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Nestlé S.A. : Nestlé CEO warns water scarcity is major threat to food industry



Nestlé S.A. : Nestlé CEO warns water scarcity is major threat to food industry

Nestlé S.A. / Nestlé CEO warns water scarcity is major threat to food industry
. Processed and transmitted by Thomson Reuters ONE. The issuer is solely
responsible for the content of this announcement.

Nestlé Chief Executive Officer Paul Bulcke has used his keynote speech at the
annual City Food Lecture in the United Kingdom to warn the food industry that
water scarcity is one of the greatest threats it faces.

In his speech, 'Water - the linchpin of food security', Mr Bulcke argued that
overuse of fresh water poses not only a serious environmental hazard, but also
a major risk to political and social stability.

He said water scarcity will be the cause of massive food shortages within the
next 15-20 years and that now was the time for industry, governments and other
stakeholders to act decisively.

Grain shortfall
"It is anticipated that there will be up to 30% shortfalls in global cereal
production by 2030 due to water scarcity," said Mr Bulcke.

"This is a loss equivalent to the entire grain crops of India and the United
States combined.

"Resource shortages lead to price increases and volatility," he continued.

"Higher prices for staple cereals are not so much of a problem for the West,
or for most people in Europe. But a price increase of more than 200% will
certainly be felt when you have to spend 40 to 60% of your income on food,
mostly staple food."

Food industry challenges
Mr Bulcke took the opportunity to highlight some of the other challenges
currently facing the food industry, particularly the horsemeat crisis that has
affected a number of retailers and manufacturers in Europe, including Nestlé.

"The horse meat issue affects the entire industry," he said. "Widespread fraud
is being committed by a few across Europe. I understand that many consumers
and many of you in the industry feel misled, I feel the same. This should not
happen, it is unforgivable. We have let our consumers down.

"The success of the food industry in general, and of companies such as Nestlé,
is built on trust," he continued. "Trust is our most important asset and we
should all work hard not to lose it.

"What our industry is facing today is a trust issue. It is wrong and
unacceptable that a minority has put our entire industry and all the people
involved in it in such a bad light."

Mr Bulcke pointed out that while the food industry is often heavily
criticised, it has played an important role in the global development of
society in feeding millions of people with safe and nutritious products.

"Our industry has made major progress over the years," he added. "Food has
never been safer and yet, the perception is sometimes the opposite. But the
current issue is not a food safety issue, it is a trust issue.

Affordable, quality food
Mr Bulcke cautioned that if food companies are to continue to produce enough
affordable, quality food for the fast-growing and increasingly prosperous
global population, ensuring availability of fresh water is vital.

"There will be a further 2.3 billion people on the planet by 2050, adding to
existing demand for food and energy," he said.

"Already today, water withdrawals are in excess of sustainable supply, and
this gap continues to widen.

"It is only by working together with policymakers, civil society, agriculture
and other stakeholders at local and international levels that we can develop
effective, coherent and concrete action.

"This is an issue that must be addressed urgently. I am convinced it can be
solved. We should give water the right priority, the right value."

Potential savings
Mr Bulcke said that agricultural productivity rates have failed to keep up
with global population growth.

Although reducing water use in agriculture was a major challenge he said, it
was also a great opportunity to make a difference.

"More than two thirds of all the world's fresh water is withdrawn by
agriculture, but the physiological need of plants amounts to only half of this
amount," Mr Bulcke continued. "This means there is potential to make enormous
savings."

He gave examples of the different ways Nestlé works with its agricultural
partners to reduce water use, from breeding coffee plants with higher drought
tolerance, to training farmers in improved irrigation and water saving
techniques.

He also mentioned how the company has made savings in its manufacturing
operations, reducing its water withdrawals from 4.5 litres per USD of sales
ten years ago to only 1.5 litres today.

Distorting policies
Mr Bulcke referred to use of cereal crops for biofuels as increasing demand
for water and driving price increases in staple foods.

"In 2005, 12% of corn in the United States was used for biofuels," he said.
"By 2011, this had risen to 42%. This means that more than 115 million tonnes
of grain - enough to feed 370 million people - is being diverted to biofuels.

"Nestlé is not against biofuels, but we are against using food for fuel."

Reducing waste
Mr Bulcke pointed out that almost one-third of food produced for human
consumption is lost or wasted globally, which amounts to about 1.3 billion
tonnes per year.

He said that further water savings could be made if more was done to address
food waste across the value chain - from agricultural production down to
household consumption.

He said that by purchasing milk directly from farms in developing countries,
Nestlé has managed to reduce losses between farm and retail by up to 1.4
million tonnes annually, an "enormous saving" compared to traditional milk
supply chains.

Manufacturers could also do more to help consumers in industrialised countries
reduce the amount of food they throw away, for example by offering products in
smaller portions.

Annual event
Mr Bulcke was speaking at London's prestigious Guildhall in front of an
invited audience of food industry and media representatives.

His lecture was followed by a question and answer session with a panel of food
industry specialists, chaired by Sheila Dillon of BBC Radio 4's 'The Food
Programme'.

The City Food Lecture is given every year by a leading figure in the food
business who is invited to speak about the issues they regard as most
important in shaping the way food is produced, distributed, marketed, sold and
consumed.

Related information:
Nestlé's policies on water: www.nestle.com/csv/water
Nestlé UK: www.nestle.co.uk

Read more stories about Nestlé and water:
Nestlé celebrates 20 years of community partnership to protect water sources
in France
www.nestle.com/Media/NewsAndFeatures/Pages/Nestle-Agrivair-anniversary.aspx
World Water Day: Nestlé's efforts on water
www.nestle.com/media/NewsAndFeatures/Pages/world_water_day_2012.aspx
Nestlé goes on the road to promote water conservation in the US
www.nestle.com/Media/NewsAndFeatures/Pages/NW-tour-truck.aspx

Media enquiries
Tel: +41 21 924 2200
Email: mediarelations@nestle.com

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Source: Nestlé S.A. via Thomson Reuters ONE
HUG#1680984

--- End of Message ---

Nestlé S.A.
Avenue Nestlé 55 Vevey

WKN: 887208;ISIN: CH0038863350;
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