Insert image here Accelerating Growth through Innovation and Premiumization Kohzoh Takaoka Chief Executive Officer Nestlé Japan 57
Nestlé Japan: Delivering growth in aging and shrinking developed market Population (mio.) < 65 yrs. GDP (JPY Tri.) GDP deflator (index: 2005=100) 130 30% 600 GDP 120 125 Population 25% 20% 500 400 110 100 120 % <65 yrs people 15% 300 GDP deflator 90 115 10% 5% 200 100 80 70 110 1980 1985 1990 1995 2000 2005 2010 2015 Sources: IMF, Cabinet Office 0% 0 60 1980 1985 1990 1995 2000 2005 2010 2015 58
Nestlé Japan: Food and Beverages delivering solid growth CAGR (11-15) + 3.4% 2011 2012 2013 2014 2015 59
Nestlé Japan: Strong Improvement of profitability in Food and Beverages +44% vs. 2011 2011 2012 2013 2014 2015 60
Japan: Aging population / changing lifestyles driving shift to single households Increasing single / couple households (% of households) Single Couple Parent+child(ren) Others 25.6 30.1 21.6 19.9 18.8 18.4 31.9 27.9 26 24.1 42.1 31.3 19.8 20.8 21 18.9 15.5 12.5 19.8 23.1 27.6 32.4 34.4 36.5 Sources: Statistics Bureau, Ministry of Internal Affairs and Communication 1980 1990 2000 2010 2020 2030 61
Japan: Single households driving shift from family to individual consumption Traditional Family Now and Future Single General vs. single household eating expenditure Single household % of total household food expenditure General household (excl. single) 18 32 In-home cooking Prepared OOH 50 161 Eating-out expenditure ( K/year/ person) Total household Source: Nikkei Business, MIC 62
Nestlé Japan: Accelerating growth in the 21 st century New Reality New Customer Problem Solution Individual coffee consumption Preparation for each cup of coffee is troublesome System solution Shift to Out-of-home Non-availability of good-quality coffee in offices at affordable price Nescafé Ambassador 63
NESCAFÉ single serve systems: Solving single household problems NESCAFÉ Gold Blend Barista NESCAFÉ Dolce Gusto 64
NESCAFÉ Ambassador: Innovating how we work with consumers OOH To provide coffee in offices with affordable price per cup To energize communication in many communities To co-create new values with NESCAFÉ Ambassador 65
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NESCAFÉ Ambassador: Innovating how we work with consumers OOH 250 000 ambassadors Serving 2.5 mio people every day 1 billion cups served in 2015 67
The New Reality in Japan: Price polarization in the FMCG Market VS Chocolatier National Brand 68
Nestlé Japan: Accelerating growth in the 21 st century New Reality New Customer Problem Solution Luxury chocolatier chocolates are booming National brands being commoditized having no craftsmanship Kit Kat STUDiO in collaboration with local chocolatier 69
Kit Kat Chocolatory: Introducing craftsmanship to national brands x20 1,500 JPY/kg 28,600 JPY/kg 70
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Kit Kat Chocolatory: Enhanced availability through e-commerce Gift wrapping, message card Multiple flavour assortment gift box Packaging engraving service Laser engraved chocolate 72
Innovation & Renovation offer customers new solutions New business model (beyond products) Digital 73
Further Innovation & Renovation to come NESCAFÉ Dolce Gusto matcha Green Tea New System Solution by IoT 74
NESCAFÉ Dolce Gusto Matcha Green Tea Real Japanese product using traditional techniques available in single serve 75
New System Solution by IoT IBM Watson powered Big Data & Analytics Artificial Intelligence Cognitive Knowledge Connecting people EC Purchase support Tama II 2016 launch Maintenance support Connection hub to enrich NESCAFÉ experience In-home and Out-of-home 76
4 Key Takeaways 1 2 3 4 NEW REALITY CHANGE IN CONSUMERS PROBLEMS New reality changes the problems of our consumers and offers the possibility to develop true innovations through delivering of new solutions INNOVATION BEYOND PRODUCTS INTERNET & AI Internet and Artificial Intelligence allows us to solve our consumers new problems and delivers growth opportunity INNOVATION BEYOND PRODUCTS NEW BUSINESS MODEL NESCAFÉ Ambassador: Bringing good-quality coffee, in a convenient way and at affordable prices into the office environment PREMIUMIZATION CHOCOLATORY The combination of national brands and craftsmanship offers new opportunities to deliver more value to our consumers 77