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1、Nestl.We unlock the power of food to enhance quality of life for everyone,today and for generations to come.Annual Review 2022Our purposeContentsAccompanying reportsCorporate Governance Report 2022Compensation Report 2022Financial Statements 2022You can find more informationabout the Nestl Group at
2、Find out more about Creating Shared Value at coverPurina ONE+Plus Joint Health Formula Purina ONE+Plus Joint Health Formula dry dog food combines nature and research for results,with a SmartBlend of high-quality ingredients,plus fish oil and glucosamine,for a formula that supports dog joint health a
3、nd mobility.2 Letter to our shareholders 6 Generating value through our strategy 10 Innovating to unlock the power of food 14 Creating shared value 24 Accelerating data-driven digitalization 28 Connecting through our brands 44 Financial review 68 Corporate Governance and Compliance 75 Shareholder in
4、formationNestl.Unlocking the power of food to enhance quality of life for everyone,today and for generations to come.We constantly aim to push the boundaries of what is possible with food,beverage and nutritional health products to promote better health,greater accessibility andaffordability,effortl
5、ess preparation,protection of our natural resources andenjoyment.Nestl Annual Review 20221In 2022,our organic growth was strong,with resilient RIG and responsible pricing to reflect significant cost inflation.Asummary of the 2022 full-year results can be found in the table to the right.*Financial pe
6、rformance measures not defined by IFRS.For further details,see Financial review on page 46.Group sales(in CHF)Organic growth*Real internal growth*94.4 billion 8.3%0.1%Underlying trading operating profit*(in CHF)Underlying trading operating profit margin*Underlying trading operating profit margin*16.
7、1 billion17.1%-40 Basis pointsConstant currencyTrading operating profit*(in CHF)Trading operating profit margin*Trading operating profit margin*13.2 billion14.0%0 Basis pointConstant currencyEarnings per share(in CHF)Earnings per shareUnderlying earnings per share*3.42-43.5%+9.4%Constant currencyOpe
8、rating cash flow(in CHF)Free cash flow*(in CHF)11.9 billion24.7%of net financial debt6.6 billionProposed dividend(in CHF)Proposed dividend increase2.95+5.4%Our financial performanceOur Nutrition,Health and Wellness strategy is the engine of our value creation.What we sell(in CHF billion)Where we sel
9、l(in CHF billion)Number of employeesNumber of countries we sell in275 000188Total group salaries and social welfare expenses(in CHF)Corporate taxes paid in 2022(in CHF)15billion3.1billionOur businessWe focus our energy and resources where unlocking the power of food can make the greatest difference.
10、We apply our expertise in nutrition,health and wellness to help people,families and pets live happier,healthier lives.We work to protect and restore the environment and generate significant value for our shareholders and other stakeholders alike.Powdered and Liquid BeveragesConfectioneryWater25.2Pre
11、pared dishes and cooking aids12.58.13.5Milk products and Ice cream11.3Nutrition and Health Science15.7PetCare18.1GC5.8EUR22.3AOA21.0LATAM12.3NA33.0Our key non-financial performanceWe create shared value through our social and environmental commitments.To measure our progress,we usea comprehensive se
12、t of indicators that support our business performance and generate value for our shareholders and other stakeholders.Some key performance indicators are included here the full set is inour Creating Shared Value andSustainability Report.Our climate commitmentOur KPI*Net zero greenhouse gasemissions b
13、y 2050 20%reduction of scope 1,2 and 3GHG emissions by 2025 and 50%reduction by2030,versus 2018 baseline 6.4 million tonnesgreenhouse gas emissions(COe)reductions compared withabusiness-as-usual scenario,with an additional 4.3 million tonnesCOe of removals initiated in2022,giving a total 10.7 millio
14、n tonnes COeOngoing Our forests commitmentOur KPI*Deforestation-free supply chains forourmeat,palm oil,pulp and paper,soyandsugar supply chains by end 2022 99.1%assessed deforestation-free for stated supply chains in 2022OngoingOur plastics commitmentOur KPI*Cut virgin plastic in our packaging by a
15、third by 2025 10.5%reduction in virgin plastic in our packaging in 2022 versus 2018 baseline On trackOur diversity,equity and inclusion commitmentOur KPI*Increase the representation of women inthe top 200+senior executive positions to 30%by 202230.2%women in the top 200+senior executive positions Ac
16、hievedOur youth commitmentOur KPI*Help 10 million young people around the world have access to economic opportunities by 2030 5.6 millionyoung people around the world with access to economic opportunities(cumulative)On trackOur nutrition commitmentOur KPI*Bring tasty and balanced diets within reach
17、for billions 129.2 billionservings of affordable nutrition with micronutrient fortification (the“bigfour”micronutrients:iron,vitamin A,iodine and zinc)provided in 2022 On track*Non-financial performance metrics are defined in the Reporting Scope and Methodology for ESG KPIs document available at EY
18、has performed limited assurance on the six key performance indicators on this page.The assurance statement with EYs independent conclusion can be found at: Annual Review 20222Staying the course True to our valuesAt the start of 2022,the extreme challenges of the COVID-19 pandemic seemed to be waning
19、.There were some supply chain challenges as well as inflationary pressures but those appeared to be manageable.The unexpected invasion of Ukraine at the end of February changed the course of the year.Global supply chain issues proliferated,inflation became rampant,concerns over energy shortages took
20、 hold and food insecurity grew.We faced a choice this past year in how to react to these challenges.There was little handwringing as it was clear to us that we could not lose sight of our long-term strategy:we continued to invest in R&D,our brands and sustainability initiatives.Increased food insecu
21、rity only strengthened Nestls commitments to maintaining essential food supplies,providing affordable nutrition and advancing regenerative food systems.To stay on course required a constant rebalancing between growth,affordability,and meeting our commitments to shareholders and other stakeholders.Th
22、ere were no easy solutions,but we did not waver in our resolve to deliver on short-term expectations,progress on our long-term ambitions and remain true to the core of our strategy:Good for You,Good for the Planet.Nestls decentralized five-zone structure allowed us to be close to our consumers and r
23、espond to shifts in their needs,while our global,balanced and diversified portfolio helped us weather inflation and supply chain challenges.Dear fellow shareholders,The turbulent operating environment of the past year has only reinforced our commitment to Nestls longer-term objectives.Good for You,G
24、ood for the Planet is at the heart of our strategy.Our strong brands,our impactful innovation capabilities and our operational execution have helped us continue to deliver.“Increased food insecurity only strengthened Nestls commitments to maintaining essential food supplies,providing affordable nutr
25、ition and advancing regenerative food systems.”Nestl Annual Review 20223U.Mark Schneider,Chief Executive Officer(left),and Paul Bulcke,Chairman(right)Dependably on trackEven in a year as challenging as 2022,we continued to deliver.We stayed focused on bringing fast-paced innovations to market,enhanc
26、ing our digital capabilities,investing in our brands and managing our portfolio.Our real internal growth remained robust under challenging conditions.We adjusted prices to reflect our own growing costs due to inflation.However,we did so responsibly,seeking internal efficiencies and cost-saving measu
27、res to try to limit price increases.Nestls role has always been to make nutritious food affordable and accessible to people everywhere,and we stay committed to that even in times of economic headwinds.Highlights from 2022 include the following:Organic growth reached 8.3%,with pricing of 8.2%andreal
28、internal growth of 0.1%.Foreign exchange reduced sales by 0.9%.Net acquisitions had a positive impact of 1.1%.As a result,totalreported sales increased by CHF 7.3 billion or 8.4%toCHF94.4billion.Underlying trading operating profit(UTOP)margin reached 17.1%.The trading operating profit(TOP)margin was
29、 unchanged versus the prior year at 14.0%on a reported basis.As announced at our investor seminar,we expect our underlying trading operating profit margin to return to a range of 17.5%to18.5%by 2025,following the impact of cost inflation on ourmargin in 2021 and 2022.Underlying earnings per share(EP
30、S)increased by 9.4%inconstant currency and by 8.4%on a reported basis to CHF4.80.We expect to deliver an underlying EPS growth target range of 6%to 10%in constant currency.Earnings per share decreased by 43.5%to CHF 3.42 on a reported basis,mainly reflecting the gain on thedisposal of LOral shares i
31、n 2021.Free cash flow was CHF 6.6 billion,as working capitalincreased temporarily in the context of supply chain constraints and capital expenditure remained atanelevated level.We expect to trend toward free cash flow of 12%of sales and ROIC of 15%by 2025.Nestl Annual Review 20224Strategic portfolio
32、 managementIn 2022,we continued to invest in high-growth categories that contribute to our Nutrition,Health and Wellness strategy.Nestl remains disciplined in its approach to portfolio management,looking for strategic and cultural fit,as well as attractive financial returns.We remain focused on driv
33、ing sustained profitable growth in the coffee category with the announced acquisition of Seattles Best Coffee brand from Starbucks.Inaddition to Starbucks packaged coffees sold by Nestl under the Global Coffee Alliance,Seattles Best Coffee will join Nestls roster of beloved coffee brands in the Unit
34、ed States including Nescaf,Nespresso and Blue Bottle.We continue to develop Nestl Health Sciences leadership position in nutrition and health,sharpening the focus on Consumer Care and Medical Nutrition.In 2022,we acquired a majority stake in Orgain as well as the businesses of Puravida and The Bette
35、r Health Company.The new brands expand our markets in the vitamins,minerals and supplements segment in the United States,Latin America and Oceania.At the same time,we decided to explore strategic options for Palforzia,the peanut allergy treatment,following slower than expected adoption by patients a
36、nd healthcare professionals.Innovating to unlock the power of foodBuilding a pipeline of highly differentiated innovations,while rapidly testing and launching new ideas,fuels our growth.Our focus is on delivering tasty,nutritious,affordable and sustainable products by anticipating growing trends and
37、 meeting peoples diverse evolving needs and preferences,while investing in solutions with an improved environmental footprint.In 2022,we were able to maintain the same time-to-market speed as in 2021,despite the challenging environment.Infant nutrition.We continue to develop science-based nutritiona
38、l solutions for infants.The newly launched infant formula with Nutrilearn Connect,a unique nutrient blend to increase brain myelination,and rollout of our infant formulas with five human milk oligosaccharides(HMOs)to support gut health and immunity exemplify this focus.In 2022,infant formula with HM
39、Os had CHF1.3billion in sales with double-digit growth.Coffee.We are innovating novel systems that bring the perfect cup of coffee to consumers in a sustainable way.Nescaf Dolce Gusto Neo gives coffee lovers the best coffee-shop-at-home experience with three brewing methods and compostable paper-bas
40、ed pods.Nespresso will also roll out a new range of compostable paper-based capsules that are retro-compatible with Nespresso Original machines,while Nespresso Vertuo Pop offers the smartest,smallest,most optimized and accessible coffee machine ever,made from 35%recycled plastic.Plant-based.Market d
41、emand for plant-based products continues to create opportunities for new offerings across the entire food and beverage portfolio,which contribute to our sustainability goals.An early focus into a wide variety of plant-based alternatives and a retail focus on ready-made meals has proven to be a winni
42、ng strategy.Recent launches include Gerber Plant-tastic,soy-based Milo,KitKat V,Garden Gourmet Voie Gras and Malher Huevo Ms.Plant-based products generated sales of around CHF1billion in 2022,posting high single-digit organic growth.Accelerated digitalizationData and technology are an essential sour
43、ce of competitive advantage and Nestl continues its data-driven digital transformation.We are building a seamless consumer experience and channel-less commerce system,unlocking value via consumer data across geographies and categories.E-commerce sales grew by 9.2%to account for 15.8%of total Group s
44、ales.We remain on track to hit 25%by 2025.Artificial intelligence and remote assistance are allowing us to be more agile and flexible in our manufacturing sites and supply chains more important now than ever.Creating Shared ValueCreating Shared Value has always been fundamental to the way we do busi
45、ness at Nestl.We have long believed that our company can only be successful in the long term by creating value for both our shareholders and society.For decades,our activities and products have aimed to make Nestl Annual Review 20225Paul BulckeChairmanU.Mark SchneiderChief Executive Officera positiv
46、e difference to society in order to foster Nestls ongoing success.We have not wavered in that commitment in the face of short-term challenges this year.Net Zero Roadmap.We have made good progress on our Net Zero Roadmap,which was strongly supported by our shareholders at the 2021 Annual General Meet
47、ing.We have already passed peak carbon,with greenhouse gas emissions below the 2018 baseline.From 2024,we will vote annually on a comprehensive report on our non-financial performance,including our climate-related agenda.Our commitment to advancing regenerative food systems supports this agenda.We a
48、re supporting farmers in their transition to regeneration through the Nescaf Plan 2030 and our income accelerator program for cocoa-farming families.Affordable nutrition.Our offering of affordable and accessible products aims to provide lower-income consumers with high-quality food products that del
49、iver nutritional value at an affordable cost and in an appropriate format.Most of our affordable and accessible offering is fortified with at least one of the“big four”micronutrients:iron,iodine,vitamin A and zinc.In 2022,we provided 129.2billion fortified servings of affordable nutrition products.G
50、ood for You.In 2022,we made a commitment to increase the transparency of the nutritional value of our global portfolio.For the first time,we benchmarked our entire global portfolio against the Health Star Rating(HSR)system a nutrient profiling system used by the Access to Nutrition Initiative and ha
51、ve given an overview of our wide range of specialized nutrition products,which are not covered by“For decades,our activities and products have aimed to make a positive difference to society in order to foster Nestls ongoing success.Wehave not wavered in that commitment in the face of short-term chal
52、lenges this year.”the HSR system.Nestl is the first company to disclose the nutritional value of its entire portfolio.Refined Board oversightOur Board of Directors continued to provide valuable guidance on our strategy,business performance and sustainability agenda.We maintained our practice of addi
53、ng diverse experience and expertise through the appointment of two new independent directors.In recent years we have,in particular,strengthened the Boards expertise on food systems,food and beverage,digitalization,marketing,sustainability and other topics.During 2022,the Board further refined the go
54、vernance framework related to our sustainability agenda,including theannual work plan of the dedicated Sustainability Committee,which advises on all aspects of the Groups environmental and social sustainability,including our efforts on climate change,human rights,and diversity and inclusion.Consiste
55、ntly committed to our purposeWe are committed to creating shared value for our shareholders and all stakeholders connected to our business by unlocking the power of food to enhance quality of life.We could not do this without the loyalty of our employees,business partners and investors.In this chall
56、enging year,we thank our employees for their admirable dedication in keeping us on track while rebalancing.We are also grateful for the support of our business partners,our consumers and the communities where we operate.We thank you,our shareholders,for your continued trust in us to stay the course.
57、Nestl Annual Review 2022610.8%growth in affordable nutrition products7.4%growth in premium products9.2%organic growth in e-commerce22%of portfolio rotated 2017-2022Garden Gourmet Sensational Crispy Mini FiletIn 2022,we continued to expand the plant-based food options within our Garden Gourmet brand,
58、such as the new 2.0 Sensational Crispy Mini Filet.Generating value through our strategyNestl Annual Review 20227Nestl creates value through a persistent focus on relevance,operational agility and executional excellence.As a company,we continuously evolve our product offerings to meet consumer needs
59、and excite consumer preferences.We strive for a balanced pursuit of financial growth through rapid innovation,operational efficiency and resource allocation.Our long-term strategy ensures we deliver consistent,sustainable success.Good food,Good life is good businessWe focus our energy and resources
60、where unlocking the power of food can make the greatest difference to the lives of people and pets,protect and enhance the environment,and generate significant value for our shareholders and other stakeholders alike.Products that are right for consumers and right for the planet are increasingly desi
61、rable and make for good business.This helps us be a force for good.Accordingly,we:Apply our expertise in nutrition,health and wellness developed over more than 150 years to help people,families and pets live happier,healthier lives.Bring affordable,safe and high-quality nutrition to consumers,regard
62、less of income level,taking advantage of our long-standing presence around the world.Meet the needs of modern consumers with healthy,delicious,convenient products for conscious,time-constrained lifestyles.Strive to package and deliver our products in ways that are safe and protect the environment.Br
63、ing distinctive,premium innovations to market fueled by creative exploration and consumer insights,pioneering nutrition science and culinary excellence.Enhance our food systems and offer more plant-based food and beverage options to be consumers first choice as they diversify their diets.Commit to a
64、mbitious sustainability goals to advance the health of the planet,drive societal progress and support sustainable,healthy food systems.Our long-term value creation model is based on the balanced pursuit of top-and bottom-line growth as well as improved capital efficiency.We create value guided by th
65、ree strategic pillars:Growth through continuous innovation.Operational efficiency.Resource and capital allocation with discipline and clear priorities,including through acquisitions and divestitures.Sustained organic sales growthWe maintain a diversified portfolio,both in terms of geography and cate
66、gory.Our agility in changing environments and cultivation of our global,regional and local brands contribute to long-term financial performance.Our objective is to sustain a mid single-digit organic growth rate through rapid innovation,market share gains and portfolio management.We compete in attrac
67、tive and growing categories,and prioritize investments to stay relevant and win in every segment and market in which we operate.Our digital technologies help us identify emerging consumer needs and business model opportunities so we can bring differentiated innovation to market fast.We partner with
68、customers across the retail landscape to adapt our product portfolio and channel strategies,leveraging our global brands to customize new products for local tastes and preferences.In 2022:31 of our trusted brands,including Maggi,Milo and Nido,generated over CHF1 billion each in annual sales attheret
69、ail level.E-commerce sales represented 15.8%of sales and grewby 9.2%,and our digital marketing spend increasedto 55%.Our premium offerings represented around 30%ofsalesand grew at a high single-digit rate.Plant-based products generated sales of around CHF1billion,posting high single-digit organic gr
70、owth.Emerging markets represented 42%of sales and grewby 10%.Sales of affordable,accessible products many nutrient-fortified accounted for around 18%of emerging market sales and grew at a double-digit rate.We focus on categories and geographies with attractive dynamics where Nestl has an ability to
71、win.Since 2017,we have completed or announced more than 100transactions(acquisitions and divestitures)with annual sales equivalent to around 22%of 2017 Group sales.In 2022,these included:Purchase of a majority stake in Orgain,a US leader in plant-based nutrition,with the option to fully acquire Orga
72、in in 2024.Acquisition of Puravida,a premium Brazilian nutrition and health lifestyle brand,expanding the consumer health portfolio in Latin America.Acquisition of The Better Health Company in New Zealand,which includes the GO Healthy brand and New Zealand Health Manufacturing,expanding Nestl Health
73、 Sciences portfolio of vitamins,minerals and supplements in AOA.Acquisition of the Seattles Best Coffee brand from Starbucks.Creating a partnership with L Catterton to bring together Freshly and Kettle Cuisine.Divestment of Gerber Good Start.Nestl Annual Review 20228We take decisive action to restor
74、e growth and profitability when businesses underperform.Nestl has decided to explore strategic options for Palforzia,the peanut allergy treatment,following slower than expected adoption by patients and healthcare professionals.The review is expected to be completed in the first half of 2023.Going fo
75、rward,Nestl Health Science will sharpen its focus on Consumer Care and Medical Nutrition.We have formed a partnership with L Catterton to bring together Freshly and Kettle Cuisine,a leading manufacturer of fresh artisanal foods for retail and foodservice customers.L Catterton will be the majority ow
76、ner,with Nestl holding a minority stake.Operating more efficientlyWe fuel our growth agenda through disciplined cost management,improving operational efficiency at all levels of the business.Alongside sales growth,this approach enables us to free up resources for reinvestment in product innovation,b
77、rand building,digitalization and sustainability initiatives,while creating value for our shareholders.Internal efficiency projects help us free up resources for investments by optimizing our skills and enhancing effectiveness and speed of our organization.We continued to adapt our organization to be
78、 more agile,flexible and digitalized.In manufacturing,we continued to upgrade our operational footprint in 2022,increasing factory fixed overheads by around 6%.In procurement,increased global buying combined with a reduced number of product specifications helped us reduce costs and complexity.Global
79、buying through our three purchasing hubs was 68%in 2022.In our administration,we continued to simplify and standardize processes.As a percentage of sales based on a 5-quarter rolling average,working capital increased to 1.9%in 2022 due to our conscious decision to temporarily increase inventory leve
80、ls.This decision,taken in the context of significant supply chain disruptions and the energy crisis in Europe,reflects ourcommitment toensure continuity of supply.Prudent allocation of capitalOur priorities are to invest in the long-term growth and development of our business,while increasing shareh
81、older returns and creating shared value.Nestl pursues a value creation model that balances growth in earnings per share,competitive shareholder returns,flexibility for external growth and access to financial markets.We will continue to invest to drive brand building,innovation,digitalization and sus
82、tainability.Investing for the long term includes R&D investment,brand support and capital expenditure to support organic profitable growth.We focus on projects with the highest potential to create economic profit.We are accelerating our capital expenditure plans for our fast-growing categories,parti
83、cularly coffee and pet care.We are disciplined when it comes to mergers and acquisitions in order to protect our ROIC.We have athorough project governance in place,with clear accountability and targets.In 2022,Nestl acquired a majority stake in Orgain,aleader in organic,plant-based nutrition in the
84、United States,with a foundation in science,great taste and broad appeal.CDBAENestl Annual Review 20229 A USA CHF 625 million USD 675 million in new beverage facility in Glendale,ArizonaB Mexico CHF 315 million USD 340 million in new Nescaf factory in Veracruz,MexicoC Brazil CHF 50 million BRL 300 mi
85、llion to support Neo launch in Nescaf factory in Montes Claros,BrazilD Spain CHF 99 million EUR 100 million for digital technology in Nestl coffee factory in Girona,SpainE Thailand CHF 133 million THB 5 billion in new Purina PetCare factory in Rayong,ThailandPotential acquisitions must havea good st
86、rategic and cultural fit with our organization and offer attractive financial returns.We look for creative ways to structure transactions and build partnerships that enhance our strategic options.We have demonstrated our commitment to maintaining a high level of reinvestment into the business while
87、at the same time continually increasing capital returns to shareholders.We do this by increasing our dividend year after year.Based on our 2022 performance,the Board of Directors has proposed a dividend increase of 15centimes to CHF2.95 per share to be paid in April 2023.This will be our 28th consec
88、utive annual dividend increase.As a result of our strong free cash flow generation and business disposals,we continued to return excess cash to shareholders through share buybacks.In 2022,Nestl repurchased 92million of its shares for a total amount of CHF10.6billion atan average price of CHF115.36 p
89、er share.Nestl plans to repurchase CHF20billion of its shares over the period 2022to 2024.Creating Shared Value:The way we operateWe build for the long term,act with focus and combine global resources with local know-how to create value for Investing in strategic and high-growth regions and categori
90、esIn addition to Starbucks packaged coffees,Seattles Best Coffee will join Nestls collection of beloved coffee brands in the UnitedStates,which include Nescaf,Nespresso and Blue Bottle.both society and our shareholders at a meaningful scale.We do so because we believe that business should act as afo
91、rce for good.Nestl continues to follow through on our commitments to do business in a way that creates shared value,illustrated by progress toward net zero greenhouse gas emissions,regenerative agriculture,100%deforestation-free supply chains,sustainable packaging and improved nutrition in our portf
92、olio.Nestl Annual Review 202210Nespresso Our paper-based compostable capsules offer consumers a choice between fully recyclable aluminum capsules and compostable paper.Innovating to unlock the power of food1.7billion Swiss francs invested inR&D annually 4100 R&D employees globally 23R&D locations wo
93、rldwide 2 new focus areas (Nestl Institute of Agricultural Sciences and R&D Latin America)Nestl Annual Review 202211Food provides essential nutrients to support the good health of people and pets,in a tasty and pleasurable way.It is a vital pillar of cultures,brings people together,underpins economi
94、es and impacts planet health.At Nestl,through our R&D organization,we innovate with purpose to unlock the power of food and deliver tasty,nutritious,affordable and sustainable products for today,and for generations to come.Our innovation capabilities We continuously strengthen our innovation capabil
95、ities to ensure that we deliver products that meet peoples diverse evolving needs,while reducing our carbon footprint and contributing to company growth.In 2022,we were able to maintain the same time-to-market speed as in 2021,despite the challenging environment.Through our regional R&D centers in A
96、frica,China,India and South-East Asia,we can innovate closer to the people we serve with agility.We recently inaugurated an additional regional R&D Center for Latin America in Santiago,Chile,enabling us to innovate for consumers in the region,while leveraging our global science and technology capabi
97、lities to deliver tasty,nutritious,affordable and sustainable products.We also rely on new innovation tools to increase speed,efficiency and decision making,and deliver breakthrough solutions.Using advanced algorithms,we can capture information on trends,ingredients,flavors and health benefits to vi
98、rtually create and quickly test concepts before further refining for launch.Using these tools,in China we launched Nescaf Dalgona coffee mixes and Nesvita probiotic supplements for adults.We are also exploring the use of artificial intelligence and data science that can help to manage tradeoffs betw
99、een taste,nutrition,sustainability and affordability in an increasingly complex innovation environment.To go from idea to shop in six months with new sites in Chile,China,India and Arlington,Virginia,in the UnitedStates we now have 14 R+D Accelerators.Since 2019,the Accelerator initiative has had ov
100、er 300participants,with 150new products in 20countries.Using a test-and-learn approach and working closely with retailers,we quickly develop and pilot novel concepts before investing in a full-scale launch.After a successful pilot test for KitKatV,we launched the vegan chocolate on a wider scale in
101、15European markets.Nutrition solutions across life stages We develop innovations that are backed by science across life stages,for people and pets.New research showed that Nutrilearn Connect,a unique nutrient blend,increases brain myelination,a process vital for cognition and motor development durin
102、g early life.This led to a first launch in Hong Kong and China under the Wyeth S-26 Ultima brand.We also continued the rollout in 20 markets of infant formula with five HMOs to support gut health and immunity.To meet toddlers unique nutritional needs,we introduced Gerber Powerblend cereals in China
103、and India.These aremade from diverse food groups such as whole grains,legumes,milk and fruits to support immunity,brain development and the gut microbiome.Providing solutions for people with specific health needs is also a priority for us.To support women during and after pregnancy while breastfeedi
104、ng,we launched a range of Materna multivitamins and supplements in Latin America and Europe.In the United States,we developed a range of Compleat plant-based standard tube feeding formulas to support digestive health,increased energy needs or decreased fluid needs in patients aged 1 to 13 years.In C
105、hina,we launched Yiyang milk powder made with mulberry leaf extract,a traditional Chinese ingredient,to support people aged over 45 years inmanaging blood glucose.For cats and dogs,we launched Purina Pro Plan supplements in a multi-format such as oils,powders and tablets to support mobility,immunity
106、,vitality,healthy skin and coat.Our new regional R&D Center for Latin America in Santiago,Chile,enables us to innovate tasty,nutritious,affordable and sustainable products that are highly relevant to local consumers.Nestl Annual Review 202212Increasing access to affordable nutritionEveryone has the
107、right to adequate and nutritious foods,including high-quality protein.In Latin America,under the Malher brand,we piloted a powdered,shelf-stable,plant-based protein blend to complement egg dishes in a nutritious and affordable way.When cooking scrambled eggs,omelets and batters,the soy-based Huevo M
108、s can replace some eggs at a lower cost,but with an equal amount of protein,fewer calories,and less cholesterol and saturated fats.Our scientists developed a new source of iron suitable for dairy products and three times more absorbed when compared to existing sources.It was first used in Bunyad Iro
109、n+,an affordable dairy-based drink to address iron deficiency in children in Pakistan,with more products to follow.Breakthrough technology for sugar reduction Offering healthier choices as part of a balanced diet is a priority for us.Our new proprietary technology reduces sugar in key raw materials,
110、with no impact on taste or texture,for different types of products.Based on fermentation,the technology significantly reduces sugar in malt and milk,while generating prebiotic fibers.We introduced sugar-reduced Milo in South-East Asia,Africa and Oceania,with other product categories and geographies
111、to follow.Pioneering plant-based productsOur expertise in proteins,nutrition,plant sciences and culinary arts enables us to develop tasty,nutritious and sustainable plant-based products across brands,categories,formats and geographies.This includes soy-based Milo in Thailand,Nestl Veggie plant-based
112、 yogurt with probiotics in Chile,Garden Gourmet Schnitzel in Europe,Garden Gourmet Voie Gras an alternative to foie gras in Spain and Switzerland,and Gerber Plant-tastic range of organic foods and snacks for toddlers in the United States and Europe.Actively pursuing novel technologiesTransitioning t
113、oward regenerative food systems requires changes in the way agricultural raw materials are produced and sourced.We created the Nestl Institute of Agricultural Sciences to translate and apply agricultural science and identify the most promising technologies.Part of our global research organization in
114、 Switzerland,the Institute includes a plant science unit in France,and cocoa,coffee and dairy research farms in Ecuador,Cte dIvoire,Thailand and Switzerland.We also explore emerging technologies with start-ups,such as the pilot for animal-free dairy proteinbased beverages through our US R+D Accelera
115、tor.Using precision fermentation,the products are made with animal-free protein sourced from the start-up Perfect Day,which is identical to cows milk whey protein without compromising on nutrition and taste.We are also exploring tasty,nutritious and sustainable cultured meat with the start-up Future
116、 Meat Technologies.Scientists at the Nestl Institute of Agricultural Sciences screen science-based agricultural solutions and assess their potential for reducing the environmental footprint of key agricultural raw materials.Nestl Annual Review 202213The new,patented Nescaf Dolce Gusto Neo,with compo
117、stable paper-based pods and proprietary SmartBrew technology,was refined over five years at the Nestl System Technology Center in Switzerland.We are innovating novel systems that bring the perfect cup of coffee toconsumers in a sustainable way.This work is driven by R&D experts atthe Nestl System Te
118、chnology Center inSwitzerland.Neo,a new cutting-edge system for Nescaf Dolce Gusto first launched in Brazil,gives coffee lovers the best sustainable coffee-shop-at-home experience.It comes with a proprietary SmartBrew technology that combines three brewing methods so that consumers can enjoy high-qu
119、ality espressos,coffee-shop-like americanos and drip-style coffees in one single machine.Its new range of compostable paper-based pods deliver high-quality coffee with 70%less packaging than current capsules.For Nespresso lovers,we developed a new range of paper-based compostable capsules that are r
120、etro-compatible with Nespresso Original machines,which will pilot in France and Switzerland in 2023.Through extensive research,the Nestl System Technology Center developed the paper-based pods and capsules together with the Nestl Institute of Packaging Sciences to ensure that the packaging protects
121、the coffee and maintains good taste and quality during extraction.Other novel systems launched include Nespresso Vertuo Pop,the smartest,smallest,most optimized and accessible coffee machine ever,made from 35%recycled plastic.These new systems meet the expectations of todays most passionate coffee l
122、overs and represent the long-term future of the category.IN FIGURESOUR VOICES“When we develop a new system,we need to harmonize its three key elements for the perfect in-cup result:the product,its packaging and the machine.”Julia LauricellaHead of Nestl System Technology CenterSwitzerland Raising th
123、e bar for coffee systems200novel material structures tested before perfecting the Neo paper-based podNestl Annual Review 202214Creating shared valueGolden Morn Our Golden Morn cereal brand in Nigeria contains over 50%whole grains,is fortified with essential nutrients such as vitamin A and iron,and i
124、s mainly made from locally sourced ingredients from Nigerians,for Nigerians.6.4 million tonnesgreenhouse gas emissions(COe)reductions compared with a business-as-usual scenario99.1%assessed deforestation-free in stated supply chains10.5%reduction in virgin plastic in our packaging since 201830.2%wom
125、en in the top 200+senior executive positions Nestl Annual Review 202215Nestls purpose is to unlock the power of food to enhance quality of life for everyone,today and for generations to come.This purpose drives us to make a positive impact on people,pets and the planet now and in the future.We are c
126、ommitted to supporting a just transition to regenerative food systems that can nourish the world.Understanding our material topics To reflect shifting trends and stakeholder priorities,we regularly conduct a materiality assessment to identify where Nestl has the greatest impact on society and the en
127、vironment,and which impacts are most important to our business success.In 2022,we worked with an independent third party to interview 55 internal and external stakeholders to make the assessment.Based on their responses,we identified critical topics for our business and stakeholders,including signif
128、icant changes since our last assessment.The top-rated topics are covered in this section:product quality and safety,health and nutrition,greenhouse gas emissions,packaging lifecycle management,water management,ecological impacts,and environmental and social impacts in our ingredient supply chain.The
129、se and all other material topics,as well as the assessment results,are covered in detail in our Creating Shared Value and Sustainability Report.Improved nutrition and labelingWe aim for our food to be tasty,nutritious,sustainable,and accessible and affordable to everyone,across all life stages.Our e
130、xtensive portfolio ranges from beverages and meal solutions to confectionery and healthcare nutrition products.We are improving the nutritional profile of our products by adding more whole grains,proteins and fibers while reducing sugars,sodium and saturated fats without compromising taste.In 2022,w
131、e updated our systems and policies to further improve the healthiness and taste of our products.Providing transparent information about our products is central to maintaining peoples trust.In 2022,for the first time,we benchmarked our entire global portfolio against the Health Star Rating(HSR)system
132、,a nutrient profiling system used by the Access to Nutrition Initiative and on front-of-pack labels in some countries.We are also reporting separately on specialized nutrition products like infant foods and medical nutrition,which are not covered by the HSR system.Nestl is the first company to discl
133、ose the nutritional value of its entire portfolio,ranging from occasional treats to nutritious foods and beverages for daily consumption,to our specialized nutrition offerings.Uncle Tobys Oat Milk range in Australia is made with 100%Australian oats and has aHealth Star Rating of four out of five.SEL
134、ECTED 2022 RATINGS*Brands accounting for approximately 10%of Nestl net sales are B Corp certified.*Nestl Annual Review 202216Further,to communicate transparently about the nutritional composition of our products,we will continue to display locally relevant front-of-pack nutrition labeling schemes,su
135、ch as Nutri-Score.In our Creating Shared Value and Sustainability Report,we disclose the nutritional value of local portfolios in 13 countries using their respective government-endorsed front-of-pack labeling systems.This transparency is part of Nestls efforts to grow and expand the nutritious segme
136、nts of our portfolio,including plant-based,childrens and healthy aging products.Access to essential and affordable food products Product access and affordability are more important than ever given the social and economic instability and supply chain constraints the world is facing.Nestl remainscommi
137、tted toproviding essential food products inmarkets worldwide.We also continue to offer a wide range of affordable and micronutrient fortified products,totaling 129.2billion fortified servings of affordable nutrition products in 2022.New offerings include Bunyad Iron+in Pakistan and expansion in Nest
138、l East and Southern African Region(ESAR)of Nestl Everyday,an affordable,medium-fat milk powder enhanced with locally sourced ingredients containing calcium,iron,vitamins and zinc.Marketing our products responsibly We advertise our products according to strict guidelines especially when it comes to h
139、ow we communicate to children and how we promote breast milk substitutes.In 2022,we announced plans to update our Marketing Communication to Children Policy with a commitment not tomarket confectionery,ice cream or water-based beverages with added sugars to children aged under 16years.This will meet
140、 the strictest standard in the industry.In 2022,we also announced plans to update our policy on the responsible marketing of breast milk substitutes,with a commitment tounilaterally stop the promotion of infant formula globally for babies aged 0to6months.Product quality and food safety Quality and s
141、afety for consumers is Nestls top priority.This applies to our entire portfolio,from foods and beverages to systems and services.Quality assurance and product safety is one of Nestls Corporate Business Principles,while our Quality Policy guides our actions in thisarea.Our global,independently verifi
142、ed quality management system is our platform for guaranteeing food safety and compliance with quality standards in conformance with laws and regulatory requirements,ISOnorms and internal standards.We carefully revised our quality management systems in 2022 and are placing even greater emphasis on re
143、inforcing aquality and food safety culture,strengthening competencies,performing more frequent and targeted testing,enhancing verification,and making better use ofdata for prediction and detection of incidents.Our road to net zeroIn 2022,our greenhouse gas(GHG)emissions remained decoupled from busin
144、ess growth,as we achieved higher revenues and lower absolute emissions.To help fight deficiencies,Bear Brand tailors the micronutrient fortification of its products to the specific nutritional gaps of each market where it is sold.The nutritional value of our portfolio*Excluding PetCare(79%net sales*
145、)Including PetCare(97%net sales*)Net sales from products with a Health Star Rating of:HSR of less than 1.521%17%HSR of 1.5 to less than 3.522%18%HSR of 3.5 or above37%30%Net sales from specialized nutrition products without HSR:Specialized nutrition20%35%*Excludes products that are not foods or beve
146、rages for consumption,and some recentacquisitions.GovernanceBoards oversightOversight of climate-related risks and opportunities is embedded at the highest level.The Board has oversight of climate-related matters and monitors progress toward related goals.The Boards Sustainability Committee reviews
147、Nestls sustainability agenda and the Audit Committee is informed of the content of our non-financial reporting andofthe audit process for selected assured metrics.Managements roleThe Executive Board is responsible for executing sustainability strategies,including our Net Zero Roadmap,through an ESG&
148、Sustainability Council.At operational level,an ESG Strategy and Deployment Unit drives implementation.StrategyStrategy/Risk ManagementClimate-related risks and opportunitiesClimate change is considered a material risk for Nestl.Within our Enterprise Risk Management framework,we conduct an annual ass
149、essment of climate change risks and review the strategy and plans tomitigate them.We assess related financial risks using a discounted cash flow methodology.Our assessment establishes:Transition risks:we have assessed transition risks to 2030,based on exposure levels from low-,medium-and high-emissi
150、on pathways.Modeling results show a degree of exposure,but our Net Zero Roadmap could reduce this by up to half.Physical risks:changing temperatures and weather extremes can affect the quality and availability of key raw materials through lower and variable yields,as well as shifts in the regions su
151、itable for cultivation.For ingredients covering 90%of our spend,we have assessed exposure to 2040,based on a likely 1.5C global temperature rise.For our key materials cocoa,coffee,dairy and palmoil we outline the mitigating actions.Nestl is well positioned to implement nature-based solutions for les
152、s resource-intense and more resilient food production,as it has direct access to more than 500 000 farmers.One significant example is the Nescaf Plan 2030,which aims to help drive regenerative agriculture,reduce GHG emissions and improve farmers livelihoods.Impacts of climate-related risks and oppor
153、tunitiesResilience of the organizations strategyRisk ManagementProcesses for identifying and assessing climate-related risksProcesses for managing climate-related risksIntegration into the organizations overall risk managementMetrics&TargetsMetrics used to assess climate-related risks and opportunit
154、iesIn addition to the indicators published last year,for 2022,we have added the percentage of key raw materials sourced through regenerative agriculture methods as a major component of our Net Zero Roadmap forincreasing climate resilience.Scope 1,2 and 3 greenhouse gas(GHG)emissionsIn 2022,70%of car
155、bon savings generated came from interventions in raw material sourcing and 30%came from other value chain efficiencies and innovative product categories.This demonstrates our ability to mitigate climate risks and embrace opportunities.Targets used to manage climate-related risks,opportunities andper
156、formanceWe review our Net Zero Roadmap for achieving planned GHG emissions reductions for 2025 and 2030 annually to validate that our activities are keeping us on the path to net zero and are helping mitigate and adapt to climate risk throughout our value chain.Nestl Annual Review 202217Our alignmen
157、t with the Taskforce on Climate-related Financial DisclosuresNestl Annual Review 202218Scope 1,2 and 3 GHG emissions within the boundaries of our NetZero Roadmap have now reduced by 6.4million tonnes compared with a business-as-usual scenario.These emissions have fallen below our 2018 baseline for t
158、he first time since introducing our Roadmap,despite revenue growth over the same four-year period.Emissions reductions are the result of a wide range of projects in ouragricultural supply chains,aswell as in our factories.In addition to these emissions reductions,we secured 4.3million tonnes of GHG
159、removals by implementing nature-based solutions that transfer GHGs from the atmosphere into carbon stores.These removals take place within our supply chain and the landscapes where we source our raw materials,and help to restore forests,wetlands and peatlands,or improve land management.We are proud
160、of our progress,but know there is more to do to reduce Nestls absolute emissions on our way to net zero by 2050.We are still adapting our approach in response to what we learn.Many of our emissions reduction and removal activities will take time to implementbut we remain confident they will yield ra
161、pid results to keep us on track.Our commitment to help farmers in a just transition toward regenerative agriculturesupports our climate-related agenda.Progress on our deforestation-free commitment In 2010,Nestl was one of the first companies to commit toend deforestation in its supply chains.By the
162、end of 2022,99.1%of our primary supply chains for meat,palmoil,pulp and paper,soy and sugar were assessed asdeforestation-free.From experience,we know that the last percentage points are the hardest to reach due to the volume sourced from thousands of smallholders who require customized technical as
163、sistance at a local level.We remain focused on achieving our deforestation-free commitment.Our vision for packaging and circularity Our vision continues to be that none of our packaging,including plastic,ends up in landfill or as litter.As with carbon,we are moving beyond peak virgin plastics,reduci
164、ng the volume we use while our business continues to grow.We have a strategy that supports our vision and addresses both product design and infrastructure systems.By reducingunnecessary packaging,designing better packaging for reuse and recycling systems,modeling fair collection systems and supporti
165、ng good regulation,we aim to support the transition to no waste in landfills or nature.Our Henniez bottled-water plant in Switzerland produces renewable energy by collecting and burning manure from local cattle in a biogas plant,together with spent coffee grounds from Nespresso.2070605040
166、302001102021Net Zero Roadmap launched2022203093.399.7Business-as-usual scenarioActual emissions2019202094.3*2018 baselinePeak carbon*Baseline restated due to acquisitions,divestures,emissions factor restatements and adjusted scope6.4Million tonnes of CO2e reductions compared with a business-as-usual
167、 scenario68%Ingredient sourcing28%Manufacturing4%PackagingKey initiatives delivering GHG emissions reductions in 2022 Nestl Annual Review 202219As a signatory of the Ellen MacArthur Foundation Global Commitment,our aim is to have 100%of our packaging designed for acceptance in recycling systems.By 2
168、025,more than 95%of our packaging will be designed for recycling.We are on track to reduce our use of virgin plastics from 2018 levels by one-third by 2025:at end of 2022,we had reduced our use of virgin plastics by 10.5%.Reuse and refill systems are also important.We have run over 20 packaging reus
169、e pilots in 12 countries,providing products in our Nestl Waters business and with partners such as Loop,Aldo and Carrefour.However,we recognize that more needs to be done and will work with retail partners to increase and scale up reuse and refill systems.We advocate for well-planned regulation to e
170、nable collection,sorting,reuse and recycling systems.We support regulations like extended producer responsibility and deposit return systems.We are also highly committed to supporting UN negotiations for a high-ambition Global Plastics Treaty as a legally binding agreement to end plastic pollution.P
171、romoting sustainable productionIn addition to our own actions,we need to foster large-scale changes throughout our supply chain,if we are to support ajust transition to regenerative food systems.In France,we launched a pilot with Carrefour testing new refillable solutions for Nescaf,confectionery an
172、d pet food in the bulk aisles of two hypermarkets.Progress on our roadmap to 20%reduction in greenhouse gas emissions by 2025 and 50%reduction by 2030 and net zero by 20502018 baseline(million tonnes of COe)NET ZERO ROADMAPNestl Annual Review 202220We aim to address environmental and social impacts
173、for 14 priority raw materials by assessing whether they have been produced sustainably.Produced sustainably means that the origin of the materials is known and the way they are produced has been assessed as compliant with our environmental and social requirements.The 14 priority raw materials are ce
174、reals and grains;cocoa;coconut;coffee;dairy;fish and seafood;hazelnuts;meat,poultry and eggs;palm oil;pulp and paper;soy;spices;sugar;and vegetables.We have set specific environmental and social requirements for each raw material.We aim for 100%of these materials to be produced sustainably by end of
175、 2030.Advancing regenerative agricultureWe are helping farmers in our supply chain transition to regenerative agriculture practices.Regenerative agriculture is an approach to farming that aims to improve soil health and soil fertility,protect and enhance biodiversity,and preserve water resources.As
176、agriculture accounts for the majority of our GHG emissions,and healthy soil and biomass can capture increased levels of carbon,this approach is central to achieving net zero.In 2022,we published the Nestl Agriculture Framework,which describes our vision for agriculture as a central building block of
177、 more regenerative food systems.The framework contains common principles and techniques that may be expanded on for specific crops.Most importantly,farmers Soil moisture sensors and plant stress-level sensors are helping farmers in our supply chains determine when to irrigate,how often and with how
178、much water.The new Nestl Agriculture Framework aims to help our agriculture and sourcing experts and suppliers to understand and implement our regenerative agriculture model.Nestl Annual Review 202221are at the center of our model.Where introducing regenerative agriculture practices generates initia
179、l risks or costs for smallholder farmers,we may provide technical,collaborative or financial assistance to support a just transition.Our Nescaf Plan 2030 and income accelerator program for cocoa-farming families are examples of how weare supporting farmers.We also established the Nestl Institute of
180、Agricultural Sciences,a new center that builds on our existing agricultural expertise.Its aim is to translate novel agricultural science into concrete applications and identify promising agricultural technologies,with a focus on plant science,dairy livestock and agricultural systems.Respecting human
181、 rights Regenerative food systems put people at the center.By respecting and advancing human rights in our value chain,we are building a foundation that contributes to a resilient future for our planet and its people.In 2021,we outlined our approach and salient human rights issues in a new Human Rig
182、hts Framework and Roadmap.In 2022,we published our Data Protection and Privacy action plan.In 2023,we will publish the remaining action plans for each of our salient issues,describing the actions we intend to take,the collective action needed to help tackle root causes and key indicators for measuri
183、ng the effectiveness Reducing dairy emissions is essential to Nestls climate ambitions,so we are exploring changes to cow feed,manure management,pasture coverage and renewable energy use,among others.Nestl is creating action plans for the 11 salient human rights issues most relevant to its business
184、and stakeholders,publishing the Data Protection and Privacy action plan inMarch 2022.Nestl Annual Review 202222The Nestl Youth Entrepreneurship Platform is a one-stop shop where young people can gain access to knowledge and facilities,such as our technology centers and international network of R+D A
185、ccelerators.of each plan.Our framework and action plans will help us protect people,first and foremost,as well as stay ahead of emerging human rights due diligence legislation in the markets where we operate.Creating youth opportunitiesAs part of our Nestl needs YOUth initiative,in August we brought
186、 together all our existing youth innovation initiatives in one place on the Nestl Youth Entrepreneurship Platform(YEP).This digital platform supports young innovators and entrepreneurs who want to gain new knowledge and skills,test an idea or grow their businesses in areas ranging from food science
187、and technology to the development of products and services,including sustainable packaging and regenerative agriculture.Nestl created access to economic opportunities for a total of 1.7million young people in 2022,bringing the total since 2017 to 5.6 million.+500+500Nestl Annual Review 202223Helping
188、 to improve farmerincomes We plan to extend the program to all cocoa-farming families in our global cocoa supply chain by 2030.Our income accelerator program aims to improve the livelihoods of cocoa-farming families and tackle the root causes of child labor risks in cocoa production,while advancing
189、sustainable farming practices.Poverty is the main reason that children work on cocoa farms.Building on more than a decade of experience with our Nestl Cocoa Plan and our Child Labor Monitoring and Remediation System,this innovative approach aims to incentivize cocoa farming families to make sustaina
190、ble changes that will help move them closer to aliving income.Through the accelerator,we pay a cash incentive directly to cocoa-farming households for activities such as pruning to increase crop productivity,planting shade trees to increase climate resilience,growing additional crops or raising live
191、stock to diversify income,and enrolling children in school.Our suppliers send the payments when costs are typically high like the back-to-school period.We also help farmers and women in the household access the training and resources needed to make the changes.To enable these payments and bring abou
192、t lasting change,we are shifting our sourcing to segregated cocoa supplies that can be traced from the farming family all the way to our factory.The income accelerator program is expanding a successful pilot of 1000 farmers in Cte dIvoire to a further 10 000 families.We will assess the results,adapt
193、ing where necessary,before extending the program throughout our global cocoa supply chain by 2030.OUR VOICES“It motivates me to see farmers convinced of the benefits:over 90%want to continue pruning and some already pruned the remainder of their plot.”IN FIGURESCHF 500the amount families can earn an
194、nually in the first two yearsLuc Affoli NGuessan ToussaintIncome Accelerator Project Manager Cte dIvoireNestl Annual Review 202224Accelerating data-driven digitalizationMaggi Meu SegredoWe are building culinary ecosystems to engage with our consumers along the entire journey from recipe inspiration
195、to shopping experience.Through platforms like Receitas Nestl,consumers can find inspiration and services easily online or in-store through QR codes.55%of total media spend was on digital media275 million first-party data records15.8%sales through e-commerce150 connected factoriesNestl Annual Review
196、202225Consumers want access to goods and services,regardless of channel.They expect brands to connect with them directly and get new products to market quickly.Plus,they want full transparency about how theirproducts were made.To meet these demands anddrive growth,we are accelerating our data-driven
197、 digital transformation.Acceleration of e-commerceIn 2021,we launched the e-commerce acceleration initiative,building detailed action plans by market.In 2022,our primary focus was executing these plans to improve e-commerce performance in all markets and categories.Our 2025 ambition of 25%of sales v
198、ia e-commerce will impact all markets,brands and roles.As such,a key priority is building e-commerce skills.We have created a global e-commerce community of more than 3000 employees who connect and share best practices,successes and challenges.We are reaching an even wider audience with online webin
199、ars and trainings.More than 11 000 people across Nestl have already attended these events.Executing online has parallels with offline but requires a different approach to win.While remaining agile,we have defined our vision of perfect shelf execution and have set about measuring this by market and r
200、etailer,down to the SKU level.By standardizing and scaling our approach,we can improve digital shelf execution including content,text,ratings and reviews.To advance our Retail Digital Media we are working closely with our retail partners,adapting our ways of working and developing practices to impro
201、ve return on investment.As the retail landscape becomes more fragmented,we have ever more customers and channels to manage.This complexity requires us to do more with less.With Amazon,one of our largest e-commerce customers,we created the Amazon center of scale where we outsource or automate routine
202、 tasks to ensure our teams are only working on the most value-adding activity.Advancing always-on analyticsQuick access to actionable data insights is key to understanding fast-changing consumer needs and optimizing our demand-generation activities,thus maximizing our resources.We are harnessing the
203、 power of data to streamline our business practices,becoming more strategic and predictive while making changes in real time.In 2022,our analytics capability has been critical to help us navigate an extremely volatile retail environment and rising costs of raw materials.Our data-powered sales and ma
204、rketing teams have been able to optimize our sales prices and promotional activity while maintaining consumer demand for our brands and products.Our strategic revenue management program now covers around 95%of our markets.We are also leveraging artificial intelligence(AI)with end-to-end analytics to
205、 deepen collaboration with customers,improve product assortment and enhance promotion effectiveness.To increase the effectiveness of our marketing investment,we are investing in proprietary solutions deployed at scale in many geographies from Indonesia to North America.Retailer websites,apps and dir
206、ect-to-consumer platforms are a shop window for our consumers to engage with our brands.Tracking and making continuous improvements at scale help us continuously improve the customer experience and drivesales.Nestl Annual Review 202226We recently created a hub for data science in Bangalore.Here,we a
207、re developing solutions to track the return on every investment in key Zone AOA markets and building models to predict best investment scenarios that allow us to adjust channel strategies in real time.With 55%of our media spend invested on digital platforms and exponential need for platform-specific
208、 content,we have built a more efficient and agile operating model for creating and optimizing content.In 2022,we further expanded our expertise across the digital value chain and the content studio model:37 content studios are producing high-quality content 50%cheaper than our previous model.We use
209、AI to track,correct and enhance the relevance of more than 500 000 digital assets per year across the key digital platforms,leading to performance improvement up to 66%in return on ad spend measured across Meta platforms,Facebook and Instagram.Digitally enhanced operations We are deploying advanced
210、operational planning technology at scale covering all key areas across our value chain from demand sensing to production scheduling.The technology allows us to drive agility and resilience of our operations,enhancing our ability to react to consumer demand quickly and efficiently.We have successfull
211、y implemented these core capabilities in the United States,our biggest market,and are accelerating rollout with the intention to reach 80%of our businesses by the end of 2025.Our core digital technologies are now deployed in more than 275 factories in 60 countries,enabling over 50 000 connected work
212、ers to be highly productive and autonomous with fast and easy decision making.The data gathered from these technologies is used by AI and predictive analytical tools to enable the delivery of exceptional quality,zero breakdowns,improved energy efficiency and reduced water consumption.Our ability to
213、frequently reconfigure the supply networks through digital twins and AI-based optimization methods delivers cost efficiency and resilience in turbulent times.Digitally enabled transport control towers(or T-Hubs)are now deployed in more than 20 locations,manage more than 16 000 trucks daily and cover
214、 85%of our turnover.Capabilities have been built around cost efficiency as well as resilience and responsiveness.Our journey to warehouse automation is well underway to deliver cost efficiency.These agile operations meet customer requirements while mitigating labor shortage.Validation of sustainabil
215、ityDigitalization helps enable Nestls sustainability agenda in areas such as sustainable packaging,responsible sourcing,tackling CO emissions and water management.With the help of our greenhouse gas performance system,we are now able to monitor our carbon footprint more accurately,including Scope 3
216、emissions.In addition to an automated combination of Nestl spend and activities with the emission factors from relevant external databases,this system enables Nestl to include primary data about emissions from suppliers and farms.In 2022,we debuted a new technology to improve end-to-end traceability
217、 and substantiate sustainability claims.Nespresso partnered with OpenSC to use their technology to bring greater transparency and accountability to the supply chain for Reviving Origins organic coffee,Kahawa Ya Congo,by using smart devices and QR codes.The OpenSC platform automatically verifies that
218、 each smallholder farmer receives the correct Nespresso AAA Sustainable Quality Program premium directly for the coffee they produced either via mobile money or cash.Nestl is investing EUR 100 million in one of its largest coffee factories in Girona,Spain,installing state-of-the-art digital technolo
219、gy that will accelerate improvement in sustainability,logistics and production capacity.Nestl Annual Review 202227Receitas Nestl drives higher consumption ofNestl products,with a 30%frequency increase observed in Brazil.Nestls online recipe platforms provide an opportunity to connect directly with c
220、onsumers to gain insights on culinary preferences and drive higher consumption of Nestl products.In Latin America,our recipe platforms reach more than 100 million consumers annually.Our Nestl online recipe platforms allow our brands to engage with consumers directly,inspiring home cooks and foodies.
221、With Rece(i)tas Nestl,Latin American consumers can tap into more than 20 000 recipes,access how-to cooking tutorials,pose direct questions to our chefs and follow nutritional guidance to create balanced diets for their families.Nestl is connecting with communities and influencers to co-create recipe
222、s and leverage insights toinform future product innovation.The platforms offer us the ability to collect richer data about culinary preference,which gives us the opportunity to serve diverse audiences with personalized content and choose the best brands forengaging with consumers.By connecting the p
223、latforms with ourretailers,we can drive consumers to use shoppable recipes to receive the ingredients directly at their doorstep,creating instant value for all parties involved.We have deployed over 150recipe websites and created more than 70 000recipes that are globally accessible through our smart
224、 recipe hub back end.Engaging consumers onlineOUR VOICES“Recetas Nestl has been a key enabler for our brands to connect with consumers directly and improve online communication effectiveness.”IN FIGURESJulieta LoaizaHead of Consumer and Corporate Communications Mexico+200 millionvisits to Rece(i)tas
225、 Nestl in 2022Nestl Annual Review 202228Our brands are enjoyed by people around the world.Connecting through our brandsPetCarePage 32Powdered and Liquid BeveragesPage 30brand Cat FoodNestl Annual Review 202229ConfectioneryPage 40WaterPage 42Milk productsand Ice creamPage 38Nutrition andHealth Scienc
226、ePage 34Prepared dishes and cooking aidsPage 36INFANT CEREALSINFANT CEREALSINFANT CEREALSENLIGHTENED FOODSNestl Annual Review 202230At a glance25.2Sales(in CHFbillion)22.2%UTOP margin26.7%Percentage of Nestls salesOur Powdered and Liquid Beverages category includes our coffee,cocoa and malt beverage
227、 businesses.This category features iconic coffee brands Nescaf,Nespresso and Starbucks,plus the worlds most popular chocolate malt drink,Milo.MiloThanks to our new proprietary technology,in 2022 Milo hit market shelves in Asia,Africa and Oceania with sugar reduction,while preserving itssignature tas
228、te.Starbucks Frappuccino The iconic ready-to-drink Starbucks Frappuccino,in Coffee and Mocha flavors,is now available to consumers in select markets across South-East Asia and Oceania.Nespresso Reviving OriginsUsing OpenSC technology,Nespresso is bringing greater transparency and accountability to t
229、he supply chain for Reviving Origins organic coffee,KahawaYaCongo,involving over 1000smallholder farms.Nescaf Gold Roastery With sales above expectations since its launch in 2021,the Nescaf Gold Roastery collection of instant coffee is expertly roasted in batches by our master roasters to unlock the
230、 very best flavors.powdered and liquid beverages Providing the worlds favorite drinks Nestl Annual Review 202231OUR VOICES“We are moving to an integrated strategy,using regenerative agriculture to deliver emissions reduction,improved farmer income and better social conditions.”Climate change is putt
231、ing coffee-growing areas under pressure.Building on a decade of experience with the Nescaf Plan,Nestl is accelerating work to help tackle climate change and address social and economic challenges within Nescaf supply chains.In 2022,Nestls largest coffee brand and one of the worlds favorite coffees o
232、utlined its extensive plan to invest over one billion Swiss francs to help make coffee farming more sustainable:the Nescaf Plan 2030.A central part of this is working with coffee farmers to help them transition to regenerative agriculture.Regenerative agriculture is an approach to farming that aims
233、to improve soil health and protect water resources and biodiversity.Healthier soils are more resilient to the impacts of climate change and can increase yields,helping improve farmers incomes.As such,supporting farmers to make this transition canhelp reduce emissions from coffee farming while contri
234、buting tobetter farmer livelihoods and stronger communities.Nescaf is committed to supporting farmers who take on the risks and costs associated with the move to regenerative agriculture,with priority for the seven countries where we source 90%of our coffee.Nescaf will provide farmers with training,
235、technical assistance and high-yielding coffee plantlets.In Mexico,Cte dIvoire and Indonesia,Nescaf will pilot a financial support scheme to help farmers accelerate the transition to regenerative agriculture.Renewing the world of coffee IN FIGURES87%of Nescafs coffee produced sustainably in2022(100%b
236、y 2025)Marcelo BurityHead of Green Coffee Development,Coffee SBU United KingdomPart of Nescafs contribution to Nestls net zero emissions commitment involves helping coffee farmers plant more than 20 million trees across 8 countries by 2026.Nestl Annual Review 202232Our PetCare business delivers life
237、-changing nutrition for pets alongside expertise for their owners and veterinarians.Purina is guided by science and driven by passion to enrich the lives of pets and the people who love them.Purina Pro Plan supplements This line of supplements complements the Pro Plan pet food range,scientifically d
238、esigned to help support mobility,immunity,vitality,healthy skin and coat,and calmer behavior in both dogs and cats.Purina Cat Chow Launched in Latin America,the new modern and premium Purina Cat Chow helps to protect cats and strengthen their natural defenses with natural prebiotic fiber and no arti
239、ficial colors or flavors.Purina Fancy Feast Medleys As part of the#1 global wet cat food brand,the Medleys range offers an elevated mealtime experience with a refreshed design and new globally inspired recipes crafted with high-quality ingredients.Purina ONE Immune Defence Plus+The Purina ONE brand
240、relaunched its dry cat line in Asia,Oceania and Africa with Immune Defence Plus+,which is a specialty blend that helps to support the immune health of cats.petcare Bringing pets and people together At a glance18.1Sales(in CHFbillion)20.5%UTOP margin19.2%Percentage of Nestls salesNestl Annual Review
241、202233IN FIGURESPurina Pro Plan Veterinary Diets HA Hydrolyzed was the first truly hypoallergenic dry diet for dogs with food allergies.Progressive science has led to Purina Pro Plan Veterinary Diets EL Elemental our most advanced formula for dogs withfoodsensitivities to date.Purina Pro Plan Veteri
242、nary Diets EL Elemental is formulated with purified amino acids to support dermatological and gastrointestinal health in dogs with adverse food reactions.It contains low-allergen carbohydrate sources to help minimize the risk of an allergic reaction.It is also highly digestible to promote optimal nu
243、trient absorption and has limited fat to aid digestion for dogs with compromised gastrointestinal tracts.The formula contains omega-3 and omega-6 fatty acids,vitamin A and zinc to maintain and protect the skin barrier,and prebiotic fiber to help nourish the gastrointestinal tract.Great taste ensures
244、 adequate nutrition intake.The science behind Purina therapeutic diets represents a collaboration between Purina nutritionists,researchers and veterinarians.Purina Pro Plan Veterinary Diets EL Elemental serves as another example of using breakthrough science to create life-changing therapeutic nutri
245、tion that addresses challenging conditions.In 2022,Purina Pro Plan Veterinary Diets EL Elemental arrived on US shelves.Additional countries will follow in 2023.This is great news for dogs with food sensitivities and their owners.Formulating breakthrough therapeutic diets OUR VOICES“Seeing our scienc
246、e-based innovations positively impact the lives of pets and people who love them is incredibly rewarding.”Double-digitorganic growth for Purina ProPlan Veterinary Diets in 2022Annie ValuskaPrincipal Scientist,Nestl Purina North AmericaUnited StatesThe Purina Pro Plan Veterinary Diets range includes
247、other innovative dry diet formulas such as UR Urinary for cats and HA Hydrolyzed for dogs.Nestl Annual Review 202234Our nutrition business provides science-based products and solutions for mothers,babies and children.Our Nestl Health Science business empowers healthier lives by offering an extensive
248、 portfolio of science-based consumer care and medical nutrition.OrgainNestl Health Science purchased a majority stake in Orgain in 2022,a leader in plant-based nutrition in the United States with an emphasis on clean,all natural,organic ingredients.At a glance15.7Sales(in CHFbillion)19.1%UTOP margin
249、16.6%Percentage of Nestls salesGerber Plant-tasticGerber Plant-tastic allows babies and toddlers to discover the world of plants with a trio of greens,grains and beans carbon neutral in the United States since its launch.Althra,Alfar and Alfamino Nestl Health Science is the leader in the CMPA(cows m
250、ilk protein allergy)formula market in mainland China,with Althra,Alfar and Alfamino holding over 50%market share and growing triple digits.BEBA Bio Our first certified organic formula range with reduced carbon emissions supports healthy child development while caring for the planet with sustainably
251、sourced ingredients and plant-based lids and scoops.nutrition and health science Boosting health through nutrition Nestl Annual Review 202235Nestl is committed to helping parents and caregivers get the infant formula they need so their children can thrive.We were pleased to work with the US governme
252、nt to address the formula shortage as part of Operation Fly Formula.In the spring of 2022,the United States experienced a severe infant formula shortage following a recall of another manufacturers products.Nestl teams from around the globe mobilized all resources to help address the crisis through i
253、ts Nestl Health Science and Nutrition businesses.Although a small player in the US infant formula market,Nestl realized early on this could become a national health crisis for families and took immediate action,even as details of supply chain issues were still unfolding.Nestl teams in Switzerland,Ge
254、rmany,the Netherlands,Mexico and the United States accelerated production of formulas,including those that serve a critical medical purpose.During a time when infant formula out-of-stock rates hit as high as 70%,Nestl was the first partner to participate in Operation Fly Formula.The first two flight
255、s in May 2022 flew 500 000 bottle equivalents of Nestl Health Sciences Alfamino Infant and Alfamino Junior and a million bottle equivalents of Gerber Good Start Extensive HA all for babies with cows milk protein allergies.This was followed by many more shipments of specialized and non-specialized Ne
256、stl infant formula,including NAN Supreme pro and Gerber Gentle.OUR VOICES“The logistics of moving so much product in such a short timeframe were complex.Our teams across Europe and the United States pulled together to make it happen.”42 million+equivalent 8-ounce bottles sent under Operation Fly For
257、mulaIN FIGURESOlivier GlronHead of Supply Chain,Nestl Health Science Switzerland Supporting Operation Fly Formula Teams in the factories in Konolfingen and Nunspeet worked tirelessly to ensure that Nestl could help with the specialized infant formula shortage in the United States.Nestl Annual Review
258、 202236Our prepared dishes and cooking aids category provides the daily essentials,including bouillons,chilled culinary products,and frozen food and pizzas.Iconic brands such as Maggi,Stouffers and DiGiorno cater to regional and local tastes.prepared dishes and cooking aids Assisting with everyday m
259、eals At a glance12.5Sales(in CHFbillion)16.3%UTOP margin13.2%Percentage of Nestls salesTotole Cooking Sauces The expanded Totole range added two new low-sodium variants with 25%less salt to help Chinese consumers getsuperior savory taste in their top dishes in a natural andhealthier way.Maggi Market
260、 Place The new Maggi De La Huerta range in Latin America addresses consumer demand for naturality with creamy vegetable soups and all-in-one-seasonings rich in herbs and spices.Stouffers Bowl-FULLS Bold and tasty frozen-ready meals like Fried Chicken and Mashed Potatoes meet consumer expectations fo
261、r high-quality,restaurant-inspired recipes delivering high-protein satiety in a bowl format.Maggi Recipe Solutions New Maggi Recipe Solutions combine all spices and aromatics needed for a recipe,as well as simple steps to help Malaysian cooks prepare great tasting dishes easily.Nestl Annual Review 2
262、02237Demanding flexitarian consumers want easy ways to include more healthy,plant-based meals in their diets without compromising on taste.Nestl is at the forefront in responding to this trend,innovating plant-based options that are delicious,nutritious,sustainable andmore convenient.Nestl continues
263、 to use its innovation expertise to develop and improve delicious plant-based food.High-quality,sustainably sourced ingredients contribute to great taste.The increased use of vegetables and legumes creates greater nutritional value.In 2022,we continued to expand the plant-based options within our Ga
264、rden Gourmet brand,such as the new chicken alternative,Sensational Crispy Mini Filet.Beyond new innovations,we constantly explore ways to improve the quality of existing popular plant-based products the Garden Gourmet Sensational Burger is now even more flavorful and juicy.Our plant-based strategy i
265、s not only about creating meat alternatives.The popular Maggi Veggie Masala Noodles has the same iconic taste as the original but now includes nutritious carrots and beans.Plus,Maggi offers recipes to cook delicious plant-based meals from scratch.Plant-based versions of the popular Wagner Piccolinis
266、 have now entered more homes,providing vegan and vegetarian options.And the new Thomy Vegan Tartare offers a plant-based sauce option.Our plant-based innovations are proving that we can offer consumers healthy options with a lower environmental burden that taste great.Advancing the plant-basedfood p
267、ortfolio OUR VOICES“We use our R&D expertise to rapidly develop great-tasting,nutritious and sustainable plant-based options.”Haguith PeretzR&D Plant-Based MealSolutions Department Lead GermanyWithin our popular Maggi line of bouillon cubes,our Kub Or made from plant-based ingredients adds its iconi
268、c flavor to rice,pasta,soups and vegetable dishes.Mid single-digit growth in plant-based food products in 2022IN FIGURESNestl Annual Review 202238milk products and ice cream Offering something for everyone Our milk products business delivers nutritional products for all stages of life,ambient dairy,
269、plant-based alternatives and coffee creamers.Our ice cream business offers a variety of special treats.At a glance11.3Sales(in CHFbillion)22.7%UTOP margin12.0%Percentage of Nestls salesNescaf Gold Cappuccino Ice Cream Piloted in Malaysia with an eye toward further rollout,this refreshing new way to
270、indulge Nescaf Gold Cappuccino uses Nescaf Gold coffee in the innovative soft coating and the ice cream.Molico MultigoldLaunched in Brazil,this multi-benefit product is rich in calcium for bones,collagen for joints,fiber for gut health,protein for muscles,and vitamins and minerals for immunity.Starb
271、ucks Zero CreamerThis new zeroadded sugar creamer option in Caramel Macchiato and Hazelnut Latte flavors addresses the consumer-driven trend toward sugar reduction,without compromising on taste.Yiyang GI Control Yiyang continues to support healthy aging in China with this new functional milk powder
272、that supports blood glucose management by providing low glycemic index(GI)nutrition.Nestl Annual Review 202239Addressing irondeficiencyIN FIGURES417 million fortified servings of Bunyad Iron+consumed in 2022In Pakistan,where one out of two children is deficient in iron,Nestl has brought a breakthrou
273、gh solution to market with Bunyad Iron+.The affordable dairy-based drink is fortified with a new source of iron that is more suitable for dairy products,as well as three times more absorbed in the body compared to existing availablesources.Access to affordable nutrition is a global challenge affecti
274、ng many people around the world,especially in emerging countries.Many people suffer from micronutrient deficiencies,particularly children and pregnant women.To help address this challenge,Nestl is accelerating its efforts to develop more affordable nutrition products that contain essential vitamins
275、and minerals.The unique and proprietary iron source is based on Ferri-Pro,a technology originally developed by Riddet Institute at Massey University in New Zealand acquired by Nestl in January 2019.After acquiring the technology,Nestl R&D continued to work with Massey University to bring the new sou
276、rce of iron to the market.The result is Iron+.The Nestl Dairy teams in Pakistan and Switzerland,supported by the Nestl R&D Center for Dairy in Konolfingen,Switzerland,successfully launched the innovative Iron+in the affordable nutrition brand Bunyad in 2022.Two glasses of Bunyad Iron+offer 60%of dai
277、ly iron requirements,as well as providing calcium and vitamins Aand C.OUR VOICES“Using our R&D expertise in dairy products,we optimized and improved the taste,stability,cost and other key parameters to bring Iron+to the market.”In April 2022,Nestl East and Southern African Region(ESAR)launched Nestl
278、 Everyday,an affordable dairy powder product aimed at supporting the whole family against micronutrient deficiencies.Heike SteilingHead of Nestls R&D Center for Dairy SwitzerlandNestl Annual Review 202240Our confectionery business includes the iconic KitKat brand and a portfolio of much-loved region
279、al and local brands.The business innovates to create great tasting chocolate products and nutritious snacks.confectionery Crafting that singular delightAt a glance8.1Sales(in CHFbillion)16.8%UTOP margin8.6%Percentage of Nestls salesTalento and AlpinoBrazilian consumers are increasingly moving to mor
280、e premium chocolate tablets like Talento the“best of Garoto”with 100%Brazilian cocoa,and the smooth and creamy Nestl Alpino.Cailler The iconic premium Swiss chocolate brand Cailler continues to win over consumers with its unique chocolate taste,crafted with Swiss milk from Gruyre-region farmers.Munc
281、h This popular and affordable coated wafer in India continues to appeal to consumers through price point management and an interactive digital campaign with the IPL cricket league.Uncle Tobys Uncle Tobys,synonymous with goodness since 1893,is the fastest growing kids snack brand in Australia,with ta
282、sty products that score high on the Health Star Rating system.Nestl Annual Review 202241IN FIGURESThe KitKat Chocolatory I Brazil boxes,available in several editions,offer typical Brazilian flavors like Aa,Beijinho and Guaran so lovers of KitKat can explore thetastes of Brazil.KitKat is attracting n
283、ew consumers by appealing to local needs and tastes.Since the 1950s,the brand has invited people all around the world to,“Have a break,have a KitKat.”With double-digit growth in 2022,more and more people worldwide are doing just that.Over 5 billion KitKat bars were sold in 2022.For a brand launched
284、more than 80years ago,its continued relevance is due to strong brand building and distribution.Young adult consumers in both developed and developing countries are making it one of the fastest growing chocolate bars in the world.Growth in India has been driven by the ability to hit key price points
285、with the 1-,2-and 4-finger bars.Alongside this has been a tireless commitment to increasing distribution of the products insmall shops.The impressive growth achieved in Asia is equally matched by a runaway success in Latin America.In Brazil,with KitKat Chocolatory stores and products as well as a pa
286、rtnership with the Rock in Rio music event,the brand is increasing its appeal to young adult consumers.Equally important to growth are the efforts to remain relevant to chocolate consumers in markets where the brand has existed for many years.In the UK,the brand switched its 2-finger range to use re
287、cycled(and recyclable)plastic wrappers.Across Europe,the vegan KitKat V continued rollout in 2022.And inAustralia and Canada,KitKat tablets arewhat people crave for a break.Growing globally by giving breaksOUR VOICES“My job is to make sure KitKat is available and visible in every store so that every
288、body can buy a KitKat whenever they want to take a break.”EaswarSalesIndia85+countries with KitKat direct salesNestl Annual Review 202242waterQuenching thirst and moreOur water business is dedicated to providing healthy hydration,enhancing quality of life while contributing to a sustainable future.T
289、he strategic focus is on international premium and mineral water brands as well as healthy beverages.At a glance3.5Sales(in CHFbillion)7.8%UTOP margin3.7%Percentage of Nestls salesNaleczowianka NA+Relaks Expanding the Polish NA+range of functional waters,the new Relaks is enriched with magnesium and
290、 vitamin B3,and infused with lemon balm and orange blossom flavor to support body and mind.EssentiaEssentia continues its strong performance in the United States with high single-digit organic growth and market share gains driven by distribution expansion in convenience and drug stores.Perrier Energ
291、ize Lemon-Lime Perrier Energize,the iconic sparkling water from France powered by plant-based caffeine,is now available in a delicious Lemon-Lime flavor,fora zesty and invigorating low-calorie sensation.Acqua Panna Our new brand purpose to cultivate natural and cultural beauty comes to life with an
292、iconic visual identity redesign and a new cross-media communication campaign,honoring the waters Tuscan roots.Nestl Annual Review 202243At Nestl Waters,protection of water resources in terms of quantity and quality is at the heart of our sustainability strategy.This is crucial both for our operation
293、s and for the communities located in the watersheds where we operate.We are unwavering in our commitment and continued to make progress toward our goals in 2022.For several years now,we have used the Alliance for Water Stewardship(AWS)Standard to structure our understanding and drive actions to supp
294、ort good water stewardship.Created by prominent conservation organizations and experts,adoption of the AWS Standard is helping us strengthen the collection and sharing of data on watersheds,engage with local stakeholders and communities,and analyze shared water challenges to design tailored action p
295、lans,including collective initiatives within the watershed.In 2021,Nestl Waters expanded its efforts to include a commitment to lead the regeneration of local water cycles,to help create a positive water impact everywhere we operate.More than 100projects will be implemented by 2025 across 47 sites w
296、ith that objective.At the end of 2022,40 projects have already been identified or implemented.These projects are adjusted to local contexts and bring tailored benefits,including a drip irrigation program in the Pakistani city of Sheikhupura,restoration of water quality in Thailands Khanom Chin canal
297、 and pond renaturation to protect amphibians close to Spains Viladrau municipality.Championing water stewardship IN FIGURESWith a commitment to certify all our sites by 2025,at the end of 2022,21 of 47 sites have AWS certification Our Spanish mineral water brand Viladrau is working with local enviro
298、nmental organizations to improve biodiversity intheMontseny Natural Park.OUR VOICES“With Nestls global presence,we can learn from our many partners and contribute to solving the water challenges in locations near our operations.”Cdric EggerHead of Sustainability,Nestl Waters Switzerland 2144Nestl An
299、nual Review 2022Financial reviewNestl Annual Review 202245Key figures(consolidated)In millions of CHF(except for data per share and employees)20212022Results Sales 87 088 94 424 Underlying trading operating profit(a)15 119 16 103 as%of sales 17.4%17.1%Trading operating profit(a)12 159 13 195 as%of s
300、ales 14.0%14.0%Profit for the year attributable to shareholders of the parent(Net profit)16 905 9 270 as%of sales 19.4%9.8%Balance sheet and Cash flow statementTotal Equity53 727 42 792 Net financial debt(a)32 917 48 159 Ratio of net financial debt to total equity(gearing)61.3%112.5%Operating cash f
301、low 13 864 11 907 as%of net financial debt42.1%24.7%Free cash flow(a)8 715 6 570 Capital additions 12 977 8 264 as%of sales 14.9%8.8%Data per shareWeighted average number of shares outstanding(in millions of units)2 788 2 707 Basic earnings per share CHF6.063.42Underlying earnings per share(a)CHF4.4
302、24.80Dividend as proposed by the Board of Directors of Nestl S.A.CHF2.802.95Market capitalization,end December 351 682 285 865 Number of employees(in thousands)276 275 Principal key figures(b)(illustrative)in CHF,USD,EURIn millions(except for data per share)Total CHFTotal CHFTotal USDTotal USDTotal
303、EURTotal EUR2022220212022Sales 87 088 94 424 95 212 98 772 80 564 94 010 Underlying trading operating profit(a)15 119 16 103 16 530 16 845 13 987 16 033 Trading operating profit(a)12 159 13 195 13 293 13 802 11 248 13 137 Profit for the year attributable to shareholders of the parent(Net
304、profit)16 905 9 270 18 481 9 697 15 638 9 230 Total Equity 53 727 42 792 58 747 46 281 51 961 43 444 Market capitalization,end December 351 682 285 865 384 542 309 177 340 122 290 225 Data per shareBasic earnings per share 6.063.426.633.585.613.41(a)Certain financial performance measures are not def
305、ined by IFRS.For further details,see Foreword on page 46.(b)Income statement figures translated at weighted average annual rate;Balance sheet figures at year-end rate.Nestl Annual Review 202246Group overviewForewordThe Financial review contains certain financial performance measures,that are not def
306、ined byIFRS,that are used by management to assess the financial and operational performance oftheGroup.They include among others:Organic growth,Real internal growth and Pricing;Underlying trading operating profit margin and Trading operating profit margin;Net financial debt;Free cash flow;and Underl
307、ying earnings per share(EPS)and EPS in constant currency.Management believes that these non-IFRS financial performance measures provide useful information regarding the Groups financial and operating performance.The Alternative Performance Measures document published under defines these non-IFRS fin
308、ancial performance measures.Operating segments 2021 comparative figures have been adjusted following the creation of Zone North America(NA)and Zone Greater China(GC)as of January 1,2022.Zone AOA includes Middle East and North Africa(MENA)previously included in Zone EMENA(see Note 3 of the 2022 Conso
309、lidated Financial Statements).IntroductionLast year brought many challenges and tough choices for families,communities and businesses.Inflation surged to unprecedented levels,cost of living pressures intensified and the effects of geopolitical tensions were felt around the world.The entire Nestl tea
310、m demonstrated dependability,as we navigated this difficult environment.Organic growth was solid,margins continued to be resilient and our underlying earnings per share development was strong.At the same time,we ensured access to nutritious products and affordable offerings globally.During 2022,we a
311、lso confirmed our longstanding nutrition strategy,with Good for You,Good for the Planet at its heart.We took important actions to further strengthen our industry-leading responsible marketing practices and to provide transparency on the nutritional value of our global portfolio.At the same time,we a
312、lso advanced the implementation of our climate roadmap.Looking to 2023,we expect another year of robust organic growth,with a focus on restoring our gross margin,stepping up marketing investments and increasing free cash flow.Nestls value creation model puts us in a strong position to achieve our 20
313、25 targets and to generate reliable,sustainable shareholder returns.Group sales Organic growth(OG)was 8.3%.Pricing increased to 8.2%,reflecting significant cost inflation.Realinternal growth(RIG)was positive at was positive at 0.1%,following a high base of comparison in 2021,supply constraints and p
314、ortfolio optimization actions.Organic growth was 7.1%in developed markets,driven by pricing.In emerging markets,organic growth was 10.0%,supported by both pricing and RIG.By product category,Purina PetCare was the largest contributor to organic growth,with continued momentum for science-based and Ne
315、stl Annual Review 202247premium brands Purina Pro Plan,Purina ONE and Fancy Feast,as well as veterinary products.Sales in coffee grew at a high single-digit rate,with broad-based growth across brands and geographies,supported by a strong recovery of out-of-home channels.Sales of Starbucks products g
316、rew by 12.9%to reach CHF3.6billion,generating over CHF1.5billion of incremental sales compared with 2018.Infant Nutrition saw double-digit growth,with broad-based contributions across geographies and brands.Confectionery posted high single-digit growth,reflecting particular strength for KitKat,seaso
317、nal products and key local brands.Dairy reported mid single-digit growth,with continued momentum for coffee creamers,affordable fortified milks and home-baking products.Water recorded double-digit growth,with a sales decrease in the fourth quarter as a result of temporary capacity constraints.Prepar
318、ed dishes and cooking aids posted low single-digit growth,following a high base of comparison in 2021,with continued strong demand for Maggi.Sales in vegetarian and plant-based food grew at a mid single-digit rate.GardenGourmet in Europe continued to see double-digit growth,while sales for Sweet Ear
319、th in North America were impacted by SKU optimization.Nestl Health Science reported mid single-digit growth,driven by Medical Nutrition and healthy-aging products.By channel,organic growth in retail sales remained robust at 7.2%.E-commerce sales grew by 9.2%,reaching 15.8%of total Group sales.Organi
320、c growth of out-of-home channels reached 23.5%,with sales exceeding 2019 levels.In the fourth quarter,RIG for out-of-home channels moderated to a mid single-digit rate as a result ofpost-pandemic normalization.Net acquisitions increased sales by 1.1%,largely related to the acquisitions of the core b
321、rands of The Bountiful Company and Orgain.The impact on sales from foreign exchange was negative at-0.9%.Total reported sales increased by 8.4%to CHF94.4billion.Sales by geographic areasDifferences 2022/2021(in%)in CHFin local currencyin CHF millionsBy main markets2022North America+15.2%(a)33 000 Un
322、ited States+15.4%+10.4%30 314 Canada+13.0%+12.3%2 686 Europe+0.3%(a)22 291 France 6.5%+0.6%3 558 United Kingdom+0.1%+7.1%3 409 Germany 5.2%+2.1%2 316 Rest of geographic area+3.4%(a)13 008 of which Switzerland 2.4%2.4%1 109 Asia,Oceania and Africa+3.7%(a)20 967 Philippines+0.4%+6.3%2 667 India+12.9%+
323、14.7%1 960 Australia+1.8%+5.4%1 510 Rest of geographic area+3.4%(a)14 830 Latin America+17.9%(a)12 323 Brazil+28.4%+17.6%3 756 Mexico+16.7%+10.7%3 457 Chile+1.8%+11.8%1 302 Rest of geographic area+16.0%(a)3 808 Greater China+5.1%(a)5 843 Greater China+5.1%+5.2%5 843 Total+8.4%(a)94 424(a)Not applica
324、ble.Nestl Annual Review 202248Underlying trading operating profitUnderlying trading operating profit increased by 6.5%to CHF16.1billion.The underlying trading operating profit margin decreased by 30basis points to 17.1%on a reported basis and by 40basis points in constant currency,reflecting signifi
325、cant cost inflation.Gross profit increased by 2.5%to CHF42.7billion.Gross profit margin decreased by 260basis points to 45.2%,following significant broad-based inflation for commodity,packaging,freight and energy costs.The impact of cost inflation increased in the second half,reflecting higher costs
326、 for dairy,cereals and energy.Pricing,growth leverage and efficiencies helped to partly offset the impact of cost inflation.Distribution costs as a percentage of sales benefited from the divestment of the Nestl Waters North America brands.Marketing and administration expenses decreased by 2.6%to CHF
327、16.8billion.Consumer-facing marketing spend decreased temporarily,following a lower level of promotion and marketing activities in the context of supply constraints.Consumer-facing marketing spend increased in the second half of the year compared to the first half.Administrative expenses as a percen
328、tage of sales benefited from very disciplined cost control.Restructuring expenses and net other trading items were CHF2.9billion,slightly below the prior year.As a result,trading operating profit increased by 8.5%to CHF13.2billion and the trading operating profit margin was unchanged versus the prio
329、r year on a reported basis at 14.0%.Underlying trading operating profit by operating segmentIn%of salesTrading operating profitby operating segmentIn%of sales Zone NA Zone EUR Zone AOA Zone LATAM Zone GC Nespresso Nestl Health Science21.0%18.6%21.2%20.3%16.4%14.2%16.1%15.7%13.6%-9.0%22.9%22.4%21.5%2
330、0.3%Underlying trading operating profit and Trading operating profitIn millions of CHF In%of sales Underlying trading operating profit Trading operating profit2022217.1%13 19514.0%15 11916 10312 15917.4%14.0%Nestl Annual Review 202249Net financial expenses and Income taxNet financial expe
331、nses increased by 19.2%to CHF1.0billion,reflecting higher average net debt.Our average cost of net debt increased slightly to 2.2%,compared to 2.0%in 2021.The Group reported tax rate increased by 330basis points to 24.2%as a result of one-off items.The underlying tax rate was relatively stable at 20
332、.9%.Net profit and Earnings per shareNet profit decreased by 45.2%to CHF9.3billion.Net profit margin decreased by 960basis points to 9.8%,reflecting the gain on disposal of LOral shares in 2021.As a result,earnings per share decreased by 43.5%to CHF3.42 on a reported basis.Underlying earnings per sh
333、are increased by 9.4%in constant currency and by 8.4%on a reported basis to CHF4.80.The increase was mainly the result of strong organic growth.Nestls share buyback program contributed 1.8%to the underlying earnings per share increase,net of finance costs.Cash flowCash generated from operations before changes in working capital increased from CHF16.8billion to CHF18.4billion,up 20 basis points as