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AcceleratingGrowth throughInnovation and Premiumization
Kohzoh Takaoka
Chief Executive Officer
Nestlé Japan
60
70
80
90
100
110
120
0
100
200
300
400
500
600
1980 1985 1990 1995 2000 2005 2010 2015
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Sources: IMF, Cabinet Office
GDP (JPY Tri.)
GDP
GDP deflator
(index: 2005=100)
GDP deflator
Population (mio.)< 65 yrs.
Population
0%
5%
10%
15%
20%
25%
30%
110
115
120
125
130
1980 1985 1990 1995 2000 2005 2010 2015
% <65 yrs people
Nestlé Japan: Delivering growth in aging and shrinking developed market
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2011 2012 2013 2014 2015
Nestlé Japan: Food and Beverages delivering solid growth
CAGR (11-15) + 3.4%
2011 2012 2013 2014 2015
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Nestlé Japan: Strong Improvement of profitability in Food and Beverages
+44% vs. 2011
19.8 23.1 27.6 32.4 34.4 36.512.5
15.518.9
19.8 20.8 2142.1 31.3
31.9 27.9 26 24.1
25.6 30.121.6 19.9 18.8 18.4
1980 1990 2000 2010 2020 2030
Increasing single / couple households (% of households)
Single Couple Parent+child(ren) Others
61
Japan: Aging population / changing lifestyles driving shift to single households
Sources: Statistics Bureau, Ministry of Internal Affairs and Communication
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18
32
Single
household
General
household
(excl. single)
% of total household food expenditure
Eating-out expenditure (¥K/year/ person)50 161
Japan: Single households driving shift from family to individual consumption
Traditional
Family
In-home cooking
Now and Future
Single
Prepared OOH
General vs. single household
eating expenditure
Total household
Source: Nikkei Business, MIC
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Nestlé Japan: Accelerating growth in the 21st century
New Reality New Customer Problem Solution
Individual coffee
consumption
Shift to Out-of-home
Preparation for
each cup of coffee
is troublesome
Non-availability of
good-quality coffee in offices
at affordable price
System solution
Nescafé
Ambassador
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NESCAFÉ single serve systems: Solving single household problems
NESCAFÉ Gold Blend Barista NESCAFÉ Dolce Gusto
To provide coffee in offices with
affordable price per cup
To energize communication in many
communities
To co-create new values with
NESCAFÉ Ambassador
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NESCAFÉ Ambassador: Innovating how we work with consumers OOH
Nestlé Investor Seminar 201666
250’000 ambassadors
Serving 2.5 mio people every day
1 billion cups served in 2015
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NESCAFÉ Ambassador: Innovating how we work with consumers OOH
VS
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The New Reality in Japan: Price polarization in the FMCG Market
Chocolatier National Brand
New Reality New Customer Problem Solution
Kit Kat STUDiO in
collaboration
with local
chocolatier
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Nestlé Japan: Accelerating growth in the 21st century
Luxury chocolatier
chocolates are
booming
National brands
being commoditized
having no
craftsmanship
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x20
Kit Kat Chocolatory: Introducing craftsmanship to national brands
1,500JPY/kg
28,600JPY/kg
71 Nestlé Investor Seminar 2016
• Gift wrapping, message card
• Multiple flavour assortment gift box
• Packaging engraving service
• Laser engraved chocolate
Kit Kat Chocolatory: Enhanced availability through e-Commerce
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• New business model
(beyond products)
• Digital
Innovation & Renovation offer customers new solutions
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Further Innovation & Renovation to come
NESCAFÉ Dolce Gusto matcha Green Tea
New System Solution by IoT
“Real” Japanese product using traditional techniques available in single serve
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NESCAFÉ Dolce Gusto Matcha Green Tea
EC Purchase support
Tama II 2016 launch Maintenance support
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New System Solution by IoT
IBM Watson powered
Big Data & Analytics Artificial Intelligence Cognitive Knowledge
Connecting people
Connection hub to enrich NESCAFÉ Experience In Home & OOH
EC Purchase support
Connection hub to enrich NESCAFÉ experience In-home and Out-of-home
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4 Key Takeaways
NEW REALITY – CHANGE IN CONSUMERS PROBLEMSNew reality changes the problems of our consumers and offers the possibility to develop
true innovations through delivering of new solutions
2INNOVATION BEYOND PRODUCTS – INTERNET & AIInternet and Artificial Intelligence allows us to solve our consumers new problems and
delivers growth opportunity
3INNOVATION BEYOND PRODUCTS – NEW BUSINESS MODELNESCAFÉ Ambassador: Bringing good-quality coffee, in a convenient way and at
affordable prices into the office environment
4PREMIUMIZATION – CHOCOLATORYThe combination of national brands and craftsmanship offers new opportunities to deliver
more value to our consumers