I'm reading the paper the other day and all of a sudden I come across this giant headline. Nestle wants it all virtue and profit. So my first question to you is, do you really want it all to take it all from all of us all the virtue and all the profit Let me throw it back to you [ UNKNOWN ] we all like be profitable and be virtuous at the same time? So yeah, that's the goal. That is the goal. So you know and yet you are enormous company and so there is an enormous target on your back sometimes and part of this article, really Talked about some of the challenges of being the world's largest food and water and beverage company, but just want to give you a sense of the size, you're a 304 billion dollar market cap, just an enormous company that you do business all around the world, everyone knows your products but it's milk and chocolate in. Kite cat candy and bottled waters we said some of the best name brand although not this one actually .>> Not this one yeah .>> So we shelve knowing that .>> Constant trying .>> And food seasonings, and pet foods, and a coffee of course. So it's Haagen does ice cream I forgot that was one of my favorites. But it's it's like the water this issue and I know that we're guilty for having these plastic water bottles. But your water bottles are kind of everywhere. They're they're plastic refuse. They're in the oceans. There was just a study just this week from a group called break free from plastic. They have a lot of volunteers going around and And they've found 4, 846 pieces of Nestle branded plastic in 31 countries. It was the second after Coke. How do you deal with that? Sure. And so, I think water and packaging, I think, is a good topic to start on. So clearly, we're proud of being in the water business. You have to drink something. Hydration is very important. It's part of a good and healthy nutrition regimen. And clearly, having water is better than having carbonated soft drinks. We were betting on this trend very early, starting in the late 80s and then we're riding it all the way til now. I think 2016 was the year when you saw crossover when it comes to the US where the per capita consumption of carbonated soft drinks for the very first time, fell below the one for water and I believe that's a contribution to public health. Okay, and that's something I think we should feel good about and and it's very positive Now you got to do this responsibly, you've got to do responsibly on how you get the water. So being a good steward of the aquifers where we take the water from is very important to us. And the article that you mentioned was also talking about how we do this and how we convince the other people of this aquifer that we share the water work that we do this in a good and equitable manner. And then, of course, the second challenge is packaging. So clearly for water on the go, you need to have some sort of resealable container. What is that container? What's the material it's made from? How does it get recycled? So it's not about the material per se. It's about the responsible use of that material. Investor responsibility was stepping up too. So there's been some criticism though that in several communities, particularly in the United States and Florida and Michigan and California, the criticism is that you're extracting so much water out of the aquifers in some cases a half a million to a million gallons a day So reported anyway, that it's draining those aquifers and how do we and that you pay very little for that privilege in the sense of, one time fees in some cases. How do you Make the chase that you are being pushed towards. Yeah, so when I look at some of the internal policies and guidelines I feel good about stepping up to the responsibility. I do agree that every once a while when public relations situations do get out of hand- Yeah. That we're not doing a good job telling our side of the story. So for example, in Florida, we are paying a rate for the use of that of water that's very similar to what other people pay for taking water of the municipal credit. So this is not something we get for free. And again, in terms of our policies, remember there's lots of things that influence an aquifer and the water quality and the water table in the aquifer. Overall, we are always very small part of that we're not the only people participating in this. I do believe from what I've seen in the situations I investigated that we handle those situations very responsibly. Having said that, most of the time there is a community relations problem behind [ UNKNOWN ] situation that has gone wrong. It is our responsibility to manage that better [ UNKNOWN ] we take on board. So it's interesting, you're a company that gets praise so much because you were earlier on the [ UNKNOWN ] value idea. The idea that there was multiple stakeholders that really need to be served. And yet you were criticized a lot in previous leaders of the company I should say not you particularly but of course Mr Famous infant formula one. We wrote a story that Maggie noodles which was a crazy crisis that happened in India and the water bottle issue. There obviously a lot of your competitors Including this one that are making these products but you are in the spotlight a lot. And you talk about changing the narrative, but it just seems like you keep getting embroiled in these issues. Yeah, and [ UNKNOWN ] as a starting point, I don't make a difference between me and previous leaders of the company. It's team that's led Okay. And this is a company that's present in a 190 countries on this planet. We are in ten different food and beverage categories. And let me say it very openly, we're trying hard but you do not always get it right, okay? And then it's more about when you become aware of a problem. How do you actually rise to that occasion? How do you fix it and and how focused are you on that? And I think that sincerity is something that hopefully does come across. So again, we don't do everything right but when we get alerted to a problem, I think we're seriously Christiana figures was here earlier and she talked about the fact that there's $ 8. 8 trillion of that sit under management, committed to what she called, truly putting pressure on companies they own. To meet the sustainability goals. You talked about your brand new commitment. Just we were talking about this earlier, to the degree and a half to, to really keeping to meeting that 2030 challenge on your sustainability. Can you talk about that? Yeah, and so we also explore that whole topic in more detail during a lunch breakout session with Cristiana and I think between her views and my views. I think we're very much aligned. And, before we talk about the capital, let's talk about the consumer that we serve. And we're clearly seeing that [ INAUDIBLE ] interests and sustainability interests, that used to be sort of a fringe interest 30 or 40 years ago, they're becoming mainstream, okay? Everybody's getting interested in that. As a consumer company, Even if we weren't caring about this at all, but we do, even if we weren't caring about this at all, we cannot afford to lose the consumer and especially not be younger consumer. And hence, as this is turning mainstream, it's in our best interest to really work up to these requirements and do the best we can. Now in our case, this was easy because environmental Responsibility was something that has always been close to the heart of the company. I think very early on, we started to get engaged in this. We were pioneers, for example, on water free manufacturing in some of our agricultural products. Pioneers when it comes to avoiding deforestation Cutting down on greenhouse gas emissions. So I think we tried it early. But before capital think about the consumer. It's no coincidence as you look around the planet, as you look at who's scientist, one and a half degree pledge that you find certain over indexation when it comes to consumer facing companies. Because I think, those are feeling the pressure first. Then you have the capital side and of course investors are getting more and more interested as well, that applies to all industries. So between the consumer side and the people that give you the money. Yeah, I think there's a lot of strong force you have ,>> a lot of major institutional shareholders. Are you actually hearing this is this being discussed with you in terms of Being open about your commitment to the sustainability goals. I know it comes internally but are you also having pressure? It's coming up. But let's also make no mistake. The same people that say that this is very important to them still require top notch financial performance. [ LAUGH ] So it's not that anyone basically says look, we want you to be an ESRI leader and we'll cut your slack on let's say a percentage point on return on invested capital and So in a sense, you got to be a top performer on the financials and yet at the same time have a convincing roadmap towards a better eco footprint. And the same dual challenge is the food issue. So we have to feed a growing planet And this is something you've taken on personally in your role as leading this giant company, but also the pressures of packaging and the pressures of obesity and the pressures of what we put in those products, whether it's sugar, high calorie content You know, you are wrestling with both of those two. Yeah. So all of these elements that you mentioned, are right. I think the one big theme and maybe the one thing that I want you to take away where we can make a lot of progress on health, public health, and a lot of progress on the sustainability front at the same time. Is plant- based nutrition. And I think what happens in the Western world in particular is no one talks about cutting out animal proteins. But we are so over indexed on animal proteins that if you go lower on that, there's an automatic health benefit to it. And if you go lower on that, there's also an automatic Eco benefit to it because it's so intuitive. I mean, think about raising plants first to feed an animal so that that animal then feeds man, as opposed to raising the plants right away and with those plants feeding man. It's so obvious, it doesn't even need explanation. And so over time making progress on that I think is key. But if only you could make say a bacon cheeseburger with a plant based product. And we can, yes. Okay, so this is the transition. And you made this really specifically to speak to my family, correct? Yeah. That's what this was for? And so here again, it's coming out of the specialist corner. So until a few years ago, vegetarians or vegans or what have you were a minority. I think what's happening now is that plant based foods are fast becoming mainstream. You saw all the craze about the plant based hamburgers you know the incredible stock valuations that some of these companies have seen, and also the huge interest in fast food chains to add these items to the menu That's part and parcel of these products becoming mainstream. So, it's true in our modesty, we are the first company to announce what we call the triple play. That's a bacon cheese burger. So there's some companies that do a good patty, some companies that do a good cheese and some companies that can do a good bacon, all planned based. We can do all three of them. Okay, we wanted to show our quick service restaurants partners that if you partner with us, you can get that complete kit from one hand. So you waited for impossible foods like Beyond Meat to pioneer this area, and now you're going to crush them right? With this bacon cheeseburger. Look. This is a big town. I think everyone has seen amazing growth rates. But let me also say because everyone's will see media coverage saying, okay, there were these incredibly virtuous pioneers and now big food is discovering this. This is an overnight success that has taken us 30 years, okay, we've been playing around with plant based proteins and plant based foods since the late 1980s. And I think this is also an interesting case study about established companies versus startups when it comes to know how and thinks that you can take right out of control. So, these new startups are give or take eight or ten years old and this is how long it took them to get the product to market because they were starting from scratch. So we've been playing around with plant based proteins for 30 years, but from the moment we said let's do a hamburger patty. To the moment it was on the shelves there was 18 months and it's right up there when it comes to performance right up there when it comes to nutritional So clearly if you have a lot of accumulated experience, it's easy for you to make that [ UNKNOWN ] happen. So in a minute I wanna go to the audience for questions, so please think about one. We'll have our Mike Wranglers come to you. But part of what we were talking about is a cultural shift here earlier and w you mentioned a stat to me that I found kind of amazing it was the 50 million how do we 50 billion I'm excuse me, hamburgers that that Americans eat.: Yeah. And. You know, I've heard a lot of, you know, different takes on the taste of these vegan plant based products. Can they really satisfied meat eaters? So I mean, this is a number that's really worth remembering 50 billion hamburger patties consumed in the United States every year. So that computes for every Delta American. To about three weeks, okay? In France just to give you a point of reference, every adult French person consumes 14 a year so give or take one a month. So that shows you, this is an American business when it comes to the main business opportunity. So, eating at the McDonalds that I see everywhere and parents. Well but don't go for the salad. Yeah, that's a lot. And so being able to change that culture you feel and how does Nestle play a role in that and that cultural change? Well, I think as you explore these new food trends, there is a new spirit of trial and error because these trends come incredibly fast, you need to execute fast. In the past, it was not unusual for new food and beverage product for us to take two or three or four years to make it from concept to store shelf. These days on a plain vanilla product it takes us about six to nine months on something that's more demanding that the burger was a year and a half. Yeah. Good. Case in point is our latest Starbucks coffee range. We closed that deal with Starbucks last August. We unveiled 24 different Starbucks products in February. We were on the shelf in March. And so this was a nice way for the outside world to see that we were actually doing it in six months. That's amazing. So we have a question here? Do I see any panel? Okay? You're right there. Just just identify yourself, please. Sure. Susan Oliver. Thank you. I haven't found your answer yet to the water bottle. So I think you've said you justify the distribution of water and I get that, but the whole issue of the waste stream is obviously really important. So I just ask you if you've. If you've got an answer or you're working towards an answer. Yeah, Thanks. So look, first and foremost, as a fellow citizen, I would encourage everyone to drink water and more water and events from tap. I mean, this is a healthy thing to do. Okay, so this is just from one person to another, as a business in addition to water bets from a tap or purified source There is a need for water on the go. And as long as you do bed responsibly, I see nothing wrong with satisfying that need. Someone has to do it and think about the last time you took off for a trip. You took it with you, you can do it in an open container it has to be resealable. Again, all of us needs to be done responsibly. But if you do bad it can \ g be good business. It serves a good purpose and compared to other food and beverage categories as nothing worse with that. Again, it has to be done well. It's important to make a distinction between people who sell purified water because then you just take it off the grid. People who really serve you fresh spring water because that's when all of these issues of managing an aquifer and being a responsible partner to the farmers and communities around you comes in. That's a whole different quality level. But then you're not dealing with something that is just taken off the grid, purified remineralize with lots of chemicals. It's a different thing. And that's the league we're playing and it comes with a different responsibility. You and I have talked a little bit about being local for local and the importance of manufacturing your food products, all of your products in local markets and as a something, a tool to reduce your footprint Could you just talk a little bit about that and how committed you are to that? Yeah, so start with the consumer. I think food and beverage is an incredibly local product tastes a very different think about European two neighboring countries that are among our top 10 markets France and Germany, side by side and get so different when it comes to their food preferences. So you got to work from what your local consumer wants if you want to be relevant to all the consumers that you're serving, ideally, because there's also usually farming communities and supply chains involved, even aside from the tastes, you want to make it as close to consumer as possible. So to give you a sense about Nestle we operate more than 400 manufacturing facilities around the world. And very early on when we started in the country market we would typically invest in local manufacturing capacity, would try to become inside us to the largest extent possible. So good example, United States. I get this question all the time from investors, how will the trade wars impact you? Well, not very much. We operate About 70 plants in the United States we make almost everything we sell their locally and to enhance were really local for local company when it comes to that. We're gonna have to leave it up there. Thank you Mark. That was a great conversation. [ APPLAUSE ] Thanks so much. [ BLANK_AUDIO ]

How Nestle Is Reshaping The Future Of What We Eat

Leadership

Food giants are under pressure to solve a myriad of problems, from world hunger to rising rates of obesity and increasing demand for nutritious, sustainable food.