Though just three months into his role as chief executive officer, Paul Bulcke has longstanding ties to Nestlé.

Bulcke has spent the past 29 years with the company, including most recently as executive vice president and director for Zone Americas. He was named CEO in April, replacing Peter Brabeck- Letmathe, who stepped down as CEO but remains chairman.

Bulcke has made it clear that he intends to continue the company’s broadening focus on nutrition, health and wellness.

“The strong start to the year reflects Nestlé’s momentum as the world’s leading nutrition, health and wellness company,” Bulcke said in statement regarding the company’s reported organic growth of 9.8% for the first quarter of 2008.

Bulcke takes the helm at a time when the food company, along with its competitors, faces increased challenges. Input cost pressures in milk, wheat and other commodities is by far the greatest challenge Nestlé has faced over the past year.

One way it is weathering the economic storm is by remaining committed to transforming itself from a “commodity, raw-materialsbased food and beverages company to an added-value, science-inspired nutrition, health and wellness company” Bulcke told SN.

As a result of this change, just 30% of manufacturing costs currently come from raw materials. To help achieve this, Nestlé renovates 20% of its product portfolio each year to makeits products healthier and more nutritious.

That means reducing such ingredients as sugar and salt and eliminating trans fatty acids, while adding in ingredients like iron to boostthe nutritional profile of its products.

For example, in the U.S., Nestlé introduced Dreyer’s ice cream with 50% less fat and one-third fewer calories. Another example is Svelty Figura, a yogurt drink sold in Mexico with no fat and one-third of adult daily protein needs.

Since 2004, Nestlé has reduced the use of sugar in its product portfolio by more than 220,000 tons. And since 2002, it has cut its use of trans fatty acids by more than 43,000 tons.

Another way the company is combating increased cost pressures is by leveraging its strong brands. In 2007, it had 29 so-called “billionaire brands,” or those that achieved sales of over $1 billion Swiss francs.

It’s also growing what it calls its Popularly Positioned Products, aimed at lower-income consumers in developing countries. Such products are adapted to meet the nutritional needs of specific consumers. For instance, in Central America, Maggi Sopa Crecimiento — a chicken and noodle soup with a milk base — contains protein, vitamins and minerals needed for child development; and in Africa, Maggi bouillon is made with iodized salt to help prevent thyroid disease.

Luxury and premium products are another growth area. Nespresso premium coffee, one of the company’s top luxury brands, experienced 40% growth in 2007.

Nestlé also wants to take hold of the luxury chocolate market. To help in that effort, it recently announced the 2009 opening of the Chocolate Centre of Excellence, the company’s first R&D facility entirely dedicated to the development of premium and luxury chocolate. The new factory will be located in Broc, Switzerland, and will be operational in the first half of 2009.

— CAROL ANGRISANI

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