12. M. LOZANO E. GIACOMINI, M. CAMARA M. danone-danonecom-prod.s3. (Activia / Danoninho) GranADDA (Danone Mother Brand) 3. SALES FORCE MACHINE Execution @POS (PUMA) BU Northeast 4. STRONG OPERATIONS MACHINE

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  • BRAZIL

  • Danone in Brazil: 42 years history...

    4. WATER starts in 2008 3. BABY (re)starts in 2007

    2. MEDICAL starts in 19961. DAIRY starts in 1970

  • Economics: solid ground

    1. GDP moderate growth 2. inflation under control

    3. Robust Intl reserves 4. liberating Selic

    x5

  • Demographics: robust domestic market

    2005 175MM

    7%

    38%

    27%

    A/B (> USD

    2,400 month)

    C(USD 550 -

    2,400 month)

    D(USD 275 -550 month)

    E: (USD 275/ month I D (275 550)/ C ( 550 2,400) / A/B (> 2,400)

    Income Allocation: 20% pop. = 64% income / 40% pop. = 2% income

    E(USD 275 month )

    28%

    2009 188MM

    11%

    51%

    23%

    A/B

    C

    D

    E 15% E

    2014 200MM

    16%

    57%

    20%

    A/B

    C

    D

    8%

    +7MMPeople

    +18MMPeople

    +11MMPeople

    +30MMPeople

  • Brazil takes off

    GDP

    Toward the 5th rank!

    Brazil

    France

    Germany

    Internal MarketHuge emerging middle class

    2003 2014AB C DE

  • Mariano LOZANOGM Dairy

    Danone Brazil: from successful turnaround to

    sustainable growth

  • Fresh Dairy Products: middle class pushing PCC, Danone earning market share

    Fresh Dairy Product PCC (kg)

    4.75.7

    6.7

    2004 2008 2012 2016

    2,9

    29.838.0

    26.9

    19.02004 2005 2006 2007 2008 2009 2010 2011 YTD

    2012

    192,9

    Fresh Dairy Product market share

  • 2004 2005 2006 2007 2008 2009 2010 2011 E1 2012

    Actimel + Densia

    Danoninho

    Activia

    Granadda

    CAGR (2012 vs 2004) = 14.7%

    Danone Brazil: mid-teens growth

  • KEY SUCCESS FACTORS (Growth)

    1. PEOPLE DEVELOPMENTSenior (local) Management Team Intra Entrepreneurship Spirit

    2. PORTFOLIO MANAGEMENTADDA (Activia / Danoninho) GranADDA (Danone Mother Brand)

    3. SALES FORCE MACHINEExecution @POS (PUMA) BU Northeast

    4. STRONG OPERATIONS MACHINEIndustrial & Supply Chain capabilities Common IT&IS platform (SAP)

  • 1. People development (Intra Entrepreneurship)

  • 2. Portfolio management

    GranADDA ADDA

  • 2. Portfolio management (VOL)

    ~200 000 tons ~200 000 tons

  • 2. Portfolio management (Activia)

    1. COMMUNICATION

    4. TAILORED STUDY!

    2. SALES X 10

    3. Exploring PACK Format

  • 2. Portfolio management (Danoninho)

    1. Tailored STUDY

    4. Most visited WEBSITE!

    2. SALES X 2

    2008 2009 2010 2011 2012

    85% 84%86% 83%

    31

    Top

    two

    boxe

    s

    2 476%

    5

    3. Building a DESIRED Character

  • 2. Portfolio management (Danone)

  • 3. Sales force machine (Puma)

  • 3. Sales force machine (Nordeste BU)

    1. FOCUSED Team

    4. EARNED LEADERSHIP!

    2. SALES X 3.5

    3. DEDICATED Factory

    2007 2008 2009 2010 20122011

    BU NE - Diretoria

    Gerente do Negcio

    MKT Trade MktCanalIndireto

    Supply OperaesVendas InspetoriaFinanasCanalKA IndustrialCanalDireto

    30.6

    32.930.8

    5.7

    2007 2008 2009 2010 2011 YTD12

    -14.3

    DANONE Comp.1 Comp. 2 Comp.3

    +2.1

    Tons

  • 4. Strong operation machine (supply)

    1.86m

    1.86m

    2 796 km

  • 4. Strong operation machine (IT&IS)

  • DANONE BRAZIL moving forward...

    We count with...

    ... PASSIONATED (entrepreneurial) PEOPLE

    ... GREAT EQUITY behind our BRANDS

    ... STRONG SALES FORCE MACHINE

    ... ROBUST OPERATIONS POWERHOUSE

    We are bullish in

    developing YOGHURT CONSUMPTION (1YD)... Growing FASTER than COMPETITORS (SOM) Creating ACCRETIVE VALUE

  • Waters

    Mauricio CAMARA

  • THE BIG SIZE OF THE MARKET

    Brazilian Water Market Per capita Consumption Bottled Water

    THE VERY LOW PCP

    1.0bn

    (Liters of Still Water Zenith)

    3x lower

    In 2008 the decision to start up a water business in Brazil was based on ....

  • THE LACK OF INVESTMENT

    Advertising InvestmentAVG M / YR Brazil

    Clearly an underdeveloped market with no active competition

    CSD = Carbonated Soft Drinks

    Also based on...

    AND LACK OF BRAND EQUITY

    Source: Perceptor - Brand Equity researh

    0

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    Brand Equity Evaluation Note 1 to 10 - Perceptor

    1% No brand differentiation

    Brand 1

    Brand 2Brand 3

    Brand 4

    Brand 5

  • DEVELOP THE MARKET USING ATOUT

    MODEL

    Strong Media support & POS animation

    3 strategic pillars to tackle the opportunity

    ROLLOUT BONAFONT

    MEXICAN MODEL

    Elimination Positioning

    REGIONAL FOCUSSO PAULO STATE

    GDP (B) 470POP (M INHAB) 40

    Of total water market

  • CAGR = 55% (2010 2012)

    The results 4 years later

  • Edna GIACOMINIGeneral Manager Danone Baby Nutrition Brazil

    Baby Nutrition

  • Beginning of history in Brazil

    NumicoIMF brands: Aptamil & Bebelac

    Master brand: Support

    A regional company playing only in SP metro

    Danone bought

    Numicoglobally

    Danone became the master brand

    Geographical expansion to SPI and RJ

    + MG and South

    2007: the beginning of Danone Baby Nutrition history

    + West CenterNortheast

  • 168mln

    The IMF market (2007)

    PCC: 4.7kgPenetration: 14%

    Powder milk for healthy babies (0 to 12 months)

    Unhealthy babies with special needs (0 to 12 months):Soy; Anti Reflux; Allergy & Preterm

    Market sharesIMF Market Split

    The Baby Food category in 2007

    Regulatory environment: consumer communication forbidden

    Competitor

  • Lack of innovation

    2007 diagnosis

    Under-developed market for Specials

    Low investment in category development

  • Creating Category Recognition (Credibility)

    Leading Category Innovation

    Improving Presence Geographic Expansion

    2007 action plan

  • 2007 action plan

    Creating Category Recognition (Credibility)

    Leading Category Innovation

    Improving Presence Geographic Expansion

  • 1. Aptamil (Danone) 78%

    2. Brand1 (competitor) 70%

    Spontaneous Awareness

    97%

    95%

    Total Awareness

    99%

    99%

    HCP Recommendation (babies till 12 months)

    Brand1: 83%

    Aptamil: 87%Aptamil: 87%

    Creating Category Recognition (Credibility)

    Competitor

    Competitor

  • 2007 action plan

    Creating Category Recognition (Credibility)

    Leading Category Innovation

    Improving Presence Geographic Expansion

  • Pregomin

    Till 2007

    MS: 7.8%

    2012 MS:

    38.9%

    2008

    2010

    2011

    AR (Anti-Reflux) best in class formula

    PretermSoy 1 & 2

    Aptamil PeptiExclusiveMild Allergy Treatment

    Lactose Free

    HA

    Leading Category Innovation

    Pregomin PeptiSevere Allergy

    Treatment

  • 2007 action plan

    Creating Category Recognition (Credibility)

    Leading Category Innovation

    Improving Presence Geographic Expansion

  • WD: 83%2012

    2007 2011

    From 5 (2007) to 130 (2012) sales employeesSynergy with Medical: Tenders & Distributors

    Synergy with Dairy: KA distribution

    WD: 35%2007

    We are moving to a national company

    Improving Presence Geographic Expansion

  • Results

    Mkt w/out DBN CAGR (07-11): 14%

    DBN CAGR (07-11): 38%

    Market CAGR (07-11) 20%

    CAGR (07-11): 8,1%

    PCC:5.8kg (+1.1kg) I Penet.:17% (+3pp)

    870mln

    Baby Food market (2011) IMF market (2011)

    DBN Sales EvolutionMarket Share Evolution (%)

    304mi

  • Voluntary work (Medical reps)

    Objectives:

    Tell histories for hospitalized infant patients

    Create a happy moments in a delicate situation, contributing to health treatment

    Since Sep/12: open to All Danoners

    PROJECT BENEFITS

    Provides a unique experience to all involved

    Engages Danoners with the company values

    Establishes partnership with key stakeholders

    Being socially responsible

  • Marcelo BORGES

    Medical Nutrition : playing the future

  • Agenda

  • Large target populationand increasing purchasing power

    (1) Sources: Observador Brasil 2010 Ipsos/Cetelem; Brazilian Institute of Geography and Statistics; Grupemef and internal data(2) Note: use of WRI available countries (27) to calculate NBC segments through extrapolations in different zones and overall ITC

    (3) Sources: World Resource Institute; EIU; UN human development report; BCG analysis * Target Brasil/IMS

    2010 2050

    Social-economic profile evolution*

    Middle class growth (+ 28%)

    Purchasing Power is increasing,especially in emerging middle class

    Demography is changing very fast.Country is getting older,

    but still with a high number of children

  • Country% of GDP*

    Public Private Total

    France 8.7% 2.3% 11.0%

    UK 6.9% 1.5% 8.4%

    Italy 6.7% 2.0% 8.7%

    Significant Expenditure in Healthand Growing Pharmaceutical Industry

    Pharma Market is expect to grow more than 50% by 2013 (1)

    OTC represents more than 30%of Pharma market

    Non-reimbursed market Source: * Total Private and Public Health Expenditure OECD 2007

    **Sistema de Informaes de Beneficirios - ANS/MS - 06/2009 e Cadastro de Operadoras/ANS/MS - 06/2009

    He