Dairy Strategy Jordi CONSTANS - Felix MARTIN
2009: Emphasis on volume and market share Danone Dairy Volume Evolution 7.0% 2.7% -1.0% Q1 09 Q2 09 Q3 09
2009: Accelerating volume growth in all geographies Mature Countries Volume Evolution Developing Countries Volume Evolution 8.4% 5.9% 4.9% -1.5% 1.1% -0.3% Q1 09 Q2 09 Q3 09 Q1 09 Q2 09 Q3 09 Mature 56% Developing 44%
2009: Accelerating volume growth in all brands Functional Brands Volume Evolution 14.9% Functio nal 39% Nutritio nal 61% Nutritional Brands Volume Evolution 10.2% 6.8% 3.6% -4.6% -2.1% Q1 09 Q2 09 Q3 09 Q1 09 Q2 09 Q3 09
2009: Reinforcing our market share as a result Germany +1.1pt Canada +6.4pt UK +1.4pt Poland +0.8pt USA +1.2pt Mexico +2.9pt France +1.3pt Hungary +8.5pt Egypt +7.1pt China +15.7pt Japan +2.2pt Chile +5.5pt 65% of countries gaining significant volume market share* Source: MRCI *Last period 2009 vs same period 2008
2009: 3 extra growth drivers 1. Vertical Innovation 2. Reset Program 3. New Geographies
1. Vertical Innovation New Categories New Moments Danonino Yoghurt: 20% of Danonino volume in Romania Activia Breakfast: 20% of Activia volume in Bulgaria Danonino Cereals: 15% of Danonino volume in Russia Activia End of Meal: 15% of Activia volume in UK
2.1 Reset Program: Value for Money Management USA 2008 2009 Premium index: 116 107 GRP: 23,500 26,000 Volume MS: 26.2 27.2 Poland 2008 2009 Premium index: 120 114 GRP: 60,000 77,000 Volume MS: 32.8 34.2 Mexico Q1 Q3 Premium index: 113 108 GRP: 23,000 27,000 Volume MS: 36.3 41.2 Adjusting Price & Balancing Mix + Increase GRP Pressure = Volume market share points
2.2 Reset Program: Activating Nutritional Brands Nutrition 4 All Pleasure Greek Yoghurt: 4% of volume Danone Spain Relaunch Danone Core Mexico: 27% of total country volume in october & + 385% vs last year Indulgence twin pot: 5-9% of country volume when launched
2.2 Reset Program: Activating portfolio by price points Market share 64 % 2,21 /kg CANN/kg 51 % 1,38 /kg 56 % 1,03 /kg 71 %
2.3 Reset Program: More and closer consumer investment Activia Belly dancing saga Emotional Claim Actimel fortifying Web & Bloggers Communities Activia brand +55% in volume in 2009 Activia sales + 52% CAGR on last 4 years Actimel volume +31% in October 2009 Indulgent brands Mimi Saga Danette: sales +15% in 2009 Social Responsibility Equity Share Your Meal 2004-2009: 7 mln meals given to children in need
2.4 Reset Program: Build Superior Taste Ensure product superiority Excellent Daily Superior Communicate taste COMMUNICATION 1. Beauty Shots on TV 2. Variety Heroes 3. Taste challenge event 4. Range taste 50% superior 40% parity 10% inferior SAMPLING POS
ktons 3 New geographies contribution : profiting from last 5 years effort 300 250 200 150 100 50 0 2005 2006 2007 2008 2009 Current Geographies New Geographies Export 2005-2009: + 800 mln inhabitants Close to 5% of Danone sales in 2009
Spain France Argentina Belgium Saudi Arabia Hungary Portugal Poland Czech Republic Bulgaria Ireland Finland Canada Austria Romania Mexico Slovakia Slovenia Algeria Germany South Africa United Kingdom Uruguay Netherlands Italy Turkey Chile Russia Brazil USA Sweden Kazakhstan Switzerland Greece Ukraine China (SHG GHZ) Japan Egypt Indonesia Colombia Significant room for growth 12 10 8 Uplift last 5 years 6 4 2009 2 0 Danone Per Capita Consumption (kg/yr)
Today, more than ever, food is at the heart of health issues Food abundance Food scarcity «Did you know that more than 700 million adults will be obese in 2015?» «Did you know that 1 billion people do not have daily access to adequate nutrition?»
Today, more than ever, food is at the heart of health issues Some suffer from food abundance 1) Chronic diseases CardioVascular / Obesity 2) Deficiency diseases Osteoporosis 3) Life style diseases Stress / Digestive discomfort
Today, more than ever, food is at the heart of health issues Others from food scarcity 1) Nutritional Deficiencies Undernutrition in proteins or energy 2) Infections Diarrhea, H Pylori
Major health disorders related to food Did you know that 80% of people with Diabetes type 2 are overweight or obese? Diabetes Obesity Did you know that a 40-year old, nonsmoking, obese woman has 7.1 years less of life expectancy than her normal-weight counterpart? Cardiovascular Malnutrition > 20 between 10 and 19 < 9 Did you know that each year nearly 1 million americans die from a cardiovascular? Did you know that 1 person dies from hunger every 4 seconds?
The awareness of the role food plays continue to increase Macro Nutrients Kilo calories Prot, Glu, Lip H 2 O Micro Nutrients Genetic specificity Probiotics Vitamins, amino acids, Oligominerals, polyphenols, Flora Physiology Science of functioning of living systems Metabolism
Benefit s
Benefit s
Czech France Canary Spain PCC Activia 2008 (kg/inhabitant/year) Belgium Hungary Slovakia Ireland Portugal Bulgaria Canada Finland UK Slovenia Mexico Russia Netherl Argentina Italy Austria Germany Saudi Poland Brazil 0,4 0,4 0,4 0,3 0,3 0,3 0,2 0,2 Romania USA Greece Chile Algeria Japan Ukraine Sweden Turkey South BENEFIT Activia: full potential of benefit Tasty digestive comfort In all moments Bloating Taste Breakfast After Dinner 2,6 2,6 1,9 1,9 1,7 1,4 1,4 1,4 1,3 1,3 1,3 1,1 1,1 1,0 0,9 0,9 0,8 0,8 0,7 0,7 0,6 0,5 0,5 2009 0,1 0,1 0,1
Canar Ireland Spain PCC Actimel 2008 (kg/inhabitant/year) Austria Belgium Slovenia Germany Argent UK Portugal Finland Italy Nether France Hungary Czech Poland Slovakia Russia Sweden Romania Ukraine USA Canada Greece Saudi Mexico BENEFIT Actimel: full potential of benefit Simple consumer claim Where it works Resistant Fortifying 2,4 2,2 1,6 1,2 1,1 1,1 0,9 0,8 0,7 0,7 0,7 0,5 0,5 0,5 0,5 0,4 0,3 0,3 0,2 0,2 0,1 0,1 0,1 0,1 2009 0,0 0,0 0,0
BENEFIT Activating nutrition benefit Value-added Innovation Pleasure oriented Basic Leverage Danone brand Competitive price Superior taste Door-opener Leverage local brand name Pre-empt private labels Good Taste Roots
BENEFIT Exploring potential of new benefits Incidence 20% 18% Muscular pain Immunity Tiredness Cholesterol 16% 14% Digestion Hair loss Current Benefit New Benefit 12% Skin ageing Under Assessment Benefit 10% Constipation Menopause Mineral deficiency Obesity 8% Retention of water Arthritis 6% Diabetes Gastritis Calcium deficiency 4% Underweight Intestinal problems Osteoporosis 2% Digestive disorders Lactose intolerance Chron Mental agility 0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Ipsos, Health Barometer Project, figures from 1 European country Concern
BENEFIT Exploring and assessing new benefits Roll out osteoporosis benefit - 50% of daily amount in Calcium and Vit D - Validated by International Osteoporosis foundation (check) - Start extension in Western Europe after excellent results in Spain and Argentina Densia Yoghurt in launch phase : 1.5% of total country volumes Same results as Danacol launch
BENEFIT Exploring new business models Casa Danone Barcelona Danone restaurant concept: 300,000 visitors in the only store in Barcelona Education Yogurt Bar Restaurant
Reach Activia targets potential PREVALENCE 30% PENETRATION 20% 46% 42% 40% 28% 52% 37% Source: Market Research
Tons TARGET Danacol: a 500 mln potential through roll-out Historical country sales Levers 2010: 130 147 160 New communication strategy 300 280 260 240 220 2009 TONS 200 180 160 140 2008 TONS 120 2007 2008 2009 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Week Little Tony strategy to be rolled out in existing countries: up to +50% vs last year! Only 13 countries 82% market share Potential: 32% of Activia sales in mature markets Affordability: from 0.65/dose to 0.32/dose
TARGET Danonino entering 2 major geographies 105 mln kids of 3 to 8 yrs USA National rollout end 2009 China 2010
TARGET White space in current big countries: East Russia + West USA + North Brazil + 200 mln new consumers One meaningful area to assess BOP model: Indian subcontinent > 1 bn people Geographical Footprint Per capita potential in recently opened countries 800 mln consumers with <1 kg per cap
To reach full potential of our mission, we need to be prepared for a tougher environement Soft consumer spending Tougher regulatory environement Raws and pack inflation Environmental sensitivity
ECONOMIC SUSTAINABILITY Building economic sustainability with consumer price below inflation Cross productivity programs: 10/15% reduction in 3 years Reinvent milk cost By-product valorization Milk cracking Upstream differentiation Enabling to full Topline growth Target 3 year savings 10/15% R&P cross productivity Supplier reengagement Decomplexification + Dan Source P R O D U C T I V I T Y 15/20% Lean & mean organization Agile Booster program Synergies between divisions within the same country A&P optimization Media Pitch every 2 years Drastic reduction of non media costs Maximize assets utilization Co-distribution project for external partners Using spare capacities to boost nutritional brands 5/10% 10/15% 5/10%
ENVIRONMENTAL SUSTAINABILITY Building environmental sustainability 30% reduction of CO 2 /kg on direct scope: plant, transport & packaging = productivity contribution Offset actions towards CO 2 neutrality Soil Restauration Consumer Education Plan
HUMAN & ORGANIZATION SUSTAINABILITY Building human sustainability through unique organization & mindset Empowerment: P&L in CBU Product development leaned toward the field Agility Short lead times to react Labs philosophy: try vs test Networking attitude LOBAL: Topline organisation CBU leading major global projects Outward looking Leveraging stakeholders and KOLs Permanent radar screen