Nestle People first

Quality Management Principles

Employees, people and products are more important at Nestle than systems. Systems and methods, while necessary and valuable in running a complex organization, should remain managerial and operational aids but should not become ends in themselves. It is a question of priorities. A strong orientation toward human beings, employees and executives is a decisive, if not the decisive, component of long-term success. Quality products Nestle focus is on products. The ultimate justification for a company is its ability to offer products that are appealing because of their quality, convenience, variety and price -- products that can stand their ground even in the face of fierce competition. Long-term view Nestle makes clear a distinction between strategy and tactics. It gives priority to the long-range view. Long-term thinking defuses many of the conflicts and contentions among groups. This applies to employment conditions and relations with employees as well as to the conflicts and opposing interests of the trade and the industry. Decentralization Switzerland is home to Nestls Swiss subsidiary, its international headquarters and the registered office of Nestls holding company, but Nestle does not regard its Swiss headquarters as the center of the universe. Decentralization is a basic principle of Nestle. Our policy is to adapt as much as possible to regional circumstances, mentalities and situations. By decentralizing operational responsibility, we create strength and flexibility and are able to make decisions that are better attuned to specific situations in a given country. Policies and decisions concerning personnel, marketing and products are largely determined locally. Uniformity A very important concern at Nestle has to do with uniformity: how consistent Nestle's principles, policies, rules of conduct and strategies should be, and to what extent they should differ depending on the country, subsidiary, region, branch or group of products. Diversification Nestle does not want to become either a conglomerate or a portfolio manager. Nestle wants to operate only those businesses about which it has some special knowledge and expertise. Nestle is a global company, not a conglomerate hodgepodge. Flexibility and simplicity

The public's sense of the power and size of a corporation is often inaccurate, for a company's power is limited by a host of factors including legislation, competition, regulatory bodies and publicity. From a business point of view, it is desirable for a firm to achieve the size best suited to a specific industry or mode of production. To be competitive internationally and make significant investments in research and technology, a larger company has an advantage. Research and development Nestle is probably unique in the food industry in having an integrated research and development program that engages in applied and basic research in the fields of human physiology, health, nutrition and raw materials. Nestle research and development program gives us the capacity to create new types of products that we cannot even imagine today, especially in the critical area where preventive medicine and food products overlap. In addition, as concern for the environment grows, research will play an important role in overcoming environmental problems. Foresight At present, the world faces daunting questions about its ability to provide enough wholesome food for everyone. Malnutrition and poor eating habits are still serious problems in many developing countries. By 2100, the world's population will double. Will it be possible to feed a world with so many inhabitants? At Nestle, the big picture is all about feeding the world and providing food and nutrition for an ever-growing population. Nestle response to this situation is to intensify research, strive for innovations and improve quality. Handling of raw materials The Nestle Group is in principle not directly involved in primary production of raw materials and other food ingredients. In general we use locally available raw materials and purchase them either directly from producers or through existing trade channels. Raw materials have to meet clearly established quality criteria and are checked for possible contaminants including environmental contaminants. Our purchasing specifications comply not only with legal requirements but go further to ensure highest safety and wholesomeness of our products. Packaging Manufacturing comprises all unit operations necessary to transform perishable raw materials into finished products, with the aim to make them safe and convenient for the consumers. The manufacturing activities of the Nestle Group:

respect natural resources by efficient use of raw materials and energy minimize waste generation and emissions ensure environmentally safe disposal of all waste which cannot be recycled.

Marketing and distribution Marketing is based on the principle of satisfying consumer needs. This is the foundation also for the environmental marketing approach of Nestle.

Environmental product claims in advertising, promotional material and on packaging are in accordance with legal requirements, based on solid scientific evidence and used in a serious and reasonable manner. Nestle aim is to minimize wastage in communication, publicity and promotional material, in particular through more precise targeting of marketing activities. Consumer promotions and merchandising material such as consumer offers, in store promotions, display material, leaflets, printed matter, etc. take environmental aspects into account. Information, communication and education Nestls policy is designed to provide correct and coherent information on the activities of the Group. Activities related to the environment benefit from the same treatment and their communication is secured through all currently available means inside and outside the Group. Legislation and regulations It is the policy of the Nestle Group to strictly comply with all laws and regulations relevant to activities. Nestle participate in discussions on food legislation and regulations between international organizations, government representatives, industry, the scientific world and consumer associations.