Oct 4, 2009

Report on Nestlé

The Nestlé Policy on the Environment

CEO's Statement

Over the past several decades, significant progress has been achieved towards
protecting the world's environment. This objective remains a fundamental duty and
a collective responsibility that must be shared between the public, governments
and the private sector.

As the World Food Company, Nestlé is dedicated to providing consumers with the
best food throughout life. Our Company's primary function is the transformation of
perishable raw materials into finished products that meet consumers' expectations
for safety, quality, convenience, and value. From our earliest days, we have
recognized the need to protect the environment in our business activities.
Exercising this commitment, which is part of our broader commitment towards the
good of the community, remains central to our business today and tomorrow.

The Nestlé Policy on the Environment was published in 1991 to define our world-
wide strategy on environmental issues and to state our long-standing commitment
to environmentally sound business practices. It is communicated internally within
the Nestlé Group and externally to all interested parties and institutions. Following
its publication, the Nestlé Environmental Management System (NEMS) was
established to consolidate all environmental measures taken by the Nestlé Group.
The NEMS is being implemented across our entire business.

Today, preserving natural resources and minimizing waste has become a part of
day-to-day business for our employees and is an integral part of our strategy to
achieve global competitiveness. The 1999 update of the Nestlé Policy on the
Environment reiterates our strong environmental commitment and reflects our
priorities as we move into the new millennium. It also recognises developments in
the international environmental arena.
The application of the Nestlé Policy on the Environment at every level of our
operation forms an essential part of the Nestlé Corporate Business Principles and
enables us to contribute to sustainable development — meeting the needs of the
present, without compromising the ability of future generations to meet their own
needs.

Research & Development

Nestlé's research and development centers have two primary objectives: to create
new products and manufacturing processes and to improve those that already exist.
Along with product quality and safety, the conservation of resources and the
preservation of the environment form an integral part of the development criteria
for new projects.

Research and development encompasses a wide range of environmentally-related

activities with emphasis on:

* environmentally sound production techniques and sourcing criteria for

agricultural raw materials;

* processing methods that minimize water and energy consumption, as well as

waste g

* eneration;

* packaging designs that reduce total waste and enable environmentally sound
disposal options while safeguarding product safety and quality; and

* innovative ways to recover by-products and thus generate secondary raw

materials and energy.

For important product or process innovation and renovation, Nestlé's research and
development centers prepare an environmental impact study. This covers
significant aspects in the product life cycle, from the sourcing of raw materials,
through processing, to the packaged consumer product and the end-life of the
packaging material. This study is carefully evaluated, in conjunction with detailed
information on the potential manufacturing site, to ensure that new projects meet
Nestlé's environmental standards.

Of the 807 million Swiss francs spent in 1998 on Nestlé R&D throughout the Group,
a good part went towards enhancing the wholesomeness of our products.
Additionally, these expenditures improved our production process, created better
packaging, and avoided waste and unwanted residues.

R&D Is Making a Difference

As an example, significant progress has been made in recent years in energy and
water intensive blanching and cooking operations. At the end of these processes
water must be removed which resulted in wasted energy and raw materials —
vegetables or pasta for example.

Now water is replaced by steam at low pressure. As a result, water consumption

was reduced by 80% and product losses during cooking were more than halved.
This means lower costs for energy and for wastewater treatment, while at the same
time increasing the product yield by 6%. In another example, extraction residues
from the production of chicory-based instant drinks, which were expensive to
dispose of, have been turned into a valuable animal feed ingredient.

A recent processing improvement for french fries showed product quality can be
significantly improved while also saving energy. One conclusion of R&D is that what
is good for the environment is often synonymous with good industrial practice.

Preserving Species

The disappearance of many species and varieties of animals and plants is a reality.
Over the past few years, this issue has attracted increasing recognition and much is
being done today to preserve the earth's biological diversity. Industry plays an
important role in these efforts since many business sectors depend on nature's
diversity for their sustainable success. Nestlé, as the world's largest single buyer of
coffee and cocoa, lives up to its responsibility by developing the most advanced
preservation techniques for many different coffee and cocoa varieties threatened by
extinction. In addition, Nestlé collaborates with public research institutes to share
its experience and makes its results freely available.

In the future, Nestlé R&D units are determined to build environmental protection
into products and processes right from the start. High on the agenda are integrated
farming techniques involving minimal use of fertilizers and chemicals, and recourse
to biological pest control methods whenever possible.

SUPPLY CHAIN

Agricultural Raw Materials

In general, Nestlé is not directly involved in the production of raw materials.

Wherever possible, locally available raw materials are used. They are either
obtained directly from producers or purchased through trade channels. Nestlé
applies the following principles when sourcing raw materials:

* all raw materials must meet both legal and internal quality criteria, including
limits on possible environmental contaminants;

* whenever possible, preference is given to raw materials that are produced by

environmentally sound farming methods (e.g. integrated crop management); and;

* farmers are encouraged to apply sustainable farming methods and, where

appropriate, are provided with assistance in crop production and dairy farming.
Such assistance includes the provision of recommendations for the conservation of
natural resources (soil, water, air, energy, bio-diversity) and techniques for reducing
environmental impact.

Manufacturing

Manufacturing comprises all processes that are necessary to transform perishable

raw materials into safe and convenient food products for consumers. Nestlé strives
to achieve optimal performance in its manufacturing activities, including the
environmental aspects. As such, the manufacturing practices of the Group:
 * respect natural resources by emphasizing the efficient use of raw materials,
water and energy;

* minimize the use of environmentally-hazardous substances;

* continuously seek improvement in the efficiency of production facilities; and

* reduce waste generation and emissions as much as possible, consider recycling

of waste a priority and dispose of non-recyclable waste in an environmentally sound
manner.

Regular environmental assessments of Nestlé's manufacturing practices are

conducted to:

* evaluate factory performance;

* review factory compliance with applicable legislation and Nestlé's own

standards;

* fully investigate incidents that could affect the environment and take relevant
measures; and

* compare results with previous targets and set new improvement objectives.

In addition, Nestlé exchanges information on environmental protection technology

and practices in order to ensure a wide use of best practices.

Nestlé encourages its contract manufacturers to use environmentally sound

manufacturing practices.

Environmental Performance of Our Factories

Minimizing the environmental impact of our factories has always been a prime
consideration. Therefore, we periodically review environmental performance of the
entire Nestlé Group. The results are very encouraging:
 * Nestlé has no major environmental problems.

* Nestlé complies with relevant regulations or, in a few exceptional cases, has
initiated action to do so.

* Measures taken are proactive and often anticipate future regulations. Many
times, measures taken to improve the environment also reduce costs.

These surveys also allow us to put concrete figures to our efforts: Over the past
years, Nestlé has invested an average of some 100 million Swiss francs per year in
specific measures to protect the environment. This amounts to approximately 3% of
total capital expenditure and includes only readily identifiable environmental
investments. In addition, substantial amounts were expended as part of regular
capital investment projects and factory environmental operating costs. Examples of
these additional expenditures include environmental aspects related to factory
construction and renovation, environmental training of personnel, and maintenance
costs for wastewater treatment facilities.

Recent Environmental Investment

The factory environmental surveys are a valuable management tool which are
periodically repeated as part of the Nestlé Environmental Management System
(NEMS).

Water, Our Top Priority

Nestlé engineers and factory planners have pioneered wastewater treatment the
world over. Whenever factories went up, often in remote locations of developing
countries, where neither local expectations nor legislation required environmental
safeguards of any kind, appropriate wastewater treatment was provided. Nearly 30
million Swiss francs have been invested annually over the past few years in
wastewater treatment facilities. While we can be genuinely proud of these
achievements around the world, we continue to upgrade existing plants and build
new ones where necessary.
Examples of Nestlé's substantial investments in this area are:

* As early as 1920 Nestlé had constructed and started the operation of a

wastewater treatment plant in Kempttal near Zurich. At that time it included a
settling basin and trickling filter. 1932 saw the addition of a biological component
which constituted Switzerland's first wastewater treatment plant operating with
activated sludge, a principle still used today.

* An 80% reduction in water consumption of some cooking processes through an

extensive R&D project.

* A facility in Himeji, Japan, serving one of the largest instant coffee factories in
the world, was rightly considered a model installation when it was built almost 30
years ago, and thousands of Japanese water treatment specialists have visited it
over the years.

* A facility in Dongguan, China has established itself as a model for wastewater

treatment. It too is visited regularly by Chinese wastewater specialists.

Reducing Air Emissions

Another important investment area is for air protection. The biggest environmental
investments over the past few years went into the conversion of heating units from
heavy fuel to natural gas. When these conversions can be used to install combined
steam and power generation systems; impressive energy savings are achieved in
addition to environmental benefits. Therefore, we favor these co-generation plants
wherever feasible.

Co-generation processes are much more efficient than conventional power plants
and therefore usually lead to a significant, global reduction in both energy
consumption and release of "greenhouse" gases. Nestlé currently operates over 10
co-generation facilities throughout the world.

Co-generation examples are:

At the Nestlé Gerona plant in Spain, the co-generation system, commissioned in
1991, reduced gas consumption by 3600 tons of oil, equivalent per year, and
decreased overall carbon dioxide emissions by 8000 tons annually.

The savings at the York factory in Britain, where a coal-fired boiler house has been
replaced by a gas turbine co-generation plant, are very impressive. Carbon dioxide
output was reduced from 131,000 tons per year to 59,000 tons per year.
Additionally, sulfur dioxide emissions are completely avoided at the factory level
(650 tons per year) and cut by more than half, from 1059 to 436 tons, at the level of
the supplying national power station.

Phasing Out Ozone-Damaging CFCs

The characteristics of chlorofluorocarbons (CFCs) make them suitable for a wide

range of refrigeration and air conditioning applications necessary for many of
Nestlé's manufacturing processes. However, there is evidence that they contribute
to the depletion of the stratospheric ozone layer. This has led to several inter-
governmental agreements to phase out the use of CFC's. Nestlé anticipated this
phase out early and has established a detailed CFC phase-out program to replace
CFCs used in industrial refrigeration systems with non-CFC alternatives. To date,
Nestlé has reduced it's CFC emissions by more than 80% of 1986 levels. We are
committed to continuing to address the issue of ozone-depleting substances and
further improve these dramatic results.

Recovering Solid Waste

Landfills in many countries are rapidly approaching their limits, thus becoming a
costly and cumbersome problem. However, Nestlé has stopped looking at solid
waste as part of the problem, but as part of the solution. Solid waste has become a
valuable raw material when recycled, composted or used for fuel in energy recovery
processes.

Coffee grounds, which are a by-product of instant coffee manufacturing, is a case in

point: Much of the investment related to solid waste is earmarked to build coffee
ground energy-recovery systems that use the coffee grounds' energy value to
produce steam for our factories.
In Raja Muda, Malaysia we installed this state-of-the-art machinery, the first of its
kind in Asia, outside Japan. Now coffee grounds are used as fuel. Thus, for every
100 tons of coffee grounds we save the equivalent of about 40 tons of fossil fuel.
The decision to develop and install this energy-recovery system is typical for how
Nestlé anticipates problems and pioneers solutions.

Additionally, in some markets factory solid wastes are composted to produce a high
quality soil amendment product. In some cases this product is packaged and sold
for use as a 1natural fertilizer.

In New Milford Connecticut, USA Nestlé built a state of the art composting facility
that processes both solid and liquid wastes, sludges, and by-products from its local
factories, co-packers, and distribution centers. Additionally, the composting facility
provides a solution to the local community for disposal of landscaping and
gardening wastes, which are banned from landfills in that area. This facility recycles
more than 50,000 tons of waste materials annually, preventing them from going to
landfills.

Packaging

Packaging serves a major role in our daily lives. It protects food products from
spoilage and ensures safety from manufacture through storage, distribution and
consumption. Packaging may also provide tamper-evidence features. It
communicates information, including nutritional information and serving
instructions, and provides the convenience demanded by today's consumers.

Nestlé is committed to reducing the environmental impact of packaging, without

jeopardizing the safety, quality or consumer acceptance of its products. It is Nestlé's
objective to develop safe and wholesome packaged foods using the most efficient
and appropriate packaging materials available, while, at the same time, satisfying
consumer requirements and expectations.

Nestlé seeks packaging solutions that:

* result in the lowest possible weight and volume of packages;

 * take into account new packaging materials and processes that reduce the
impact on the environment;

* avoid the use of substances that can adversely impact the environment during
packaging production and disposal;

* decrease packaging waste at all stages, including package manufacturing, use

and disposal;

* increase the use of recycled materials wherever possible; and

* increase the recyclability and compatibility of its packages with existing

packaging waste management schemes.

Regular assessments of Nestlé's packaging are carried out and action plans are
implemented.

Nestlé supports industrial and governmental efforts to promote integrated waste

management that takes into consideration matters such as source reduction, reuse,
recycling, composting, energy recovery, and landfill.

Nestlé encourages suppliers of its packaging materials to adopt sound

environmental practices.

Packaging Source Reduction

Packaging waste is one environmental issue that affects the entire consumer goods
industry. However, the gap is wide between reality and perception: While food
packaging accounts for less than 1% of total solid waste in most countries, it is
highly visible to consumers. Even if the problem of food packaging is small in
relation to overall environmental problems, it is nevertheless an important issue for
Nestlé.

The most direct opportunity to reduce the scale of the problem is to use as little
material as possible. This is not a recent effort by the food industry. Over the last
four decades, between the 1950s and 1990s, the weight of a glass milk bottle has
been reduced by 36%, a steel food can by 66%, and an aluminium beer can by 81%.
Even though packaging source reduction has always been a consideration, we
decided to reinforce these efforts in a more systematic way. The first world-wide
environmental packaging survey was completed in 1991 for the Nestlé Group and
has been repeated annually ever since.

The last survey revealed that by the end of 1998, Nestlé, without compromising
product quality, reduced our use of packaging materials by nearly 150,000 tons
compared to 1990. These reductions resulted in savings of approximately 250
million Swiss francs.

Cumulative Reductions in Packaging Materials

Examples of Packaging Source Reduction

A few recent examples that underline Nestlé's efforts:

In Australia the Easter Egg Novelty cartons were reduced in size by altering the
design to provide support for the egg. The new design resulted in a 31% reduction
in use of paper board.

In Pakistan the Nestlé NIDO package, which consisted of 4 bags in a display box,
was replaced by an aluminium stand-up pouch. This resulted in a 39% reduction, or
47 tons, and saves 290,000 Swiss francs per year.

In Indonesia the Nestlé Dancow 200 and 400g display boxes were reduced in size by
18 and 25%, respectively. This resulted in a waste reduction of 38 tons and saved
nearly 100,000 Swiss francs per year.
In Columbia the display box for Maggi bouillon tablets was eliminated. This resulted
in a reduction of 303 tons of packaging material and represented a savings of over
one million Swiss francs per year.

While important progress has already been achieved, we strive to continuously

identify opportunities for further reduction.

Distribution

Distribution of products from the factory to the customer involves transport and
storage. Efficient management of the distribution system is essential to preserve
the safety and quality of Nestlé's products, to ensure a high level of customer
service, and to meet its commitment to environmentally sound business practices.

To this end, Nestlé:

* selects appropriate transportation modes, with particular attention given to

optimum unit loads (pallets), vehicle-capacity utilization, route planning, and
consolidation with outside partners, scheduling, and fuel conservation;

* optimises warehouse and distribution center locations and environmentally

efficient operational systems; and

* identifies and implements measures to reduce energy consumption and waste.

Nestlé encourages its distribution service providers to use environmentally sound

practices.

Distributing our goods from factory to retail centers consumes some 400 million
liters of fuel each year. While we undertake every effort to reduce this, it is useful to
put this figure into perspective: the distribution of 10 kg of our products from
factories to retail outlets in Europe requires an average of 0.25 liters of fuel. To
transport the same amount from the supermarket to home, consumers burn, on
average, one to two liters of fuel.
Efficient Container Loading

Improving transport efficiency benefits the environment, but it also makes

economic sense. Seemingly simple measures, such as replacing bulky wooden
pallets by thin, carton-type slip-sheets, have the potential to save more than 600
international truck journeys a year in our European operations alone. Optimizing
shipping cases to fill transport vehicles without leaving gaps between differently
shaped containers, together with optimal route planning, Nestlé has already
achieved substantial savings.

Pioneering Rail Transport

In countries with competitive railways, moving goods from road to rail is an

effective option to reduce road congestion. For example:

* Vittel has developed a specially adapted block train concept to supply its
regional terminals in France. Vittel transports nearly half of its production, or over
930 million bottles per year, by rail.

* Our Swiss, and later the Austrian subsidiary, convinced the railways to offer
overnight trains to bring goods from the national distribution centers to terminal
stations for local deliveries by road.

Marketing

Marketing is based on the principle of satisfying consumers' needs. The overall trust
of consumers in Nestlé's brands and products comes from a quality image that has
been continuously strengthened for over 130 years. Nestlé strives to increase this
trust through its commitment to environmentally sound business practices.

For this reason, Nestlé:

* opposes short-term, opportunistic "green marketing" that can mislead the

consumer;
 * bases environmental claims in advertising, promotional material, labelling, and
corporate communications on solid scientific evidence; and

* selects materials and printing methods for merchandising materials such as

consumer offers, in-store promotions, display materials, leaflet, and printed
materials in light of environmental considerations.

No "Green Marketing"

Nestlé adheres to the Code on Environmental Advertising established by the

International Chamber of Commerce. This Code is based on the principle of self-
regulation and self-discipline and is intended to assist companies in making
responsible use of environmental claims in advertising.

Sustainable Development

For Nestlé, respect for the environment is part of a broader perspective on

sustainable development. Nestlé has adhered to The Business Charter for
Sustainable Development of the International Chamber of Commerce (ICC) since its
publication in 1991. Measures for environmental protection often trigger beneficial
economic and social effects, and vice-versa. Since the Rio Summit in 1992, all of
society, be it governments, industry, NGOs or others, have tried to translate the
sustainable development concept into reality. As part of this effort, we participate in
the work of several organizations dealing with this subject: For example, we are a
founding member of the World Business Council for Sustainable Development
(WBCSD) in Geneva, and we contribute actively in the Working Group Sustainable
Development in the City of Vevey.

Nestlé Working with Communities —

South Africa

Nestlé is supporting several community-based organizations in putting sustainable

development into practice. Recently, in South Africa, we have given support to Eco
Link and LEAP to finance and help manage programs which clean up the
environment and improve hygiene in rural areas.

The Eco Link project is aimed at providing assistance through education. People are
taught to collect litter such as paper, cardboard and cans, which when put in a
trench and covered with a compost can then be used to plant vegetables. The litter
provides the necessary drainage and moisture retention. The project has dual
advantages: it cleans up the environment and provides fresh vegetables for the
family, as well as providing an income when surplus food is grown. This program is
now being presented to school children who are encouraged to grow small gardens
at school.

In rural areas water supply is a major problem. Women can spend almost 5 hours a
day collecting water for the home. In addition, the springs from which they take the
water are often used by animals and can be polluted. Nestlé is taking part in a
project to help villagers establish a supply of clean water near to home.

People were taught how to identify sources of underground springs and to channel
rain water and store it in reasonably hygienic conditions. The team taught villagers
how to construct a tank to catch the rain water using corrugated iron and wire mesh
as a "mould" which is then plastered with a cement, stone and sand mixture. With a
wooden cover on top and a tap at the base the villagers have the means to store
clean, drinkable water.

Information, Communication & Training

Nestlé provides information on its activities, including those related to the

protection of the environment. Within this context, Nestlé:

* communicates its environmental efforts, both inside and outside the Company,
to build understanding concerning its environmental commitment;

* fosters strong environmental awareness and responsibility among its

employees through training programs; and

* shares environmental information with governments, local communities,

industry, consumers and other interested stakeholders.
We do this through a wide variety of means. For example, our factory
environmental surveys involve thousands of people at all levels, from top
management to the factory floor. These practical exercises are reinforced by in-
house magazines, specialized newsletters, and videos.

To help educate the public, Nestlé works with organizations that produce films on
environmental issues, sponsor re-forestation programs, or create educational
materials for the public. These activities are also important to our role in sustainable
development.

At our international training center in Switzerland, environmental issues are now a

regular part of courses attended by Nestlé's international executives. These efforts
are multiplied by countless training sessions organized by our Group companies.

Internal communication and training are a priority for Nestlé. As a people-driven

company, employees are our most important asset. Thus, we emphasize all
measures that help them act in an environmentally responsible manner.

Legislation

Nestlé complies with all laws and regulations which apply to its activities, including
those involving the environment. To promote an effective regulatory system with
respect to the environment, Nestlé:

* participates in legislative and regulatory discussions between international

organizations, government representatives, industry, the scientific community, and
consumer associations;

* supports appropriate voluntary initiatives designed to protect the environment;

* fosters rational environmental laws and regulations;

* opposes unjustified prohibitions and other discriminatory measures; and

 * favors the harmonizing of environmental laws, regulations and standards in
order to eliminate existing and future trade barriers.

Nestlé Environmental Management System

Nestlé has made systematic efforts to account for environmental concerns of all its
activities. In particular, we have appointed environmental officers, issued policies,
conducted environmental surveys, reinforced training efforts, developed
environmental communications, and made many innovations in our packaging.

To complement and integrate these efforts, we created and implemented Nestlé's

own Environmental Management System.

The Nestlé Environmental Management System (NEMS) is an essential corporate

management tool that consolidates all organizational and technical measures taken
by the Group to achieve environmentally sound business practices. The NEMS
objectives include the following:

* to provide a systematic approach that ensures compliance with Nestlé's

environmental policy, applicable legislation and Nestlé's operational standards;

* to ensure the continuous improvement of Nestlé's environmental performance,

for example, through the conservation of natural resources and minimizing waste;

* to achieve compatibility with international voluntary standards on

environmental management systems, such as ISO 14001 and the European Union
Eco-Management and Audit Scheme; and

* to build mutual trust with consumers, governmental authorities and business

partners.

The Nestlé Environmental Management System is being implemented throughout

Nestlé's entire operation.
We believe NEMS will enhance our global performance and contribute to our
competitiveness in the world market.

NEMS in Action: Germany

First EMAS Registration of a Nestlé Factory at Weiding, Germany

On December 19, 1995, our factory in Weiding, Germany became the first Nestlé
factory in Europe to be registered in the European Eco-Management and Audit
Scheme (EMAS). This means that Weiding's environmental management system
and public environmental statement have been examined and validated by an
external, accredited verifier.

Weiding Factory Greatly Reduced Disposed Waste

Even Prior to EMAS

Employing around 900 people and producing more than 550 high-value products
ranging from infant foods to condensed milk to chilled deserts, the Weiding factory
is one of largest plants in Germany. The existence of a comprehensive waste
management scheme at the factory was of great assistance in developing the new
environmental management system. As part of the development of the
environmental management system, environmental manuals were prepared both
for the factory and Nestlé Germany. These manuals provide the foundation of the
system setting policies, principles, and management procedures related to the
environmental aspects of the operations.

In addition, a site-related environmental statement was published that included an

"invitation to dialogue" addressed to employees, authorities, clients, suppliers, the
media, and neighboring communities. The EMAS registration has been successfully
repeated in 1998 and complemented with an ISO 14001 certification.
Following Weiding, several other Nestlé factories throughout the world have
succeeded in obtaining ISO 14001 certification and EMAS registration.

NEMS in Action: USA

In 1996, the Danville, Virginia, USA factory was the first Nestlé US factory to fully
implement NEMS - which is based on and consistent with ISO 14001

Danville has shown that good environment is also good business. In the first year of
implementing NEMS, the factory reduced solid waste by over 10% resulting in
savings of $370,000 and reduced its wastewater impact and concentrations by 8%.

These successes were made possible through the dedication of the factory
employees and a strong emphasis on training and awareness. The factory
implemented an environmental training program as part of the new employee
orientation and the semi-annual environmental training for all employees.

Waste Reduced Through NEMS

NEMS Supports the Environment and Business

Cumulative Savings

The continuing nature of NEMS has facilitated similar accomplishments annually. To

date, factory savings related to NEMS have exceeded $800,000 and solid wastes
have been reduced by 41%.

NEMS in Action: Philippines

Part of NEMS is ensuring a high degree of employee environmental awareness. As
an example, Nestlé Philippines, in implementation of NEMS, prepared through an
interdisciplinary task force, a highly regarded environmental training program. This
program is continuously provided to groups of employees and highlights specific
issues related to their job functions and protection of the environment.

The success of this program is evidenced by the numerous awards received by

Nestlé Philippines manufacturing facilities. Most notable of these are:

* "Outstanding Healthy Workplace Award" given by government agencies

including the Department of Health, Department of Environment and Natural
Resources, and the Department of Labor and Employment, to the Cabuyao and Lipa
Factories in 1998.

* "Mother Nature Award" given by the Pollution Control Association of the

Philippines in 1998.

* "Anvil Award of Excellence" given by the Public Relations Society of the

Philippines for Nestlé's efforts in enhancing the environmental awareness of the
public.

* "Most Environment-Friendly Company" Award given by the Laguna Lake

Development Authority to three Nestlé factories (Cabuyao, Aurora, and Alabang) in
1996.

* One of the "Greenest Company" Awards given by the DENR to the Aurora
factory in 1996.

The water discharge from these facilities is of very high quality. Tilapia, a fresh
water fish, often harvested for food, abundantly grows in the clarifying ponds and
discharge canals of their treatment facilities.

ENVIRONMENTAL UPDATE

World Water Resource Issues

World Water Forum - The Hague

The 2nd World Water Forum was held at The Hague, Netherlands, from 17 - 22
March 2000, timed to culminate on a Water Ministerial Conference and World Water
Day. The World Water Forum brought together representatives from politics,
business and experts in the water field as well as non-governmental organizations,
and has as its goal to heighten the awareness of the problems of water in the world,
with the objective of ensuring a worldwide supply of clean water by 2025. The
Forum organized a CEO Panel which included Chief Executive Officers from 10
international companies from three broad sectors - water services, consumer
products and water engineering and consultancy. The CEO Panel issued a joint
statement for the Ministerial Conference, which can be found at the World Water
Forum's website. Below is the text of Nestlé CEO, Peter Brabeck-Letmathe, who was
one of the 10 CEOs present in The Hague.

"As an industrialist, as a citizen and as a father, I am deeply conscious of the

urgency for a new approach for the sustainable use of water.

We need water to survive, we, as industrialists, need it to produce food for the
untold hundreds of millions of human beings still suffering from hunger and the
billions yet to be born. Water is essential for Nestlé's economic well-being and the
steps taken to preserve its quality, to ensure careful and responsible use spring
from enlightened self-interest. So do our yearly investments of more than CHF 100
million in environmental and water-related projects, so do the hundreds of waste
water treatment plants our company operates worldwide.

The problem we are facing today, however, goes far beyond what we, as a single
company, can do. As a good corporate citizen of the world, we pledge our support to
the broad-based, co-operative effort needed to find lasting solutions.

Let us be clear about the magnitude of the challenge and let us look at facts. Fact
one: all the water used by Nestlé's 70 sources for our worldwide bottled water
business Perrier Vittel amounts to 0.0006 percent of the estimated global water
withdrawals. Fact two: far more than 60 percent of the available water is used in
agriculture - much of it wastefully, since over half of it is lost. Yet some refuse even
to consider modern biotechnology, presently a conceivable way to higher yields,
with less water, less fertilizer, less pesticides.
As an entrepreneur, I remain optimistic. In the Nestlé Group, we shall pursue and
intensify our efforts to handle water as a valuable commodity. Our "Water Policy"
describes those steps in detail. Furthermore, you can count on my corporation's
support, its know-how and its good will to all measures to which we can bring a real
contribution. Nestlé grew to its present size by taking a long-term view. I believe
that helping to preserve the planet's most vital resource is consistent with that
view."

March 20 2000

Our pledge to infant nutrition dates back 130 years to our founder Henri Nestlé

The production of infant food goes right back to the origins of the Nestlé Company.
Henri Nestlé's 'Farine Lactée' was the first product to bear the Nestlé name; it was
the first industrially-produced infant food, based on 'wholesome cow's milk' mixed
with cereals. In the middle of the nineteenth century, one in five children born in
Switzerland in the working class died before the end of their first year. Increasing
numbers of mothers were going out to work, and had no time to breast feed.

The First Cereal for Infants

It was against this background that Nestlé had developed his infant food for young
children, and in 1867 a physician persuaded him to try it on a 15-day old boy who
was very ill — he had been born prematurely and was refusing his mother's milk
and all other types of nourishment. Nestlé's new food worked, and the boy survived.
From the very beginning, Nestlé's product was never intended as a competitor for
mother's milk. In 1869, he wrote: "During the first months, the mother's milk will
always be the most natural nutrient, and every mother able to do so should herself
suckle her children."

Growing Worldwide Demand

Nevertheless, the demand for his product was so great that it was soon being sold
throughout Europe and as far afield as Russia, the United States and Australia. The
factors that made it a success then — quality and nutritional value — are still as
valid today for the wide range of infant formula, cereals and baby food in jars
manufactured by Nestlé. The World Health Organization (WHO) recognizes that
there is a legitimate market for infant formula, when a mother cannot or chooses
not to breast feed her child. Nestlé markets infant formula in conformity with the
principles and aim of the WHO International Code of Marketing Breast Milk
Substitutes, and seeks dialogue and cooperation with the international health
community and in particular with the WHO and UNICEF, to identify problems and
their solution. Nestlé's expertise as the world's leading infant food manufacturer,
gained over more than 125 years, is put at the disposal of health authorities, the
medical profession and mothers and children everywhere.

Breast milk is best for babies. Before you decide to use an infant formula consult
your doctor or clinic for advice.

SWOT ANALYSIS:

Strengths:

In mine view these are the strengths of Nestle. The first and the most important
strength of Nestle is the name of company itself. They never compromise on
quality. They produce quality products according to the specification of customer.
Their system of sale & sale promotion is also one of the strength of Nestle. In the
area in which they want to sell the product they hold seminars and shows. In this
area they monitor the sale and increase the production. They try to convince
ultimate consumer.

The milk collection procedure of Nestle is also one of its strength. They collect milk
from selected people and check its purity at the location. Then special trucks take it
to factory. Where they boil milk at 140 degree centigrade and then cool it. This
process is repeated for 3 to 4 times. There milk contains 3.5% fat, which is
recommended internationally.
Weaknesses:

One of the weakness of nestle is the product range of Nestle. As there product line
is very vast, so they cannot give equal attention toward the promotion of each
product. We can take the example of candies produced by Nestle, they give
absolutely no attention toward promoting them despite the fact that if we consider
the trust people have on nestle brand there is a large market for candies, While
they are promoting their milk products effectively. The reason behind this
discrepancy is that they have limited budget to promote their products.

The other weakness of Nestle is that the company has a very limited number of
sales staff in the southern Punjab due to which they are losing some market.

Opportunities:

Nestle can increase their share if they focus on lower middle class. We can take the
example of small pack of Every Day tea whitener whose introduction increases the
sales of nestle tremendously. The reason for this was that the price of Every Day
tea whitener was with in the range of lower middle class. So, Nestle can increase its
share by focusing on lower middle class.

The other opportunity for Nestle is that if they introduced milk bottle like Candia
and sell them directly to the customers they can increase their share. By selling
directly to customers means that they provide milk to the people at their doorsteps.

Threats:

In Pakistan Nestle face threats from lower companies. We can take the example
Haleeb and Dairy Queen. The sales of these products have badly affected the sale
of Nestle Milk Pack. Haleeb is well promoted than the Nestle Milk Pak.
Nestle also face threat from Cadbury, which is multinational company. Cadbury sell
candies and chocolates and it affect the sale of Nestle products in the field of
candies.