---

Nestlé operates a factory in Harare, producing milk powder and cereals for the local market. Over the last few days Nestlé has faced questions about its relationship with the Gushungo Dairy Estate. Nestlé has been present in Zimbabwe for over 50 years and is a fully-fledged member of the local community, employing around 200 people there and providing additional employment for many hundreds of milk farmers and other suppliers. The continuous supply of consistently high quality fresh milk is crucial to Nestlé’s operations in Zimbabwe. During the last few years Nestlé has witnessed the collapse of Zimbabwe’s dairy industry. Nestlé prefers to work within contractual agreements to ensure a constant supply of fresh milk, but at the end of 2008, the company found itself operating in a market where 8 of its 16 contractual suppliers had gone out of business. As a result, in early 2009, Nestlé was forced to purchase milk on the open market from a wide variety of suppliers on a non-contra

---