HISTORY OF NESTLE

Nestlé began in Switzerland in the mid 1860s when founder Henri Nestlé created one of the first
baby formulas. Henri realized the need for a healthy and economical product to serve as an
alternative for mothers who could not breastfeed their babies. Mothers who were unable to
breastfeed often lost their infants to malnutrition. Henri‟s product was a carefully formulated
mixture of cow‟s milk, flour and sugar. Nestlé‟s first product was called Farine Lactée (“cornflour
gruel” in French) Henri Nestlé. The product was first used on a premature baby who could not
tolerate his mother‟s milk or other alternative products of that time. Doctors gave up on treating
the infant. Miraculously the baby tolerated Henri‟s new formula and it provided the nourishment
that saved his life. Within a few years the first Nestlé product was marketed in Europe.

In 1874 the Nestlé Company was purchased by Jules Monnerat. Nestlé developed its own
condensed milk to contend with its competitor, the Anglo-Swiss Condensed Milk Company. The
Anglo-Swiss Condensed Milk Company made products like cheese and instant formulas. The
two companies merged in 1905, the year after Nestlé added chocolate to its line of foods. The
newly formed Nestlé and Anglo-Swiss Milk Company had factories in the United States, Britain,
Spain and Germany. Soon the company was full-scale manufacturing in Australia with
warehouses in Singapore, Hong Kong and Bombay. Most production still took place in Europe.

The start of World War I made it difficult for Nestlé to buy raw ingredients and distribute
products. Fresh milk was scarce in Europe, and factories had to sell milk for the public need
instead of using it as an ingredient in foods. Nestlé purchased several factories in the U.S. to
keep up with the increasing demand for condensed milk and dairy products via government
contracts. The company‟s production doubled by the end of the war. When fresh milk became
available again after the war, Nestlé suffered and slipped into debt. The price of ingredients was
increasing, the economy has slowed and exchange rates deteriorated because of the war.

An expert banker helped Nestlé find ways to reduce its debt. By the 1920s Nestlé was creating
new chocolate and powdered beverage products. Adding to the product line once again, Nestlé
developed Nescafé in the 1930s and Nestea followed. Nescafé, a soluble powder,
revolutionized coffee drinking and became an instant hit.

With the onset of the Second World War, profits plummeted. Switzerland was neutral in the war
and became increasingly isolated in Europe. Many of Nestlé‟s executive officers were
transferred to offices in the U.S. Because of distribution problems in Europe and Asia, Nestlé
opened factories in developing countries in Latin America. Production increased dramatically
after America entered the war. Nescafé became a main beverage for the American servicemen
in Europe and Asia. Total sales increased by $125 million from 1938 to 1945.

Nestlé continued to prosper, merging with Alimentana S.A., a company that manufactured
soups and seasonings, in 1947. In the coming years, Nestlé acquired Crosse & Blackwell,
Findus frozen foods, Libby‟s fruit juices, and Stouffer‟s frozen foods. Nescafé instant coffee
sales quadrupled from 1960 to 1974, and the new technology of freeze-drying allowed the
company to create a new kind of instant coffee, which they named Taster‟s Choice.

Expanding its product line outside of the food market, Nestlé became a major stockholder in
L‟Oréal cosmetics in 1974. Soon after the company suffered with increasing oil prices and the
slowing growth in industrialized countries. Foreign exchange rates decreased, in turn reducing
the value of sterling, the pound, dollar and franc. Prices of coffee beans and cocoa rose
radically, presenting further problems for Nestlé. The company decided to venture into the
pharmaceutical industry by acquiring Alcon Laboratories, Inc. While trying to deal with unstable
economic conditions and exploring its new ventures, Nestlé faced the crisis of an international
boycott.

Many organized groups began boycotting all of Nestlé‟s products because they disapproved of
Nestlé marketing its baby formula in developing countries. Problems like illiteracy and poverty
caused some mothers to use less formula than recommended. In a watered down formula, vital
nutrients are lessoned. Contaminated water presented another problem, since the formulas had
to be mixed with water. The organizations argued that the misuse of formula resulted in the
malnutrition or death of many infants in developing countries.

According to Nestlé the World Health Organization never made statements tying infant death or
malnutrition with baby formulas. The company didn‟t deny the superiority of breastfeeding and
agreed that substituting breast milk for other substances could be very dangerous. Nestlé
explained that breastfeeding and non-breastfeeding mothers in developing countries often gave
their babies whole cow‟s milk, tea, cornstarch, rice water or a mix of flour and water. These
alternatives were very unhealthy and a nutritional baby formula was a better choice. Nestlé says
that it has never discouraged breastfeeding when it was possible. Nestlé agreed to follow the
International Code in developing countries in 1984, and the boycott was suspended. It resumed
several years later when the organizations believed Nestlé was sending free or low cost baby
formulas to developing countries. Nestlé said it only sent formula to countries that allow
donations for orphans, multiple births, and babies with no access to breast milk. The company
has stopped all public advertising for formula in developing countries for almost 20 years. The
boycott continues to some extent to this day without satisfactory resolution.

By the 1980s Nestlé had a new Chief Executive Officer. The company focused on improving its
financial situation and continuing to expand. In the one of the largest takeovers at that time,
Nestlé bought Carnation for $3 billion and parted with any unprofitable businesses. International
trade barriers diminished in the 1990s, opening trade with parts of Europe and China. In the
1990s Nestlé acquired San Pellegrino, and Spillers Petfoods of the UK. With the acquisition of
Ralston Purina in 2002, the Nestlé-owned pet care businesses joined to form the industry leader
Nestlé Purina PetCare. The leading in the food industry, Nestlé brings in $81 billion in overall
sales and has 470 factories around the world. Nestlé will continue to grow, introduce new
products and renovate existing ones. The company‟s mission is to focus on long-term potential
over short-term performance.

BOARD OF DIRECTORS:

The executive board, a distinct entity from the board of directors, includes:

 Peter Brabeck, Chairman of the Board of Directors, Nestlé S.A.

 Paul Bulcke, Chief Executive Officer, Nestlé S.A.
 Werner Bauer, Executive Vice President, Nestlé S.A., Chief Technology Officer, Head of
Innovation, Technology, Research & Development
 Friz van Dijk, Executive Vice President, Nestlé S.A. Asia, Oceania, Africa, Middle East
 Luis Cantarell, Executive Vice President, Nestlé S.A. United States of America, Canada,
Latin America, Caribbean
 José Lopez, Executive Vice President, Nestlé S.A. Operations, GLOBE
 John J. Harris, Executive Vice President, Nestlé S.A. Chairman & CEO of Nestlé Waters
 Nandu Nandkishore, Executive Vice President, Nestlé S.A. CEO of Nestlé Nutrition
 James Singh, Executive Vice President, Nestlé S.A. Finance and Control, Legal, IP, Tax,
Global Nestlé Business Services
 Laurent Freixe, Executive Vice President, Nestlé S.A. Europe
 Petraea Heynike, Executive Vice President, Nestlé S.A. Strategic Business Units, Marketing,
Sales and Nespresso
 Marc Caira, Deputy Executive Vice President, Nestlé S.A. Head of Nestlé Professional
Strategic Business Division
 Jean-Marc Duvoisin, Deputy Executive Vice President Nestlé S.A. Head of Human
Resources and Centre Administration
 David P. Frick, Senior Vice President and ex officio Member of the Executive Board
According to a 2006 global survey of online consumers by the Reputation Institute, Nestlé has a
reputation score of 70.4 on a scale of 1–100.

AWARDS AND CITATIONS

Nestlé Malaysia bagged two awards at the inaugural StarBiz-ICR Malaysia Corporate
Responsibility Awards 2008

Nestlé Malaysia bagged two awards at the inaugural StarBiz-ICR Malaysia Corporate
Responsibility Awards 2008 in the marketplace and community categories for companies with
market capitalisation of RM1bil and above. Seven companies in total were honoured for their
exemplary corporate responsibility (CR) initiatives in the event jointly organised by Star
Publications (M) Bhd and the Institute of Corporate Responsibility Malaysia (ICRM).

Star Publications group managing director and chief executive officer Datin Linda Ngiam said
the awards were introduced with a strong interest and commitment to encourage responsible
business practices.

“The focus is on how businesses can be responsible in the way they make money and not just
what to do with the money once they made it,” she said.

ICRM chairman Datuk Johan Raslan said, “A responsible CR approach in a company‟s

business strategies can help reduce cost, mitigate risks, improve reputation, motivate
employees, drive innovation and boost performance,”

Most Admired Company in Malaysia 2008

WALL STREET JOURNAL ASIA 200

Nestlé (Malaysia) Berhad earned the top spot as the overall most-admired Malaysian company
ahead of other corporate giants such as Maxis, Public Bank, Genting, Petronas and YTL
Corporation in the Wall Street Journal Asia‟s Asia 200 survey of readers. Nestlé was also No. 1
in the categories of corporate reputation and quality of its products and services, and No. 3 in
innovation in the survey. The Asia 200 survey of 2,447 executives and professionals conducted
by market-research firm Colmar Brunton in 12 Asian-Pacific countries is the ultimate
performance review of Asia‟s leading companies.

Nestlé Wins ACCA MESRA Social Reporting Award

Nestlé (Malaysia) Berhad won the Association of Chartered Certified Accountants (ACCA)
Malaysia Environmental and Social Reporting Awards (MESRA) 2007 for the Social Reporting
category. We beat 44 other entries to win the title "Best Social Report", while UEM Environment
won over 16 other entries for the Environment Reporting category. Executive Director, Finance
& Control Mr Stéphane Alby accepted the award from the Managing Director of Securities
Commission Dato‟ Nik Ramlah Nik Mahmood and President of ACCA Malaysia Advisory
Committee Dato‟ Khalid Ahmad on behalf of the Company. The Awards Presentation Ceremony
was held on 22 May at The Prince Hotel Kuala Lumpur and is in its sixth year. The awards was
held to reward transparency and to acknowledge corporations that take the effort to report on
their environmental and social activities. It aims to set examples and new benchmarks of
reporting for corporate Malaysia.

The 3rd Malaysian Media Awards 2007

Nestlé was voted „Advertiser of the Year‟ in the 3rd Malaysian Media Awards organised by
Media Specialist Association (MSA) of Malaysia, based on the overall outstanding performance
in many categories for 2006 and we were the proud winner of 3 out of the 10 Gold awards that
were up for grabs. In addition, we were also awarded 2 Silver and 1 Bronze awards and were
also named Finalist in several other categories.

IT Excellence Awards 2007

Nestlé Malaysia‟s Salesforce Automation Project won the MIS Asia IT Excellence Awards 2007,
under the category of Best Business Enabler (Manufacturing), beating finalists Motorola and
Tata Motors. The Award recognises the SFA Project Implementation team which has boosted
the ability of an organisation to disseminate information internally and exchange it with their
partners; creating new revenue streams and improving customer service.

Asian Marketing Effectiveness Awards (AMEA) 2007

Together with McCann Erickson, NESCAFÉ Kick-Start garnered the Bronze Award under the
category of „Most Effective Use of Branded Content‟ in the Asian Marketing Effectiveness
Awards (AMEA) 2007. NESCAFÉ Kick-Start (McCann Erickson) was one of the two winners
from Malaysia in this prestigious award.

Silver Quill Awards

Apart from being awarded the “Excellence Award for the Highest Number of Silver Quills
Achieved” during the International Association of Business Communicators (IABC) Malaysia
Silver Quill Awards 2007, Nestlé (Malaysia) Berhad was also named the winner of 3 other
categories – Communication Management for „Spicing Up the Community‟ project, Economic,
Social & Environment Development for „Spicing Up the Community‟ project and Communication
Management (Special Events) for Nestlé, Nourishing Malaysia Showcase.

NESTLÉ (MALAYSIA) BERHAD WINS SILVER QUILL

Nestlé (Malaysia) Berhad was awarded the Silver Quill Awards for its “Click into English”
education programme under the Economic, Social and Environmental Development category,
presented during the Malaysia Chapter of the International Association of Business
Communicators (IABC) Malaysia Silver/Gold Quill Awards 2006 held at Grand Plaza Park Royal
Hotel on April 3.

Edaran Otomobil Nasional Bhd emerged as overall grand champion in the communications best
practice awards competition which attracted 27 entries locally.

Platinum PR Awards

Nestlé (Malaysia) Berhad came out tops in the Platinum PR Awards held in New York under the
category of Public Affairs, for a submission on the Nestlé, Nourishing Malaysia Showcase 2006.
We also received honourable mention under the Community Relations category for our „Spicing
Up the Community‟ Chilli project.

KPMG / The Edge Shareholder Value Awards 2006

In the KPMG / The Edge Shareholder Value Awards 2006, Nestlé (Malaysia) Berhad emerged
top in the F&B industry and took sixth placing overall, up two rankings from last year‟s list of Top
100 Listed Companies in terms of Shareholder Value Creation. This proved that our constant
focus on the 7 value drivers (in particular, the operational 4 drivers – sales growth, profit margin
improvement, working capital and fixed assets intensity) is recognised and acknowledged by the
industry.
ACCA MESRA Awards

The Association of Chartered Accountants (ACCA) Malaysia held the Malaysia Environmental
and Social Reporting Awards (MESRA) 2006 Awards presentation to reward transparency and
recognise corporations which report their environmental and social activities. Nestlé Malaysia
was 1st runner-up for the Best Social Reporting in an Annual Report category, and was also
short-listed under the Social Reporting Category.

Kancil Awards 2006

The Malaysian Kancil Awards is a vehicle for the 4As to realise its vision for brand
communications industry and serves as a platform to increase the visibility of our brands
through effective creativity. The annual event allows Advertising & Communication Agencies to
showcase their best works produced for their clients for the year. This year, Nestlé Malaysia is
proud to accept The Advertiser of the Year Award, presented to the Client who has
demonstrated courage and consistency in creative communication, an advertiser who is a
“brand centric” creative champion, committed to building Brand Equity by taking the less beaten
path.

National Award for Management Accounting (NAfMA) Awards

Nestlé Malaysia won the „Excellence Award‟ at the National Award for Management Accounting
(NAfMA) for 2005 which is the highest accolade given to an organisation for outstanding best
practices in management accounting.

The award is a tremendous recognition reflecting the evolution of Finance as an effective

Business Partner and driver of Value Creation in the Pursuit of Business Excellence. Among the
criteria for the assessment were leadership and top management commitment, customer and
market focus, promoting valueadded activities and management accounting information.

ACCA-MESRA Awards

Nestlé Malaysia was shortlisted for the ACCA (Association for Chartered Certified Accountants)
Malaysia Environmental & Social Reporting Awards [MESRA] 2005 under the Environmental
Reporting Category. We were judged on our Sustainability report in the Annual Report 2004.

The aim of the Awards is to identify and reward innovative attempts to communicate corporate
social responsibility performance, whilst rewarding transparency. At the core of the judging
criteria are completeness, credibility and communication.

Fortune’s The World’s Most Admired Companies

Nestlé clinched the top spot in the consumer food products category in a survey conducted by
Fortune to determine The World‟s Most Admired Companies, where top companies in 26
industries were judged by their peers in the industry. A total of 345 companies in 26 industries
and 25 countries participated.

Annual Regional Best Managed Companies Award Presentation / Press Conference

Once again, Nestlé took the Annual Regional Best Managed Companies Award in the “Best
Corporate Governance” (ranked 5th) category and the “Best Investor Relations” (ranked 9th)
category for first time.

The Annual Investor Poll was based on interviews and polling with more than 253 regional and
local fund managers and buy-side equity analysts. 17 Malaysian companies were ranked within
this poll. Together with the main sponsor of the event, Credit Suisse, the Group Publisher and
CEO of Finance Asia Mr Jonathan Hirst presented the award to Nestlé Malaysia, which was
represented by Controller, Confectionery Business Unit Mr Pierre Magne on August 3 at the
Mandarin Oriental Hotel.