BUSINESS REVIEW North America SEPTEMBER 2010
Disclaimer This presentation contains forward looking statements which reflect Management s current views and estimates. The forward looking statement involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.
Key Facts NPPC North America NPPC is the leading PetCare Company in North America. We are number 1 or 2 in every category. Market Shares have increased 2.0 pts. over the past 3 years. We are responsible for 42% of the category growth over the past 5 years and 57% of the growth in the grocery and mass channel (versus our market share which is currently 33%). We are ahead of the acquisition targets. Our scale and operating model provide a sustained advantage within our petcare competitive set.
North America is a large region for pet food. Value Volume EUROPE 39% EUROPE 34% AOA 14% LATAM 13% NORTH AMERICA 34% AOA 10% LATAM 15% NORTH AMERICA 41% Nestlé Purina Global PetCare Sales for 2009 were $12 billion.
The USA market is biased to Dry Petfood. Value Volume 2% 9% 21% 11% 9% 10% 17% 42% Dry Dog Dry Cat Wet Dog Wet Cat Dog Snacks Cat Snacks Litter 3% 6% 7% 14% 49%
The Petfood Category Is resilient with the ability to cover cost increases with pricing. % Chg vs YA Price Increase Q1 06 Price Increase Q2 07 Price Increases Q1 & Q3 08 Price Increase Q1 09
Pet Population continues to experience steady growth. Mio 3 YR CAGR Dog 1.5% Cat 0.9%
Major channels are fairly similar in size with Pet Specialty growing faster. All Other 13% (Vet, Club, Value) Food 27% Mass 30% Pet Specialty 30%
NPPC posts share gains in petcare across all channels over the past 4 years. Food Mass Pet Spec
NPPC is the only branded vendor to achieve $ share gains in 2010. A/O 15.4% PVL 10.9% +.2 +.9 NPPC 33.6% +.2 Delmonte 9.8% -.2 Colgate 8.1% -.1 P&G 7.6% -.6 Mars 14.7% -.4
NPPC is #1 or Strong #2 in all category segments. NPPC Market Share NPPC Share Position Dry Cat 38% #1 Wet Cat 63% #1 Dry Dog 28% #1 Wet Dog 28% #2 Total Snacks 24% #1 Litter 32% #1
Sales and Profits are ahead of acquisition targets. 8 7 6 Actual Sales Aq. Assumption Sales Actual EBIT Aq. Assumption EBIT 5 4 INDEX = Value versus that year s assumption 2004 2007 2010 INDEX SALES 110 119 133 EBIT 117 125 133
Our leading brands generally growing faster than our overall portfolio. 04-10 CAGR Friskies 9.3% Alpo Dog Pro Plan Beggin Friskies Dog Chow Beneful 9.7% 28.7% Tidy Cats Fancy Feast 10.6% Other -3.5% Cat Chow Dog Chow ONE 6.0% Cat Chow 11.0% ONE Tidy Cats 3.8% Beneful Alpo Dog 2.8% Other Fancy Feast Pro Plan Beggin 8.7% 10.7% Overall Portfolio CAGR 04-10 is 8.0%
$ Billions Innovation and renovation platform is a critical component of our growth over the past 5 years. 8 6 4 2 0 16% 19% 23% 20% 19% 21% 2004 2005 2006 2007 2008 2009 Sales I & R
Innovation is very broad based.
Innovation is more than product.
Innovation is more than product.
Product Supply Capabilities NPPC North America 24 factories in North America. Based on Make it where you sell it model that moving raw ingredients is more effective than moving finished goods. Delivers Best-In-Class total delivered cost and high service levels. Geographically distributed capacity and innovative portfolio cleansing has indefinitely deferred capital for a new factory. 70% of customer shipments are one touch from the factory to the customer enabled by scale and flexible, efficient business practice incentives.
NPP NA Manufacturing Network Innisfail Caledonia Moncton Mississauga Maricopa Flagstaff Denver Hager City Dunkirk Jefferson Ft. Dodge Mechanicsburg Clinton Zanesville Crete. Allentown Davenport St Joseph Weirton Springfield Bloomfield King William Oklahoma City Atlanta
Salesforce Capabilities Enabled by Multi-functional Teams Rigorous Segmentation drives financial and human resources to high value customers. General manager mindset balances growth and customer profitability in performance reviews and compensation. Local customer teams are empowered through flexible customer specific funding plans. Team-based, multi-functional organizations with embedded supply chain expertise. Balanced focus on Employee and Customer Satisfaction annual measurement. Delivered at Best-in-Class cost.
Waggin Train Acquisition Waggin Train is a leading marketer of premium, meat based dog treats in the USA. Waggin Train is the fastest growing brand in the dog snacks sub-segment and has grown the total dog snacks sub-segment. Waggin Train has 3 of the top 5 SKU s in the dog treat subsegment. Waggin Train fills a gap in our current dog treat portfolio and provides a new growth platform with new consumers to the Nestlé Purina business.
Key Takeaways NPPC North America NPPC North America is a growth business in a mature market. Category and market shares are growing. Our brands and our category have been very resilient during the economic downturn. Our financial performance is significantly ahead of the acquisition assumptions. Focus, scale and capability building in consumer insights, product supply networks and customer relationship management create gaps to our competition.