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Dairy Strategy
Jordi CONSTANS - Felix MARTIN
2009: Emphasis on volume and market share
-1.0%
2.7%
7.0%
Q1 09 Q2 09 Q3 09
Danone Dairy
Volume Evolution
2009: Accelerating volume growth in all geographies
-0.3%
4.9%
8.4%
Q1 09 Q2 09 Q3 09
-1.5%
1.1%
5.9%
Q1 09 Q2 09 Q3 09
Mature Countries
Volume Evolution
Developing Countries
Volume Evolution
Developing44%
Mature56%
2009: Accelerating volume growth in all brands
6.8%
10.2%
14.9%
Q1 09 Q2 09 Q3 09
-4.6% -2.1%
3.6%
Q1 09 Q2 09 Q3 09
Functional Brands
Volume Evolution
Nutritional Brands
Volume EvolutionNutritio
nal61%
Functional
39%
2009: Reinforcing our market share as a result
Source: MRCI *Last period 2009 vs same period 2008
65% of countries gaining
significant volume market
share*
Canada
+6.4pt
USA
+1.2pt
Mexico
+2.9pt
France
+1.3ptJapan
+2.2ptEgypt
+7.1pt
Chile
+5.5pt
Poland
+0.8pt
Germany
+1.1pt
UK
+1.4pt
China
+15.7pt
Hungary
+8.5pt
2009: 3 extra growth drivers
1. Vertical Innovation
2. Reset Program
3. New Geographies
1. Vertical Innovation
Danonino
Yoghurt:
20% of Danonino
volume in
Romania
Activia
Breakfast:
20% of Activia
volume in
Bulgaria
Danonino
Cereals:
15% of Danonino
volume in Russia
New Categories New Moments
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
Relaunch Danone Core Mexico:
27% of total country volume in
october & + 385% vs last year
Greek
Yoghurt:
4% of volume
Danone Spain
Indulgence
twin pot:
5-9% of country
volume when
launched
2.2 Reset Program:
Activating portfolio by price points
64 %
51 %
56 %
71 %
Market share CANN/kg
2,21 €/kg
1,38 €/kg
1,03 €/kg
2.3 Reset Program: More and closer consumer
investment
Activia Belly
dancing saga
Mimi Saga
Share Your Meal
Actimel
fortifying
Emotional Claim Web & Bloggers’
Communities
Indulgent brands Social Responsibility
Equity
Activia sales + 52%
CAGR on last 4 years
Activia brand
+55% in volume
in 2009
Actimel volume +31%
in October 2009
Danette: sales
+15% in 2009
2004-2009: 7 mln
meals given to
children in need
2.4 Reset Program: Build Superior Taste
Communicate tasteEnsure product superiority
Excellent
Daily
Superior
50%
superior
40%
parity
10%
inferior
COMMUNICATION
SAMPLING POS
1. Beauty Shots on TV
2. Variety Heroes
3. Taste challenge event
4. Range taste
New Geographies
Export
Current
Geographies
3 New geographies’ contribution :
profiting from last 5 years effort
2005-2009:
+ 800 mln inhabitants
Close to 5% of Danone
sales in 2009
0
50
100
150
200
250
300
2005 2006 2007 2008 2009
kto
ns
Significant room for growth
Danone Per Capita Consumption (kg/yr)
2009
0
2
4
6
8
10
12
Spai
n
Fran
ce
Arg
enti
na
Be
lgiu
m
Sau
di A
rab
ia
Hu
nga
ry
Po
rtu
gal
Po
lan
d
Cze
ch R
ep
ub
lic
Bu
lgar
ia
Irel
and
Fin
lan
d
Can
ada
Au
stri
a
Ro
man
ia
Mex
ico
Slo
vaki
a
Slo
ven
ia
Alg
eria
Ger
man
y
Sou
th A
fric
a
Un
ited
Kin
gdo
m
Uru
guay
Ne
ther
lan
ds
Ital
y
Turk
ey
Ch
ile
Ru
ssia
Bra
zil
USA
Swed
en
Kaz
akh
stan
Swit
zerl
and
Gre
ece
Ukr
ain
e
Ch
ina
(SH
G G
HZ)
Jap
an
Egyp
t
Ind
on
esia
Co
lom
bia
Uplift last 5 years
Today, more than ever,
food is at the heart of health issues
« 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? »
Food abundance Food scarcity
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
Obesity
Diabetes
> 20
between 10 and 19
< 9
Cardiovascular Malnutrition
“Did you know that 1 person
dies from hunger every 4 seconds?”
“Did you know that each year nearly
1 million americans die from a
cardiovascular?”
“Did you know that 80% of people with
Diabetes type 2 are overweight or obese?”
“Did you know that a 40-year old, non-
smoking, obese woman has 7.1 years less of
life expectancy than her normal-weight
counterpart? “
The awareness of the role food plays continue to increase
Flora
Physiology
Macro Nutrients Genetic specificity
Probiotics
Metabolism
Kilo calories
Prot, Glu, Lip
H2O
Vitamins, amino acids,
Oligominerals,
polyphenols,
Micro Nutrients
Science of functioning
of living systems
Be
ne
fits
Be
ne
fits
Activia: full potential of benefitBENEFIT
2009
Bloating Taste Breakfast After Dinner
Tasty digestive comfort In all moments
PCC Activia 2008 (kg/inhabitant/year)
2,6 2,6
1,9 1,9
1,7
1,4 1,4 1,4 1,31,3 1,3
1,1 1,11,0
0,9 0,9 0,80,8 0,7 0,7
0,60,5 0,5
0,4 0,4 0,4 0,3 0,3 0,3 0,2 0,20,1 0,1 0,1
Cze
ch
…
Fra
nce
Ca
na
ry …
Sp
ain
Be
lgiu
m
Hu
ng
ary
Slo
va
kia
Ire
lan
d
Po
rtu
ga
l
Bu
lga
ria
Ca
na
da
Fin
lan
d
UK
Slo
ve
nia
Me
xic
o
Ru
ssia
Ne
the
rl…
Arg
en
tin
a
Ita
ly
Au
str
ia
Ge
rma
ny
Sa
ud
i …
Po
lan
d
Bra
zil
Ro
ma
nia
US
A
Gre
ece
Ch
ile
Alg
eri
a
Ja
pa
n
Ukra
ine
Sw
ed
en
Tu
rke
y
So
uth
…
Actimel: full potential of benefitBENEFIT
Resistant Fortifying
Simple consumer claim Where it works
PCC Actimel 2008 (kg/inhabitant/year)
2,4
2,2
1,6
1,2 1,1 1,10,9
0,8
0,7 0,7 0,7
0,5 0,5 0,5 0,50,4 0,3 0,3 0,2 0,2
0,1 0,1 0,1 0,1 0,0 0,0 0,0
Ca
na
r…
Ire
lan
d
Sp
ain
Au
str
ia
Be
lgiu
m
Slo
ve
nia
Ge
rma
ny
Arg
en
t…
UK
Po
rtug
al
Fin
lan
d
Ita
ly
Ne
the
r…
Fra
nce
Hu
ng
ary
Cze
ch
…
Po
lan
d
Slo
va
kia
Ru
ssia
Sw
ed
en
Ro
ma
nia
Ukra
ine
US
A
Ca
na
da
Gre
ece
Sa
ud
i …
Me
xic
o
2009
Activating nutrition benefitBENEFIT
• Leverage Danone
brand
• Competitive price
• Superior taste
• Leverage local brand name
• Pre-empt private labels
• Good Taste• Roots
• Innovation
• Pleasure orientedValue-added
Basic
Door-opener
Exploring potential of new benefitsBENEFIT
Intestinal problems
ChronDigestive disorders
Constipation
Mineral deficiency
Calcium deficiency
Retention of water
Hair loss
Muscular pain
Digestion
UnderweightOsteoporosis
Tiredness
Mental agility
Cholesterol
Arthritis
Menopause
Skin ageing
Obesity
Lactose intolerance
Diabetes
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
ConcernIpsos, Health Barometer Project, figures from 1 European country
New Benefit
Current Benefit
Under Assessment Benefit
Immunity
Incidence
Gastritis
Exploring and assessing new benefitsBENEFIT
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
Exploring new business modelsBENEFIT
Casa Danone Barcelona
Danone restaurant
concept:
300,000 visitors in the
only store in Barcelona
Education Yogurt Bar Restaurant
Reach Activia targets potential
46%
40%
30%
52%
42%
28%
20%
37%
PREVALENCE PENETRATION
Source: Market Research
Danacol: a €500 mln potential
through roll-outTARGET
Only 13 countries82% market sharePotential: 32% of Activia sales in mature
markets
Historical country sales
2007 2008 2009
130147
160 New communication strategy
Levers 2010:
“Little Tony” strategy to be rolled out in
existing countries: up to +50% vs last year!
Affordability:
from €0.65/dose
to €0.32/dose
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
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
Tons
2009 TONS
2008 TONS
Danonino entering 2 major geographiesTARGET
China 2010
USA
National roll-
out end 2009
105 mln kids of 3 to 8 yrs
TARGET
GeographicalFootprint
One meaningful area
to assess BOP model:
Indian subcontinent
> 1 bn people
Per capita potential in
recently opened
countries
800 mln consumers
with <1 kg per cap
White space in current big
countries: East Russia + West
USA + North Brazil
+ 200 mln new consumers
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
Cross productivity programs:
10/15% reduction in 3 years
Reinvent milk cost
By-product valorization
Milk cracking
Upstream differentiation
R&P cross productivity
Supplier reengagement
Decomplexification + Dan Source
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
Enabling to full Topline growth
Building economic sustainability with
consumer price below inflationECONOMIC
SUSTAINABILITY
10/15%
5/10%
10/15%
5/10%
P R O D U C T I V I T Y
15/20%
Target 3 year savings
Building environmental sustainabilityENVIRONMENTAL
SUSTAINABILITY
30% reduction of CO2/kg on direct scope: plant, transport & packaging = productivity contribution
Offset actions towards CO2 neutrality
Consumer Education Plan
Soil Restauration
Building human sustainability through
unique organization & mindset
HUMAN &
ORGANIZATION
SUSTAINABILITY
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