valvita in South Africa. In the Home<br />
<strong>and</strong> Office sector we acquired Black Mountain in the<br />
United Sates <strong>and</strong> Fresh Water in Argentina.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Milk products, nutrition <strong>and</strong> ice cream<br />
<strong>Nestlé</strong> has long been a major player in the dairy business worldwide, originally with<br />
well known shelf stable br<strong>and</strong>s such as Nido, Nespray, La Lechera <strong>and</strong> Carnation, then<br />
building a strong international presence in chilled dairy <strong>and</strong> ice cream under<br />
the <strong>Nestlé</strong> br<strong>and</strong>. Innovation <strong>and</strong> renovation play a major role in the development<br />
of milk based products as well as of breakfast cereals, managed as a joint venture<br />
with General Mills. The area of nutrition, with its benefits to health, well-being <strong>and</strong><br />
fitness, is having a significant impact on the development of our business. A wide<br />
range of added value products such as start-up <strong>and</strong> follow-up formulas, growing-up<br />
milks, cereals, enteral diets, oral supplements <strong>and</strong> performance foods are actively<br />
developed <strong>and</strong> brought successfully to market under the <strong>Nestlé</strong> br<strong>and</strong>.<br />
2000 1999 1998<br />
Sales 21 974 19 411 19 175<br />
Trading profit 2 620 2 168 1 837<br />
Capital expenditure 530 366 576<br />
In millions of CHF<br />
34
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Flavoured skimmed milk<br />
with sweetener, enriched<br />
with calcium <strong>and</strong> iron.<br />
Sales Shelf stable dairy products showed strong<br />
growth in 2000 as a result of both our increased pace<br />
of innovation <strong>and</strong> the better economic situation in<br />
Asia <strong>and</strong> Latin America.<br />
We have followed the successful launches of 1999<br />
with roll-outs into our main markets of value-added<br />
products such as pre-school milks with the<br />
Prebio 1 br<strong>and</strong>ed active ingredient <strong>and</strong> adult milks<br />
with Omega 3:6.<br />
Our innovation has been focused at making traditional<br />
products attractive to new consumers. Examples<br />
include Molico flavoured non-fat milk powders with<br />
chocolate <strong>and</strong> strawberry in Brazil; flavoured<br />
sweetened condensed milk stick packs sold in Brazil<br />
<strong>and</strong> Chile; <strong>and</strong> special packs with small plastic<br />
Disney characters in Colombia.<br />
36<br />
Stick pack of<br />
calcium-enriched<br />
sweetened<br />
condensed milk.<br />
Natural, creamy yoghurts<br />
enriched with calcium.<br />
We have also re-entered Bangladesh with Nido full<br />
cream milk powder <strong>and</strong> Blue Cross milk drinks<br />
<strong>and</strong> we launched a UHT <strong>Nestlé</strong> milk in the Mumbai<br />
region of India, the second largest market in the<br />
world for cows’ milk.<br />
Meanwhile, subsequent to the letter of intent<br />
signed with Snow Br<strong>and</strong> Milk <strong>Products</strong> Co. Ltd.<br />
in Japan, we have reached an agreement to establish<br />
a marketing joint venture. <strong>Nestlé</strong> br<strong>and</strong>ed yoghurts<br />
will be launched around May 2001 under the Everyday<br />
<strong>and</strong> Sveltesse br<strong>and</strong>s. Snow Br<strong>and</strong> will be responsible<br />
for the primary activities of manufacturing <strong>and</strong><br />
distribution, <strong>Nestlé</strong> for marketing, quality assurance<br />
<strong>and</strong> product development.<br />
Whilst the chilled dairy category has not grown<br />
at the same rate as shelf stable, important markets<br />
including France, Portugal, Spain, Mexico <strong>and</strong><br />
Hong Kong delivered strong performances.
A spiral of lightly whipped<br />
yoghurt <strong>and</strong> fruit purée.<br />
Several initiatives during the year have strengthened<br />
the market positions of our br<strong>and</strong>s, especially the<br />
relaunch of LC 1 in Germany, Italy <strong>and</strong> Spain, the launch<br />
of Yoco (children’s nutrition) in Spain, Belgium <strong>and</strong><br />
Germany, the expansion of the Pak Fook soya product<br />
br<strong>and</strong> in Hong Kong <strong>and</strong> the introduction of character<br />
licensed products such as Disney <strong>and</strong> Pokemon<br />
in Australia, Argentina <strong>and</strong> Hong Kong. We also<br />
incorporated Br<strong>and</strong>ed Active Ingredients into strong<br />
nutrition br<strong>and</strong>s such as Sveltesse <strong>and</strong> Mio.<br />
Further major initiatives during 2000 included<br />
increasing the availability of chilled dairy products<br />
through sales to schools, hospitals, airlines <strong>and</strong><br />
through vending machines <strong>and</strong> innovative “on the go”<br />
concepts such as stick packs.<br />
Low fat yoghurt enriched<br />
with calcium <strong>and</strong> vitamin D<br />
to help build stronger bones.<br />
<strong>Nestlé</strong> has entered Pakistan, a high growth potential<br />
market for chilled dairy products. It has also acquired<br />
the remaining minority shareholding of Mis Süt, which<br />
is now integrated into <strong>Nestlé</strong> Turkey, to strengthen<br />
<strong>Nestlé</strong>’s position in this key market.<br />
Infant nutrition grew at a high rate mainly because<br />
of a strong recovery in Asia. Infant cereals achieved<br />
substantial growth with good performances in key<br />
markets such as Brazil <strong>and</strong> India. Sales of baby foods<br />
in jars, marketed primarily in Europe, remained<br />
stable, whilst <strong>Nestlé</strong> infant nutrition was successfully<br />
introduced to the Spanish food trade.<br />
The geographical expansion of the innovative probiotic<br />
BL concept, as well as its extension into new infant<br />
product categories, has continued, whilst our first<br />
range of baby foods in long shelf life plastic pots won<br />
consumer <strong>and</strong> trade acceptance in Europe.<br />
37<br />
Cereals with BL Bifidus.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Cereal bar adapted<br />
for diabetics.<br />
Clinical nutrition enjoyed accelerated growth in 2000,<br />
particularly in North America. In Europe, notably in<br />
France, the Clinutren range of oral supplements gained<br />
good acceptance <strong>and</strong> increased its market share<br />
significantly. Those Asian <strong>and</strong> Latin American markets<br />
which <strong>Nestlé</strong> entered in 1999 showed good progress,<br />
<strong>and</strong> our geographic expansion continued during 2000.<br />
New products included Nutren Junior <strong>and</strong> Peptamen<br />
Junior, in powder form, for children over 1 year, <strong>and</strong><br />
Nesvital, which offers simple <strong>and</strong> efficient solutions<br />
for particular dietary requirements such as a high<br />
protein drink for slimming <strong>and</strong> a balanced cereal bar<br />
for diabetics.<br />
Performance nutrition has continued to create<br />
value-added foods which have a positive impact on<br />
consumers’ health <strong>and</strong> well-being, as well as<br />
tasting good.<br />
Natural active ingredients which have been identified<br />
<strong>and</strong> scientifically proven to have specific functionality<br />
in digestion, bone density, cholesterol level <strong>and</strong> infant<br />
nutrition are being incorporated into an ever wider<br />
38<br />
Nutren Junior<br />
is a nutritionally complete<br />
diet for children.<br />
A new concept of vending<br />
machine in Spain.<br />
range of <strong>Nestlé</strong> products around the world. These<br />
include probiotics in infant products, prebiotics <strong>and</strong><br />
Omega 3:6 fatty acids in milk products, as well as<br />
calcium in yoghurts, cereals <strong>and</strong> beverages.<br />
The ice cream business strengthened its market<br />
position during 2000 by further exp<strong>and</strong>ing its<br />
distribution <strong>and</strong> introducing creative new products<br />
such as Smarties Pop Up in Europe, Milo Cup<br />
in Australia <strong>and</strong> Duets in Spain.<br />
Our blue swimming pool visual identity has proven<br />
highly impactful, delivering immediate recognition <strong>and</strong><br />
strong br<strong>and</strong> appeal to consumers. We have, therefore,<br />
continued its extension into all markets. This is a key<br />
element in our drive to increase the visibility <strong>and</strong><br />
availability of our products.<br />
Another initiative to improve availability was a new<br />
type of vending machine in Spain, based on a<br />
packaging innovation, which allowed us to reach<br />
additional outlets such as shopping malls,<br />
amusement parks <strong>and</strong> theatre complexes. We also<br />
extended our presence in the townships of<br />
South Africa through the use of specially conceived<br />
points of sale.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Milo ScoopShake:<br />
a successful launch<br />
in Australia.<br />
Poor climatic conditions had an impact on volumes<br />
in the critical Summer period in most of Europe,<br />
but highlights included the particularly strong<br />
performances in Russia, Mexico <strong>and</strong> South-East Asia,<br />
as well as the positive start to our joint venture<br />
with Häagen Dazs in the United States.<br />
Cereal Partners Worldwide (CPW), our joint venture<br />
with General Mills for breakfast cereals outside North<br />
America, now operates in nearly 80 countries which,<br />
together, account for three quarters of breakfast cereal<br />
consumption outside the United States <strong>and</strong> Canada.<br />
2000 was another successful year for the joint venture<br />
which saw good volume growth in Continental Europe,<br />
Asia <strong>and</strong> Latin America supported by increases in<br />
market share in most countries. CPW’s consolidated<br />
market share in the countries where it operates<br />
has progressed to an estimated 21%, a strong number<br />
two position.<br />
40<br />
Twice the pleasure:<br />
ice cream <strong>and</strong> real Smarties.<br />
A fun <strong>and</strong> innovative way<br />
to eat ice cream in Spain.<br />
CPW launched La Lechera in Mexico <strong>and</strong> Moça in Brazil<br />
to capitalise on the strength of <strong>Nestlé</strong>’s sweetened<br />
condensed milk br<strong>and</strong>s in those markets. Additionally,<br />
CPW exp<strong>and</strong>ed Crunch cereal into several European<br />
markets <strong>and</strong> Cini Minis into Pol<strong>and</strong>, all of which<br />
contributed to the positive overall result.<br />
Profit<br />
Trading profit rose by 21%. Dairy shelf stable<br />
milk products saw a further recovery in margins,<br />
particularly in Latin America. Nutrition also improved<br />
results, assisted by strong volume growth, while<br />
refrigerated dairy products had to face difficult<br />
situations in some European markets. Despite<br />
unfavourable climatic conditions in Europe, ice cream
Breakfast cereal,<br />
new to Mexico.<br />
improved its profitability globally thanks to<br />
an increased performance in both North <strong>and</strong> Latin<br />
America.<br />
Capital expenditure Capital expenditure increased<br />
from CHF 366 million in 1999 to CHF 530 million.<br />
We increased our capacity for ice cream in Mexico<br />
<strong>and</strong> breakfast cereal in Pol<strong>and</strong> <strong>and</strong> Mexico. We<br />
also invested in a chilled dairy factory in Istanbul to<br />
support the launch of Petit Yoco in Turkey. We<br />
rationalised our milk production facilities in the UK.<br />
In South-East Asia <strong>and</strong> Oceania we are restructuring<br />
around a few focused core factories in Australia,<br />
the Philippines, Malaysia, Thail<strong>and</strong> <strong>and</strong> Indonesia<br />
which will be producing milk powder, infant formula,<br />
infant cereals <strong>and</strong> liquid milks for the different<br />
markets of the region.<br />
Energy bars <strong>and</strong> gel for athletes<br />
<strong>and</strong> sports enthusiasts.<br />
Acquisitions<br />
In April, we acquired PowerBar Inc<br />
in the US, the leader in the emerging energy<br />
bar category. This company takes <strong>Nestlé</strong> into sports<br />
nutrition <strong>and</strong> offers a range of premium energy bars,<br />
gels <strong>and</strong> drinks. These products are used <strong>and</strong> endorsed<br />
by world-class athletes <strong>and</strong> are increasingly popular<br />
with sports enthusiasts <strong>and</strong> consumers with active<br />
lifestyles.<br />
41
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Prepared dishes, cooking aids<br />
<strong>and</strong> pet care<br />
A diversified range of soups, stocks, sauces <strong>and</strong> culinary preparations, primarily<br />
under the Maggi br<strong>and</strong>, is adapted to local tastes, recipes <strong>and</strong> ingredients in<br />
each country. Maggi instant noodles are sold in the Far East-Pacific area, as well as<br />
Europe, Africa <strong>and</strong> Latin America. <strong>Nestlé</strong>’s frozen prepared dishes are marketed<br />
mainly under two br<strong>and</strong>s, Stouffer’s in the United States <strong>and</strong> Maggi in other regions<br />
of the world. <strong>Nestlé</strong> is present in Italian cuisine with Buitoni pastas <strong>and</strong> sauces, both<br />
refrigerated <strong>and</strong> shelf stable. The Buitoni range also includes a wide choice of frozen<br />
pizzas <strong>and</strong> recipe dishes. In Europe, a full range of delicatessen products <strong>and</strong> cold<br />
meats is available under the Herta br<strong>and</strong>. The Group also manufactures cold sauces<br />
<strong>and</strong> condiments under various br<strong>and</strong>s such as Thomy, Crosse & Blackwell <strong>and</strong> Winiary.<br />
Our increasingly important pet care business, under the Friskies br<strong>and</strong>, is a strong<br />
number two in the global market.<br />
2000 1999 1998<br />
Sales 20 632 20 185 18 765<br />
Trading profit 1 948 1 850 1 617<br />
Capital expenditure 390 464 442<br />
In millions of CHF<br />
42
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Sales<br />
The substantial increase in sales <strong>and</strong> profit<br />
reflects the good performance of cooking aids<br />
<strong>and</strong> prepared dishes, the Group’s priorities in the<br />
culinary sector. This is the result of a strong focus on<br />
local food <strong>and</strong> cooking habits as well as constant<br />
innovation <strong>and</strong> renovation of the traditional, high<br />
potential dehydrated products categories. Stocks,<br />
sauces <strong>and</strong> soups, in particular, showed very<br />
satisfactory results, partially due to increasing<br />
penetration <strong>and</strong> geographical extension, notably<br />
in Central <strong>and</strong> Eastern Europe, Asia <strong>and</strong> Africa.<br />
We introduced a range of liquid stocks in the<br />
Netherl<strong>and</strong>s, where Maggi already enjoys a leading<br />
position with traditional stock cubes. In France we<br />
launched an innovative range of seasonings for rice<br />
in convenient stick-packs, Maggi Parfum de Riz.<br />
In West <strong>and</strong> Central Africa the Maggi stocks business<br />
maintained its stellar performance whilst, in Russia,<br />
2000 marked the start of local production<br />
of Maggi stocks.<br />
44<br />
Involved cooking<br />
of contemporary food<br />
in Germany.<br />
Chicken is the leading<br />
stock flavour in Russia.<br />
Recipe Mix concept in tablets<br />
for authentic Malaysian dishes.<br />
In Asia, where “cooking from scratch” remains the<br />
tradition, we are continuously improving our position<br />
in dehydrated cooking aids. In Malaysia we launched<br />
a paste recipe mix range, targeted at the country’s<br />
different ethnic groups.<br />
Under the Fix br<strong>and</strong>, Maggi Germany launched two<br />
new recipe mix concepts for Wrap’s (Mexican style<br />
tortillas) <strong>and</strong> Fingerfood. We introduced this category,<br />
where Maggi is the leader, 25 years ago. It continues<br />
to grow, driven by constant innovation of recipes<br />
adapted to new ways of cooking.<br />
In France, we introduced a range of instant soups<br />
under the Maggi Sveltesse br<strong>and</strong> in new <strong>and</strong> innovative<br />
stick-packs, whilst the Czech <strong>and</strong> Slovak Republics<br />
saw the successful launch of a new Maggi soup range<br />
where the consumer has only to add an egg to achieve<br />
home-made quality. Brazil, meanwhile, benefited<br />
from the introduction of the Maggi “Sopas de Casa”,<br />
a high quality soup range.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Dehydrated soups with<br />
home-made quality.<br />
Dehydrated prepared meals continued to perform<br />
well, especially cup products, br<strong>and</strong>ed Crosse &<br />
Blackwell in the UK <strong>and</strong> Maggi in other European<br />
countries.<br />
Maggi instant noodles had another very good year,<br />
especially in Asia where Maggi has built a strong<br />
leadership in Malaysia <strong>and</strong> India, <strong>and</strong> has achieved<br />
very encouraging increases in sales.<br />
<strong>Nestlé</strong> sells frozen pizzas <strong>and</strong> Italian dishes, as well<br />
as chilled pasta <strong>and</strong> sauce under the Buitoni br<strong>and</strong><br />
<strong>and</strong>, after the divestment of the Findus br<strong>and</strong> (except<br />
in Switzerl<strong>and</strong> <strong>and</strong> Italy) <strong>and</strong> part of our commodity<br />
frozen food business in Europe, we have been able to<br />
focus our frozen food business on our core categories<br />
46<br />
Great taste <strong>and</strong><br />
convenience in France.<br />
Tasty <strong>and</strong> fast:<br />
oven bake in the US.<br />
A successful Mexican<br />
speciality in the US.<br />
of recipe dishes, pizza <strong>and</strong> snacks. Sales of these<br />
products performed extremely well, both in the USA<br />
<strong>and</strong> Europe, as a result of new product launches, as<br />
well as renovation of existing products.<br />
The launch of Stouffer’s Skillet Sensations in the US<br />
was repeated in Canada <strong>and</strong> followed in the US<br />
by the successful launch of Stouffer’s Oven Sensations,<br />
delivering high quality convenient food for oven<br />
preparation. As a result of these initiatives, Stouffer’s<br />
has considerably strengthened its position in the US<br />
market. We also introduced to that market a line of<br />
frozen Mexican specialities under the br<strong>and</strong> Ortega.
The real Pizzeria<br />
style pizza in France.<br />
Italian tradition at its best.<br />
A number of initiatives have been taken in Europe<br />
within the frozen pizza category resulting in an<br />
improved position in all markets. An example is<br />
Fraîch’Up in France which is a self-rising crust pizza.<br />
This technology gives a real “pizzeria style” quality.<br />
The La Cocinera business in Spain, acquired in 1999,<br />
had an excellent year, strengthening our leadership<br />
position in recipe dishes in that country.<br />
Sales of br<strong>and</strong>ed frozen foods are also increasing<br />
in channels outside the traditional supermarkets.<br />
Examples include frozen entrées (for microwave<br />
reheating) in vending machines in non-staffed<br />
cafeterias, <strong>and</strong> frozen multi-portion dishes for<br />
deli counters.<br />
Chilled products also had a very satisfactory<br />
performance. The <strong>Nestlé</strong> Toll House chilled cookie<br />
dough business in the US considerably strengthened<br />
its market position, mainly through successful<br />
new product launches.<br />
Acquisitions <strong>and</strong> divestitures We acquired an<br />
important stocks business, together with the br<strong>and</strong><br />
Consomate, to reinforce our position in the important<br />
Mexican market.<br />
We sold the Findus br<strong>and</strong>, with the exception<br />
of Switzerl<strong>and</strong> <strong>and</strong> Italy, <strong>and</strong> some of the related<br />
frozen food assets, which represented around<br />
CHF 900 million in annualised sales.<br />
47<br />
Innovative technology in<br />
the US: just break <strong>and</strong> bake.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Premium nutrition dog<br />
food in Europe.<br />
Pet care Pet owners are increasingly aware of the<br />
impact of nutrition on the health <strong>and</strong> well-being<br />
of their pets. <strong>Nestlé</strong>’s strategy of applying human<br />
nutrition know-how to pet food creates strong<br />
competitiveness in this environment. The rapid<br />
expansion of dog foods with chicory, a natural source<br />
of inulin for improved digestive health, across markets<br />
<strong>and</strong> product formats was the most significant example<br />
of this strategy at work, <strong>and</strong> was complemented<br />
by new ranges with proven benefits to dental health<br />
<strong>and</strong> skin <strong>and</strong> coat condition.<br />
Sales in Europe improved in 2000. The Digestion+ dry<br />
dog food range with chicory was extended to wet<br />
<strong>and</strong> treats products. The expansion of Vital Balance<br />
premium cat <strong>and</strong> dog food in the grocery channel <strong>and</strong><br />
LifePlan premium cat food in the specialist channel,<br />
both with proven benefits to pets’ well-being, also<br />
contributed to this growth.<br />
48<br />
The premium nutrition<br />
choice for cats.<br />
The healthy choice for puppies<br />
in Latin America.<br />
Sales in the US were impacted by significant<br />
competitive activity. Despite this, Friskies USA <strong>and</strong><br />
Canada increased market share of core br<strong>and</strong>s Fancy<br />
Feast, Mighty Dog <strong>and</strong> Alpo. The Alpo dog treats<br />
<strong>and</strong> biscuits range was successfully relaunched with<br />
natural fibre <strong>and</strong> chicory. We have also developed<br />
strategic alliances with internet retailers to build our<br />
position in this growing channel.<br />
Sales increased sharply due to strong internal growth<br />
<strong>and</strong> acquisitions in Latin America where Alpo Nutrition<br />
Plus with chicory was successfully launched in grocery<br />
<strong>and</strong> alternative channels.<br />
In Asia <strong>and</strong> Oceania Friskies extended Alpo with<br />
chicory to Japan, Korea <strong>and</strong> Thail<strong>and</strong> whilst EPOL dry<br />
dog food was relaunched in South Africa.
A nutritious alternative<br />
to milk for cats.<br />
Healthy <strong>and</strong> tasty<br />
snacks for dogs.<br />
In Japan Mon Petit Gold wet cat food was<br />
relaunched <strong>and</strong> introduced to convenience stores in<br />
response to consumer dem<strong>and</strong>.<br />
Acquisitions<br />
In Argentina we acquired Cargill’s<br />
petfood business including the leading br<strong>and</strong>s Dogui<br />
<strong>and</strong> Gati.<br />
In January 2001 we made an agreed offer, subject<br />
to approvals, for Ralston Purina, the premier pet care<br />
company in North America. Their business is highly<br />
complementary to our existing business, both in<br />
the Americas <strong>and</strong> internationally, <strong>and</strong> will make <strong>Nestlé</strong><br />
a world leader in the fast growing pet care industry.<br />
Profit<br />
The improving trend in profitability of<br />
Prepared dishes, cooking aids <strong>and</strong> pet care continued<br />
with a 5% increase in trading profit, lowered by the<br />
divestiture of Findus business in Europe. The<br />
profitability of pet care decreased slightly, due to an<br />
intensification of competition in North America<br />
<strong>and</strong> substantial marketing investments to develop our<br />
positions in Latin America.<br />
Capital expenditure Capital expenditure decreased<br />
from CHF 464 million in 1999 to CHF 390 million.<br />
We increased the capacity of some frozen food<br />
facilities in the US in response to the success of the<br />
Stouffer’s br<strong>and</strong>. We also invested in our pet care<br />
business in Europe <strong>and</strong> Brazil, as well as generally<br />
in line rationalisation <strong>and</strong> productivity related<br />
improvements.<br />
49
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Chocolate, confectionery <strong>and</strong> biscuits<br />
The global trend towards eating “on the go” provides opportunities for <strong>Nestlé</strong> to grow<br />
by offering new <strong>and</strong> improved confectionery concepts that respond to consumers’<br />
desire for a wider range of taste experiences, available whenever <strong>and</strong> wherever<br />
they want them. The range includes international br<strong>and</strong>s such as <strong>Nestlé</strong>, KitKat,<br />
Smarties, Lion, Crunch, After Eight <strong>and</strong> Polo as well as popular local br<strong>and</strong>s such<br />
as Cailler, Butterfinger, Rossiya, Orion, Caja Roja, Sao Luiz <strong>and</strong> Star.<br />
2000 1999 1998<br />
Sales 10 974 10195 10485<br />
Trading profit 1 166 882 976<br />
Capital expenditure 250 280 388<br />
In millions of CHF<br />
50
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Small individual wafer fingers<br />
with the taste <strong>and</strong> appearance<br />
of st<strong>and</strong>ard KitKat.<br />
Sales Sales showed an upturn from previous years<br />
when the economic crisis in key markets affected our<br />
performance. Sales in Russia, the US, Asia <strong>and</strong> Latin<br />
America markedly improved although the situation<br />
in Brazil remained difficult. The strong programme of<br />
innovation <strong>and</strong> renovation, which enabled our br<strong>and</strong>s<br />
to gain market share <strong>and</strong> volume, strengthened<br />
our major br<strong>and</strong>s <strong>and</strong> saw successful launches <strong>and</strong><br />
extensions in many markets. The development of<br />
our No. 1 product br<strong>and</strong> KitKat continued: KitKat Petit<br />
was introduced in Japan whilst the extraordinary<br />
52<br />
Wafer fingers in three<br />
flavours (milk, coconut,<br />
hazelnut) in Pol<strong>and</strong>.<br />
Elegant biscuits in dark<br />
chocolate with a hint of mint<br />
in Germany.<br />
success of KitKat Chunky in the UK led to this product<br />
being rolled out across Europe <strong>and</strong> other markets<br />
including Australia, South Africa <strong>and</strong> Canada. New<br />
variants such as KitKat Breaktime were successfully<br />
introduced in the UK, which saw the launch, as well,<br />
of an indulgent, large sized variant of Polo <strong>and</strong>, for<br />
children, a MilkyBar Choo. Meanwhile we responded to<br />
consumer dem<strong>and</strong> for more indulgent biscuits with<br />
a Rolo <strong>and</strong> Yorkie biscuit in the UK <strong>and</strong> an After Eight<br />
biscuit in Germany. In France, our leading position<br />
in premium chocolate was enhanced with the<br />
introduction of <strong>Nestlé</strong> chocolate sticks.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
A jelly rope covered<br />
with multi-flavoured<br />
Nerds c<strong>and</strong>y in the USA.<br />
We delivered another good performance in Eastern<br />
Europe, helped by our focus on improving distribution<br />
<strong>and</strong> merch<strong>and</strong>ising. We further consolidated our<br />
leadership position in chocolate in Russia where the<br />
local Savinov sugar br<strong>and</strong> retained its No. 1 position.<br />
We captured a significant percentage of the Czech<br />
Republic market with the launch of Orion Delissa,<br />
a chocolate covered wafer, <strong>and</strong> launched Princessa<br />
Moments wafer fingers in Pol<strong>and</strong>.<br />
The performance in Asia improved markedly, helped<br />
by that region’s economic recovery <strong>and</strong> the newly<br />
established co-ordinated industrial <strong>and</strong> commercial<br />
structures in ASEAN. We launched several successful<br />
new products, such as Frutips variants <strong>and</strong> a <strong>Nestlé</strong><br />
Wafer Countline in Malaysia.<br />
54<br />
A healthy vitamin<br />
enriched biscuit<br />
in Brazil.<br />
The newly launched<br />
Cailler Nougatine<br />
in Switzerl<strong>and</strong>.<br />
We recorded strong growth in India, Korea, the<br />
Middle East <strong>and</strong> Israel, while the KitKat Chunky launch<br />
in Oceania <strong>and</strong> South Africa gained significant<br />
market share.<br />
Our br<strong>and</strong>s maintained their market share in North<br />
America with the launch of KitKat Chunky in Canada<br />
towards the year end, as well as production<br />
streamlining <strong>and</strong> greater support for the Wonka<br />
children’s range in the USA.<br />
In Latin America, we held our position in a difficult<br />
Brazilian market <strong>and</strong> introduced several new added<br />
value biscuit products, notably a healthy range<br />
under the Vitalife br<strong>and</strong>. We performed well in the<br />
Bolivarian region (Colombia, Ecuador, Venezuela),<br />
recovering from a difficult 1999 due to improvements<br />
in sales <strong>and</strong> distribution, together with our focus<br />
on br<strong>and</strong> innovation. Our manufacturing<br />
re-organisation in Mexico paid dividends with all<br />
br<strong>and</strong>s showing growth.
Indulgent, large sweet with<br />
natural strawberry flavour <strong>and</strong><br />
real cream in the UK.<br />
High value for money<br />
white chocolate wafers<br />
in China.<br />
Profit After two difficult years, trading profit<br />
rebounded in 2000 to increase by 32%. Chocolate<br />
margins improved significantly in all three<br />
geographical zones, with a good recovery in Russia.<br />
Sugar confectionery margins were down in the USA<br />
<strong>and</strong> Western Europe, while Biscuit performance<br />
improved, particularly in Israel.<br />
Capital expenditure Capital expenditure declined<br />
slightly from CHF 280 million in 1999 to<br />
CHF 250 million. The investment went generally into<br />
improving our capabilities in chocolate production.<br />
Sticks of dark chocolate<br />
with pieces of hazelnut<br />
in France.<br />
Acquisitions <strong>and</strong> divestitures We made two<br />
important acquisitions: Svitoch, the leading Ukrainian<br />
confectionery company <strong>and</strong> Joe, the leading Romanian<br />
wafer company. Both acquisitions complement <strong>Nestlé</strong>’s<br />
Eastern European strategy, where we are developing<br />
a strong leadership position. In Japan, the group’s<br />
participation in <strong>Nestlé</strong> Mackintosh KK was increased<br />
to 100%.<br />
Meanwhile, in line with our strategy, we sold the Intra<br />
Cocoa processing facility in Italy.<br />
55<br />
A premium quality <strong>Nestlé</strong><br />
chocolate tablet in Spain.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
FoodServices<br />
<strong>Nestlé</strong> first entered the food services market in the early eighties, targeting<br />
institutions <strong>and</strong> restaurants. Over the next twenty years <strong>Nestlé</strong> rapidly increased its<br />
product offering <strong>and</strong> built itself into the market leader. Its strategy was reoriented in<br />
1999 to turn the emphasis from being product driven to becoming more customer<br />
focused. <strong>Nestlé</strong> FoodServices today spearheads the Group’s drive into the fast<br />
growing area of out-of-home consumption, enabling its customers to cater to the<br />
impulse market <strong>and</strong> consumers’ desire to eat whenever, wherever <strong>and</strong> however they<br />
want. It combines its expertise in the out-of-home market with <strong>Nestlé</strong>’s high quality<br />
br<strong>and</strong>s such as Nescafé, Nestea, Nesquik, Maggi <strong>and</strong> Buitoni to enhance the<br />
competitive advantage of its customers. It has also developed specific <strong>Nestlé</strong><br />
FoodServices br<strong>and</strong>s such as Davigel, Minor’s <strong>and</strong> Chef to meet the requirements of<br />
such diverse customers as catering companies, fast-food chains, hotels, restaurants<br />
<strong>and</strong> airlines.<br />
<strong>Nestlé</strong> FoodServices’ success in creating products <strong>and</strong> services that meet the<br />
requirements of its customers has enabled it to achieve a higher than Group average<br />
level of growth at a higher than average level of profitability. It should remain<br />
a growth engine for the Group as out-of-home consumption continues to grow<br />
in popularity, driven by changes in demographics, socio-economic factors <strong>and</strong><br />
consumers’ growing dem<strong>and</strong>s for indulgence, convenience <strong>and</strong> new eating<br />
experiences.<br />
The sales of <strong>Nestlé</strong> FoodServices are divided amongst the food product categories on pages 29 to 55.<br />
56
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
FoodServices FIS – The Flavour Specialists<br />
<strong>Nestlé</strong> FoodServices is the world leader with sales<br />
in excess of CHF 6 billion. It is customer focused<br />
which allows both geographical expansion with<br />
our customers <strong>and</strong> expertise in each channel with<br />
solutions, such as an airline confectionery box or<br />
toppings for McFlurry, adapted to individual operators.<br />
Key objectives for 2000 were to continue to grow<br />
whilst improving our professionalism <strong>and</strong> developing<br />
further systems across products, technology <strong>and</strong><br />
equipment. We also launched our Intranet site to<br />
enable managers <strong>and</strong> sales people to share best<br />
practice. Fast <strong>and</strong> effective communication is key<br />
as FoodServices delivers new business in the<br />
out-of-home channels.<br />
Beverages We have seen a remarkable growth<br />
in sales <strong>and</strong> in the number of vending machines <strong>and</strong><br />
beverage systems placed on the market. There has<br />
also been increased loyalty to <strong>Nestlé</strong>’s global coffee<br />
br<strong>and</strong>, Nescafé, which, with Milo, Nesquik <strong>and</strong> Nestea,<br />
received greater exposure through the development<br />
of unique impulse points of sale, including Nescafé<br />
trucks, tricycles, kiosks, motor bikes <strong>and</strong> the Café<br />
Nescafé. Our major beverage br<strong>and</strong>s extended their<br />
presence with key customers through, for example,<br />
co-br<strong>and</strong>ed beverage dispensers <strong>and</strong> coffee corners in<br />
petrol stations, convenience stores <strong>and</strong> fast-food<br />
restaurants.<br />
Food New products, including liquid sauces <strong>and</strong><br />
stocks <strong>and</strong> a new shelf-stable product category<br />
incorporating crispy particles, have set a new level of<br />
convenience. With customised culinary solutions,<br />
developed with <strong>and</strong> for the customer, such as paste<br />
sauces or product <strong>and</strong> dispensing solutions,<br />
we are fulfiling customer requirements <strong>and</strong> creating<br />
innovative food delivery from the counter <strong>and</strong> the<br />
kitchen.<br />
58<br />
FIS (Food Ingredients Specialities) is a worldwide<br />
organisation, creating, producing <strong>and</strong> marketing<br />
flavourings for the food manufacturing industry<br />
globally. As a result of a clear <strong>and</strong> on-going emphasis<br />
on quality, FIS has become the flavour partner<br />
of choice for major food producers across the globe.<br />
A highlight of 2000 was the opening of new offices,<br />
flavour creation <strong>and</strong> application laboratories <strong>and</strong> a<br />
production unit in Jurong, Singapore. This new facility<br />
will allow FIS to develop more specifically Asian<br />
flavours <strong>and</strong> to be even closer to its customers in this<br />
region. The facility includes a new Customer Service<br />
Centre for Asia. Inside, it will house an impressive<br />
array of specialist food industry machinery. This pilot<br />
plant is designed to simulate typical food applications<br />
<strong>and</strong> processing conditions on an industrial scale for<br />
the region. The new construction adds to the two<br />
other strategically placed FIS Customer Service Centres<br />
located in Paris, France, <strong>and</strong> New Milford, USA.<br />
FIS combines <strong>Nestlé</strong> know-how in food application<br />
<strong>and</strong> food underst<strong>and</strong>ing with its own fundamental<br />
underst<strong>and</strong>ing of flavours <strong>and</strong> flavouring systems to<br />
provide flexible, cost-effective <strong>and</strong> competitive<br />
solutions to its business partners around the world.<br />
FIS customers are benefiting from its reinforced<br />
focus on flavours <strong>and</strong> from its speed in both product<br />
development <strong>and</strong> delivery.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Pharmaceutical products<br />
Alcon Laboratories is the global leader in vision care. Its product lines cover<br />
therapeutic, surgical <strong>and</strong> consumer products, including Patanol, Betoptic S, TobraDex<br />
<strong>and</strong> Ciloxan in pharmaceuticals, LADARVision, AcrySof, Legacy, Accurus, BSS,<br />
Viscoat, <strong>and</strong> Custom Paks in the Surgical area, Opti-Free Express, Opti-One <strong>and</strong><br />
Clerz Plus in Consumer <strong>Products</strong> <strong>and</strong> Cipro HC Otic for ear care. Falcon<br />
Pharmaceuticals, meanwhile, is Alcon’s generic label. Alcon also has technological<br />
leadership in the rapidly growing retractive surgical market through Summit<br />
Autonomous.<br />
In 1989, <strong>Nestlé</strong> <strong>and</strong> L’Oréal formed Galderma. This company offers dermatologists<br />
a range of products for the treatment of skin complaints, including Differin, which<br />
has become the retinoid of choice for the topical treatment of acne, Metrogel/Rozex,<br />
for rosacea, Loceryl for nail fungus <strong>and</strong> Silkis for psoriasis.<br />
2000 1999 1998<br />
Sales 4 798 4 010 3 443<br />
Trading profit 1 212 1 077 915<br />
Capital expenditure 113 91 81<br />
In millions of CHF<br />
60
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
The LADARVision 4000<br />
excimer laser – better vision<br />
without corrective lenses.<br />
Alcon Alcon again reported strong growth <strong>and</strong> an<br />
excellent profit performance in 2000. All product lines<br />
<strong>and</strong> geographic areas contributed to this success.<br />
New proprietary product introductions <strong>and</strong> the<br />
acquisition of Summit Autonomous, the refractive eye<br />
surgery market leader, further stimulated growth.<br />
Our dedication to innovation, combined with our<br />
concentration on the needs of vision care specialists<br />
<strong>and</strong> others who treat eye conditions, has brought<br />
the company to worldwide prominence in its field.<br />
The highlights of 2000 included new launches such as<br />
the AcrySof single-piece intraocular lens, Clerz Plus<br />
Lens Drops that help prevent protein build-up while<br />
refreshing contact lenses, <strong>and</strong> a new “No Rub”<br />
indication for Opti-Free Express Multi-Purpose<br />
Disinfecting Solution for contact lenses. Patanol, the<br />
leading ocular allergy product on the market,<br />
continued its vigorous growth, further exp<strong>and</strong>ing this<br />
market segment due to its therapeutic efficacy<br />
<strong>and</strong> broad acceptance by physicians <strong>and</strong> patients alike.<br />
62<br />
The unique AcrySof singlepiece<br />
intraocular lens<br />
to be implanted through<br />
a smaller incision.<br />
With the development of new products <strong>and</strong> the<br />
acquisition of new technologies as priorities, <strong>and</strong><br />
with increasing market shares throughout the<br />
world, Alcon is well positioned for continued growth.<br />
Galderma Galderma, the joint venture between<br />
<strong>Nestlé</strong> <strong>and</strong> L’Oréal in the field of dermatology,<br />
maintained strong growth in 2000, achieving a<br />
turnover of CHF 816 million, an increase of 28.5%.<br />
Five years after its launch, Differin, a topical treatment<br />
for acne continued to increase its market share.<br />
The US launch of Differin Cream stimulated growth,<br />
helping to make Galderma the worldwide leader in<br />
topical anti-acne, with a market share of about 20%.<br />
Silkis, a new topical vitamin D treatment for psoriasis<br />
had an excellent reception from dermatologists,<br />
following its launch in the Netherl<strong>and</strong>s, Switzerl<strong>and</strong>,<br />
Germany <strong>and</strong> Brazil.
The only solution for<br />
“No Rub” use – a new level<br />
of convenience <strong>and</strong> safety<br />
for contact lens wearers.<br />
The only drop that helps<br />
prevent protein build-up<br />
on contact lenses.<br />
Galderma’s other strategic products all achieved<br />
sustained growth. Loceryl, the topical anti-fungal<br />
treatment for onychomycosis acquired in 1999, made<br />
good progress. Metrogel/Rozex, the topical treatment<br />
for rosacea, has continued to grow worldwide.<br />
Sales of the Cetaphil range of cleansers <strong>and</strong><br />
moisturisers for sensitive skin also grew significantly.<br />
Galderma obtained its first product registrations<br />
in Eastern Europe <strong>and</strong> created a new subsidiary in<br />
Hong Kong.<br />
Profit<br />
Trading profit rose by 13% thanks to sales<br />
volume growth. The progression was partly offset<br />
by increased investments in research <strong>and</strong> development<br />
<strong>and</strong> operating expenses related to the Summit<br />
acquisition.<br />
Capital expenditure Capital expenditure increased<br />
from CHF 91 million in 1999 to CHF 113 million. The<br />
predominant project was the expansion of Alcon’s Fort<br />
Worth manufacturing facility to meet the flourishing<br />
Differin Cream, a new<br />
form of the leading topical<br />
retinoid for acne.<br />
international market for contact lens care products.<br />
Other major projects included enlarging the Alcon plant<br />
in Sinking Spring, Pennsylvania, <strong>and</strong> a major expansion<br />
of the viscoelastics production area in the Puurs,<br />
Belgium facility.<br />
Acquisitions Alcon catapulted itself into technology<br />
leadership in the rapidly growing refractive surgical<br />
market through its acquisition in July 2000 of Summit<br />
Autonomous. This business is benefiting as individuals<br />
seek surgical corrections of visual abnormalities such<br />
as myopia, hyperopia <strong>and</strong> astigmatism. Alcon’s<br />
disposable products, prescription pharmaceuticals<br />
<strong>and</strong> dry eye therapies complete a full offering to<br />
refractive surgeons.<br />
In the United States, Galderma acquired Capex,<br />
the first corticosteroid shampoo on the market for<br />
seborrheic dermatitis of the scalp.<br />
63<br />
Silkis Ointment, the first<br />
synthetic natural<br />
Vitamin D for topical<br />
treatment of psoriasis.
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Associated companies<br />
<strong>Nestlé</strong> holds an interest of at least 20% in these companies but does not exercise<br />
management control. They are included in the financial statements by the equity<br />
method. Their net results appear, in proportion to <strong>Nestlé</strong>’s participation, in the<br />
Group’s consolidated income statement under “Share of results of associated<br />
companies”. The Group’s share of their net assets is shown in the consolidated<br />
balance sheet under “Financial assets”.<br />
The most important associated company is L’Oréal, the world leader in the cosmetics<br />
market. <strong>Nestlé</strong>’s involvement with L’Oréal started in 1974. L’Oréal markets over<br />
500 br<strong>and</strong>s <strong>and</strong> more than 2000 products in all sectors of the beauty business: hair<br />
colour, permanents, styling aids, body <strong>and</strong> skincare, cleansers <strong>and</strong> fragrances. Its<br />
products are found in all distribution channels.<br />
<strong>Nestlé</strong>’s share of associated companies 2000 1999 1998<br />
Sales 5519 4 831 5 156<br />
Results 395 339 300<br />
In millions of CHF<br />
64
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
L’Oréal Professionnel:<br />
New haircare<br />
line Série Expert.<br />
L’Oréal<br />
L’Oréal, the world’s leading cosmetics<br />
company, is controlled by Gesparal, a holding<br />
company, of which <strong>Nestlé</strong> owns 49% <strong>and</strong> the<br />
Bettencourt family 51%. In 2000, the company<br />
continued its rapid development. Consolidated sales<br />
rose 17.9% to EUR 12.7 billion; net profit amounted to<br />
EUR 1028 million, up by 24.2%, <strong>and</strong> for the sixteenth<br />
consecutive year, profit on ordinary activities before<br />
taxation achieved double digit growth.<br />
L’Oréal continues its organic growth in its three key<br />
zones: Western Europe, North America <strong>and</strong> the rest of<br />
the world. It has strengthened its policy of investing<br />
in the United States <strong>and</strong> in numerous developing<br />
countries. The establishment of new subsidiaries, as<br />
well as the launching of innovative products <strong>and</strong><br />
international development are all part of its growth<br />
policy.<br />
Furthermore, in 2000, its external growth policy has<br />
been especially fruitful. Notable strategic acquisitions<br />
included Carson Inc, global leader in ethnic beauty<br />
66<br />
Outrageously full, soft,<br />
healthy-looking lashes.<br />
Anti-ageing innovation:<br />
the highest concentrations<br />
of pure Retinol <strong>and</strong><br />
Vitamin C ever combined.<br />
RALPH a colourful floral<br />
fragrance, captures the spirit<br />
of young women who<br />
approach life with confidence,<br />
style <strong>and</strong> optimism.<br />
products with a presence in the United States <strong>and</strong><br />
South Africa, Matrix Essentials, leader in professional<br />
hair products in North America, <strong>and</strong> Kiehl’s, a very<br />
selective skin care br<strong>and</strong>, famous in the US, founded<br />
in 1851 in New York City. L’Oréal also signed a<br />
strategic alliance with the Japanese company<br />
Shu Uemura, pioneer in the art of make-up <strong>and</strong><br />
beauty care.<br />
This alliance <strong>and</strong> these strategic acquisitions, added<br />
to local acquisitions such as Laboratoires Ylang SA,<br />
Argentina’s leading producer of mass market make-up,<br />
<strong>and</strong> Respons, a Sc<strong>and</strong>inavian shampoo br<strong>and</strong>, provide<br />
an exceptional growth opportunity for the Group.<br />
L’Oréal continues therefore to consolidate its strategy<br />
as the world leader in comestics.<br />
Detailed information about L’Oréal’s activities<br />
<strong>and</strong> results is available in its Annual Report <strong>and</strong> on its<br />
website (www.loreal-finance.com).
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
History<br />
First came infant <strong>and</strong> milk nutrition Innovation<br />
<strong>and</strong> an entrepreneurial spirit have been <strong>Nestlé</strong><br />
characteristics from the start.<br />
In 1866, while the Page brothers in Cham were building<br />
Europe’s first condensed milk factory, for the Anglo-<br />
Swiss Condensed Milk Co., Henri <strong>Nestlé</strong>, in Vevey, was<br />
developing his infant cereal “Lactous Farina <strong>Nestlé</strong>”,<br />
launched in 1867. The two companies merged in 1905<br />
to become the “<strong>Nestlé</strong> & Anglo-Swiss Condensed Milk<br />
Co.”. The former had developed a successful long-life<br />
product from fresh milk, a highly perishable raw<br />
material, whilst Henri <strong>Nestlé</strong> had achieved international<br />
acclaim due to the remarkable qualities of his<br />
invention. Given the high infant mortality rate, due<br />
mainly to the lack of an appropriate breast-milk<br />
substitute, his infant cereal responded to a real need.<br />
Henri <strong>Nestlé</strong> (1814-1890)<br />
His name <strong>and</strong> the nest symbol (<strong>Nestlé</strong> means<br />
“little nest” in German) were the guarantee of the<br />
consistent quality of his product, the result of<br />
painstaking scientific research.<br />
68<br />
Then came product diversification Contacts with<br />
other leading companies that had innovative ideas led<br />
to acquisitions <strong>and</strong> diversification. The Company<br />
exp<strong>and</strong>ed in 1929 through the acquisition of the Cailler,<br />
Peter <strong>and</strong> Kohler chocolate companies, followed<br />
in 1947 by the Maggi group <strong>and</strong> its culinary products.<br />
Thus, <strong>Nestlé</strong> became the heir to inventions such as<br />
Daniel Peter’s milk chocolate (1875) <strong>and</strong> Julius Maggi’s<br />
vegetable-based soups (1884) <strong>and</strong> stock cubes (1908).<br />
<strong>Nestlé</strong>’s accumulated knowledge, as well as the<br />
perseverance <strong>and</strong> competence of scientists like Max<br />
Morgenthaler, made possible the huge success<br />
of the Nescafé launch in 1938.<br />
Subsequent acquisitions opened the doors to new<br />
areas, such as preserves (Crosse & Blackwell, 1960),<br />
frozen foods (Findus, 1962), mineral water (Vittel, 1969)<br />
<strong>and</strong> pet care (Carnation, 1985). Others reinforced the<br />
Company’s position in established areas, for example,<br />
Italian cuisine (Buitoni, 1988), chocolate <strong>and</strong><br />
confectionery (Rowntree, 1988) or performance foods<br />
(PowerBar, 2000).<br />
At the same time, research at <strong>Nestlé</strong> resulted in the<br />
development of new products such as Milo (1934),<br />
Nestea (1944), Nesquik (1948), NAN (1962), Yes (1979),<br />
Nespresso (1986), LC 1 (1994) <strong>and</strong> <strong>Nestlé</strong> Pure Life<br />
(1998). Existing products such as Nescafé, Maggi<br />
culinary products or the various dairy products have<br />
been constantly improved <strong>and</strong> adapted to current<br />
consumer life-styles.<br />
Today <strong>and</strong> tomorrow a company that cares about<br />
consumers all around the globe<br />
Today, <strong>Nestlé</strong><br />
is the world’s leading food company. Its international<br />
R&D network supports the products made in<br />
479 factories in 81 countries. Being a company<br />
dedicated from the start to food, <strong>Nestlé</strong> remains<br />
sensitive to culinary <strong>and</strong> eating habits, <strong>and</strong> responds<br />
to specific nutritional problems, whilst also setting<br />
<strong>and</strong> matching new trends such as growing out-of-home<br />
consumption.
1867<br />
Henri <strong>Nestlé</strong>’s Infant cereal<br />
1905<br />
Anglo-Swiss Condensed Milk Co.<br />
(Merger with <strong>Nestlé</strong>)<br />
1929<br />
Peter, Cailler, Kohler<br />
Chocolats Suisses S.A.<br />
(Merger with <strong>Nestlé</strong>)<br />
1938<br />
Development of Nescafé<br />
1947<br />
1947<br />
<strong>Nestlé</strong> Alimentana S.A.<br />
(New name after<br />
merger with Maggi)<br />
1977<br />
<strong>Nestlé</strong> S.A.<br />
1970<br />
Libby<br />
1977<br />
Alcon<br />
1986<br />
Herta<br />
1993<br />
Finitalgel<br />
1960<br />
Crosse & Blackwell<br />
1971<br />
Ursina-Franck<br />
1978<br />
Chambourcy<br />
1988<br />
Buitoni-Perugina<br />
1994<br />
Alpo<br />
1962<br />
Findus<br />
1973<br />
Stouffer<br />
1985<br />
Carnation<br />
1988<br />
Rowntree<br />
1998<br />
Sanpellegrino<br />
69<br />
1969<br />
Vittel<br />
1974<br />
L’Oréal<br />
(minority interest)<br />
1985<br />
Friskies<br />
1992<br />
Perrier<br />
1998<br />
Spillers Petfoods<br />
2000<br />
PowerBar
<strong>Products</strong> <strong>and</strong> br<strong>and</strong>s<br />
Manufacture <strong>and</strong> sale of products<br />
<strong>Nestlé</strong> has 479 factories in 81 countries around the<br />
world. This is a reduction from 509 in 1999, resulting<br />
from disposals <strong>and</strong> closures. We are running a Group<br />
wide drive to improve the performance of our assets<br />
through the sharing of best practice, improved<br />
technology <strong>and</strong> communication, more sophisticated<br />
supply chain management <strong>and</strong> shared resources.<br />
We are also refocusing our manufacturing base to<br />
meet the dem<strong>and</strong>s of today’s more liberated<br />
international marketplace, whilst seeking to realise<br />
the benefits of our scale to achieve high flexibility<br />
at low cost.<br />
Number of factories<br />
70<br />
2000 1999<br />
Europe 198 220<br />
Americas 151 153<br />
Asia, Oceania <strong>and</strong> Africa 130 136<br />
Total 479 509<br />
Beverages<br />
Milk products, nutrition <strong>and</strong> ice cream<br />
Prepared dishes, cooking aids<br />
<strong>and</strong> pet care<br />
Chocolate, confectionery <strong>and</strong> biscuits<br />
Europe<br />
Pharmaceutical products<br />
Austria 1 �� � �� � �<br />
Belgium 3 �� �� �� � ��<br />
Bulgaria 1 � � � �� �<br />
Czech Republic 3 �� � � �� �<br />
Denmark 1 � �� � � �<br />
Finl<strong>and</strong> 1 � �� � � �<br />
France 38 �� �� �� �� ��<br />
Germany 27 �� �� �� �� �<br />
Greece 5 �� �� �� �� �<br />
Hungary 4 �� � �� �� �<br />
Italy 25 �� �� �� �� �<br />
Netherl<strong>and</strong>s 8 � �� �� �� �<br />
Norway 2 �� �� �� � �<br />
Pol<strong>and</strong> 6 �� �� �� �� �<br />
Portugal 5 �� �� � � �<br />
Republic of Irel<strong>and</strong> 3 � � �� �� ��<br />
Romania 2 � � � �� �<br />
Russia 5 �� �� �� �� �<br />
Slovakia 1 � � �� � �<br />
Spain 19 �� �� �� �� ��<br />
Sweden 2 �� � � � �<br />
Switzerl<strong>and</strong> 9 �� �� �� �� ��<br />
Turkey 3 �� �� � � �<br />
Ukraine 1 � � � �� �<br />
United Kingdom 23 �� �� �� �� �<br />
The figure in bold after the country denotes the number<br />
of factories.<br />
Local production<br />
(may represent production in several factories)<br />
Imports (may, in a few particular cases, represent purchases<br />
from third parties in the market concerned)
Beverages<br />
Milk products, nutrition <strong>and</strong> ice cream<br />
Prepared dishes, cooking aids<br />
<strong>and</strong> pet care<br />
Chocolate, confectionery <strong>and</strong> biscuits<br />
Americas<br />
Pharmaceutical products<br />
Argentina 8 �� � � � �<br />
Brazil 22 �� � � � ��<br />
Canada 11 �� �� �� �� ��<br />
Chile 7 �� � � � �<br />
Colombia 3 �� �� �� �� �<br />
Costa Rica 1 � � � � �<br />
Cuba 2 � � � �<br />
Dominican Republic 3 �� �� �� � �<br />
Ecuador 3 �� �� �� �� �<br />
El Salvador 1 � � � � �<br />
Guatemala 1 � �� � �<br />
Jamaica 2 �� �� �� � �<br />
Mexico 15 �� � � �� ��<br />
Nicaragua 1 �� � �<br />
Panama 2 �� �� �� � �<br />
Peru 2 �� �� �� �� �<br />
Puerto Rico 1 � �� � � �<br />
Trinidad <strong>and</strong> Tobago 1 �� �� �� � �<br />
United States 61 �� �� �� �� ��<br />
Uruguay 1 �� � � � �<br />
Venezuela 3 �� �� �� �� �<br />
71<br />
Beverages<br />
Milk products, nutrition <strong>and</strong> ice cream<br />
Prepared dishes, cooking aids<br />
<strong>and</strong> pet care<br />
Chocolate, confectionery <strong>and</strong> biscuits<br />
Pharmaceutical products<br />
Asia, Oceania <strong>and</strong> Africa<br />
Australia 12 �� � �� �� �<br />
Bangladesh 1 �� �� � �<br />
Cambodia 1 � �� � � �<br />
Cameroon 1 �� �� � �<br />
Egypt 4 �� �� � �� �<br />
Ghana 1 �� �� �� � �<br />
Guinea 1 � � �� � �<br />
India 6 �� � � � �<br />
Indonesia 5 �� �� �� �� �<br />
Israel 12 �� �� � �� �<br />
Ivory Coast 2 �� �� � �<br />
Japan 3 �� �� �� �� �<br />
Jordan 1 �� � � � �<br />
Kenya 1 �� �� �� � �<br />
Lebanon 1 �� � � � �<br />
Malaysia 7 �� �� �� �� �<br />
Morocco 1 �� �� �� � �<br />
New Zeal<strong>and</strong> 4 �� � �� �� �<br />
Nigeria 1 �� �� � �<br />
Pacific Isl<strong>and</strong>s 4 �� �� �� �� �<br />
Pakistan 2 �� �� � �� �<br />
People’s Rep. of China 18 �� �� �� �� ��<br />
Philippines 8 �� �� �� �� �<br />
Republic of Korea 1 �� � �� � �<br />
Saudi Arabia 1 � �� � � �<br />
Senegal 1 � �� �� �<br />
Singapore 1 �� � �� � �<br />
South Africa 13 �� �� �� � �<br />
Sri Lanka 2 �� �� � �<br />
Syria 1 �� �� �� �<br />
Thail<strong>and</strong> 8 �� �� �� �� �<br />
Tunisia 1 �� �� � � �<br />
Vietnam 3 �� �� � �<br />
Zimbabwe 1 �� �� �� � �
Management Report 2000<br />
General information<br />
72
General information<br />
Agenda for the 134th Ordinary General Meeting<br />
of <strong>Nestlé</strong> S.A.<br />
Thursday 5th April 2001<br />
at 3.00 p.m. at the “Palais de Beaulieu”, Lausanne<br />
1 Annual report, report of the auditors<br />
1a 2000 annual report <strong>and</strong> accounts of <strong>Nestlé</strong> S.A.;<br />
report of the auditors<br />
1b 2000 consolidated accounts of the <strong>Nestlé</strong> Group;<br />
report of the <strong>Nestlé</strong> Group auditors<br />
2 Release of the Board of Directors<br />
<strong>and</strong> of the Management<br />
3 Decision on the appropriation<br />
of profits resulting from the balance sheet<br />
of <strong>Nestlé</strong> S.A.<br />
4 Elections to the Board of Directors<br />
Rainer E. Gut (term of office for 4 years)<br />
Jean-Pierre Meyers (term of office for 5 years)<br />
Nobuyuki Idei (term of office for 5 years)<br />
André Kudelski (term of office for 5 years)<br />
5 Modifications of the Articles of Association<br />
5a Change in the capital structure<br />
5b Editorial modification of Art. 5 bis<br />
5c Modification of Art. 35<br />
Next Ordinary General Meeting:<br />
Thursday 11th April 2002<br />
at the “Palais de Beaulieu”, Lausanne<br />
Elections to the Board of Directors At the General<br />
Meeting of 5th April 2001, the terms as directors of<br />
Messrs Rainer E. Gut, Fritz Gerber, Jean-Pierre Meyers<br />
<strong>and</strong> Reto F. Domeniconi will expire. Having reached the<br />
age limit, Mr. F. Gerber will not st<strong>and</strong> for a new term.<br />
Mr. R. F. Domeniconi has expressed the wish to leave<br />
the Board. The two other directors are eligible <strong>and</strong><br />
present themselves for re-election. In accordance with<br />
the provisions of the Board’s regulations concerning<br />
the age limit, Mr. R. E. Gut will st<strong>and</strong> for a four-year<br />
term. Mr. J.-P. Meyers is st<strong>and</strong>ing for a five-year term.<br />
Furthermore, the Board of Directors is recommending<br />
that the General Meeting elect as new directors,<br />
also for five-year terms, Mr. Nobuyuki Idei, Chairman<br />
<strong>and</strong> Chief Executive Officer of Sony Corporation,<br />
Tokyo, Japan, <strong>and</strong> Mr. André Kudelski, President<br />
<strong>and</strong> Chief Executive Officer of Kudelski Group,<br />
Cheseaux-sur-Lausanne, Switzerl<strong>and</strong>.<br />
73
General information<br />
Important dates<br />
5th April 2001<br />
134th Ordinary General Meeting,<br />
“Palais de Beaulieu”, Lausanne<br />
11th April 2001 Payment of the dividend<br />
26th April 2001<br />
Announcement of first quarter 2001<br />
sales figures<br />
22nd August 2001<br />
Publication of the half-yearly<br />
report January/June 2001<br />
19th October 2001 Announcement of first nine<br />
months 2001 sales figures; Autumn meeting with the<br />
press (Zurich)<br />
28th February 2002 Announcement of 2001 sales<br />
figures <strong>and</strong> results; Press conference (Vevey)<br />
10th April 2002<br />
Announcement of first quarter 2002<br />
sales figures<br />
11th April 2002<br />
135th Ordinary General Meeting,<br />
“Palais de Beaulieu”, Lausanne<br />
74
Shareholder information<br />
Stock exchange listings As of 31st December 2000,<br />
the registered shares of <strong>Nestlé</strong> S.A. were listed on<br />
the exchanges of Zurich, Brussels, Frankfurt, London,<br />
Paris, Tokyo <strong>and</strong> Vienna.<br />
In November 2000, <strong>Nestlé</strong> S.A. announced the delisting<br />
of its shares from the exchanges of Amsterdam, Brussels,<br />
Tokyo <strong>and</strong> Vienna. The shares were delisted from<br />
the exchange of Amsterdam on 29th December 2000.<br />
American Depositary Receipts (ADRs) representing<br />
<strong>Nestlé</strong> S.A. shares are offered in the USA by Morgan<br />
Guaranty Trust Company of New York.<br />
Registered Offices <strong>Nestlé</strong> S.A., avenue <strong>Nestlé</strong> 55,<br />
CH-1800 Vevey (Switzerl<strong>and</strong>), tel. (021) 924 21 11.<br />
<strong>Nestlé</strong> S.A. (Share Transfer Office), Zugerstrasse 8,<br />
CH-6330 Cham (Switzerl<strong>and</strong>), tel. (041) 785 20 20.<br />
Further information For any additional information<br />
about the management report, please contact<br />
<strong>Nestlé</strong> S.A., Investor Relations, avenue <strong>Nestlé</strong> 55,<br />
CH-1800 Vevey (Switzerl<strong>and</strong>), tel. (021) 924 27 42,<br />
fax (021) 924 28 13.<br />
E-mail: investor.relations@nestle.com<br />
As to information concerning the share register<br />
(registrations, transfers, address changes, dividends,<br />
etc.), please contact <strong>Nestlé</strong> S.A., Share Transfer<br />
Office, Zugerstrasse 8, CH-6330 Cham (Switzerl<strong>and</strong>),<br />
tel. (041) 785 20 20, fax (041) 785 20 24.<br />
The Company offers the possibility of depositing<br />
free of charge <strong>Nestlé</strong> S.A. shares traded at the Swiss<br />
Exchange at its Share Transfer Office in Cham.<br />
<strong>Nestlé</strong> URL: http://www.nestle.com<br />
75