Nestlé broadens strategic co-operation with Barry Callebaut in Europe

   
To Press Releases listVevey,Feb 15, 2007

Nestlé S.A. and Barry Callebaut AG announce their intention to broaden their strategic co-operation in Europe. The project spans three countries and includes the transfer of production facilities in Italy and France, as well as a long-term supply contract for Barry Callebaut to furnish chocolate mass to Nestlé chocolate factories in Russia. The agreement is subject to employee consultation as well as to regulatory approval. The two parties expect a final agreement to be signed during the summer of 2007.

For Nestlé, the worldwide move away from primary cocoa transformation is part of its ongoing strategic transformation process. This accounts for the proposed sale of the cocoa liquor and chocolate mass production facility at the San Sisto factory in Perugia. Nestlé understands that the new acquirer will significantly increase capacity in this facility.

Nestlé looks forward to extending the already existing supplier-customer relationship with Barry Callebaut, with its high degree of specialization and state-of-the-art know how. Thus, Nestlé chocolate factories in Russia will receive significant amounts of chocolate mass from Barry Callebaut.

Furthermore, Nestlé proposes to transfer its chocolate factory in Dijon to Barry Callebaut. Widening the product range should reverse declining volumes and improve the competitiveness of this plant. Nestlé will outsource the production to Barry Callebaut who, in addition, can use the existing capacity and equipment to manufacture some of its own products. Under the proposal the existing workforce at Dijon would be transferred to Barry Callebaut.

Nestlé is convinced that the challenging and changing chocolate market in Europe remains promising, provided that the right structures are in place. Nestlé sees the strategic co-operation with Barry Callebaut as a positive element in the Group's determination to remain a key actor in the European chocolate market.

Contacts:
Nestlé Corporate
Media: François-Xavier Perroud Tel.: +41-21-924 2596
Investors: Roddy Child-Villiers Tel.: +41-21-924 3622
Nestlé France
Media: Jean-Christophe Huertas Tel.: +33-1-60 53 15 97
Nestlé Italiana
Media: Carlo Salvadori Tel.: +39-348-72 72 052
Nestlé Russia
Media: Alik Tuigunov Tel.: +7-495-727 6640