On April 6, at the main forum of the 8th China FMCG Innovation Conference, New Distribution specially invited Zhang Xiqiang, Executive Vice President of Nestlé Group and Chairman and CEO of Nestlé Greater China, to the conference site. Zhang has served as Executive Vice President of Nestlé Group and Chairman and CEO of Nestlé Greater China since January 2022. He has nearly 30 years of experience in the pharmaceutical and FMCG industries, with extensive expertise in finance, operations, sales, and management. He holds a Bachelor's degree in Economics from the University of Shanghai for Science and Technology and an MBA from the School of Management at Fudan University (Hong Kong). He also holds both Chinese CPA and Australian CPA certificates. In 2012, Zhang joined Nestlé as Senior Operations Director for Wyeth Nutrition in Greater China. In 2015, he was promoted to Senior Vice President of Retail for Greater China. Since 2017, he has served as CEO of Shanghai Totole Food Co., Ltd. and Head of Nestlé's Culinary Foods business in Greater China. At the conference, Zhang delivered a keynote speech titled "Let Innovation Become a Powerful Engine for High-Quality Development." The following is an excerpt from his speech (partially abridged).

Nestlé's Path to High-Quality Development

The theme of this conference is excellent—innovation, specifically innovation in consumer goods. So today, I will speak on the theme of "High-Quality Development as a Growth Engine." Today, Nestlé is the world's largest food and beverage company by revenue, consistently ranking first globally. We just released our results: last year's sales were around 700 billion RMB, with profits around 120 billion RMB. In 2022, among all publicly listed food and beverage companies globally, we achieved the highest market capitalization, which is related to our profitability. Therefore, we must continue to focus on profitability in the future. Many years ago, Nestlé implemented a "1+N" strategy, operating in 186 countries and regions, with 354 factories globally and 260,000 employees worldwide. We provide more than 1 billion product units to consumers every day. Innovation has always been Nestlé's core value and DNA.

157 years ago, Nestlé's founder, Henri, noticed that poor newborn mothers lacked good breast milk substitutes, so he innovatively invented infant formula, which was based on cow's milk powder. Although the quality at that time was far inferior to modern products, it was one of Nestlé's earliest innovations. Today, Nestlé has become a giant in the global food and beverage industry, still adhering to innovation as the cornerstone of development. Why? Nestlé's path to high-quality development has been driven by innovation from the very beginning. As everyone knows, Nestlé's purpose is to "Unlock the power of food to enhance quality of life for everyone, today and for generations to come." We aim to bring consumers the best, healthiest, and most technologically advanced products. This is the value of our entire company. We are committed to fully exploring the power of food to enhance the quality of life for every individual.

This year marks Nestlé's 36th year of operation in China. In 1987, Nestlé started its milk powder business in Shuangcheng District, Harbin, Heilongjiang Province, and in 1988, it started its coffee business in Dongguan, Guangdong Province. Last year, Nestlé's net sales in China reached 41.3 billion RMB, with total net sales around 50 billion RMB. Currently, Nestlé has 25 operating bases and 8 innovation and R&D centers in China.

Innovation is the only driving force for development. Nestlé's corporate innovation focuses solely on consumers and customers. The ultimate goal of all our work is to ensure that every person and every family enjoys a beautiful life, to give back to our communities, and to create shared value. In terms of sustainable development and ecological protection, Nestlé is a global leader because large enterprises must take responsibility, lead by example, and guide other companies to progress together. On this basis, we implement our strategies step by step.

Innovation Goes Far Beyond This

1. Coffee Business

Specifically, Nestlé is most famous for Nescafé, one of the most renowned brands in the coffee sector. In 1938, Nestlé invented instant coffee, the world's first. In the 1950s, Nestlé introduced freeze-drying technology to preserve the original aroma of coffee and allow long-term storage while maintaining consistent taste. In 1961, to improve consumers' taste experience, Nestlé invented Coffee-Mate, which became very popular in the U.S. market. In 1988, Nestlé launched Nespresso, a convenient and high-quality home capsule coffee system. In 2018, Nestlé entered a strategic partnership with Starbucks to expand the high-potential out-of-home business and formed a global coffee alliance to ensure the highest quality coffee is provided to consumers. In 2020, recognizing that many consumers wanted freshly roasted coffee, Nestlé introduced the Roastelier solution, opening its first store in Shanghai's Jing'an Temple area. Freshly roasted coffee has a different taste, and you can enjoy it within five minutes. This is our innovation in the coffee field, and we are continuously doing more new things.

2. Milk Powder Business

In infant nutrition, one of Nestlé's core products is infant formula. For example, Wyeth Illuma was developed through years of research tailored to Chinese conditions. I still advocate that breastfeeding is best, but when it's not possible, you must choose the best formula. Since the 1980s, Nestlé has been dedicated to researching breast milk composition, discovering that breast milk contains over 600 nutrients and components that sustain life—truly nature's most precious gift to humanity. Nestlé has been studying how to replicate the composition and ratio of breast milk, such as the recent research achievement—HMO (Human Milk Oligosaccharides)—aimed at providing infants with the safest care. Besides infant formula, Nestlé has also made many innovations in dairy and special medical foods. We focus on high-value products rather than ordinary milk powder. Our premium, innovative, and functional products are highly recognized in the market. Many consumers today suffer from blood sugar issues. Our sugar-controlling milk powder has been clinically proven to help control blood sugar and delay blood sugar peaks, which is very helpful for consumers concerned about blood sugar and those with diabetes. In special medical foods, Nestlé has also invested years of research and significant resources. For example, our product Suyisu took five years and tens of millions of RMB in investment to develop. It is the first special medical formula approved for oncology use, achieving dual enhancement of immunity and nutrition. Its three unique nutritional selling points are deeply recognized and loved by consumers.

3. Culinary Foods

In the culinary foods sector, we are also actively innovating. For example, in oyster sauce, we found that the biggest problems are that high-end oyster sauce is too expensive, low-end oyster sauce is of poor quality, and glass bottles are inconvenient to pour. Therefore, Totole creatively launched a squeeze-bottle packaging for abalone oyster sauce to make it easier for consumers to use. It is sold on various platforms and sells very well. Moreover, Totole's oyster sauce bottles are smaller, more suitable for small families, and can be used up in about one to two weeks, ensuring freshness with repeat purchases.

4. Pet Care

In Nestlé's portfolio, pet care is the second-largest business, second only to coffee. The pet brand PURINA has global sales exceeding $12 billion, with more than 30 world-first technologies and continuous investment in R&D. Its products help improve pets' immunity, making them smarter and more active. Additionally, Nestlé's products help reduce pet owners' allergies to pets, bringing more joy to pet owners.

5. Giving Back to Society

Beyond product innovation, Nestlé is also committed to giving back to society. For example, our DFI Dairy Farming Institute in Harbin teaches local dairy farmers cattle breeding and management, helping them improve productivity and quality. This is our contribution to China's dairy farming. We are also proud to have the Nestlé Coffee Center in Yunnan. More than 30 years ago, we brought coffee seedlings to China for the first time, and through years of effort and innovation, we have turned Pu'er, Yunnan, into a globally leading coffee origin. This is something we are very proud of. Now, Yunnan coffee is in short supply, with many brands sourcing coffee beans there, and Yunnan coffee is exported to many parts of the world. Our mission is not only to do business well but also to bear social responsibility. We are committed to achieving carbon neutrality across the entire value chain by 2050. We have formulated the "2050 Strategy" and "2030 Strategy" and incorporated ESG KPIs into the compensation system of every manager.

Finally, our innovation goes far beyond this. We innovate not only at the product level but also in organizational methods, business models, and mechanisms and processes. We hope to drive Nestlé's continuous high-quality development through ongoing innovation.

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