Pricing power needed to offset input costs and wage inflation –
cost savings alone will no longer safeguard margins

Soft commodity price pressures remain an issue – could wage
inflation become a new issue in 2007?

We find Nestle, Numico and Reckitt Benckiser the most attractive,
and Unilever the most underestimated

Contents
Summary 1
Is the sector still attractive? 3
Raw material impact 8
Wage inflation a potential risk? 11
Pricing power the main determinant 15
Companies 21
Beiersdorf ................................................................................................................23
Cadbury Schweppes ...............................................................................................27
CSM ........................................................................................................................31
Danone....................................................................................................................35
Henkel KGaA...........................................................................................................39
Nestlé ......................................................................................................................43
Numico ....................................................................................................................47
Reckitt Benckiser.....................................................................................................51
Unilever NV .............................................................................................................55
Appendix 1: Commodities 58
Appendix 2: Employee costs 60
Appendix 3: Other scenarios 61
Disclosures Appendix 63