Thank you, everybody, for joining the Nestlé fireside chat. The eagle-eyed amongst you might have noticed a slight typo on the holding slide. Apparently, it has changed outside, but it's not in here. Good morning, Anna, and thanks for being here. I think, given the sudden change of the CEO, it's really appreciated that you've fronted up, done the meetings yesterday, and been as transparent as you can be. You're now happy to sit down and talk to me and your investors sitting in the audience, and those analysts and investors who are listening online or during the playback. Thank you. OK, let's get into this. I'm going to ask you the elephant in the room question. Can you maybe just outline as best you can what happened with Laurent? Can you give us some context as far as you're able? Sure. Back in May, we received a speak-up through our internal channels alleging a romantic relationship with an employee and improper favoritism. That was investigated through an internal investigation overseen by the board, and no evidence was found at that point. At that point, Laurent also made a personal statement stating that there had been no such thing. Subsequent to that, we had a number of other speak-ups making slightly different allegations and with slightly different information. On the back of that, the board initiated a second, broader external investigation. It was that that triggered information that led to the board believing that there had been a breach of conduct and that they needed to act to change the CEO. OK. Thank you. In terms of the speed of change, you know, why did it happen so quickly? Can you maybe explain a little bit around the succession process? I think some people have been a bit surprised that perhaps there hasn't been a full internal or external process. What was the thinking? Sure. It's interesting. In fact, we've had lots of questions about succession at Nestlé. Laurent was 62 years old. He's 63 years old now. Of course, the boards have been focused on succession considerably anyway. A lot of work had been going on in the background, looking at both internal and external candidates. We didn't expect to find ourselves here now. Timing has come earlier. I think the reason you don't see us do an external search now is because the board felt that, actually, they'd done all of the work and were well placed, therefore, to appoint the best candidate that they have identified, which is Philipp. In many ways, given that that work has been done and they can move quickly to appoint Philipp, it allows us to keep real momentum in the business. Can you tell us a little bit more about Philipp? Or is it Phil or Philipp? Why he's the right CEO for Nestlé and his background? He does seem to me he's a bit of a break from the past. He's a bit younger, 49 years old. Makes me feel old. He only joined the executive board, I think, in January. Am I right in saying that? He's led Nespresso, but he hasn't really had wider Nestlé experience. Just a little bit about him and his biography, I guess. Sure. Philipp's been with Nestlé for more than 20 years. He's done a broad range of jobs. He's run the global coffee business for Nestlé. It was Philipp that drove the rollout, for example, of Starbucks into 90 countries around the world. More recently, he's led Nespresso. He's a really strategic, thoughtful leader. He's also very pragmatic and executionally focused. I've seen that working alongside him. Since he's been in Nespresso, he's really come into that job fast. I've seen him act to invest to drive growth boldly whilst driving simplification across the organization. I absolutely see why the board have made the choice that they've made. I think he'll bring a freshness of perspective and, I think, a pace to change at Nestlé. I think that's one of the reasons that the board has made this appointment. When shall we expect Philipp to present to markets and meet analysts and investors? I'm aware there's a lot of demand. You'll see him at Q3, and we're looking at ways to introduce him to the investment community ahead of that. We'll come back to you on that one. We've heard the demand. OK. Maybe segue in terms of, like, you know, your time at Nestlé. I'd be very interested to understand how the performance management of Nestlé has evolved over time on the KPIs. You know, maybe you can give some examples. Is there a common set of metrics now that everybody's aligned on, and maybe what they are? Yeah. As we focused on delivering organic growth, the focus is about running the business better. What we've done is describe the KPIs that you need to run the group. Actually, if you look across all functions, it's about 50 that cover things from, you know, media sufficiency across to on-time and full deliveries. They are a common set of metrics, and they are cascaded all the way down the group. Most of them are now automated. OK. I say that because the shift is a move from management by PowerPoint, where you can pick and choose the metrics that you're using to describe performance, to a described set of metrics that are informing all of our performance conversations. We talk to those metrics, both at an Executive Board level monthly, but also then at a business level and then down to a country level. I think that is one dimension of the shift. I think the other dimension of the shift that we've been driving is a focus. Rather than focus on everything equally, being really clear where those areas are that have been detracting from growth, the 18 share loss sales, and very specifically performance managing them, but also identifying those areas that will really accelerate growth. Those platforms like RTD Coffee and Pet Therapeutics will really accelerate growth. Again, performance managing them. This concept of focus and not managing to the law of averages is a really important one as we really raise that executional sharpness. I know the CMD, you mentioned the underperformers. I think you said 18 underperformers, 21% of revenues. We don't know every single underperformer, but we've got an idea of what they are. Can you give us an idea, an update, I guess, on since the CMD, how's progress looking on those underperformers? Because it's been quite material in terms of growth. I think it's been a 100- bp drag. Yep. So, yeah. Yes, exactly. Good progress. We have closed the share loss drag associated with those underperformers by more than 1/3 in the last six months. Some of them, actually, three or four of them are now in what I would call sustained share gain. Sustained is an important word because anybody can gain share in a given month. It's got to be on an MAT basis to meet the sustained test. We've got the four of them that are there. Things like MILO, which is a very important product in ASEAN, and Biscuits in Brazil. Good, three or four of those. 80% are moving in the right direction. You've got things like creamers and frozen food all moving towards share gain. There's a couple that are stubbornly not yet making progress. One of those would be Gerber, for example. There, we're taking the actions. It just takes a little while for those actions to flow through. You mentioned Gerber. Can we maybe touch on that? I'd be interested to understand the philosophy where it's more difficult, like Gerber, and it's been an issue for a long time. How do you actually reimagine Gerber? What are you actually doing to fix something that you've tried to fix before to give us confidence that this time you can actually? It's a good question. It starts with metrics because metrics allow you to describe the problem clearly. You know that clear description of, do we actually have taste preference? Do we have product preference? Taste, packaging, consumer need preference. Are we at the right price point versus the competitive set? Do we have distribution share of shelf? Do we have our share of voice? When you do that diagnosis, it's quite clear that we've lost some distribution. We've been losing some distribution because we haven't been delivering against the value proposition. We've done more work to really describe what it takes to deliver on that value proposition and what our consumer really wants versus what we might think that they want. That soup-to-nuts work has been done, and it's been heavily reviewed. The reason it takes a little while to work through is having identified the proposition shift, you then need to act on it. Yeah. Acting on it means working it through with our customers, because to get our distribution back, our customers need to believe in why they are going to give the shelf back to our proposition. That's the process that we're working through at the moment. I want to talk about the changing competition in the coffee landscape. If the KDP/JDE Peet’s deal goes through, KDP's share in coffee will go from 5% to 16%, right? That will close the gap significantly against Nestlé as the global leader in coffee. That would be a seismic change in the coffee industry landscape. How can Nestlé adapt and go even faster when you've got two companies coming together to create a pure play? Yeah. I mean, we are the leader in coffee, and we've got phenomenal brands. I mean, Starbucks, Nescafé, Nespresso are super, and they are performing. Yeah. They're gaining share. You know, we start from a good place. We compete with both of the companies today effectively. The fact that they are coming together to form a good competitor actually should be good for the category as a whole. Strong competitors, strong category, all boats rise. You can be sure that in the interregnum, when there may be a bit of distraction, we will be absolutely out there making sure that we take every advantage of that opportunity. I guess related to that, what we're seeing in the industry at the moment is the creation of a lot of pure plays. You know, whether it's Unilever Ice Cream Magnum, we just talked about the new Keurig coffee company, and other disruptors. It just seems like, you know, in a world where consumers are so choppy and channel shift, that a giant super tanker like Nestlé, how can a giant super tanker like Nestlé keep up with these kind of speedboats of pure plays in different categories when they eat and sleep single categories? What is the advantage still of that scale, I guess? What blew me away when I arrived at Nestlé is the route to market. OK. The power we have in, be it Portugal, Chile, as you go around Indonesia, as you go around the world, and I have been, of the power of our categories playing together. We're in every aisle in the supermarket. That allows us to have a really different conversation with our customers and really have an amazing route to market and a deep, deep understanding of the consumer. I think there's a huge advantage there. This is the and. What the pure plays are good at and we need to be equally good at is that execution focus. That's where you see us focusing, driving that by category execution focus so we deliver just as well and we have the power of our amazing route to market. Where that would come together, to give you an example, would be, for example, in AOA, where we've got a fabulous market presence, largely underpinned by dairy and nutrition, in countries where coffee is a fast-growing category and pet care is, in many places, quite nascent. That route to market that we have of the really powerful, profitable, cash-generating business with the real category focus on top to really drive those categories, that's where you see us competitively. I guess that's a good segue into the question around data. How are you going to go about leveraging data and using your global ISIT platform? You know, GLOBE's been in place for 20 years now, right, or 25 years. Nestlé's got reams and reams of data, but maybe it's not using it optimally to drive consumer insights or better resource allocation and maybe the demand-supply signals. How can you step change the use of data to actually work for you? This is a journey that we are well and truly on. I think Laurent has really accelerated in his time as CEO, and that momentum will continue. We are one of three companies in the world that has a single-instance ERP across the group, so we have amazing data. I can see pretty much anything, anywhere, anytime, and I look. We also have an enormous amount of data; we have 500 m illion records of first-party consumer data as well as customer data. We have the tools now, the digital tools, that put that together to give us the insights to manage our business better and faster, be it marketing return on investment tools, real-time promo tools, as well as some of the supply chain planning and forecasting tools. The shift at Nestlé is moving from allowing markets to pick and choose what tools they take and develop their own if they fancy it, to taking that data, taking the tools that we've got developed, and driving them down the organization. We can go much faster at digitizing if we use our scale to go once, and that's exactly what we're doing. Super interesting. Thank you. I want to get into a couple of the categories and a couple of the key sales. I mean, the biggest single sale in Nestlé is U.S. pet food. Yep. I think it's about 12% of group revenues, if I'm not mistaken. What is the current category growth in the U.S. pet? Maybe if you have a number, cat versus dog. How much capacity are you still to bring on? I'll leave it there. I've got one follow-up on it. Just in terms of the market, the category growth and capacity. Yeah. Let me talk around it a bit because I think context is important here. Firstly, what I would say is the fundamentals of the pet care category that underpin a sort of medium-term trajectory of mid-single-digit category growth are really strong. They are increasing pet adoption, which we're seeing globally, and increasing desire to humanize pets and treat them as members of the families, less babies, more pets, and that growth premiumization. The third one in the emerging world is increasing calorific coverage. The U.S. is at 90%, but Mexico is at 60%, India is at 20%. Actually, Eastern Europe is sort of 70% or so. That's the opportunity. In the U.S., there are also great fundamentals in that we're seeing growth in pets. Actually, we're seeing really good growth in cats. Dogs are flattish. Underneath that, families with multiple dogs are not replacing a third or a fourth dog when they pass away. More families are coming into dog ownership, which, from a category fundamental thing, is a good thing. The desire to treat dogs as pets as members of the family absolutely is very present and stronger in the younger generation. That's who we see coming into pet ownership. The fundamentals are good. It's been a lumpy category for a number of reasons. Firstly, in COVID, we saw significant pet adoption accelerated into a period. That probably has meant that we've seen slightly slower pet growth since, even though it's growing. Secondly, because of that, we have seen capacity shortfalls. Because the category's been light on capacity, we haven't seen the innovation. Innovation is what drives premiumization, that humanization of the pet. That I want a new experience to give my pet and i t's innovation that drives me to try. That has held the category back. Thirdly, you've seen a period of extreme price inflation through 2022 and 2023. We were taking about 25% pricing over that period. In 2024, you've seen all of this come together. Less price inflation. Through the year, we then saw the return of a more normal promotional environment. By normal, I mean less deep than prior to COVID. We have promotion we didn't have in those previous two years. That was deflationary. Coupled with the lack of innovation driving the premiumization, by the end of 2024, the category was flattish. Yeah. You know, which is, you know, felt quite subdued. As we've moved into this year and we're sort of coming through that promo period and we've got a little bit more capacity coming into the category, we've seen it in a 12-week window, probably the highest about 2.5% category growth. It's been a little bit slower the last few weeks, but Pepsi less in hot weather. You know, these things come and go. That's the sort of shape of things. Where are we, though, on that capacity journey? We still do not have enough capacity in wet cat food. The growth in the category, the acceleration that we're seeing, is in cats, which is wonderful because pet cats are wonderfully picky eaters. As somebody told me, a cat can go for nearly a week if it doesn't like the food, not eating, whereas, you know, a dog, it's a matter of seconds. Yeah. Cats are good. We're seeing that nice growth in wet cat food, but we don't have the capacity that we need to meet it in the U.S. at the moment, and that is holding us back. We get more capacity this quarter in Jefferson, and we've got some more capacity coming at the end of the year, which will be really helpful in terms of reigniting growth and category growth as we then bring more innovation. There's also some new, there's new segments, like, you know, refrigerated is a segment. We've seen, you know, General Mills are now making a big push into that area. You talked about Pet Therapeutics was one of the big things at the CMD. Maybe you can sort of touch on those two b its. Those are both faster-growing segments. Of the two, if I just compare them a minute, the one that we are really focused on growing is therapeutics. What is therapeutics? It's specialty diets, often prescribed by a vet to help with pet nutrition and health. Actually, you can do a lot with pet health with the appropriate diet. There we have the R&D. It's very technical. The investment that we are making is to work with vets and veterinary schools around nutrition and educate them in this space and educate them in our products and how they solve problems. It's an area where our share is 10% of the sector of the category, which is significantly lower than it should be, given our share elsewhere and our capabilities. The reason that we're very focused here is it's a high-margin, fast-growing area and w e have the R&D capability. What do we need to do? It's the investment in the footfall to get to those vets. I am more excited about that as an investment because I am very clear on the returns than I am about fresh. Fresh is also growing. You've got different types of fresh. You've got frozen. You've got chilled. You've got some ambient offerings. We know a lot about frozen and chilled and frozen and chilled route-to-market and the complexity and the margins in frozen and chilled route-to-market. It's a harder place to sustainably win profitably. What you see us doing there is making some smaller-scale investments. We've had a stake in Just Food For Dogs for a couple of years now to really explore the space. We also have a number of innovations in this space that we are learning from. We want to be really clear how that investment will scale before we put significant funds behind it. I want to switch gears to China because that was a big topic in the second quarter. You're making quite a big change to the model in China. You're moving much more to a kind of consumer pull from distribution push. Yep. You also, as part of that, taking inventory out. You've got new management in. My question really is, is that how easy is it to actually make that pivot? It is quite a fundamental change. Given the speed of change in China is dizzying, it's so quick. You're trying to do that whilst the market is so dynamic. I'm just interested in the concept of how you go about doing that. Yeah. It's an important change. While, you know, at one level, three to four weeks too much stock is not a dramatic number, it's the difference between having control of your distribution network and therefore the pricing of your products through that network so that everybody is seeing your products as profitable and therefore behind them and not. The other thing is it gives you freshness. That's why it's really important that we get it right. Now, in terms of driving consumer pull, this is about a capability uplift in the market. There are areas where we're doing a really good job. For example, NAN, which is the Nestlé infant nutrition brand, as opposed to illuma, which is the legacy YS one, it's doing really well. It's consistently gaining share because we've absolutely got that consumer offering right. That consumer offering is special diets or special formulas for babies that have allergies or specific intolerances. We have the R&D. We're delivering on that. Because we're delivering on the consumer need, we've got really nice growth. We need the same quality of consumer-led growth on the illuma side. Sharing the capabilities there is one of the ways that we will raise our game on consumer pull on illuma. Another area where it's working well and we need to learn from is in out-of-home. Back to your speed piece, I think we've cracked the speed piece. It's working well because we're working with a customer that knows the consumer well. In out-of-home, we are a big provider of the dairy products that go into Luckin Coffee. For those of you that have been to China, Luckin is the really big coffee chain growing really fast and has a dizzying pace at which new products are launched, you know, two new products each week. They're fascinating products. I mean, last time I was there, I had a cheese cappuccino and a prune. Sounds delicious. Actually, they were, genuinely. Genuinely, they're absolutely delicious. There we've got the R&D pace and the product development working really well, and we are delivering on what is a weekly ideation innovation cycle with Luckin. We know how to do it. What we need to do is build that capability across the organization. That's around uplifted capabilities. That's exactly why we've brought a great leader in across from the Philippines who's been doing it there very successfully to lead the Chinese business and support with the uplifted team. Can I ask you about the pricing rig dynamics? Yep. I think you've said that most of the pricing is done in chocolate. Is there still more to do in coffee? Are you seeing actually new pockets of food price inflation emerging again? Some countries are starting to see it pop up again as a topic. Consumer price inflation. Yeah. The two categories where we are seeing consumer prices move, and that's because of the commodity cost, is coffee and cocoa. Yeah. In terms of where we are on that, we have, as we've said, largely taken the price that we need to take this year on confectionery. There's a little bit more to go, but not much. On coffee, and by the way, that was 10% pricing. On coffee, where we've taken about 5%, we've taken the majority of price, but there's a little bit more in the second half. And the elasticities that you're seeing? Yeah, where we expected them to be. It's worth just saying on elasticities, there's two elements to elasticity. There's the absolute price point and whether you go over a price, a sort of psychological price point for the consumer. There's also elasticity vis-à-vis the competitive set. Elasticities can be a bit distorted if you take price, but your competitor doesn't, and you have a period until they do that distorts things. I say that because I think we have led on pricing in both coffee and confectionery, and generally, we go first. Yeah. Actually, you know, I'm aware that there's been quite a significant number of announcements around price increases more broadly by other players in confectionery in H2, which we won't be taking. Largely, so you know, confectionery, we're seeing what we expected to see. It's a little bit more price elastic than coffee. That's to be expected. Playing through, it's a bit more elastic in LATAM than it is in Europe. You know, where we thought it would be. Coffee performing well. Actually, we've been slightly positively surprised with the price elasticity on coffee. Coffee is a deep, deep habit. I say that smiling, knowing that, you know, it takes an awful lot for me to shift my coffee behavior. I think that is true for many people. We're seeing some sort of interesting things. Obviously, pricing has come up more on roasting ground just because there's more green coffee in it. That's moved people a little bit into soluble, which is good. Pricing is less elastic on soluble, and even less so on portioned where the pricing impacts also have been low. What about Nespresso? Because that's obviously a slightly different cycle in terms of people don't buy it as often. Is there any kind of concern about some maybe delayed elasticity? It's a good question. You know, people don't buy it as often. While we see no evidence of that yet, we continue to watch it closely. OK. Actually, Nespresso has been very, we've taken our price increases well. That's partly because we're investing behind our brands at the same time. Historically, in Nestlé, or the last few years, when we've taken significant price increases, at the same time, we've been reducing marketing spend. I think the difference this year is we're increasing marketing spend where we are taking pricing. I think that's helping us. I don't want to take a big bet on the innovation. Obviously, there's quite a big change in terms of focusing bigger, bolder innovations. Yep. I think you want to build CHF 100 million platforms over, you know, multi-year. Can you give us maybe an update on how those big bets are doing? Any of them that you'd call out? Any that you're scaling more quickly? That'd be really helpful. Yeah. We've got six who said they'll reach CHF 100 million. We've already collectively got to CHF 200 million in the first half, and we've got good momentum. I would say all of them are on track. We've got kind of three that are a little bit ahead, some more than others, three that are there or thereabouts. Usually, it's because we've been a little bit slower to execute because we wanted to get the proposition right rather than any kind of consumer response. You know, where have we got really good performance? Fancy Feast, the pyramid cat food. This is one where it's all about scaling up manufacturing, and actually, at the moment, we can sell more than we can make. OK. Sinergity, the infant nutrition brand with six HMOs and probiotics, which together really build gut health for the infant and very discernible health benefits, is doing very well. That sort of innovation, these are the ones, the thinking behind big bets, which goes broader than these six, actually. It's about really making sure that where we have a winning proposition that should work everywhere, we roll it out with pace. Yeah. Because as I've looked backwards on what's been the single biggest reason we've underperformed our innovation business cases, it's because we haven't launched the brand in the countries that we expected to launch in when we wrote it. When we got there, the priorities had moved on. When you've got a winning proposition that is going to work in all countries. Yeah. We should roll it out. That's what you see us doing, both around the ones we call big bets, but there is also the same level of focus and clarity at the zone level. For example, Kit Kat tablet in Europe is going Europe-wide. That sort of clarity is what we're driving, clarity and focus. Slightly surprised you didn't mention iced coffee as one of the big bets. I mean, in terms of the rolling out quicker, it's a great product. Could you maybe double-click on that? Where are we with that liquid roast? How many markets is it in? Is it doing what you want it to do? Can you go quicker? No, no. It's doing what we want it to do. It's a great product. It's interesting. If you just compare it with Sinergity and Fancy Feast for a minute, the consumer behavioral change is bigger. Because Fancy Feast, you already feed your cat wet cat food. This is a different, more interesting, better one, which your cat loves. Same with infant formula. How to consume infant formula is completely described. It is a better one. Nescafé espresso concentrate, it's a bit of a new concept. It takes a little bit longer to communicate to consumers what it is and how to consume it. It will naturally be a slightly slower build. Yeah. It's building really nicely. We've rolled it out. I don't know exactly how many countries because it's changing by the day. We're exactly where we want to be. I want to ask a final one just on margins. I think, I mean, you outperformed in the first half 16.5%. I think you've said the second half will be 100 basis points lower than the first half, so 15.5%. You still reiterated your full-year margin guidance importantly. Can you maybe walk us through a little bit of that step down from H1 to H2? How much of that is tariffs? How much is, if you can, give us buckets, how much is just higher COGS and currency? That would be helpful. Sure. Maybe just to step back a bit, our margin guidance for the year was to be at or above 16%. We gave that margin guidance before we had seen significant increase in commodity costs, before tariffs happened, and before the U.S. dollar weakened. I say that because a lot has changed. We're holding our guidance. We're holding our guidance because we're doing three things. We're driving efficiencies hard in the business. We have been a bit quicker to take pricing. We work very hard to mitigate the tariff impact through changing footprints, supply footprints, ingredients, but also making sure that we moved product into the U.S. ahead of tariffs. That has all benefited the first half. As I look forward to the second half, actually, the big shift between the two is, yes, we have a bigger tariff impact. The large shift really is the fact that the commodity costs, because of the timing of our hedging, are very much weighted to the second half. We'll see that flow through to the second half. As I look forward to 2026, we've got cost savings, which will continue to come. You'll see us continue to act to improve our gross margin through innovation and pricing. You'll also see that, depending on how commodity prices play out, we should be in a slightly better commodity environment given how coffee and cocoa are moving. All of that will be allowing us to see a margin improvement. I think we're on the buzzer, Anna, sadly. I think we're going to have to cut it there. Thank you for your time. You know, figure out from David whether to break out or not. Okay. No break out. Thank you, Anna, for your time. Always appreciated your support at the conference. Thank you. Okay.