Feedback from CEO/CFO Sell Side Meeting

研报英文原文证据摘录

Feedback from CEO/CFO Sell Side Meeting

st another 12 months of work

required before all four pillars consistently turn "green". Management admitted that they have

made good progress on product superiority and value but there is more that Nestle needs to do

around visibility and communication. CEO Philipp Navratil said that he thought the Kit Kat

Heist campaign was a bit of a 'gamechanger' in terms of how Nestlé does marketing, but

we sense a degree of urgency to see the same kind of marketing campaigns on more of

Nestle's other billionaire brands.

8.Coffee remains a question mark in the US

Nestle said that coffee is performing well in Europe in a subdued market and Emerging Market

coffee is dynamic so the slowdown of coffee in the quarter can be laid mainly at the door of its

US Coffee operations. Nestle took HSD pricing at Starbucks at the end of Q1, which resulted in

RIG elasticity in Q2. Management believes the consumption disruption in the US is temporary

and ultimately consumers eventually return to preferred brands. The issue, however, is that the

US single serve coffee market is under pressure and even though Nespresso is performing better

than peers, the backdrop is challenged. The good news is that Nespresso penetration is 8-10x

lower than Keurig in the US. One watch out is Nespresso retailer inventories are high, and

although management has been saying there is a risk that they could come down, so far it

hasn't happened, but there is a risk that we could see more Nespresso destocking down the

line.

9. Management challenged on its e-commerce slowdown in Q2 and profitability.

In the analyst meeting, there was a question around why e-commerce growth had slowed from

15.5% growth in Q1 to around 9% growth in Q2. This is important as e-commerce is the main