Q1 2024 Nestle SA Earnings Call - Q&A

April 25, 2024

Good afternoon, and good morning to everyone.

Luca Borlini: Good afternoon and good morning to everyone. This is Luca Borlini, head of Nestle Investor Relations. Thank you for joining the Q&A session for Nestle's Q124 2024 sales. With me today are Nestle CEO Mark Schneider and CFO Anna Manz. Starting this quarter, we are following a new format to serve you better. We will make available our prepared remarks at 7 a.m., together with our first quarter press release and presentation, on the Nestle Investor Relations website. I trust you have had the time to review these materials and listen to the recording.

This is Luca Bellini head of Investor Relations.

Luca Borlini: Thank you for joining the Q&A session for Netflix Q1, 'twenty four 'twenty 'twenty four Ceos.

Luca Borlini: With me today are nicely CEO, Mark Schneider, and our CFO ornaments.

Luca Borlini: Starting this quarter, we are following our new formats to serve you better.

Luca Borlini: We have made available our prepared remarks at seven a M together with our first quarter press release and presentation on the Nestle investor relation website.

Luca Borlini: I Trust you all at the time to review these materials and listen to the recording.

Luca Borlini: Therefore, we can go straight to the question and answer session.

Luca Borlini: Therefore, we can go straight to the question and answer session. Before we begin, please take careful note of our usual disclaimer. With that reminder out of the way, let's begin the session. The line for questions from financial analysts is now open.

Luca Borlini: Before we begin please take careful note of all the usual disclaimer.

Luca Borlini: With that reminder, given let's begin the session.

Four questions from financial analysts is now open.

Luca Borlini: Please remember to limit yourself to no more than two questions. And the first question is from Warren Ackerman at Barclays. Please go ahead, Warren. Yeah. Yes, Warren. We cannot hear you well. I don't know if there is a problem with your telephone.

Luca Borlini: Please remember to limit yourself to no more than two questions.

Luca Borlini: The first question is from Warren Ackerman at Barclays. Please go ahead, Warren.

Luca Borlini: And the first question is from Warren Ackerman at Barclays. Please go ahead Warren.

Luca Borlini: Oh.

Warren Ackerman: Yeah.

Luca Borlini: Yeah.

Luca Borlini: Yes, Warren, we cannot hear you well. I don't know if there is a problem with your telephone.

Warren Ackerman: Yes, what we cannot hear you well I don't know if there's a problem with your telephone.

Warren Ackerman: Yeah, I think it's probably a cheeky long into the call, but not high conviction, but yeah. All right, Jon.

Luca Borlini: Yeah, I think it's probably a cheeky longing for the call, but not with high conviction, but yeah. Yeah, no, we cannot hear you well, Warren. Yeah, I think so. I just think that some people think... Well, probably Warren has a problem with his connection.

Yeah, I think it's probably a cheeky long into the call.

But our conviction, but yeah.

Warren Ackerman:

Luca Borlini: Yeah, no, we cannot hear you well, Warren.

Speaker Change: Yeah, No we cannot hear you well one.

Speaker Change: Uh huh.

Warren Ackerman: Yeah, I think so. I just think that some people think there's some systemic problems.

Yeah, I think so I just think that some people think there is some systemic problems well.

Luca Borlini: Well, probably Warren has a problem with his connection. Maybe we turn to Jon Cox at Kepler. Please go ahead, John.

Billy Warren as a permanent disconnection, maybe we go we turn to Jon Cox Kepler. Please go ahead.

Jon Cox: Maybe we should go, we turn to Jon Cox at Kepler. Please go ahead, Jon. A couple of questions on my side, I wonder if you could just talk a little bit about North America and particularly the problems in the frozen and packaged food component and, regarding, you're talking about this is a temporary, strong rebound that you can already see. I wonder if you could just talk about that. What gives you confidence in that? And then the second question: you talk a lot about advertising and marketing this year to sort of reboot the rig.

Warren Ackerman: The new Fabair in disguise.

Speaker Change: John.

John: Then you've got buried in the skies.

Jon Cox: A couple of questions on my side. I wonder if you could just talk a little bit about North America and particularly the problems in the frozen and packaged food component and, you know, regarding you talking about this is temporary strong rebound you can already see. Wonder if you can just talk about that. What gives you confidence on that? Then the second question, you talk a lot about advertising, marketing this year to sort of reboot the RIG. Should we expect actually more of a sort of minimalist improvement in the margin this year because you will be spending a lot more on the marketing and advertising to reboot the top line? Thank you.

John: A couple of questions My side I Wonder if you could just talk a little bit about North America, and particularly the problems in the the frozen and packaged food component.

Speaker Change: And regarding you're talking about this as temporary strong re banked you can already say what if you can just talk about what gives you confidence on that and then the second question you talked a lot about.

Speaker Change: Advertising marketing this year to sort of reboot.

Speaker Change: The rig.

Jon Cox: Should we expect actually more of a sort of more of a minimalist improvement in the margin this year because you will be spending a lot more on marketing and advertising to reboot the top line? Thank you. Perfect. Well, lovely to meet you.

Speaker Change: Should we expect actually more of a.

Speaker Change: Sort of more of a minimalist improvement in the margin. This year, because you will be spending a lot more on that marketing and advertising to repay the top line. Thank you.

Anna Manz: Perfect. Well, lovely to meet you. I'll take the North American question. Maybe just to step back a bit first. We've had a couple of years of consumer price increases, and also, for the low-income consumer, we've had the reduction of the SNAP benefits. Particularly for that low-income consumer in the US, the combination of those two things has meant that they've seen a decrease in purchasing power of about 50%. Now, those are the consumers that predominantly buy in the frozen food category, which is why, you know, we see a continued ongoing impact there. Then there's a couple of other things that have come together in the quarter, along with that, in that we've seen some specific competition, price competition, particularly in pizza. That has impacted us a little.

Speaker Change: Perfect well lovely.

Speaker Change: Fluffy Tonight, if and I'll take the North American question.

Anna Manz: And I'll take North America. So, maybe just to step back a bit first. We've had a couple of years of consumer price increases. And also, for the low-income consumer, we've had the reduction of the SNAP benefit, and so particularly for that low-income consumer in the U.S.

Speaker Change: So maybe just to step back a bit first we've had a couple of years, if I can see him or price increases.

And let's say so the low income consumer we've had the reduction of C. A snap benefits.

Speaker Change: So it takes me for that low income consumer in the U S. The combination of those two things has meant that they've seen a decrease in purchasing power of about 50% now that is of the consumer is that predominantly by our in the frozen food category, which is why you know we see a continued.

Anna Manz: The combination of those two things has meant that they've seen a decrease in purchasing power of about 50%. Now those are the consumers that predominantly buy in the frozen food category, which is why we see a continued ongoing impact there. And then there's a couple of other things that have come together in the quarter along with that, in that we've seen some specific competition, price competition, particularly in pizza, and that has impacted us a little, and in part because we've chosen not to consistently take our prices down and handle the category in maybe a more sort of sustainable medium-term way. So that's had an impact on the course.

Speaker Change: Ongoing impacts that and then there's a couple of other things have come together in the quarter along with that.

Speaker Change: We've seen some specific competition.

Speaker Change: This competition, particularly in pizza and that has impacted us and in part because we've chosen not to consistently take our prices down and handle the category. It may be a more sustainable medium term way to that has had an impact in the quarter and then the final impact which is rather to be matured as resources.

Anna Manz: You know, in part because we've chosen not to consistently take our prices down and handle the category in maybe a more sustainable medium-term way. That's had an impact in the quarter. Then the final impact, which is relatively material, is we've also seen a retailer inventory reduction in the period. Of course, if you remember, we had the sale of Canadian frozen food a year ago, so we're still lapping that in Q1. A number of things have come together specifically in the frozen category in this quarter. I'll talk about, you know, how I think we'll move through most of those actually very quickly in a minute. I guess looking at the rest of the portfolio, just one comment there.

Anna Manz: And then the final impact, which is relatively material, is that we've also seen a retailer inventory reduction in the period. And, of course, if you remember, we had the sale of Canadian frozen food a year ago. So we're still lapping that in Q1. But a number of things have come together specifically in the frozen category this quarter. And I'll talk about, you know, how I think we'll move through most of those actually very quickly in a minute. I guess, looking at the rest of the portfolio, just one comment there. In a number of categories, including pet food.

Speaker Change: CNA retailer inventory reduction in the parish.

Speaker Change: And of course, if you remember we had a the side of Canadian face in food a year ago. So we're still lapping that in Q1. So a number of things have come together specifically in the frozen category in this quarter and I'll talk about in how I think it will move through most of that is actually very quickly.

Speaker Change: I guess I can't the rest if support Friday, just one comment the and a number of categories, including pet phased.

Anna Manz: In a number of categories, including pet food, in 2023, there was a price increase on 1 April 2023. In the comparative, you see some pre-price increase buy-in in the prior year, which just makes it a tough comp. If you wrap all that together, it's been a weaker Q1 in North America. Why do we feel good? Well, firstly, if you look at our sellout data. You know, this is Nielsen, IRI, and some of the e-commerce channels that we track, and it's not directly comparable, but it gives you a sense. Our sellout data in unit terms is down -2. That talks to a healthier underlying consumer situation in North America. A couple of other things as we look forward.

Anna Manz: In 2023, there was a price increase on the 1st of April. And so, in the comparative, you see some pre-price increase buy-in in the prior year, which just makes it a tough comp. So if you wrap all that together, it's been a weaker Q1 in North America. Why do we feel good?

Speaker Change: In 2023 that was a price increase on the first of April.

Speaker Change: And so in the comparison if you see.

Speaker Change: Some pre price increased by and in the prior year, which just makes it a tough comp.

Speaker Change: So if you wrap all that together, it's been a weaker Q1 in North America, why do we feel good well firstly, if you look at our sell out data.

Anna Manz: Well, firstly, if you look at our sell-out data... This is Nielsen IRI and some of the e-commerce channels that we track. And it's not directly comparable, but it gives you a sense. Our sell-out data in unit terms is down minus two. So that points to a healthier underlying consumer situation in North America. Then there are a couple of other things as we look forward. Obviously, we won't see a repeat of these inventory impacts, and we're largely through the Canadian frozen food exit comparative effects. So those fall away.

Speaker Change: You know she's Nielsen IRI and some of the e-commerce channels that we track.

Speaker Change: And it's not directly comparable but it gives you a sense of sell out data in units times is down minus two so that talks to a healthier underlying consumer situation in North America.

Speaker Change: Then a couple of other things as we look through it obviously, we might see our pizza sees inventory impact and we're largely through the Canadian forest and feed exit comparative effect, so they sort of way and.

Anna Manz: Obviously, we won't see a repeat of these inventory impacts, and we're largely through the Canadian frozen food exit comparative effects, so those fall away. I think the other issue from a consumer perspective is by the time we're in Q2, we'll have moved through lapping the loss of the SNAP benefits. The consumers are not richer in any way, but we no longer have the sort of comp effect of a more positive comp. Those are some of the one-off pieces. I think the things, though, that make me feel good and why we're seeing improving performance through the quarter is that we've got a very strong innovation pipeline looking forward. There's a lot to come, particularly on frozen, actually, which is a high innovation category. Consumers like to see new stuff coming through. They want new meals.

Anna Manz: And I think the other issue from a consumer perspective is that by the time we're in Q2, we'll have moved through lapping the loss of the SNAP benefits. So consumers are not richer in any way, but we no longer have the sort of comp effect of a more positive comp. So those are some of the one-off pieces.

Speaker Change: And I think the other Ritchie from a consumer perspective is by the time. We're in Q2 will have moved through lapping the loss of the snap benefits. So the consumers are not richer in any way, but we no longer have the sort of comp effect, even more positive comp. So those are some of the one off pieces.

Anna Manz: I think the things that make me feel good and why we're seeing improving performance through the quarter is that we've got a very strong innovation pipeline looking forward. There's a lot to come, particularly in Frozen, actually, which is a high innovation category. Consumers like to see new stuff coming through. They want new meals.

Speaker Change: I think the things that make me feel good and why we're seeing improving performance through the quarter is that we've got a very strong innovation pipeline looking foolish.

There's a lot to come particularly on Friday, so that Chi, which is a high innovation category consumers like see new stuff coming through they want emails. So there's a lot coming that but actually there's a lot coming across the portfolio in North America. So that's going to really help as we move into Q2 and beyond and.

Anna Manz: There's a lot coming there, but actually there's a lot coming across the portfolio in North America. That's going to really help as we move into Q2 and beyond. I'm sure Mark will come on to this in a minute. We have also been focusing our investment and stepping up our investment, particularly around the billionaire brands. You know, why do I feel good about the impacts of that? Well, we're seeing, you know, improving share gains in Purina and coffee, which are the two biggest categories. We go into Q2 with good momentum.

Anna Manz: So there's a lot coming there, but actually, there's a lot coming across the portfolio in North America. So that's going to really help as we move into Q2 and beyond. And I'm sure Mark will come on to that in a minute.

Speaker Change: I'm sure Mark will come on to this in a minute. We have also been focusing of essent and stepping up our investment, particularly around the billionaire brands and so you know why do I feel good about the impacts of that but we're saying, it's improving share share gains and purina and coffee, which is a two biggest categories. So we go into Q2 is good.

Anna Manz: We've also been focusing our investment and stepping up our investment, particularly around the billionaire brands. And so, you know, why do I feel good about the impact of that? Well, we're seeing, you know, improving share gains in Purina and coffee, which are the two biggest categories. So we go into Q2 with good momentum. And, Jon, building on that, what's important to us here, the building blocks that give us confidence for Q2 are not things that we're now thinking about putting in place in response to a slow start to the year.

Speaker Change: And then Tim.

Mark Schneider: John, building on that, what's important to us here, the building blocks that give us confidence for Q2 are not things that we're now thinking about putting in place in a reaction to a slow start to the year. These are things that we have been already putting into place and that are now in Q2 expected to come to full fruition. Other items are very clear, straightforward year-over-year and lapping items, which are also just matter of fact items and not something where we hope that something will work out right. That is giving us a very healthy degree of confidence here as we work towards through Q2. Regarding the advertising marketing, I'm glad you're bringing this up. This is not about forward-looking marketing spend that we will initiate now.

Speaker Change: Yeah.

Tim: And John building on batch, what's important to us here.

Speaker Change: Building blocks that give us confidence for Q2 are not things that we're now thinking about putting in place and a reaction to a slow start to the year. These are things that we have been already putting into place and that are now in Q2 expected to come to full fruition and other.

Mark Schneider: These are things that we have already been putting into place and that are now expected to come to full fruition in Q2. And other items are very clear, straightforward, year-over-year, and lapping items, which are also just matter-of-fact items and not something where we hope that something will work out right. So that is giving us a very healthy degree of confidence here as we work through Q2. Regarding advertising and marketing, I'm glad you're bringing this up.

Speaker Change: Other items are very clear straightforward year over year, and lapping items, which are all such as matter of fact items and not something where we hope that something will walk out right. So that is giving us a very healthy degree of confidence here as we work towards.

Through Q2.

Speaker Change: Regarding the advertising and marketing in Mcclatchy premium is up.

Mark Schneider: So this is not about a forward-looking marketing spin that we will initiate now. We've been essentially on the accelerator since Q2 last year. We were very open about a slow start last year.

Speaker Change: So this is not about.

Speaker Change: Forward looking marketing spend that we will initiate now we've been essentially on the accelerator since Q2 last year. We were very open about a slow start to last year. This was in light of significant uncertainty as we entered 2023 and where the consumer was.

Mark Schneider: We've been essentially on the accelerator since Q2 last year. We were very open about a slow start to last year. This was in light of significant uncertainty as we entered 2023 and where the consumer was. As from March last year into Q2 last year, we've been stepping on it significantly, accelerated all throughout H2, and continued accelerating all throughout Q1 now. You're building essentially on four quarters of increased momentum on the brand-building efforts, which are now bearing fruit. Anna mentioned that we're seeing improving market share trends, in particular around the billionaire brands, and that is another initiative we have to focus more strongly on these proven winners. You saw some of the data in my prepared remarks.

Luca Borlini: This was in light of significant uncertainty as we entered 2023 and where the consumer was. But then, as from March last year into Q2 last year, we've been stepping on it significantly, accelerated all throughout the second half, and continued accelerating all throughout the first quarter now. So you're building essentially on fourth quarters of increased momentum on the print building efforts, which are now bearing fruit. And I mentioned that we're seeing improving market share trends, in particular around the billionaire brands.

Speaker Change: But then as from March last year into Q2 last year, we've been stepping on its significantly accelerated all throughout the second half and continued accelerating all throughout the first quarter now so you're building essentially on four quarters of increased.

Speaker Change: Momentum on the brand building efforts, which are now bearing fruit and I mentioned that we're seeing improving market share trends in particular around the billionaire brands and that is another initiative, we have to focus more strongly on these proven winners and you saw some of the data at my prepared remarks and here again we.

Luca Borlini: And that is another initiative we have to focus more strongly on these proven winners. And you saw some of the data in my prepared remarks. And here again, we believe that in addition to the increased spending, the increased effectiveness and efficiency achieved through that will definitely pay off. Next question is from Guillaume Delmas at UBS; please go ahead, Guillaume. Thank you very much, Luca, and good afternoon, Mark and Anna. I have two questions for you, please.

Mark Schneider: Here again, we believe that in addition to the increased spending, the increased effectiveness and efficiency through that will definitely pay off.

Belief that in addition to the increased spending the increased effectiveness and efficiency through that will definitely pay off.

Luca Borlini: Next question is from Guillaume Delmas at UBS. Please go ahead, Guillaume.

Speaker Change: Next question is from Magee M did not said UBS. Please go ahead Gila.

Guillaume Delmas: Thank you very much, Luca, and good afternoon, Mark and Anna. Two questions for me, please. The first one is on the again, your RIG performance in Q1. I mean, Mark, you said Q1 played out as expected, but I think at the time of the full year result in February, the soft guidance for Q1 RIG was that it could be below the +0.4% posted in Q4. Retrospectively, it sounds a bit more optimistic than the -2% actually achieved in Q1. Also, even after excluding Zone North America and Nestlé Health Science, RIG decelerated materially. I mean, I think I get to -0.2%, ex North America and Nestlé Health Science from +0.8% in Q4.

Magee M: Thank you very much Luca and good afternoon, Mark and Matt.

Magee M: Two questions for me. Please the first one is on the again your rig performance in Q1.

Guillaume Gerard Vincent Delmas: The first one is on, again, your rig performance in Q1. I mean, Mark, you said Q1 played out as expected, but I think at the time of the fully resulting February, the soft guidance for Q1 rigs was that they could be below the plus 0.4% posted in Q4. Retrospectively, it sounds a bit more optimistic than the minus 2% actually achieved in Q1. And also, even after excluding the North America zone and Nestle Health Science, rig decelerated materially.

Mark You said Q1 played out as expected, but I think at the time of the full year results in February.

Magee M: The soft guidance for Q1 rig was that it could be below the pluses Euro point focus that puts it in Q4.

Magee M: Retrospectively it sounds a bit more optimistic than the minus 2% actually achieved in Q1 and also even after excluding the zone North America, and Nestle Health Science rig decelerated materially I mean, I think I get to minus 0.2% ex North America and then Mr Hill.

Guillaume Gerard Vincent Delmas: I mean, I think I got to minus 0.2% ex-North America and Nestle Health Science from plus 0.8 in Q4. So it seems the slowdown was maybe more pronounced than anticipated in the U.S., but also maybe it was more broad-based than you initially anticipated. Any comment on that would be helpful.

Magee M: Ryan from plus one eight in Q4, so it seems that the slowdown was maybe more pronounced than anticipated in the U S. But also maybe it was more broad based than you initially anticipated any color on that would be would be helpful.

Guillaume Delmas: It seems the slowdown was maybe more pronounced than anticipated in the US, but also maybe it was more broad-based than you initially anticipated. Any color on that would be helpful. My second question on pet care division's organic growth in Q1 was the weakest quarterly performance, I think, since 2018. You were flagging last year that double-digit OG was certainly not sustainable, and it would have to come to an end at some point. Did the magnitude of this deceleration in Q1, was it a surprise, particularly at a time when you should have had less capacity constraints? Is Q1 simply not representative of your ambition for this division in 2024? Thank you very much.

Guillaume Gerard Vincent Delmas: And then my second question on pet care. The division's organic growth in Q1 was the weakest quarterly performance, I think, since 2018. You were warning last year that double-digit OG was certainly not sustainable, and it would have to come to an end at some point. But the magnitude of this deceleration in Q1, was it a surprise, particularly at a time when you should have had less capacity constraints? Or is Q1 simply not representative of your ambition for this division in 2024? Thank you very much.

Magee M: And then my second question on Pet care.

Magee M: Division's organic growth in Q1 with the weakest quarterly performance I think since the 2018.

Magee M: You were flagging last year that double digit Oh, Gee was certainly not sustainable and it would have to come to an end at some point, but did the magnitude of this deceleration in Q1 and.

Magee M: Was it a surprise, particularly at a time when you should have had less capacity constraints or is Q1 simply not representative of your ambitions for this division in 2024. Thank you very much.

Mark Schneider: Guillaume, thank you. Let me address the first one and then also start on the second one and hand it to Anna for some additional detail. Look, we're always trying to be as helpful as we can with our statements on how the year is going, but the one line we don't wanna cross, and that applies to the full year call as well, is to get into quarterly guidance. We were giving you a pretty clear indication about the direction, but we don't want to start a habit now of giving precise orders of magnitude by quarter. I would think that would set an unhealthy precedent. That also applies to this call, by the way, where we do have strong confidence about where the Q2 is going, where the rest of the year is going.

Speaker Change: Thank you and let me translate first one and then also start on the second one and hand it to <unk> for some additional detail. So look we're always trying to be as helpful. As we can with our statements on how the year's going but the one line, we don't want to cross.

Mark Schneider: Guillaume, thank you. And let me address the first one and then also start on the second one and hand it to Anna for some additional detail. So, look, we are always trying to be as helpful as we can with our statements on how the year is going. But the one line we don't want to cross, and that applies to the full year call as well, is to get into quarterly guidance. And so we were giving you a pretty clear indication about the direction, but we don't want to start a habit now of giving precise orders of magnitude by quarter. I would think that would set an unhealthy precedent.

Speaker Change: And that applies to the full year call as well is to get into quarterly guidance and so.

Speaker Change: So we were giving you a pretty clear indication about the direction, but we don't want to start a habit now of giving precise orders of magnitude by quarter.

Speaker Change: I would think that would set an unhealthy precedent and Tim. So that also applies to this call by the way, where we do have strong comprehensive power, whereas the Q2 is going where the rest of the year is going but you know we're not getting into precise numerical guidance and that's just something I ask you to respect.

Mark Schneider: You know, we're not getting into precise numerical guidance, and that's just something I ask you to respect. What's more important to me is the underlying situation where starting from Q4 2022 to Q1 now, you had a period of six quarters with a very unsteady RIG performance. It was gyrating up and down. There was no clear, consistent picture, and a lot had to do with some trends here that were influencing the numbers pretty significantly, which were overlaying each other. A big one for some categories was post-COVID normalization, impacting, for example, Nestlé Health Science and also coffee at the time very much.

Mark Schneider: And so that also applies to this call, by the way, where we do have strong confidence about where Q2 is going and where the rest of the year is going. But, you know, we're not getting into precise numerical guidance, and that's just something I ask you to respect. What's more important to me is the underlying situation where, starting from Q4-22 to the first quarter now, you had a period of six quarters with a very unsteady rate performance. It was gyrating up and down.

Speaker Change: It's more important to me.

Speaker Change: Is.

Speaker Change: The underlying situation, where starting from Q4 'twenty two to.

Speaker Change: To the first quarter now you had a period of six quarters with a very unsteady Rick performance. It was try writing up and down there was no clear consistent picture and a lot had to do with some trends here that were influencing the numbers pretty significantly, which we're overlaying each other.

Speaker Change: A big one for some categories was post COVID-19 normalization.

Speaker Change: Packaging for example, Nestle Health Science and also coffee at the time very much.

Mark Schneider: You also had the increasing impact from this inflation spike, the price increases, the cost and some of the consumer reaction, volume reaction that you saw with our company, but also across the industry with our peers. There was an unsteady situation where some quarters came in a little better than expected, some worse. I think the important news is that with this Q1 now, we're essentially out of the lapping of some of these unsteady trends. What we're seeing now is starting from the Q2 is not just a strong rebound in RIG for that individual quarter, but also then steady positive RIG performance for the remainder of the year. That is giving us the confidence to reiterate the organic growth guidance of around 4%.

Speaker Change: But then you also had the increasing impact from this inflation spike.

Mark Schneider: There was no clear, consistent picture, and a lot had to do with some trends here that were affecting the numbers pretty significantly, which were overlapping each other. A big one for some categories was post-COVID normalization, impacting, for example, Nestlé Health Science and also coffee at the time very much. But then you also had the increasing impact from this inflation spike, the price increases at cost, and some of the consumer reaction and volume reaction that you saw with our company, but also across the industry with our peers. And so there was an unsteady situation where some quarters came in a little better than expected, some worse.

Speaker Change: The price increases at cost and some other consumer reaction volume reaction that you saw with our company, but also across the industry with our peers and so there was an unsteady situation, where some quarters came in a little better than expected some worse.

Speaker Change: Thank the important news is that with this first quarter now we're essentially out of an out of the lapping of some of these unsteady trends and what we're seeing now is starting from the second quarter is not just a strong rebound in rates for that individual quarter, but also then steady positive Rick.

Speaker Change: Performance for the remainder of the year and that is giving us the confidence to reiterate your organic growth guidance of around 4%. So that one please take away as a clear signal on Q1 itself.

Mark Schneider: I think the important news is that with this first quarter now, we're essentially out of and out of the lapping of some of these unsteady trends. And what we're seeing now, starting from the second quarter, is not just a strong rebounding rate for that individual quarter but also steady, positive rate performance for the remainder of the year. And that is giving us the confidence to reiterate the organic growth guidance of around 4%. So that one, please take away as a clear signal.

Mark Schneider: That one, please take away as a clear signal. On Q1 itself, for us, it was not a surprise. It was in line with expectations as a number of phasing year-over-year issues and, then the specific consumer weakness in the US were coming together, plus some of the self-made issues, like, for example, the, Nestlé Health Science situation and the supply chain constraints we saw there starting from Q3 last year. A lot of these issues now are either addressed, or lapped, or out of the way. Then, as Anna mentioned, we do have, the shelves stocked with new innovation, an innovation that has been getting to the shelf or to the freezers already in March and April, and that is starting to turn and to sell now. That's giving us the underlying confidence here.

Speaker Change: For us it was not a surprise it was in line with expectations as a number of phasing year over year issues and tapped into specific consumer weakness M. B U S were coming together plus some of the self made issues like for example, the Nestle health science situation and the supply chain constraints, we saw their staff.

Speaker Change: From the third quarter last year.

Speaker Change: A lot of these issues now are either distressed or lapped or out of the way and then as Anna mentioned, we do have the shelves stocked with new innovation and innovation that has been getting to the shelf are two of the freeze us already in March and April and that is starting to turn into sell now.

Mark Schneider: On Q1 itself... For us, it was not a surprise; it was in line with expectations as a number of phasing year-over-year issues and then specific consumer weakness in the U.S. were coming together, plus some of the self-made issues, like, for example, the Nestle HealthSign situation and the supply chain constraints we saw there starting from the third quarter last year. A lot of these issues are now either addressed or passed or out of the way, and then, as Anna mentioned, we do have shelves stocked with new innovation, an innovation that has been getting to the shelf or to the freezers already in March and April and that is starting to turn and sell now. So that's giving us the underlying confidence here.

Speaker Change: So that's giving us the underlying competence here.

Mark Schneider: On Pet, it's important for me to point out after four years, four consecutive years of double-digit growth, we had clearly flagged that growth would moderate. I think that's just a prudent normal assumption going forward, especially with inflation coming down a bit. That is what happened. When you just look at the individual Q1, I don't think it is doing the true underlying performance full justice because one thing that Anna flagged earlier applies here, and that is ahead of the price increases in North America last year, effective 1 April, there was some pre-buying from retailers, and that supported the Q1 and now, of course, is a negative for the year-over-year comparison.

Speaker Change: On pets.

Speaker Change: It's important for me to point out after four years four consecutive years of double digit growth. We had clearly flagged that growth would moderate and I think that's just a prudent normal assumption going forward, especially with inflation coming down a bit.

Speaker Change: And that is what happened.

Speaker Change: When you just look at the individual first quarter I don't think it is doing the true underlying performance full justice because one thing that and I flagged earlier applies here and that is ahead of the price increases in North America last year effective April 1st there was some pre buying from retailers.

Mark Schneider: On PET, it's important for me to point out that after four years, four consecutive years of double-digit growth, we had clearly flagged that growth would moderate. And I think that's just a prudent, normal assumption going forward, especially with inflation coming down a bit. And that is what happened.

And that supported the first quarter and now of course is a negative for the year over year comparison, but all in all when I look back at.

Mark Schneider: All in all, when I look there at the true positives, the continued positive performance, the increase in pet population, and the innovation we're rolling out this year, I think what's gonna happen on a full year basis is exactly what we talked about, and that is a moderation of the growth and then of course also continued strong performance in emerging markets and elsewhere internationally.

Speaker Change: The true positives the continued positive performance.

Speaker Change: The increase in pet population and the innovation, we are rolling out this year I think what's going to happen on a full year basis is exactly what we talked about and that is a moderation of accruals and then of course also continued strong performance in emerging markets and elsewhere internationally.

Mark Schneider: When you just look at the individual first quarter, I don't think it is doing the true underlying performance full justice, because one thing that Anna flagged earlier applies here, and that is, ahead of the price increases in North America last year, effective April 1st, there was some pre-buying from retailers, and that supported the first quarter, and now, of course, is a negative for the year-over-year comparison. But all in all, when I look at the true positives, the continued positive performance, the increase in PET population, and the innovation we're rolling out this year, I think what's going to happen on a full-year basis is exactly what we talked about, and that is, moderation of growth and, then, of course, continued strong performance in emerging markets and elsewhere internationally. Just a couple of numeric builds.

Anna Manz: Just a couple of numeric builds. The driver of the Q1 performance on RIG and Petcare was North America. Just one extra data point that might be helpful. The sell out, as we look across all of the different channels through which we sell, the sell out data was positive. You know, that talks to a little bit the price increase timing issue we were just talking about. Other than that, I would just note that we're gaining share consistently across North America, Europe, AOA, and LATAM. Good momentum in terms of our performance within the category.

Speaker Change: Just a calculated numeric builds and the driver of the Q1 performance on Reagan Petcare was North America, and just one extra day trend that might be helpful. The sell out as we look across all the different channels through which we sell the sell out data is positive. So you know that talks to a little bit of a price increase.

Speaker Change: Timing issue, we were just talking about.

Speaker Change: And other than that I would just night that we're gaining share consistently across the north Mac a year at a L. A on Latam. So good momentum in terms of outperformance within the category.

Mark Schneider: Thank you very much.

Guillaume Delmas: Thank you very much.

Luca Borlini: Next question is from Celine Pannuti, J.P. Morgan. Please go ahead, Celine.

Thank you very much question is sorry.

Luca Borlini: Next question is from Celine Pannuti, J.P. Morgan. Please go ahead, Celine.

So next question is from a selling Penuche JP Morgan. Please go ahead Sydney.

Celine Pannuti: Thank you, Luca. Good afternoon, Mark, and welcome, Anna. My first question is on pricing. I'm trying to understand a bit the shape of pricing as we go through the remainder of the year. Am I correct in understanding that you may have to be more price competitive in the US and that, you know, that you are as well increasing the level of promotion across some of your categories or countries in order to get that volume bounce back you

Thank you Judy and.

Sydney: Good afternoon, Mark and now welcome Ana. So my first question is on pricing and trying to understand the beats them.

Sydney: The shape of pricing as we go through the remainder of the year and am I correct in understanding that you may have to be more price competitive in the U S. And that's you know the U S. While increasing the level of promotion across some of your categories or countries in order to get that volume bounce back to you.

Anna Manz: The driver of the Q1 performance on rig impact care was normal, and just... One extra data point that might be helpful, the sell-out, as we look across all of the different channels through which we sell, the sell-out data was positive, so that talks to a little bit about the price increase timing issue we were just talking about. And other than that, I would just note that we're gaining share consistently across North America, Europe, AOA, and LATAM, so we have good momentum in terms of our performance within the country. Thank you very much.

Sydney: Okay.

Speaker Change: Got it.

Mark Schneider: Celine, maybe I'll take a first crack and then see if Anna has to add any data points. What's important for me is to underline that on a group consolidated basis, we still expect moderate positive pricing for the year 2024. Here and there, when we get inbound questions, there's fear of negative pricing on a group consolidated basis, and I just wanted to address that. No, we're seeing positive moderate pricing for the year 2024. Having said that, with different cycles here of different commodities and input costs in different geographies, pricing going forward will have to be a lot more nuanced than what we had in the past.

Speaker Change: So.

Speaker Change: Maybe I'll take a first crack and then see AV and it has to add any data points.

Speaker Change: What's important for me is to underline that on a group consolidated basis.

Speaker Change: We still expect moderate positive pricing for the year 2024.

So here and there when we get inbound questions. There's fear of negative pricing on a group consolidated basis and I just wanted to.

Speaker Change: I Trust that no we're seeing positive moderate pricing for the year, having said that with a different cycles here of different commodities and input costs in different geographies pricing going forward, we'll have to be a lot more nuanced than what we.

Luca Borlini: Thank you, Luca. Good afternoon, Mark, and welcome, Anna. So my first question is on pricing. I'm trying to understand a bit. A, the shape of pricing as we go to the remainder of the year, and am I correct in understanding that you may have to be more price competitive in the U.S. and that, you know, you are as well increasing the level of promotion across some of your categories or countries in order to get that volume bounce back? Celine, maybe I'll take a first crack and then see if Anna has to add any data points.

Speaker Change: <unk> in the past and so you will see some categories since yakov fees with continued pricing in a very targeted specific way and others, where we may have to hold steady or even you know retreat slightly on pricing in order to stay in the game and competitive and.

Mark Schneider: You will see some categories and geographies with continued pricing in a very targeted specific way, and others where we may have to hold steady or even retreat slightly on pricing in order to stay in the game and competitive. The time for across the board increases driven by across the board input cost increases that we saw, for example, in 2022, that is clearly over. It's gonna be a very specific, very nuanced picture. That applies inside a category across different geographies, or it applies to one specific zone like North America, where the picture category by category could be quite different.

Speaker Change: So the time for across the board increases driven by across the board input cost increases that we saw for example in 2022.

Mark Schneider: What's important for me is to underline that on a group consolidated basis, we still expect moderate positive pricing for the year 2024. And so here and there, when we get inbound questions, there's fear of negative pricing on a group consolidated basis. And I just wanted to address that. No, we're seeing positive moderate pricing for the year.

That is clearly over and so it's going to be a very specific very nuanced picture and that applies in.

Speaker Change: Inside of category across different geographies, what applies to one specific zone like North America, where the picture it category by category could be quite different than what you saw from the prepared remarks. For example, this morning in frozen.

Mark Schneider: What you saw from the prepared remarks, for example, this morning in frozen, in addition to innovation that we're rolling out, we also had to sharpen a few price points here and there. As you know, frozen with us, we have three sub-segments. We have the prepared meals, we have pizza, we have snacking. Even there, it's not across the board. It's very specific by brand against targeted competition. That's again the very precise way we have to move forward on the pricing front.

Mark Schneider: Having said that, with different cycles here of different commodities and input costs in different geographies, pricing going forward will have to be a lot more nuanced than what we have had in the past. And so you will see some categories and geographies with continued pricing in a very targeted, specific way, and others where we may have to hold steady or even, you know, retreat slightly on pricing in order to stay in the game and competitive.

In addition to innovation that we're rolling out we also have to sharpen a few price points here and there as you know frozen with US we have three sub segments. We have the prepared meals. We have a pizza, we have snacking and so even there it's not across the board it's very specific bypass.

Speaker Change: Rand against targeted competition and that's again the thing that the very precise way, we have to move forward on the pricing front.

Mark Schneider: And so the time for across-the-board increases driven by across-the-board input cost increases that we saw, for example, in 2022 is clearly over. And so it's going to be a very specific, very nuanced picture. And that applies inside a category across different geographies, or it applies to one specific zone like North America, where the picture by category could be quite different.

Anna Manz: One small add. Promotion is one part of the marketing mix, as Mark said, and we look at the whole. Actually, if you do look at promotion in sort of isolation, we're not seeing big increases there because as I say, there's puts and takes across the portfolio. In aggregate, there isn't a big impact. Where we do see some extra costs is as we bring new innovations to market. We need to get them into market first. Aside from that, no, there isn't any distortion here.

Speaker Change: One small add promotion is one part of the marketing mix is not suddenly look at the hull, but actually if you do look at promotion instead of isolation, we're not seeing big increases that because as I say, there's puts and takes across the portfolio and say in aggregate there isn't a big impact, but we do see some extra cash.

Speaker Change: As we bring new innovations to market, we need to get them into market first but aside from that no there isn't any distortion.

Mark Schneider: And what you saw from the prepared remarks, for example, this morning, in Frozen, in addition to the innovation that we're rolling out, we also had to sharpen a few price points here and there. As you know, Frozen, with us, we have three subsegments. We have prepared meals, we have pizza, we have snacking.

Speaker Change: Yeah.

Luca Borlini: Next question is from Warren Ackerman at Barclays. Please go ahead, Warren. Hope the line works now.

Next question is from Warren Ackerman at Barclays. Please go ahead Warren ill open. The line works now do you have a high Mach Guyana, sorry take two had been a bit of a every day.

Warren Ackerman: Yeah. Hi, Mark. Hi, Anna. Sorry, take two. It's been a bit of a heavy day. So yeah, a couple from me. The first one is, could you talk a little bit more about innovation? You've touched on it a few times, but I guess that's gonna be, you know, a big swing factor for the real internal growth. Is there anything you can share, Mark or Anna, in terms of what innovation we're seeing coming out of, you know, frozen pet and coffee looking into the balance of the year? Then just a second one around Nespresso. And coffee generally. Are you able to kind of give a little bit more color as to what you're seeing? Nespresso was a bit weaker. Is that just phasing or pricing comps?

Warren Ackerman: So yeah a couple for me. The first one is could you talk a little bit more about innovation.

Speaker Change: Only a few times, but I guess that it's going to be.

Warren Ackerman: Yeah, a big swing factor for the rate of internal growth is there anything you can share market and in terms of what innovation, we're seeing coming out of.

Mark Schneider: And so even there, it's not across the board. It's very specific by brand against targeted competition. And that's, again, the very precise way we have to move forward on the pricing front. One small ad.

Warren Ackerman: Fraser and pet and coffee looking into the balance of the year and then just a second one around the <unk> and coffee generally are you able to kind of give a little bit more color.

As to what you will see a an espresso it was a bit weaker is that just the <unk>.

Warren Ackerman: By using our pricing comps.

Warren Ackerman: Thinking about it for the balance of the year. Thanks very much.

Speaker Change: And thinking about it for the balance of the year, thanks very much.

Luca Borlini: Promotion is one part of the market. [inaudible] Next question is from Warren Ackerman at Barclays. Please go ahead, Warren. I hope the line works now.

Mark Schneider: Thanks, Warren. I suggest we'll share the innovation part of the question between myself and Anna, because I noticed we have different favorite products here in the lineup. What you'll see is it's a pretty significant roster of new products that are either already on shelf now or coming to shelf very soon. Then I'll also focus on your Nespresso question. Look, in frozen there are two areas I would want to highlight. One is an expanded offering of the healthy choices, in particular around our Lean Cuisine brand. When we discussed GLP-1 and the new interest in weight loss at the last two conference calls, and of course, that trend is developing momentum.

Speaker Change: Thanks, Lauren and I suggest we'll share the innovation part of the question between myself and Hana because I noticed we have different favorite products here in the lineup, but what you'll see is it's it's a pretty significant roster.

Warren Ackerman: Yeah, hi, Mark. Hi, Anna. Sorry, take two.

Speaker Change: New products that.

Hana: Either already on shelf now or coming to shelf very soon and then I'll also focus on Europe and espresso question.

Warren Ackerman: It's been a bit of a heavy day, so yeah, a couple from me. The first one is, could you talk a little bit more about innovation? You've touched on it a few times, but I guess that's gonna be a big swing factor for real internal growth. Is there anything you can share, Mark or Anna, in terms of what innovation we're seeing coming out of frozen pets and coffee, looking into the balance of the year? And then just the second one around Nespresso and coffee generally? Are you able to kind of give a little bit more color as to what you're seeing?

Hana: So look in frozen.

Speaker Change: There is two areas I would want to highlight.

Speaker Change: One is.

Speaker Change: An expanded offering of the healthy choices in particular around.

Speaker Change: Our <unk> lean cuisine cramped and when.

When we discussed our G O P. One of the new interest in weight loss.

Speaker Change: The last two conference calls and of course that trend is developing momentum.

Mark Schneider: I think a portion controlled meal with high protein content and then also a number of vegetables in there, that is an ideal companion product for someone who is interested in weight loss, whether you're on or not on a GLP-1 therapy. Clearly, there is new interest in this area, and we're serving and catering to that interest with new offerings. The other one that's big for me, keyword here is air fryer. Clearly, the frozen category, depending on what product you look at, has been very much built around either the oven or the microwave. Microwaves, of course, have a wonderful penetration in the US market. For the prepared meals, that's the ideal way to prepare them.

Speaker Change: And I think a portion controlled meal with high protein content and then also a number of them vegetables in there that isn't the ideal companion product for someone who is interested in weight loss, whether you're on or not on the G. P. One therapy.

Warren Ackerman: Nespresso was a bit weaker. Is that just the phasing or pricing comps? And think about it for the balance of the year. Thanks very much.

Speaker Change: And so clearly there is new interest in this area and we're serving.

Mark Schneider: Thanks, Warren. And I suggest we'll share the innovation part of the question between myself and Anna, because I noticed we have different favorite products here in the lineup, but what you'll see is it's a pretty significant roster of new products that are either already on the shelf now or coming to the shelf very soon. And then I'll also focus on your Nespresso question. So, look, in frozen, there are two areas I would want to highlight.

Catering to bear interest with new offerings. The other one that's baked for me keyboard he is air Fryer.

Speaker Change: So clearly the frozen category.

Depending on what product you look at has been very much built around either the oven or the microwave microwaves of course have a wonderful penetration in the U S market and so for the prepared meals, that's the ideal way to.

Speaker Change: Prepare them, but.

Mark Schneider: For anything that's in a sandwich format, of course, the microwave was difficult. This is where the rise in the air fryers now is making a big difference. These products are very affordable. They're gaining a lot in penetration, and so clearly they're giving you a whole lot more latitude in terms of the dishes you can create. Sandwich melts, for example, under the Stouffer's brand, it's not only very close to the brand origin, but it's also basically catering to America's most popular meal choice when it comes to lunch, which is a sandwich. This one we have a lot of hope for.

Speaker Change: For anything that's in our sandwich format of course, the microwave was difficult and so this is where the ryzen and air Fryers now is making a big difference these products at very affordable, they're gaining a lot in penetration and so clearly that giving you a whole lot more latitude in terms of the dishes, who can create and so send.

Mark Schneider: One is an expanded offering of healthy choices, in particular around our Lean Cuisine brand. And when we discussed GLP-1 and the new interest in weight loss on the last two conference calls, and, of course, that trend is developing momentum. And I think a portion-controlled meal with high protein content and then also a number of vegetables in there is an ideal companion product for someone who is interested in weight loss, whether you're on or not on GLP-1 therapy.

Speaker Change: Which melts for example, under the self as brand, it's not only very close to the brand origin.

Speaker Change: Let's also basically catering to America's most popular.

Speaker Change: As a meal choice when it comes to lunch, which is a sandwich and so this one we have a lot of hope for.

Mark Schneider: Another one I would point to that's not on shelf yet, something that is coming more like towards H2 is new products as GLP-1 companion products under Nestlé Health Science. What is going up already, sometime in May, is a specific website that will help GLP-1 patients navigate some of the Nestlé Health Science products that are suitable as companion products now.

Speaker Change: Another one I would point to you that is.

Speaker Change: 0.2, that's not on shelf, yet something that is coming more like towards the second half of the year is new products as G. O P. One companion products under Nestle Health Science, and then what is going up already sometime in May is a specific website that will help T O P. One page.

Mark Schneider: And so, clearly, there is new interest in this area, and we're serving and catering to that interest with new offerings. The other one that's big for me, the key word here, is air fryer. So, clearly, the frozen category, depending on what product you look at, has been very much built around either the oven or the microwave. Microwaves, of course, have wonderful penetration in the U.S. market. And so, for prepared meals, that's the ideal way to prepare them. But for anything that's in a sandwich format, of course, the microwave is difficult.

Speaker Change: <unk> navigate somewhat the Nestle health science products that are suitable as companion products. Now you may recall from some of the news agencies over the winter, we talked about a billion.

Mark Schneider: You may recall from some of the news agencies over the winter, we talked about CHF 1.5 billion in sales already of potential companion products for GLP-1 patients. Helping patients to navigate that and find the right choices to address problems from loss in lean muscle mass to any gastric discomfort or potential vitamin deficiencies, I think that will also be a significant help here when it comes to positioning Nestlé Health Science as a partner on your weight loss journey. The other one that's on shelf now already and ramping up is the new line of flavored Maison Perrier products that I think is gaining momentum and where we hope to see good momentum, especially in the United States. Maybe Anna, you have a few more.

Billion five in sales already of potential companion product for G. O P. One patients and so helping patients to navigate that and find the right choices to address problems from Lawson lean muscle mass too.

Mark Schneider: And so, this is where the rise in air fryers is now making a big difference. These products are very affordable. They're gaining a lot in terms of penetration. And so, clearly, they're giving you a whole lot more latitude in terms of the dishes you can create. And so, sandwich melts, for example, under Vestalfa's brand. It's not only very close to the brand's origin, but it's also basically catering to America's most popular meal choice when it comes to lunch, which is a sandwich.

Speaker Change: And the gastric discomfort or potential vitamin deficiencies and I think that will also be a significant help here when it comes to positioning Nestle health science is a partner and get weight loss journey.

Speaker Change: And then the other one that's on shelf now already in ramping up is the new line of flavored Mizzone Perry.

Products that I think is gaining momentum and where we help hope to see good momentum, especially in the United States, maybe I know you have a few more.

Anna Manz: I'll be quick. In the US alone, there's 100 new products coming out in the Purina PetCare range and, you know, we've got the capacity to deliver that now. Their science-based solutions for specific pet needs are exactly what the consumer wants. I think the microbiome solutions that were in Mark's prepared remarks earlier are, you know, a good example. The other area that I think is really interesting, and I say it because I've got teenagers, and while it is a sample size of three, it's interesting. It's resonated with a good number of people's teenagers. Cold coffee solutions.

Speaker Change: I'll be quick this are in the U S alone, there's 100, new products coming out in in the Purion, a pet care range and you know we've got the capacity to deliver that now and.

Anna Manz: And so, this one we have a lot of hope for. Another one I would point to that's not on the shelf yet, something that is coming more towards the second half of the year, are new products as GLP-1 companion products under Nestle Health Science. And then, what is going up already sometime in May is a specific website that will help GLP-1 patients navigate some of the Nestle Health Science products that are suitable as companion products now.

They're science based escalation specific Pat needs are exactly what the consumer wants and I hate the microbiome installations that we're in.

Speaker Change: Knox and patronize area.

Speaker Change: A good example, the other area that I think his rady interesting and I say it because I've got teenagers and water is a sample size of three.

Speaker Change: And it's interesting it's it's it's resonated with a good number if people's teenagers.

Anna Manz: You may recall from some of the news agencies over the winter, we talked about $1.5 billion in sales already of potential companion products for GLP-1 patients. And so, helping patients to navigate that and find the right choices to address problems from loss of lean muscle mass to any gastric discomfort or potential vitamin deficiencies, I think that will also be a significant help here when it comes to positioning Nestle Health Science as a partner on your weight loss journey.

Speaker Change: Sure.

Speaker Change: Cold coffee installations.

Anna Manz: Young people very much are looking for that cold coffee opportunity, and I think Nescafé Ice, which is the one that was on Mark's slide earlier, which is Nescafé soluble coffee, but for the cold offering, I think will really help meet that currently unmet need. We have another liquid version that's also very good that will be coming later in the year, but those are a little bit further out.

Speaker Change: Young people very much are looking for that cold coffee opportunity and I think NES cafe I switches are the one that was on my slide earlier, which is net cafe soluble coffee, but for the cold offering.

<unk> already help them meet that currently unmet need and we have a another liquid version that is let's say very good that will be coming later in the year, but those are a little bit further out.

Anna Manz: And then, the other one that's on the shelf now already and is ramping up is the new line of flavored Maison Perrier products that I think is getting momentum and where we hope to see good momentum, especially in the United States. Maybe, Anna, you have a few more. I'll be quick, but in the U.S. alone, there are a hundred new products coming out in the Purina pet care range, and we've got the capacity to deliver them now. Their science-based solutions for specific pet needs are exactly what the consumer wants.

Mark Schneider: Warren, to an Nespresso question. The big picture is that we turned the corner of post-COVID normalization last summer, very much exactly in line with our forecast. You've seen a very steady performance in H2. It's important now to not overinterpret this Q1, because what we see on a full year basis is more of a continuation of that steady performance, with the key driver being the continued success in North America. What somewhat muted this Q1 is the timing of a number of third-party e-commerce orders for Nespresso. That's a part that probably you guys have not spent a lot of attention on in the past.

Speaker Change: The warranty and espresso question.

Speaker Change: Big picture is that we turned the corner of post Covid normalization last summer very much exactly in line with our forecast and you've seen a very steady performance in the second half of the year. It's important now to not over interpret this first quarter, because what we see on a.

Full year basis, it's more of a continuation of that steady performance with a key driver being the continued success in North America.

Speaker Change: What's somewhat muted. This first quarter is the timing of a number of third party E Commerce orders.

Anna Manz: And I think the microbiome solutions that were in Mark's prepared remarks earlier are a good example. The other area that I think is really interesting, and I say it because I've got teenagers, and one is a sample size of three. It's interesting, and it's resonated with a good number of people's teenagers.

Speaker Change: Four.

Speaker Change: Espresso and that's the part that probably you guys have not spent a lot of attention on in the past, but especially with increased penetration in the U S and more presence openness Presto products on third party E. Commerce platforms. What happens is a larger part of the business gets conducted this way and.

Mark Schneider: Especially with increased penetration in the US and more presence of Nespresso products on third-party e-commerce platforms, what happens is a larger part of the business gets conducted this way. Their orders are very much algorithm-driven. So whether it does come in, you know, towards the end of one quarter or beginning of the next quarter is something that's outside of our control. We saw a larger share of those orders in Q1 last year, and hence this quarter compares a little unfavorably when it comes to that. There's a second related question on Nespresso, which refers to the coffee prices.

Anna Manz: Cold Coffee Solution. Young people are very much looking for that cold coffee opportunity, and I think Nescafe Ice, which is the one that was on Mark's slide earlier, which is Nescafe, soluble coffee, but for the cold offering, I think will really help meet that currently unmet need. And we have another liquid version that's also very good that will be coming later in the year, but those are a little bit further out. Warren, to your Nespresso question, the big picture is that we turned the corner of post-COVID normalization last summer, very much exactly in line with our forecast, and you've seen a very steady performance in the second half of the year.

Speaker Change: Their orders are very much algorithm trim and so weather does come in you know towards the end of one quarter or beginning of the next quarter is something events outside of our control and so we saw a larger share of those orders in the first quarter last year and hence at this quarter compares a little and favorite.

Speaker Change: Really when it comes to that there's a second related question on this presto, which.

Speaker Change: Refers to the coffee prices.

Mark Schneider: Also the good news is, of course, being at the premium end of the coffee range, we're using a whole lot of Arabica in Nespresso, and so we're a little bit less exposed compared to mainstream coffee brands when it comes to the recent robust price increases.

Speaker Change: They are also the good news is of course being at the premium end of our coffee range, we're using a whole lot about Rebecca in this process and so we're a little bit less exposed compared to mainstream coffee brands. When it comes to the recent robust price increases.

Anna Manz: It's important now to not over-interpret this first quarter, because what we see on a full-year basis is more of a continuation of that steady performance, with the key driver being the continued success in North America. What somewhat muted this first quarter is the timing of a number of third-party e-commerce orders for Nespresso, and that's a part that probably you guys have not spent a lot of attention on in the past, but especially with increased penetration in the U.S. and more presence of Nespresso products on third-party e-commerce platforms, what happens is a larger part of the business gets conducted this way, and their orders are very much algorithm-driven, and so whether it does come in towards the end of one quarter or beginning of the next quarter is something that's outside of our control, and so we saw a larger share of those, And they are also, the good news is, of course, being at the premium end of the coffee range, we're using a whole lot of arabica in Nespresso, and so we're a little bit less exposed compared to mainstream coffee brands when it comes to the recent robust price increase. So next question is from Jeremy Fialko at HSBC. Please go ahead, Jeremy.

Luca Borlini: Next question is from Jeremy Fialko at HSBC. Please go ahead, Jeremy.

Speaker Change: So next question is from Jeremy Fiacco with HSBC. Please go ahead the Jeremy.

Jeremy Fialko: Hi. Hi there. Thanks for taking the question. A couple of things from me. The first one is thinking about your full year outcome of around 4% organic sales growth. Just to kind of get into the kind of the, you know, hit the 4 on the nose, get into the middle of the range, obviously means you've got to do pretty much 5% organic sales growth over the remainder of the year. I know you're not gonna get into a debate about exactly where you're gonna end up, whether you hit the 4 precisely. But do you still feel that is a realistic outcome that you can deliver something around, you know, 5 without being super explicit about it?

Speaker Change: Okay.

Hi, there thanks for taking the question so.

Jeremy Fialko: Couple of things for me. So the first one is the key.

Jeremy Fialko: About your full year outcome of around 4% organic sales rates, so just to kind of get.

Jeremy Fialko:

Jeremy Fialko: Yeah.

For when those get into the middle of the range. Obviously means you got to be pretty much 5% organic sales growth of over the remainder of the year now I know I know, you're not going to get into a debate about exactly where you're going with that whether you hit before precisely but I still feel that that is a realistic outcome that you can deliver something around.

Yeah, it's five without being super explicit about it but that is let's say, we get well within the range of possibilities for Q2 to Q4 and then the second question is on the Coca.

Jeremy Fialko: That is kind of let's say we are well within the range of possibilities for Q2 to Q4. Then the second question is on cocoa. Perhaps you can just talk about your kind of exposure to cocoa, how you'll be able to sort of face some of the price rises given the hedging that you have, and you know what you think that demand in confectionery might do in response to some of the price rises that inevitably will have to be put through given how much the cocoa price has gone up. Thanks.

Jeremy Fialko: If you could just talk about your kind of exposure to Coca.

Jeremy Fialko: How will you get is a phased some of the price rise is given the hedging.

Jeremy Fialko: That you have.

Jeremy Fialko: What you think that demand in confectionary might do in response to some of the price rises so inept Judy will have to be put through given how much the coke prices have gone up.

Mark Schneider: Thanks, Jeremy. I'll let Anna comment first on the crop expectations and then focus on cocoa.

Jeremy Fialko: Thanks, Jeremy I'll, let Anna comment first on the crop expectations and then focus on cocoa.

Anna Manz: Yes. I mean, as you've heard, we're reiterating guidance today, and that is because we are confident in the delivery of the full year, understanding the degree of step-up that's required. You know, just to kind of remind you, the issues that we've seen in Q1 are quite specific. I mean, particularly in the US, those frozen specific issues are behind us. The underlying US sellout is much stronger. We've got a strong innovation pipeline and material investment. We've been seeing consistent improvement through Q1 in RIG and in our underlying share position. It's all of that together that leaves us confident in our forecast.

Anna: Yes, I mean as you've heard we're reiterating guidance today and that is because we are confident in the delivery of the full year understanding the degree of step up that's required but you know just just kind of remind cheese.

Jeremy Fialko: Hi there, thanks for taking the question about your full year outcome of around, you know, hit the four on the nose, get into the middle of the range. [inaudible] It's all very explicit about it, but that is quite, let's say, well within the range of possibilities. And then the second question is on coca, perhaps about your kind of exposure to coca, you'll be able to sort of face some of the price rises.

Anna: The issues that we've seen in the first quarter are quite specific I mean, particularly in the U S. As far as a specific issues are behind us the underlying U S. Attaches is much stronger we've got a strong innovation pipeline and material investment and.

Anna: We've been seeing consistent improvement through the first quarter.

Jeremy Fialko: Thanks, Jeremy. I'll let Anna comment first on crop expectations and then focus on cocoa. Yes, I mean, as you've heard, we're reiterating guidance today, and that is because we are confident in the delivery of the full year, understanding the degree of step-up that's required. But, you know, just to kind of remind you... We've been seeing consistent improvement through the first quarter in RIG and in our underlying share position. And it's all of that together that leaves us confident in our forecast. Cocoa price development Cocoa price development, obviously, everyone watched with a certain degree of amazement the trading patterns in cocoa recently. I won't speculate here on where it's going. Everyone, of course, has their own views on that.

Anna: In vague and in our underlying share position and it sure does that together the nieces confident in our forecast.

Mark Schneider: Jeremy, on the cocoa price development, obviously everyone watched with a certain degree of amazement the trading patterns in cocoa recently. I won't speculate here on where it's going. Everyone, of course, has their own views on that. I think the key news here for the remainder of the year is that we are largely covered as part of our forward contracting for the remainder of the year. That gives us, you know, a stable base to plan on. There aren't any near-term impacts on that. We'll now need to see where the prices go so that, you know, we can articulate and work out our strategies for the year 25.

Anna: And Jeremy on the cocoa price development, obviously, everyone watched with a certain degree of amazement are the trading patterns and cocoa recently.

Jeremy: I won't speculate here on where it's going everyone of course has their own views on that but I think the key news here for the remainder of the year is that we're largely covered as part of our forward contracting for the remainder of the year and so that gives US you know a stable base to plan on and so there aren't any near term.

Pass on that will now need to see where the prices go. So that you know, we can articulate and to work out our strategies for the year 25.

Luca Borlini: We give an opportunity to Celine to ask a second question, as she only asked one question at the start. Please go ahead, Celine.

Speaker Change: So we give them an opportunity to sell in to ask a second question as you only ask one question and just started please go ahead celina.

Anna Manz: But I think the key news here for the remainder of the year is that we are largely covered as part of our forward contracting for the remainder of the year. And so that gives us, you know, a stable base to plan on. And so there aren't any near-term impacts on that. We'll now need to see where the prices go so that, you know, we can articulate and work out our strategies for the year 25. So we will give an opportunity to Celine to ask a second question, as she only asked one question at the start. Please go ahead, Celine.

Celine Pannuti: Thank you. That's kind of you. Yeah, my second question may be building up on the previous just now. Trying to understand that bounce back in RIG throughout the year, which, you know, if you were to do to at the low end of your 2 to 3 on RIG, it will imply around 3.5. Away from the US, if I look at emerging market, AOA, and Latin America, we've seen RIG being slightly negative despite weakening pricing. If we think about those two regions that are as well important RIG driver, can you talk about what you see in the coming three quarters that will lead to an accelerated RIG in those two regions? Thank you.

Celina: Thank you that's kind of you.

Celina: Yeah. My second question, maybe building up on the previous just now.

Celina: Trying to understand that to bounce back in a week throughout the year, which.

Celina: Q2, due to the below end of year two to three on rig it would imply around three three and a half so.

Celina: Away from the U S. If I look at emerging market AOE and Latin America, we've seen weak being slightly negative despite weakening pricing. So if we think about those two regions as well importantly, being driver can you talk about what you see in the coming three quarters that will lead to next.

Celine Pannuti: Thank you, that's kind of you. Yeah, my second question, maybe building on the previous just now, trying to understand that bounce back in RIG throughout the year, which if you were to do at the low end of year two to three on RIG, it would imply around three, three and a half. So away from the US, if I look at emerging markets, AOA, and Latin America, we've seen RIG being slightly negative despite weakening pricing.

Speaker Change: Heritage weak industrial agents. Thank you.

Mark Schneider: Thanks, Celine. I suggest that, Anna and I kind of share the answer to that question. Look, on a high level, and bearing in mind what I said earlier, that we don't wanna get into quarterly guidance and certainly not quarterly guidance here by zone. What I would like to point out again is, the key feature for me is for the remainder of the year that, you have every reason to expect positive, consistent rate delivery. That is, from my perspective, the key differentiator to the picture we saw last year where things were bouncing around and, there was no clear, pattern when it comes to the direction where RIG is going.

Speaker Change: Thanks, Helene and I suggest that and then I kind of share the answer to that question and look on a high level and bearing in mind, what I said earlier that we don't want to get into quarterly guidance and certainly not quarterly guidance here by zone.

Celine Pannuti: So if we think about those two regions that are also an important RIG driver, can you talk about what you see in the coming three quarters that will lead to an accelerated RIG in those two regions? Thank you.

What I would like to point out again is.

Speaker Change: The key feature for me is for a major of the year that you have every reason to expect positive consistent rate delivery and that is from my perspective, the key differentiator to the picture. We saw last year, where things were bouncing around and there was no clear pattern when it come.

Mark Schneider: Thanks, Celine, and I suggest that Anne and I kind of share the answer to that question. And look, on a high level, bearing in mind what I said earlier, that we don't want to get into quarterly guidance and certainly not quarterly guidance here by zone, what I would like to point out again is the key feature for me is, for the remainder of the year, that you have every reason to expect positive, consistent rate delivery, and that is, from my perspective, the key differentiator to the picture we saw last year where things were bouncing around and there was no clear pattern when it comes to the direction where RIG is going.

Speaker Change: So the direction, where rig is going I think.

Mark Schneider: I think we focused a lot in this call now on North America because I think that was the one where from your perspective there was the single biggest negative surprise. To a lesser extent you find in other zones as well that issues related to either phasing or year-over-year effects. That of course we also have there benefited from what we describe for North America, and that is a consistent increase in our brand support spend from the Q2 onwards last year. Then also innovation lined up in these other zones that is going to go out or has gone out in this on shelf. Maybe Anna, you want to add to that?

Speaker Change: We focused a lot in this call now on North America, because I think that was the one where.

Speaker Change: From your perspective, if there was the single biggest negative surprise, but to a lesser extent you find in other zones as well that issues related to either phasing or year over year effects and that of course. We also have they are benefited from what we described for North America and that is.

Speaker Change: A consistent increase in our brand support spend from the second quarter on what's last year and then also innovation lined up in these other zones that is going to go out or has gone out and this on shelf, maybe I know you want to add to that just a little.

Mark Schneider: I think we focused a lot on North America on this call now on North America because I think that was, a little bit of color, start with AOA, it's growing at 3.6% in the quarter. You're right, RIG is a little bit negative, but the overall AOG is good at three points. Why is the rig a little bit weaker?

Anna Manz: Yeah, just a little bit of color. I mean, start with AOA. It's growing at 3.6% in Q1. Now you're right, RIG is a little bit negative. The overall OG is good at 3.6. Why is the RIG a little bit weaker? We've seen some really material currency devaluations in Q1, in that part of the world. That requires us to take quite considerable price when that occurs. Of course it has a bit of a volume impact when it happens. That is one of the drivers. Of course, we see some ongoing hesitancy around global brands. Those are a couple of the factors at play.

Speaker Change: It is a little bit of color so I mean.

L: Start with a L. A it's growing at three 6% in the quarter.

L: No.

Speaker Change: Youre right Nikki rig is a little bit negative.

Speaker Change: But the overall a J is is as good as 3.6 why is the regular saw this week.

Anna Manz: We've seen some really material currency devaluations in this first quarter in that part of the world, and that requires us to take quite a considerable price when that occurs, and of course, it has a bit of a volume impact when that happens, so that is one of the drivers. Then, of course, we see some ongoing hesitancy around global brands, so those are a couple of the factors at play. That said, again, we've seen underlying good momentum and improvement through the quarter and strengthening share positions. And in terms of last time, just again, that's a business that's growing a little over 3% OG, but again, slightly negative rig in Q1. Why is that rig a little bit weaker in Q1?

Speaker Change: We've seen some really material currency devaluations in this first quarter and that part of the world.

Speaker Change: And that requires us to take quite considerable price on a cousin of course, it has a bit of a volume impact.

Speaker Change: And it happens so that is one of the drivers and of course, we see some ongoing.

Speaker Change: Hesitancy around our global brands.

Speaker Change: So those are a couple of the factors at play.

Anna Manz: That said, again, we've seen underlying good momentum and improvement through the quarter, and strengthening share positions. In terms of LATAM, just again, that's a business that's growing at a little over 3% OG, but again, slightly negative RIG in Q1. Why is that RIG a little bit weaker in Q1? Back to lapping effect. In confectionery, we are lapping a huge RIG in the prior Q1, so that's a bit of a lapping effect. We've also made some portfolio actions in the dairy business to focus where we are playing, and that's had a bit of an impact on RIG. Again, underlying consumer performance is good.

Speaker Change: That surge again, we've seen underlying good momentum in perm improvement through the quarter.

Speaker Change: And strengthening short positions and in terms of his last time, just again, that's a business that's growing at a little over 3%, a J, but again slightly negative rig in Q1.

Speaker Change: Why is that railcar lessor that we carry in Q1.

Anna Manz: Back to the lapping effect. In confectionery, we're lapping a huge rig in the prior Q1, so that's a bit of a lapping effect. And we've also made some portfolio actions in the dairy business to focus while we're playing, and that's had a bit of an impact on rig. But again, underlying consumer performance is good. Thanks, Celine. The next question is from Pascal Boll at Stifel. Please go ahead, Pascal.

Speaker Change: That's a lapping effect in confectionary were lapping.

Speaker Change: Huge Reagan the prior Q1, so that's a bit of a lapping effects and we've also made some portfolio actions in the dairy business to focus where we're playing and that's had a bit of an impact on rig, but again underlying consumer performance is good.

Luca Borlini: Thanks, Anna. Next question is from Pascal Boll at Stifel. Please go ahead, Pascal.

Speaker Change: Thanks Irina next question is from Pascal bullet to Stifel. Please go ahead Ms Karla.

David Brown: Yes. Hi Mark. Hi Anna. First of all, thanks for the prepared remarks this morning. I think it's very helpful. Then, turning to my question, I first want to follow up on innovation. Thanks for giving us a sense of your upcoming innovations. I think that's helpful. Now, against the backdrop of this and the stalling growth we have seen over the last quarters, do you think it's fair to say that Nestlé was a bit hesitant or slow in innovation over the last two years? And maybe you could give us here a sense of what's the number of launches coming this year versus the last year's, just to get a sense in how far this is a real ramp up versus the past. This would be my first one.

Pascal Boll: Yes. Hi Mark. Hi Anna. First of all, thanks for the prepared remarks this morning. I think it's very helpful. Then, turning to my question, I first want to follow up on innovation. Thanks for giving us a sense of your upcoming innovations. I think that's helpful. Now, against the backdrop of this and the stalling growth we have seen over the last quarters, do you think it's fair to say that Nestlé was a bit hesitant or slow in innovation over the last two years? And maybe you could give us here a sense of what's the number of launches coming this year versus the last year's, just to get a sense in how far this is a real ramp up versus the past. This would be my first one.

Pascal Boll: Yes. Hi Mark. Hi Anna.

Pascal: Yes, Hi, Mark Hi on the first of all thanks for the prepared remarks. This morning, I think very helpful. Dan turning on my question.

Pascal Boll: First of all, thanks for the prepared remarks this morning. I think they're very helpful. Then, turning on my question, I first want to follow up on innovation. Thanks for giving us a sense of your upcoming innovations. I think that's helpful.

Pascal: First one follow up on innovation, thanks for giving US a sense of your upcoming innovations I think that's helpful. Now against the backdrop of this and the stalling growth we have seen over the last quarters do you think it's fair to say that there was a bit hesitant or slow in innovation over the last two years and maybe you could.

Pascal Boll: Now, against the backdrop of this and the stalling growth we have seen over the last quarters, do you think it's fair to say that Nestle has been a bit hesitant or slow in innovation over the last two years? And maybe you could give us here a sense of what the number of launches coming this year versus last year, just to get a sense of how far this is a real ramp up versus the past. So this would be my first one.

Pascal: Give us your sense of what's the number of launches coming this year versus the last year just to get a sense on how far this is the real ramp up versus the past. So this was would be my first one and then secondly on coffee.

David Brown: Then secondly, on coffee, against the backdrop of increased coffee and aluminum prices, how do you look at pricing from here and the RIG reaction to that, given that coffee growth was down to low single digit growth in Q1? Thanks.

Pascal Boll: Then secondly, on coffee, against the backdrop of increased coffee and aluminum prices, how do you look at pricing from here and the RIG reaction to that, given that coffee growth was down to low single digit growth in Q1? Thanks.

Pascal: Against the backdrop backdrop of increased coffee and <unk> prices, how do you look at pricing from here and the rig reaction to that given that coffee growth walks down to low single digit growth in Q1.

Mark Schneider: And then secondly, on coffee, against the backdrop of increased coffee and aluminum prices, how do you look at pricing from here and the reaction to that given that coffee growth was down to low single-digit growth in Q1? Thanks, Pascal. And on innovation, it is worthwhile to look back over the last four years, indeed. And I feel that initially, when COVID hit in 2021, we had a few things lined up for launch from the prior years and still good momentum. And hence, there was no initial slowdown when it came to innovation and renovation.

Mark Schneider: Thanks, Pascal. On the innovation, it is worthwhile to look back over the last four years indeed. I feel that initially when COVID hit in 2020 and 2021, we had a few things lined up for launch from the prior years and still good momentum, and hence, there was no initial slowdown when it came to innovation renovation. We witnessed something in 2022 because at that time it was no longer just COVID, it was also, as you know, significant impacts from supply chain constraints around the world. That is, it was taking energy away from innovation renovation efforts. As we look around, and since some of that can be also benchmarked against some of our peers, I don't think we were alone in that. This is not, in my view, a Nestlé specific decision.

Speaker Change: Thanks, Pascal and Tim on the innovation.

Speaker Change: It is worthwhile to look back over the last four years, indeed, and I feel that initially when COVID-19 hit in 2020 one.

Speaker Change: We had a few things lined up for launch from the prior years and still good momentum and hence there was no initial slow down when it came to innovation and renovation.

Speaker Change: Then we witnessed something in 'twenty two because at that time. It was no longer address COVID-19. It was also as you know significant impacts from supply chain constraints around the world and that is it was taking energy away from innovation and renovation efforts and as we look around and since some of that can be also bench.

Mark Schneider: Then we witnessed something in 22 because, at that time, it was no longer just COVID. There were also, as you know, significant impacts from supply chain constraints around the world. And that is, it was taking energy away from innovation and renovation efforts. And as we look around, and since some of that can also be benchmarked against some of our peers, I don't think we were alone in that. So this is not, in my view, a Nestle specific decision.

Speaker Change: Mark against some of our peers I don't think we were alone in that.

Speaker Change: So this is not in my view and that's the specific decision. It was simply everyone was grappling with the same issues and that is how to keep supply chains running how to focus scarce resources on.

Mark Schneider: It was simply everyone was grappling with the same issues, and that is how to keep supply chains running, how to focus scarce resources on, you know, the core SKUs and keeping shelves stocked. In that moment, less energy was devoted to innovation renovation. We have already started to step onto it again in 2023. I think here also that is consistent with some of the data that we track outside of our company. Then I think compared to 2023 levels, we are particularly strongly spring-loaded. I used that term this morning in my prepared remarks for the year 2024, and certainly also have devoted a lot of spending behind these launches to make sure that they really resonate and reach consumers. That's essentially how I saw it unfold.

Speaker Change: Now the core skus and keeping shelves stocked.

Speaker Change: And in.

Speaker Change: In that moment less energy, both devoted to innovation and renovation.

Mark Schneider: It was simply that everyone was grappling with the same issues, and that was how to keep supply chains running, how to focus scarce resources on, you know, the core SKUs and keeping shelves stocked. And at that moment, less energy was devoted to innovation and renovation.

Speaker Change: We have already started to step onto it again in 'twenty three and I.

Speaker Change: I think here also that is consistent with some of the data that we track outside of our company and then I think compared to 23 levels were particularly strongly spring loaded I use that term. This morning in my prepared remarks for the year 'twenty four and certainly also have to vote.

Mark Schneider: We have already started to step on it again in 23, and I think this also is consistent with some of the data that we track outside of our company. And then, I think compared to 23 levels, we are particularly strongly spring-loaded, I used that term this morning in my prepared remarks, for the year 24, and certainly have devoted a lot of spending behind these launches to make sure that they really resonate and reach consumers. So that is essentially how I saw it unfold.

Speaker Change: A lot of spending behind these launches to make sure that they're really resonate and and reach consumers.

Speaker Change: So.

Speaker Change: That's essentially how it unfolds.

Mark Schneider: I think during that period when there was less of that, innovation renovation activity, that may have helped inadvertently some of the private label, competition, especially in the face of an affordability crisis out there. I think now it's important and will stay consistent, is to keep the innovation renovation engine running and, obviously not just deal with regular innovation renovation, but also very meaningful things that we will drive across, the entire, geography. On pricing, Anna, do you wanna chime in on that?

Speaker Change: I think during that period, when there was less up at innovation and renovation activity that may have helped inadvertently somewhat the private label competition, especially in the face of an affordability crisis in out there, but I think now it's important and will stay consistent as to keep the innovation renovation engine.

Anna Manz: I think during that period when there was less of that innovation-renovation activity, that may have helped inadvertently some of the private label competition, especially in the face of an affordability crisis out there. But I think now it is important, and we will stay consistent in this, to keep the innovation-renovation engine running, and obviously not just deal with regular innovation-renovation but also very meaningful things that we will try across the entire geography in terms of pricing. And do you want to chime in on that?

Speaker Change: Running and obviously not just deal with regular innovation renovation, but also very meaningful things that we would try up across.

Speaker Change: The entire geography.

Speaker Change:

Speaker Change: On pricing.

Speaker Change: Oh do you want to chime in on that.

Anna Manz: Yeah. Yes. Maybe just to correct or to provide more context in that you started by mentioning that, the RIG growth in coffee in Q1. Just to join a couple of things together, yes, it was a slightly weaker quarter, Q1. You heard Mark just describe the phasing impact that we've seen in Nespresso with respect to e-commerce, which is a phasing of sales rather than a consumer thing. You've also heard me describe the timing of price increases in North America, again, giving you a phasing of sales impact. I would say, you know, coffee consumption Q1, the RIG performance understates, I think, the strengths of the category. Demand for coffee remains strong, and we continue to gain share.

Speaker Change: Yes, and maybe just to take corrective, which provides a context and that he started by mentioning that the DAYBREAK gracing coffee in Q1, and just to join a couple of things together, yes. It was a slightly weaker quarter Q1.

Speaker Change:

Speaker Change: You had not just describe the phasing impact that we've seen and in the espresso with respect to E Commerce, which is the phasing of sales rather than a can see MSA and you've also heard me describe the timing of price increases in North America, again, giving us phasing of sales impact.

Anna Manz: Yeah, yes, and maybe just to correct or to provide more context, in that you started by mentioning the distorted growth in coffee in Q1, and just to bring a couple of things together. Yes, it was a slightly weaker quarter, Q1, but you heard Mark just describe the phasing impact that we've seen in Nespresso with respect to e-commerce, which is a phasing of sales impact rather than a consumer thing, and you've also heard me describe the timing of price increases in North America, again, giving you a phasing of sales impact. So I would say, you know, coffee consumption, Q1: the rigged performance understates, I think, the strength of the category.

Speaker Change: So I would say the coffee consumption Q1 are the direct performance Understates I think the strength as a category. It's advanced coffee remains strong.

Speaker Change: And we continue to gain share.

Anna Manz: In terms of pricing going forward, we're very thoughtful about pricing market by market as Mark described earlier, where we'll look at the individual competitive position of the brand and the offering, and we will take pricing that is commensurate with what the consumer can take at the point of sale. Some places we can take more pricing, and will do, and other places will be very thoughtful in order to maintain our strong position.

Speaker Change: And in terms of pricing gang fluids, we're very thoughtful about pricing market by market as market. Just is not described earlier well look at the individual competitive position of the brand and the offering and we will take pricing that is commensurate with what the consumer can take them at the point of sale.

Speaker Change: Some places we can take more pricing and we'll do another prices, albeit I sought for in order to maintain a strong position.

Pascal Boll: And in terms of pricing going forward, we're very thoughtful about pricing market by market, as Mark described earlier, where we'll look at the individual competitive position of the brand and the offering, and we will set pricing that is commensurate with what the consumer can take at the point of sale. So some places we can take higher prices and will do, and other places we'll be very thoughtful in order to maintain our strong position. Thanks Pascal. The next question is from Bruno Monteyne at Bernstein. Please go ahead, Bruno.

Luca Borlini: Thanks, Pascal. Next question is from Bruno Monteyne at Bernstein. Please go ahead, Bruno.

Speaker Change: Thanks for color next question is from Bruno maintain at Bernstein. Please go ahead Bruno.

Bruno Monteyne: Hey, good afternoon, Mark and Anna. My first question is on, I think, an interview you did recently with manager magazin, and it talked about some pretty big cost-cutting programs. I think if I'm not mistaken, in the order of 13%. Not sure that it was misquoted. If you can say anything about the size of this cost-cutting program, or is it just steady state as Nestlé always does efficiency program? The second question is almost around the same time as the big cost-cutting kind of news article. We also heard from one of your peers doing some massive cuts in the sustainability targets, delays, canceling stuff. That sort of made me think, you know, that's probably related to the cost and the difficulty of achieving that. Do you see difficult similar challenges in terms of timing and costs of achieving that?

Bruno: Hey, good afternoon.

Bruno: Okay.

Bruno: My first question is on I think an interview you did recently with management magazine.

Bruno: And you talked about some pretty big cost cutting program, but were not mistaken the orthodox 13% maturity levels misquoted give you can say anything about the size of this cost cutting program or is it just steady state as domestic always this efficiency program.

Bruno: The second question is almost at the same time, it's a big cost good thing kind of methodical we also have.

Bruno: One of your peers are doing.

Bruno: And their sustainability.

Bruno: Canceling so and.

Bruno: That sort of made me think.

Bruno: Related to the cost and the difficulty of achieving D&C difficult similar challenges in terms of timing and the cost of achieving that.

Bruno Monteyne: Has the cost, your expected cost of achieving all your sustainability objectives, is that going up? Should we keep that in mind for future EBIT margin expectations? Thank you.

Bruno: The increased costs, you had expected cost of achieving the sustainability objectives.

Bruno: Okay.

Bruno: Future EBIT margin expectations. Thank you.

Mark Schneider: Thanks, Bruno. Just to clarify, because the line was a little bit hard and breaking up. The second question refers to our various ESG efforts in the supply chain.

Speaker Change: Thanks, Bruno interest to clarify because the line was a little bit.

Bruno Monteyne: Hey, good afternoon, Mark and Anna. My first question is about, I think, an interview you did recently with Manager magazine, and it talked about some pretty big cost-cutting problems. If we're not mistaken, on the order of 13%. Not sure that it was misquoted, but if you can say anything about the size of this cost-cutting problem, or is it just steady state as Nestle always does efficiency programs? The second question is almost around the same time as the big cost-cutting kind of news article.

Speaker Change: Heart breaking up.

Bruno: So the second question refers to our various ESG efforts into supply chain is that what you're talking about.

Bruno Monteyne: Yes.

Mark Schneider: Is that what you're talking about?

Bruno Monteyne: Yes, because, you know, your peer Unilever has said massive changes and reductions. Do you feel similar pressure and the need to rethink? Are you worried about the cost of the commitments you've made in the past and how that will weigh on the future profitability?

Bruno: Yes, because.

Speaker Change: Your peer Unilever I said, the massive changes and reduction do you feel similar questions on the need to rethink and they also are you worried about the cost of the commitment you've made in the past and how that will layer.

Bruno: On the future profitability.

Mark Schneider: Okay. Thank you. Very helpful. Look, I'm glad you're bringing up both questions because they're very core to us. On the first one, I had also seen your note on this and I'm glad that I have an opportunity to put the record straight here. That German media source, this was not an interview of mine, and it was certainly not something that we had contributed to or were part of, and it is also factually not correct. There is no Group-wide restructuring program. For those of you who know as well, you know that we don't operate this way. What we do operate on is continuous efficiency, individual steps. You see that over the years, those do amount to good efficiency drives.

Speaker Change: Okay. Thank you very helpful and look I'm glad you bring up both questions because they're very core to us. So on the first one I had also seen you'll note on this and I'm.

Speaker Change: I'm glad that I have an opportunity to put the record straight here.

Bruno: That German media source. This was not an interview of mine.

Bruno Monteyne: We also heard from one of your peers that you're doing some massive cuts in the sustainability targets, delays, and canceling stuff. And that sort of made me think, you know, probably related to the cost and the difficulty of achieving that.

Bruno: And it was certainly not something that we have contributed to over part of and it is also factually not correct. So there is no crude point restructuring program and for those of you know US well. We know you know that we don't operate this way.

Bruno Monteyne: Do you see difficult, similar challenges in terms of timing and cost of achieving that? And has the increase in cost, the unexpected cost of achieving all your sustainability objectives, is that going up? Keep that in mind for future, even larger expectations. Thank you. Thanks, Bruno. And just to clarify, because the line was a little bit hard and was breaking up. So the second question refers to our various ESG efforts in the supply chain. Is that what you're talking about?

Bruno: Where we what we do operate on is continuous efficiency individuals' steps.

Bruno: And you see that over the years those do amount to good efficiency drives there were certainly for example, when you look at the period behind 2017 in 2019 behind that.

Mark Schneider: There were certainly, for example, when you look at the period behind 2017, 2019, behind that, commensurate drive in both our margin and organic growth, and that is the business model we pursue. We call it a virtuous circle. Many of you that followed us over many years are quite familiar with this. We're not deviating from that. We're not into big style slash and burn restructurings and have no intention of going there. We see them as disruptive. Personally, I've never done one in my life, so, this is not the way we operate, and we're not deviating from it.

Bruno: <unk> drive in both our margin and organic growth and that is the business model, we pursue a we call. It the virtuous circle. Many of you that followed us over many years are quite familiar with this we're not deviating from that we're not into big style slash and burn restructurings and have no intention of going.

Bruno Monteyne: Yes, because, you know, your peer Unilever has had massive changes and reductions. Do you feel similar pressure and the need to rethink? And are you also worried about the cost of the commitments you've made in the past and how that will weigh on future profitability? Thank you. Very helpful.

Speaker Change: Yeah, we see them as disruptive personally I've never done one of my life. So this is not the way we operate and we're not deviating from it.

Mark Schneider: What you do have in select locations in Europe, for example, there was one particular announcement yesterday that referred to Germany, is individual steps where either with the goal of clarifying individual processes or digitalization or efficiency improvements, you do have a number of very limited redundancies. So we're talking about 100 positions there in the German headquarters, where, of course, we are finding a very socially responsible ways to cushion the impact on our colleagues. But there are no big style restructuring programs. What we try to get back to after several years of navigating, you know, a very difficult environment, is exactly that virtuous circle mindset that we employed so successfully during 2017 to 2019. We already cranked up the number of initiatives in that regard in 2023.

Speaker Change: What do you do have in select locations in Europe. For example, there was one particular announcement yesterday as I referred to Germany is individuals' steps, where either with a goal of clarifying.

Mark Schneider: And look, I'm glad you're bringing up both questions because they're very core to us. So on the first one, I had also seen your note on this, and I'm glad that I have an opportunity to put the record straight here. That German media source was not an interview of mine, and it was certainly not something that we had contributed to or were part of. And it is also factually not correct.

Speaker Change: Individual processes or digitalization or efficiency improvements.

Speaker Change: You do have.

Speaker Change: A number of very limited redundancy. So we're talking about 100 positions there in the German headquarters.

Speaker Change: Of course, we are finding it very socially responsible way ways to cushion the impact on our colleagues, but there are no big star restructuring programs and what we try to get back to after several years of navigating a very difficult environment is exactly that virtuous circle.

Mark Schneider: So there is no crew point restructuring program. And for those of you who know as well, we know you know that we don't operate this way. Where we operate, what we do is continuous efficiency, individual steps. And you see that over the years, those do amount to good efficiency drives. There certainly was, for example, when you look at the period behind 2017, 2019, behind that commensurate drive in both our margin and organic growth, and that is the business model we pursue. We call it the virtuous circle.

Speaker Change: Mindset that we employed so successfully during 2017 to 2019, we already cranked up the number of initiatives in that regard in 2023.

Mark Schneider: We have more of those coming in 2024 and 2025, and that should restart that virtuous circle, effort. On sustainability and ESG, let me also say very clearly that we are committed to those 2025 commitments we have given a number of years ago. Let me couple that with a very strong statement that should resonate with you. That is when it comes to these massive company-wide global multi-year efforts, really significant undertakings like our sustainable packaging initiative or the reduction in greenhouse gas emissions, you can't day trade in those, okay? If you're in one day, out the next day, accelerate one day, decelerate the next day, what you will do is confuse a large organization to no end.

Speaker Change: We have more of those coming in 2024, and 2025 and that should restart that virtuous circle.

Speaker Change: <unk>.

Speaker Change: On sustainability and ESG.

Speaker Change: You also say very clearly that we are committed to those 2025 commitments. We have given a number of years ago and let me couple of that with a very strong statement that should resonate with you and that is when it comes to these massive companywide global multi.

Mark Schneider: Many of you that have followed us for many years are quite familiar with this. We're not deviating from that. We're not into big style slash and burn restructurings and have no intention of going there. We see them as disruptive. Personally, I've never done one in my life.

Speaker Change: Your efforts.

Mark Schneider: So this is not the way we operate, and we're not deviating from it. What you do have in select locations in Europe, for example, there was one particular announcement yesterday that related to Germany, are individual steps where, either with the goal of clarifying individual processes or digitalization or efficiency improvements, you do have a number of very limited redundancies. So we're talking about 100 positions at the German headquarters, where, of course, we are finding a very socially responsible way to cushion the impact on our colleagues. But there are no big-style restructuring programs.

Speaker Change: Really significant undertakings like.

Speaker Change: Our sustainable packaging initiative or the reduction in greenhouse gas emissions you cant day trade in those.

Speaker Change: Hey, if you're in one day out the next day accelerated one day decelerate. The next day, what you will do is confused a large organization to know and so you have to be thoughtful when you articulate your goals, but then you have to see it through that's the way. It works. This is how you get traction.

Mark Schneider: You have to be thoughtful when you articulate your goals, but then you have to see it through. That's the way it works. This is how you get traction. I do remember when we articulated those targets in 2018, 2019, quite a few people on both of these pushed us, "Why aren't you more ambitious? Why don't you aim higher? Why only 2050 on greenhouse gas? Why not 2040?" We didn't stand out as the highest aiming one when there was almost like an arms race on, you know, who commits more. The good thing now is we're also not dialing it back down. We're basically in a very steady way in which these large projects should be approached, putting it in place.

Speaker Change: And I do remember when we articulated those targets in 2018 19 quite a few people on both of these pushed US why aren't you more ambitious why don't you aim higher why only 2050 on greenhouse gas why not 2040, and so we didn't stand out as the highest aiming one when there was almost like.

Mark Schneider: And what we try to get back to after several years of navigating a very difficult environment is exactly that virtuous circle mindset that we employed so successfully during 2017 to 2019. We already cranked up the number of initiatives in that regard in 2023. We have more of those coming in 2024 and 2025, and that should restart that virtuous circle effort.

Speaker Change: And arms race on you know who commits more.

Speaker Change: And the good thing now is we're also not dialing it back down we're basically in a very steady way in which these large projects should be.

Speaker Change: <unk>.

Speaker Change: Putting it in place and when you look at be 2023 sustainability report you see that on both fronts, we are making steady progress that we're known for.

Mark Schneider: When you look at the 2023 sustainability report, you see that on both fronts we are making that steady progress that we're known for.

Luca Borlini: Thank you, Bruno. Next, question is from Victoria Petrova at Bank of America. Please go ahead, Victoria.

Speaker Change: Thank you Bruno and next question is from Victoria Petrova at Bank of America. Please go ahead Victoria.

Victoria Petrova: Thank you so much. My first question would be on RIG. I just wanted to clarify, when you talked about consistently positive RIG delivery, do you mean every quarter in every geography? Just to make it clear through 2024. Do I understand correctly so that on the Q1, the VMS US RIG impact was probably close to 0.6, 0.7%? Is that the right way to think about it? My additional question on the same topic, you mentioned some SKU rationalization in LATAM. Is it the only SKU rationalization impact in first quarter, or has there been anything else in any other geographies or categories? Should we expect anything to be left in the remainder of the quarter? That's group of questions on RIG. My second question is on private label in the US.

Victoria Petrova: Thank you so much my first question would be on the <unk> I just wanted to clarify when you talked about consistently positive for rig delivery do you mean every quarter in every geography, just to make it clear through 'twenty to 'twenty, four and do I understand.

Mark Schneider: On sustainability and ESG, let me also say very clearly that we are committed to those 2025 commitments we made a number of years ago. And let me couple that with a very strong statement that should resonate with you, and that is, when it comes to these massive, company-wide, global, multi-year efforts, really significant undertakings like Our Sustainable Packaging Initiative or the Reduction in Greenhouse Gas Emissions, you can't day trade in those.

Victoria Petrova: So that on the first quarter, there and Vms you asked regain booked was probably close to 0.60, 0.7% is that the right way to think about it.

Victoria Petrova: And my additional question on the same to peak.

Mark Schneider: Okay, if you're in one day, out the next day, accelerate one day, decelerate the next day, what you will do is confuse a large organization to no end. So you have to be thoughtful when you articulate your goals, but then you have to see it through. That's the way it works. This is how you get traction. And I do remember when we articulated those targets in 2018-19; quite a few people on both of these pushed us, "Why aren't you more ambitious? Why don't you aim higher?".

Victoria Petrova: You mentioned, some SKU rationalization in Latam is it the only SKU rationalization impact in first quarter or has there been any anything else and then your other geographies or categories and should we expect anything to be left in.

Victoria Petrova: The remainder of the quarter. So that's group of questions on the rig and my second question is on private label in the U S. We're seeing private label market share in could easing.

Victoria Petrova: We're seeing private label market share increasing consequently in food. Has it had an additional negative impact on your US performance? Do you expect it has stabilized, or do you expect further disruption in remaining quarters? According to our US analyst, the SNAP consumer traded down properly in summer 2023. Don't you think that your comps will still be challenging in the beginning of Q2? Thank you.

Victoria Petrova: The consequent Lee in food.

Victoria Petrova: Has it had an additional negative impact on your U S performance do you expect it has stabilized or do you expect further disruption in the remaining quarters and according to our U S analyst the snapper consumer trade down properly in summer of 'twenty three.

Mark Schneider: Why only 2050 on greenhouse gas emissions? Why not 2040? And so we didn't stand out as the highest aiming one when there was almost like an arms race on, you know, who commits more. And the good thing now is that we're also not dialing it back down. We're basically in a very steady way in which these large projects should be approached, putting them in place. When you look at the 2023 sustainability report, you see that on both fronts, we are making that steady progress that we're known for. Thank you, Bruno. The next question is from Victoria Petrova at Bank of America. Please go ahead, Victoria.

Victoria Petrova: Don't you think that your comps will still be challenging in the beginning of the second quarter. Thank you.

Mark Schneider: Thanks, Victoria. Let me try and take a stab at both of these. On RIG, what I was referring to is every quarter, but obviously my statements are at the group level, and that is important. You know, we're not getting now into individual-

Speaker Change: Thanks, Victoria, Let me try and take a stab at both of these so on Rick what I was referring to is every quarter, but obviously my statements are at the group level and that is important and you.

Victoria Petrova: You know, we're not getting now into individual.

Victoria Petrova: Mm-hmm.

Mark Schneider: Guidance or expectations here by individual zones and ask for your understanding there. Regarding VMS, I'm glad you're bringing this up. We are on track very much as we outlined in our full year conference call in February, continuing to improve our service levels. You see for two specific brands, Nature's Bounty and Garden of Life, the data there, we try to keep it directional, Victoria, so this is not about precise percentages. Again, it's only referring to the two brands. The important thing is that the direction is up, and we are exactly on track for what we shared with you at the full year call, and that calls for Q2 being an important crossover quarter.

Victoria Petrova: Guidance, our expectations here by individuals sounds and ask for your understanding there.

Victoria Petrova: Our M. P. M. S M class your premium is up.

Victoria Petrova: We are on track very much as we outlined in our full year conference call in February.

Victoria Petrova: Continuing to improve our service levels.

Victoria Petrova: You see for two specific brands.

Victoria Petrova: My first question would be on RIC. I just wanted to clarify when you talked about consistently positive RIC delivery, do you mean every quarter in every geography, just to make it clear, through 2024? And do I understand correctly that in the first quarter, the VMS-US RIC impact was probably close to 0.6, 0.7%. Is that the right way to think about it?

Victoria Petrova: Interest bounty and garden of life at the data there we try to keep it directional Vitoria. So this is not about precise percentages and again, it's only affirmative.

Victoria Petrova: Wearing two the two brands, but the important thing is that the direction is up and we are exactly on track for what we shared with you at the full year call and that calls out for Q2 being an important crossover quarter and then.

Mark Schneider: In Q3 and Q4, we're expecting then that double-digit organic sales growth performance for the entirety of Nestlé Health Science. When I say crossover quarter in Q2, it's important for me where exactly this will happen, where we'll break into positive territory, whether this is something that's closer to April or something to June remains to be seen. You will see continued improvement from Q1. That's the important part. Especially against these weaker comparables in the back half of the year, you will see then with our supply chain restored, double-digit organic growth performance for Nestlé Health Science in its entirety. On the SKU rationalization, remember what Anna referred to is the lapping of some of these events, and you know, only then are they completely out of the system.

Victoria Petrova: And my additional question on the same topic: you mentioned some SKU rationalization in LATAM. Is that the only SKU rationalization impact in the first quarter, or has there been anything else in any other geographies or categories? And should we expect anything to be left in the remainder of the quarter? So that's a group of questions on RIG. And my second question is on private label in the U.S. We're seeing private label market share increasing in food. Has it had an additional negative impact on your U.S. performance?

Victoria Petrova: In Q3 and Q4, we're expecting then.

Victoria Petrova: That double digit organic says core performance for the entirety of Nestle Health science, So when I say crossover quarter in Q2, it's important for me where exactly at this what happened where we'll break into positive territory. Whether this is something thats closer to April or something to June remains to be seen.

Victoria Petrova: You will see continued improvement from Q1, that's the important part and then especially against these weaker comparables in the back half of the year you will see then with our supply chain restored our double digit organic growth performance for Nestle health science in its entirety and then on the.

Victoria Petrova: Do you expect it to have stabilized, or do you expect further disruption in the remaining quarters? And according to our U.S. analyst, the SNAP consumer traded down properly in summer 23. Don't you think that your comps will still be challenging in the beginning of the second quarter?

Victoria Petrova: S SKU rationalization remember what Ana referred to is the lapping of some of these events and only then other completely out of the system and we've also seen a few similar lapping of this type.

Mark Schneider: We've also seen a few similar lappings of this type in zone AOA. There, specifically because we have cleared a few lower margin, lower profitability, low growth dairy products in zone AOA, you know, even last year, beginning of last year. Now as we go through each quarter, you'll see less and less of that lapping going forward. Regarding private label, I think what you're describing, private label in the US, is very consistent with what we're describing to you, and that is with that significant reduction in purchasing power that we have seen with lower income consumers as a result of food price inflation and the SNAP reductions. Obviously, people had to make difficult choices, and in some cases, it could be trading down to a lesser, less pricey brand.

Victoria Petrova: Zone, AOA and there specifically because we have cleared a few lower margin lower profitability low CRO of dairy products in zone AOA.

Victoria Petrova: Thank you. Thanks, Victoria. I'll try and take a stab at both of these.

Victoria Petrova: You know even last year beginning of last year and so now as we go through each quarter, you will see less and less up at that point going forward.

Mark Schneider: So on RIC, what I was referring to is every quarter, but obviously, my statements are at the group level, and that is important. And, you know, we're not getting into individual guidance or expectations here by individual zones, and I ask for your understanding there. Regarding VMS, I'm glad you're bringing this up. We are on track very much as we outlined in our full year conference call in February, continuing to improve our service levels. You can see the data for two specific brands, Nature's Bounty and Garden of Life, here.

Victoria Petrova: Regarding private label.

Victoria Petrova: I think what you're describing private label in the U S. I think what you're describing is very consistent with what we're describing to you and that is.

Victoria Petrova: With that significant reduction in purchasing power.

Victoria Petrova: That we've seen with lower income consumers as a result of food price inflation Anthos nap reductions, obviously people had to make difficult choices and in some cases, it could be trading down to lesser less pricey brand it could be trading down to private label or it could be for example, switching from a prepared.

Mark Schneider: It could be trading down to private label, or it could be, for example, switching from a prepared meal to scratch cooking. There's all sorts of choices that people took. What we expect is starting from Q2 now, at the very least, you don't have this lapping issue anymore, so you're not comparing unfavorably to a quarter that was not impacted by the SNAP reduction. Of course, the issue that there is pressure, financial pressure with the lower income consumer, that by itself, simply because you lap then the reduction doesn't go away. The other good news is that, of course, you do have a very strong job market in the US, and so, income levels are rising, real income levels are rising. Over the next few quarters, I think that financial pressure is going to ease.

Mark Schneider: We try to keep it directional, Victoria, so this is not about precise percentages. And again, it's only referring to the two brands. But the important thing is that the direction is up, and we are exactly on track for what we shared with you on the full year call. And that calls for Q2 to be an important crossover quarter. And then in Q3 and Q4, we're expecting then that double-digit organic sales growth performance for the entirety of Nestle Health Science.

Victoria Petrova: Meal to scratch cooking, so there's all sorts of choices that people took.

Victoria Petrova: And what.

Victoria Petrova: What we expect is.

Victoria Petrova: Starting from Q2 now at the very least you.

Victoria Petrova: You don't have this lapping issue anymore, so you're not comparing unfavorably to a quarter that was not impacted by the snap on injection, but of course the issue that there is pressure financial pressure with the lower income consumer that by itself simply because you lapped and the reduction it doesn't go away. They have a good uses.

Mark Schneider: So when I say crossover quarter in Q2, it's important for me to know where exactly this will happen, where we'll break into positive territory, whether this is something that's closer to April or something to June remains to be seen. But you will see continued improvement from Q1. That's the important part.

Victoria Petrova: But of course, you do have a very strong truck market in the U S. And so income levels are rising and real income levels are rising and so over the next few quarters I think that financial pressure is going to ease. So you have first the lapping far away from Q2 and then we do also believe that some of these financial pressures are good.

Mark Schneider: You have first the lapping fall away from Q2, and then we do also believe that some of these financial pressures are gonna lessen as the strong job market helps here when it comes to real income levels.

Victoria Petrova: To lessen as the drunks.

Victoria Petrova: The strong drop market.

Victoria Petrova: Helps here when it comes to real income levels.

Warren Ackerman: Thank you very much.

Victoria Petrova: Thank you very much.

Victoria Petrova: Yeah.

Speaker Change: Thank you very much thanks, Victoria, So maybe just remind us if you if you can limit yourself to two questions that would be great. Because you are getting close to the NDA. So Sarah Simon from Morgan Stanley. Please go ahead Sir.

Luca Borlini: Thanks, Victoria. Maybe I just remind you if you can limit yourselves to two questions, that would be great because we are getting close to the end. Sarah Simon from Morgan Stanley. Please go ahead, Sarah.

Mark Schneider: And then, especially against these weaker comparables in the back half of the year, you will see, with our supply chain restored, double-digit organic growth performance for Nestle Health Science in its entirety. And then on the SKU rationalization, remember what Anna referred to as the lapping of some of these events. And only then are they completely out of the system.

Speaker 15: Yeah, I had a couple of questions. The first one was on water. I was just wondering if you would update us there in terms of whether you'd seen any change in consumer spending or behavior as a result of the investigation in France. On Nespresso, can you just remind us how much of the business goes through third-party e-commerce, please?

Sarah Simon: Yeah, I had a couple of questions. The first one was on water. I was just wondering if you would update us there in terms of whether you'd seen any change in consumer spending or behavior as a result of the investigation in France. On Nespresso, can you just remind us how much of the business goes through third-party e-commerce, please?

Sarah Simon: Yeah, I had a couple of questions. The first one was on water.

Sarah Simon: I was just wondering if you would update us in terms of whether you'd seen any change in consumer spending.

Sarah Simon: Or behavior as a result of the investigation in France.

Mark Schneider: And we've also seen a few similar lappings of this type in zone AOA, and they are specifically because we cleared a few lower margin, lower profitability, low growth dairy products in zone AOA even last year, beginning of last year. And so now, as we go through each quarter, you'll see less and less of that lapping going forward. Regarding private label, I think what you're describing, private label in the U.S., I think what you're describing is very consistent with what we're describing to you, and that is. With that significant reduction in purchasing power that we've seen with lower income consumers as a result of food price inflation and the SNAP reductions, obviously, people have to make difficult choices.

Sarah Simon: And then on the espresso can you just remind us how much of the business goes through third party E Commerce. Please.

Mark Schneider: Thanks, Sarah. On the second one, asking for your understanding that we have not disclosed that percentage. It is increasing with the rise of the North American business, where this activity is more pronounced, but we have not disclosed that percentage. I'm asking for your understanding there. On the first question, happy to expand. You've seen, I think, a recovery in organic growth in Q1, which is good news. We'll certainly see a continued recovery as some of the supply chain pressures are slowly easing. We're also having innovation on shelf such as the Maison Perrier products, and looking forward to the rollout in the US. I think we are, when it comes to that, geared for a better 2024.

Speaker Change: Thanks, Sara on the second one.

Sarah Simon: Asking for your understanding that we have noticed those that percentage. It is increasing with the rise of the North American business, where this activity is more pronounced but we have not disclosed that percentage some asking for your understanding are there on the first question I'm happy to expand so you've seen.

Sarah Simon: In.

Sarah Simon: I think a recovery in organic growth in the first quarter, which is good news and we'll certainly see a continued recovery as some of supply chain pressures are slowly easing.

Sarah Simon: And.

Sarah Simon: We're also having innovation on shelf such as the Amazon pantry products.

Sarah Simon: Looking forward to the rollout in the U S. So I think we are when it comes to that geared for a better 2024.

Mark Schneider: We have not seen an immediate consumer reaction to some of the headlines. Just wanted to confirm that what we talked about in January and February, we had started under the control of the French government to upgrade our operating practices already two and a half years ago. Clearly, Perrier was the flagship product where we started that. The goal was to assure absolute food safety about what is inside the bottle and, of course, complete conformity with local mineral water regulations. The latest news now that you may have seen yesterday, that on some of these products now we have decided not to ship. That's basically not new news or a new problem, but it is the application of that new process that we had agreed with the French government and the regulator.

Mark Schneider: And in some cases, it could be trading down to a less pricey brand. It could be trading down to a private label, or it could be, for example, switching from a prepared meal to scratch cooking. Starting from Q2 now, at the very least... You don't have this lapping issue anymore, so you're not comparing unfavorably to a quarter that was not impacted by the SNAP reduction. But, of course, the issue that there is pressure, financial pressure, on the lower-income consumer, that by itself, simply because you lapped and the reduction doesn't go away. The other good news is that, of course, you do have a very strong job market in the U.S., and so income levels are rising; real income levels are rising.

Sarah Simon: We have not seen an immediate consumer reaction to some of the headlines.

Sarah Simon: And.

Speaker Change: Just wanted to confirm that.

Sarah Simon: What we talked about in January and February we had started under the control of the French government to upgrade our operating practices are already two two and a half years ago.

Sarah Simon: And clearly Perry was the flagship product, where we started that and the goal was to assure absolute food safety about what is inside the bottle and of course complete conformity with local mineral water regulations and the latest news now that you may have seen yesterday that on some of these products now.

Sarah Simon: <unk>.

Sarah Simon: We have decided not to ship, that's basically not new news or new problem, but it is the application of that new process that we had agreed with the French government and the regulator.

Mark Schneider: And so over the next few quarters, I think that financial pressure is going to ease. So you have first the lapping fall away from Q2, and then we do also believe that some of these financial pressures are going to lessen as the strong job market helps here when it comes to real income levels. Thank you very much.

Mark Schneider: Where you had seen in the South of France some exceptionally heavy rainfalls in late March, early April. Remember, there's a number of wells in the Perrier perimeter. On one of the wells, they led to some measurable contamination, which we promptly shared with the regulator, and jointly we made the decision to temporarily suspend that well and also not to ship a number of products, just in the spirit of absolute food safety. Overall, what you're seeing is essentially the application of the procedure that over 2.5 years we had worked out with them. This is not a new crisis of any sorts.

Sarah Simon: Well you have seen in the south of France, some exceptionally heavy rainfalls in late March early April.

Sarah Simon: On one of the wells remember, there's a number of wells in the Peri parameter on one of the wells that led to some measure of contamination, which we promptly shared with the regulator and jointly we made the decision to temporarily suspend that well and also not to ship a number of products just in for spirit up absolute food safe.

Sarah Simon: Thanks, Victoria. So maybe I just remind you, if you can limit yourselves to two questions, that would be great because we are getting close to the end. So Sarah Simon from Morgan Stanley, please go ahead, Sarah. Yeah, I had a couple of questions. The first one was about water.

Sarah Simon: Ft, but overall, what you're seeing is essentially at the application of the procedure that over two and a half years. We had worked out with them. So this is not a new crisis of any sort.

Luca Borlini: Thanks, Anna. Next question is from Jeff Stent at Exane. Please go ahead, Jeff.

Sarah Simon: Thanks. Our next question is from Jeff Stent that exact please go ahead Jeff.

Speaker 16: Thank you very much. Two questions, if I may. The first one is, you know, when you came in Mark, you know, 2017 or so, you flagged, you know, you were going to turn around a number of the underperformers. You've obviously disposed of quite a lot of the underperformers. I was wondering if you could just talk us through which underperforming businesses you believe you've sort of organically turned around. That'd be the first question. The second question, perhaps for Anna, is in late 2021, Nestlé sold around 4% of L'Oréal. Since then, L'Oréal shares are up 10% and Nestlé shares are down around 25%. Why would it not make sense for you to sell some more L'Oréal at this stage? Thank you.

Jeff Stent: Thank you very much. Two questions, if I may. The first one is, you know, when you came in Mark, you know, 2017 or so, you flagged, you know, you were going to turn around a number of the underperformers. You've obviously disposed of quite a lot of the underperformers. I was wondering if you could just talk us through which underperforming businesses you believe you've sort of organically turned around. That'd be the first question. The second question, perhaps for Anna, is in late 2021, Nestlé sold around 4% of L'Oréal. Since then, L'Oréal shares are up 10% and Nestlé shares are down around 25%. Why would it not make sense for you to sell some more L'Oréal at this stage? Thank you.

Jeffrey Patrick Stent: Thank you very much two questions if I may the first one.

Sarah Simon: I was just wondering if you could update us there in terms of whether you'd seen any change in consumer spending or behavior as a result of the investigation in France. And then, on Nespresso, can you just remind us how much of the business goes through third-party e-commerce, please? Thanks, Sarah.

Jeffrey Patrick Stent: When you came in more.

Jeffrey Patrick Stent: 2017, or so you fly deal you are going to turn around the number of the Underperformers.

Jeffrey Patrick Stent: You've obviously dispose the quite a lot of the underperformers.

Jeffrey Patrick Stent: Wondering if you could just talk us through which underperforming businesses, you believe you're sort of organically turned around.

Mark Schneider: On the second one, I ask for your understanding that we have not disclosed that percentage. It is increasing with the rise of North American business, where this activity is more pronounced, but we have not disclosed that percentage. So I'm asking for your understanding there.

Speaker Change: That'd be the first question.

Jeffrey Patrick Stent: Second question, perhaps Toronto is in late 'twenty, one nationally sold around 4% L'oreal.

Jeffrey Patrick Stent: Since then l'oreal shares are up 10% and nationally known.

Mark Schneider: On the first question, I'm happy to expand. So you've seen, I think, a recovery in organic growth in the first quarter, which is good news. And we'll certainly see a continued recovery as some of the supply chain pressures are slowly easing, and we're also having innovation on the shelf, such as the Maison Perrier products, and looking forward to the rollout in the U.S. So I think we are, when it comes to that, geared for a better 2024.

Jeffrey Patrick Stent: 25.

Jeffrey Patrick Stent: So why would it not make sense for you to sell some more l'oreal at this stage. Thank you.

Mark Schneider: Thanks, Jeff. Happy to address both of these. Look, on the underperformers, what you've been able to track over the years is of course the large divestitures of businesses that we considered non-core or where we didn't see an area of strategic focus going forward. Beneath the surface, what we have established is a very thorough process where business sale by business sale, we review with each of the businesses underperforming items and then agree on a fixed plan or over time trade out of these. Sometimes they may not even make headlines because these are minor product divestitures or things that we simply discontinue. That process is ongoing and is alive.

Speaker Change: Thanks, Jeff So I'm happy to transpose piece, so look on the Underperformers.

Speaker Change: What you've been able to track over the years is of course the large.

Speaker Change: Divestitures of businesses that we considered non core where we didn't see an area of strategic focus going forward, but beneath the surface surface. What we have established a very thorough process where business sell by business L will review with each of the businesses.

Mark Schneider: We have not seen an immediate consumer reaction to some of the headlines. And just wanted to confirm that what we talked about in January and February, we had started, under the control of the French government, to upgrade our operating practices already shared with the regulator, and jointly we made the decision to temporarily suspend that well and also not to ship a number of products just in the spirit of absolute food safety. But overall, what you're seeing is essentially the application of the procedure that we worked out with them over two and a half years ago. So this is not a new crisis of any sort.

Speaker Change: Underperforming items, and then agree on a fixed plan or over time trade out of these and sometimes they may not even make headlines because these are minor product divestitures or things that we simply.

Speaker Change: Could this continue and so that process is ongoing and it's alive and obviously on the large businesses, while the portfolio transformation slowed down a little bit Doom bar Cobra tiers.

Mark Schneider: Obviously on the large businesses, while the portfolio transformation slowed down a little bit during the COVID years, what I think I was very explicit on in some of the previous calls is that, yes, of course, ongoing portfolio rationalization and portfolio rotation is not stopping. Hence, you saw that with the trajectory of North America in one of our slides today, and this process will go on and we're committed to it. On L'Oréal, look, I have no announcements to make today, but obviously, I hope you appreciate that we've been very good stewards of the L'Oréal stake for you as Nestlé shareholders, and we'll continue to do that going forward.

Speaker Change: What I think I was very explicit on.

Speaker Change: In some of the previous calls is that yes of course.

Speaker Change: Ongoing portfolio rationalization and portfolio rotation.

Speaker Change: It is not stopping and hence you saw that with the trajectory of North America in one of our slides today and this process will go on and we're committed to it.

Jeffrey Patrick Stent: Thanks, Sarah. The next question is from Jeff Stent at Exxon. Please go ahead, Jeff.

Jeffrey Patrick Stent: Thank you very much. Two questions, if I may. The first one is, when you came in, Mark, in 2017 or so, you flagged that you were going to turn around the number of underperformers. You've obviously disposed of quite a lot of underperformers, but I was wondering if you could just talk us through which underperforming businesses you believe you've sort of organically turned around. That'd be the first question

Speaker Change: On L'oreal look I have no announcements to make today, but obviously I hope you appreciate that we've been very good stewards of the l'oreal stake for U S nicely shareholders and we'll continue to do that going forward.

Speaker 16: Thank you.

Jeff Stent: Thank you.

Luca Borlini: Next question is from Tom Sykes at Deutsche Bank. Please go ahead, Tom.

Speaker Change: Next question is from Tom Sykes Deutsche Bank. Please go ahead Tom.

Speaker 17: Yeah. Thank you. Just quickly, you'd mentioned before, a slowdown in the mix improvement and a pickup in volume. I just wondered, is the mix, yeah, what comments you might make on mix and whether you see that as a slowdown sort of within categories or, is that something that's affected by relative growth of categories, the pet versus, others at all? Then just to sort of square off what's being said on VMS, it sounds like you kind of got almost, you know, 40-50% restocking or so in VMS. What's happened to shelf space? Would you say that is where it was pre-COVID levels, or are you looking to drive more through e-commerce than you did before, please?

Tom Sykes: Yeah. Thank you. Just quickly, you'd mentioned before, a slowdown in the mix improvement and a pickup in volume. I just wondered, is the mix, yeah, what comments you might make on mix and whether you see that as a slowdown sort of within categories or, is that something that's affected by relative growth of categories, the pet versus, others at all? Then just to sort of square off what's being said on VMS, it sounds like you kind of got almost, you know, 40-50% restocking or so in VMS. What's happened to shelf space? Would you say that is where it was pre-COVID levels, or are you looking to drive more through e-commerce than you did before, please?

Thomas Richard Sykes: Thank you and just quickly you had mentioned before slowed down and the mix improvement and a pickup in <unk>.

Mark Schneider: And the second question, perhaps for Anna, is in late 21, Nestle sold around 4% of L'Oreal. Since then, L'Oreal shares are up 10%, and Nestle shares are down around 25%. So why would it not make sense for you to sell some more L'Oreal at this stage? Thank you. Thanks, Jeff.

Speaker Change: Volume.

Thomas Richard Sykes: And I just wondered is the mix yeah, what comments you might make on.

Thomas Richard Sykes: On mix and whether you see that as a slowdown sort of within categories or is that something that's affected by relative grace of categories the pet versus.

Mark Schneider: So I'm happy to address both of these. So look, on the underperformers, what you've been able to track over the years is, of course, the large divestitures of businesses that we consider non-core or where we didn't see an area of strategic focus going forward. But beneath the surface, what we have established is a very thorough process where, business cell by business cell, we review with each of the businesses underperforming items and then agree on a fixed plan or, over time, trade out of these. And sometimes they may not even make headlines because these are minor product divestitures or things that we simply discontinue.

Thomas Richard Sykes: Are those at all and then just to sort of square of what's being said on Vms.

Thomas Richard Sykes: It sounds like it can go almost.

Thomas Richard Sykes: 40, 50% restocking also in in in Vms.

Thomas Richard Sykes: What's happened to shelf space and would you say that is where it was pre service levels or are you looking to drive more through.

Thomas Richard Sykes: E Commerce than you did before.

Mark Schneider: Thanks, Tom. Let me start with the VMS question, then maybe between Anna and I, we can see how to address the mix question. On VMS, that question came up a few times after our full year results, and we're obviously very cognizant that when you are absent from the shelf for a while, it's not like you snap your fingers, and then everyone makes the shelf space available for you tomorrow. We have to be realistic in our plan on how to get back on shelf. That said, I think there's a number of mitigating factors here. One is, remember, this is a category that is very prone to online. Online, you do have the proverbial infinite shelf.

Speaker Change: Thanks, Tom Let me start with the BMS question, then maybe between in and I can see how to address the <unk> question. So on Vms that question came up a few times after our full year results and we're obviously very cognizant that when you are at.

Mark Schneider: And so that process is ongoing and is alive. On L'Oreal, look, I have no announcements to make today, but obviously, I hope you appreciate that we've been very good stewards of the L'Oreal stake for you as Nestle shareholders and we'll continue to do that going forward. Next question is from Tom Sykes at Deutsche Bank. Please go ahead, Tom.

Thomas Richard Sykes: Absent from the shelf for a while it's not like you snap your fingers and then everyone makes the shelf space available for you Tomorrow.

Speaker Change: And so we have to be realistic and our plan on how to get back on shelf that said I think theres a number of mitigating factors here. One is remember this is a category that is very prone to online and online you do have the proverbial infinite shelf and so they are it's much easier.

Thomas Richard Sykes: Yeah, thank you. Just quickly, you'd mentioned before a slowdown in the mix improvement and the pickup in volume. And I just wondered, is the mix, yeah, what comments you might make on the mix and whether you see that as a slowdown sort of within categories, or is that something that's affected by relative growth of categories, the PET versus others at all? And then, just to sort of square off what's being said on VMS, it sounds like you can go almost 40, 50% restocking or so in VMS. What's happened to shelf space?

Mark Schneider: There it's much easier for the online retail partners to put you back up, and give you a chance because you're not talking about physically limited shelf space. For the traditional retailers, I can tell you why we did have a number of difficult conversations last fall when we were unable to supply. The good news, given the strength of the brand names that we represent, was that at the end of each of these conversations, there was a very clear signal from these retail partners that they do want to stay in business with us because we have some of the strongest names in the industry, and they know that when it comes to category captaincy and continuous innovation going forward, you know, these brand names do resonate.

Speaker Change: <unk> for the online retail partners to put you back up and give you a chance because you're not talking about physically limited shelf space.

Speaker Change: For the traditional retailers I can tell you why we did have a number of difficult conversations last fall when we were unable to supply the good news given the strength of the brand names that we represent was that at the end of each of these conversations.

Thomas Richard Sykes: And would you say that is where it was at pre-service levels, or are you looking to drive more through e-commerce than you did before, please? Thanks, Tom. Let me start with a VMS question.

Speaker Change: There was a very clear signal from these retail partners that they do want to stay in business with us because we have some of the strongest names in the industry and they know about when it comes to category captaincy and continuous innovation going forward. You know these brand names to resonate and so I think there's openness here to give us that shelf space.

Mark Schneider: Then maybe between Anna and I, we can see how to address the next question. So, at VMS, that question came up a few times after our full-year results. And we're obviously very cognizant that when you are absent from the shelf for a while, it's not like you snap your fingers, and then everyone makes the shelf space available for you tomorrow. And so, we have to be realistic in our plan on how to get back on the shelf. That said, I think there's a number of mitigating factors here. One is, remember, this is a category that is very prone to online shopping. And online, you do have the proverbial infinite shelf.

Mark Schneider: I think there's openness here to give us that shelf space. We are realistic about the plan that it'll take a while to get fully back on. We are underlying it with also some very nice innovation in the VMS space, to make it interesting, not just be back with the same article, but also some exciting new things. When you put all of that together and given that the data shows you the recovery is not like a 1 day thing, but something where you now over 2 quarters have essentially an improvement in recovery process, I think it dovetails very nicely with increasing shelf space becoming available.

Speaker Change: We are realistic about the plan that it'll take a while to get fully back on where underlying it with also some very nice innovation in the Vms space to make it interesting not just be back with the same article, but also some exciting new things and so when you put all that together and given that the data shows you a.

Speaker Change: The recovery is not like a one day thing, but something where you are now over two quarters have essentially an improvement in recovery process I think it dovetails very nicely with increasing shelf space becoming available.

Anna Manz: Yeah. On mix versus volume, I think you've heard a nuance that was more nuanced than we're trying to intend here. We've seen an improvement through the quarter actually in both, and no further nuance than that.

Speaker Change: And our mix versus volume I think you've had a nuance that was more nuance than where we're trying to intend to we've seen an improvement through the quarter actually in base and no no further nuance than that.

Mark Schneider: For traditional retailers, I can tell you why we did have a number of difficult conversations last fall when we were unable to supply. The good news, given the strength of the brand names that we represent, was that at the end of each of these conversations, there was a very clear signal from these retail partners that they do want to stay in business with us because we have some of the strongest names in the industry and they know that when it comes to category captaincy and continuous innovation going forward, these brands do resonate. And so I think there's enough openness here to give us that shelf space. We are realistic about the plan that it'll take a while to get fully back on.

Luca Borlini: Thanks, Anna Manz. Finally, the last question is from David Hayes at Jefferies. Please go ahead, David.

Speaker Change: Thanks, Amit.

Speaker Change: Finally, the last question is from Debbie days of Jefferies. Please go ahead David.

Speaker 18: Hello. Thank you. Good afternoon, all. Just one on margin. I know it's a sales call, a quick one on margin outlook, and then one just to follow up on Nespresso. On the margin outlook for next year, 17.5, 18.5, you seem to imply on the full-year call that where you sit on that range was perhaps largely down to input costs. I guess, given what we've talked about on input costs, given to some extent indications of higher competition than perhaps you were thinking and the US slowdown, which has a higher margin market, would seem to be kind of diluted as well.

Debbie: Thank you. Good afternoon. So just wanted to Marge I notice the sales go up with what our margin outlook and the ones to follow up on the spread stays on the margin outlook for next year 17 out of 18 off.

David: It seems to imply on the full year call. The what you said on that range was largely down to.

David: Input costs, I guess, given what we've talked about on input costs given to some extent indications of higher competition that perhaps you were thinking and the U S slowdown, which is a high margin market, which seem to be kind of be dilutive as well I just wonder whether you would say that yes being at the bottom end of that range is sensible and or whether there's other factors that you would point to.

Speaker 18: I just wonder whether you would say that yes, being at the bottom end of that range is sensible and/or whether there are other factors that you would point to that would maybe offset some of those hypotheses or those dynamics. Then the second question on Nespresso follow up, just this third party online platform point. Are those sold with still a direct relationship with the consumer in some form? Are you still getting all the data and consumer intel, which I know was a big thing for Nespresso, that you stayed with that direct relationship? Or is that something you're easing away a little bit on moving forward? Thank you.

Debbie: Would maybe offset some of those that hypotheses all those dynamics and then the second question on this briefly follow up just as third party online platform point.

Mark Schneider: We are underlying it with some very nice innovation in the VMS space to make it interesting, not just to be back with the same article but also some exciting new things. And so when you put all of that together and given that the data shows you the recovery is not like a one-day thing but something where you now, over two quarters, have essentially an improvement in the recovery process, I think it dovetails very nicely with increasing shelf space becoming available.

Debbie: So with still a direct relationship with the consumer in some form are you still getting all the data and consume it.

Debbie: Intel, which and there was a big thing for Nespresso states with that direct relationship or is that something youll easing away a little bit on a moving forward. Thank you.

Mark Schneider: Thanks, David. Let me try and take a crack at both. Look, we did confirm our margin guidance for this year today, so I think that should give you some confidence for this year. From what I've seen until now, I haven't seen any reason to throw into doubt the 2025 algorithm. Here again, it's only Q1, and this is a sales update, as you know, but I'm not seeing anything right now that would throw that significantly into question. Regarding the third-party business at Nespresso, this was not new.

Speaker Change: Thanks, David Let me try and take a crack at Bell. So look we did confirm our margin guidance for this year today. So I think that should give you some confidence for this year and then also from what I've seen until now I haven't seen any reason to trying to doubt the 'twenty to 'twenty five algorithm.

Mark Schneider: Yeah, and on mix versus volume, I think you've heard a nuance that was more nuanced than we're trying to intend here. We've seen an improvement through the quarter actually in both, and no further nuance than that. Thanks, Tom. And finally, the last question is from David Hayes at Jefferies. Please go ahead, David.

Speaker Change: So here again and so on your first quarter and this is a sales update as you know but.

Speaker Change: I'm not seeing anything right now that would trough at significantly into question.

Debbie: Regarding the third party.

David Hayes: So just one on margin, I know it's a sales call, a quick one on margin outlook and then one just to follow up on Nespresso. So on the margin outlook for next year, 17 and a half, 18 and a half. He seems to imply on the four-year call that where you sit on that range is perhaps largely down to input costs, I guess, given what we've talked about in terms of input costs, and or whether there's other factors that you would point to that would maybe offset some of those hypotheses or those dynamics.

Debbie: Business Aetna's press L. This was not new so this is something that in the U S goes back to I think the year 'twenty 18 or so.

Mark Schneider: This is something that in the US goes back to, I think, the year 2018 or so, when we struck some arrangements that still allow us to get some of the essential data, that is important for us to understand who our consumers are, but also made it more convenient for consumers to put, basically Nespresso products into one basket and not migrate to a different website and then do the individual transaction there. I think just like the Vertuo system was a very nice growth driver for the US because it was serving the need for a large cup system, that convenience also helped a lot with our North American expansion.

Debbie: When we struck some arrangements there's still an hours to get some of these central data.

Debbie: That is important for us to understand who our consumers are but also made it more convenient for consumers too.

Debbie: Put basically an espresso products into one basket and not migrate to a different website and then to the individual transaction there.

Debbie: And I think just like they were tool system was very nice growth driver for the U S. Because it was serving the need for a large cup system.

David Hayes: And then the second question on Nespresso, follow up, just this third-party online platform point. Are those sold in a direct relationship with the consumer in some form? Are you still getting all the data and consumer intel, which I know was a big thing for Nespresso that you stayed with that direct relationship? Or is that something you're easing away a little bit on moving forward?

Debbie: That convenience also helped a lot with our north American expansion. It is largely a north American phenomenon and I.

Mark Schneider: It is largely a North American phenomenon, and I think with the growth of North America, which is by now the largest market for Nespresso, the importance of that has then also increased. Hence, again, it's not an item that I would lose a lot of sleep over from your perspective. On a full year basis, it doesn't make a difference. When you're asking specifically about the individual quarter, then the timing of some of these orders can make a difference. With that, thanks a lot for the questions. Thanks a lot for joining us today. As mentioned, we're curious about your feedback when it comes to this new format, and we hope you like it and it serves your needs in the best possible way.

Debbie: I think with the growth of North America, which is by now have the largest market. Upon his price. So the importance of that has then also increased and hence again, it's not an item that I would lose a lot of sleep over from your perspective and on a full year basis. It doesn't make a difference, but when we are when you're asking specifically about the individual.

David Hayes: Thank you. Thanks, David. And let me try and take a crack at both.

Mark Schneider: So look, we did confirm our margin guidance for this year today. So I think that should give you some confidence for this year. And then also, from what I've seen until now, I haven't seen any reason to try to downgrade the 2025 algorithm.

Debbie: Third quarter, then the timing of some of these orders can make a difference.

Speaker Change: So with that thanks, a lot for the questions. Thanks, a lot for joining us today and as mentioned were curious about your feedback when it comes to this new format.

Mark Schneider: So here again, and it's only the first quarter, and this is a sales update, as you know, but I'm not seeing anything right now that would significantly draw that into question. Regarding the third-party business, Etna's Presso, this was not new. So this is something that in the U.S. goes back to, I think, the year 2018 or so, when we struck some arrangements that still allow us to get some of the essential data that is important for us to understand who our consumers are but also make it more convenient for consumers to put basically Nespresso products into one basket and not migrate to a different website and then do the individual transaction there.

Speaker Change: We hope you liked it and it serves their needs in the best possible way.

Mark Schneider: I hope that our confidence here about the strong RIG improvement in Q2 and the dead reliable delivery for the rest of the year did shine through. We look forward to talking to you as part of H1. Thank you.

Debbie: Hope that our confidence here about being a strong ROIC improvement in Q2 and be reliable delivery for the rest of the year did shine through and we look forward to talking to you as part of H one. Thank you.

Debbie: [music].

Debbie:

Debbie: Okay.

Debbie: [music].

Debbie: Yeah.

Debbie: [music].

Mark Schneider: And I think just like the Vertuo system was a very nice growth driver for the U.S. because it was serving the need for a large cup system, that convenience also helped a lot with our North American expansion. It is largely a North American phenomenon, and I think with the growth of North America, which is by now the largest market for Nespresso, the importance of that has also increased.

Debbie: Yes.

Debbie: Okay.

Debbie: [music].

Mark Schneider: And hence, again, it's not an item that I would lose a lot of sleep over from your perspective, and on a full year basis, it doesn't make a difference. But when you're asking specifically about the individual quarter, then the timing of some of these orders can make a difference. So with that, thanks a lot for the questions. Thanks a lot for joining us today. And, as mentioned, we're curious about your feedback when it comes to this new format.

Debbie: Okay.

Debbie: Yes.

Debbie: Okay.

Debbie: [music].

Mark Schneider: And we hope you liked it and it served your needs in the best possible way. We hope that our confidence here about the strong RIC improvement in Q2 and the reliable delivery for the rest of the year did shine through. And we look forward to talking to you as part of H1. Thank you.

Debbie: Yeah.

Debbie: [music].

Debbie: Yeah.

Debbie: [music].

Q1 2024 Nestle SA Earnings Call - Q&A

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