Dirk VAN de PUT

Dairy Strategy LATAMDairy Strategy LATAM

FRANCISCO CAMACHO General Manager, Danone ArgentinaFRANCISCO CAMACHO General Manager, Danone Argentina6 years in Groupe Danone

- GM Evian North America, GM Bonafont

Previous companies: - Procter & Gamble, Revlon

6 years in Groupe Danone- GM Evian North America, GM Bonafont

Previous companies: - Procter & Gamble, Revlon

DIDIER LAMBLIN General Manager, Danone de MexicoDIDIER LAMBLIN General Manager, Danone de Mexico20 years in Groupe Danone

- GM Danone Clover South Africa- GM Danone Austria- Danone France: Sales & Logistics Director, Plant Director, Regional Director

20 years in Groupe Danone- GM Danone Clover South Africa- GM Danone Austria- Danone France: Sales & Logistics Director, Plant Director, Regional Director

Today’s presentersToday’s presenters

10 years in Groupe Danone- Aguas Danone de Argentina: General Manager, Financial Director

Previous companies:- Molinos Rio de la Plata, Santista Alimentos

10 years in Groupe Danone- Aguas Danone de Argentina: General Manager, Financial Director

Previous companies:- Molinos Rio de la Plata, Santista Alimentos

GUSTAVO VALLE General Manager, Danone BrazilGUSTAVO VALLE General Manager, Danone Brazil

08:30 am Dairy Strategy LATAMDairy Strategy LATAM Dirk Van de PutDirk Van de Put……………………

09:00 am Country focus: MexicoCountry focus: Mexico Didier LamblinDidier Lamblin……………………

09:20 am Country focus: BrazilCountry focus: Brazil Gustavo ValleGustavo Valle…………………………

09:40 am Country focus: ArgentinaCountry focus: Argentina Francisco CamachoFrancisco Camacho………

Danone’s FDP business in LatamDanone’s FDP business in Latam

Latam offers (relative) stabilityLatam offers (relative) stability

Source: World Bank Data base.Source: Latin America Foreign debt : Economist Intelligence UnitSource: World Bank Data base.Source: Latin America Foreign debt : Economist Intelligence Unit

Population Size & GrowthPopulation Size & GrowthLATAM & CaribbeanLATAM & Caribbean

551551544544

537537530530

515515522522

107107106106

101101100100

103103104104

490490500500510510520520530530540540550550560560

20002000 20012001 20022002 20032003 20042004 2005200596969898100100102102104104106106108108

Inde

x (2

000=

100)

Inde

x (2

000=

100)

Population (Mio)Population (Mio) GrowthGrowth

GDP per capita evolutionGDP per capita evolutionLatam & CaribbeanLatam & Caribbean

3,6783,6783,8533,8533,2163,216 3,2953,295

3,7333,7334,4544,454

86868383100100 9595 9797

116116

00

10001000

20002000

30003000

40004000

50005000

20002000 20012001 20022002 20032003 20042004 20052005002020404060608080100100120120140140

Inde

x (2

000=

100)

Inde

x (2

000=

100)

GrowthGrowthGDP Growth/capita (US $)GDP Growth/capita (US $)

Market Capitalization of listed CompaniesMarket Capitalization of listed Companies(% of GDP)(% of GDP)

44.7%44.7%39.4%39.4%

32.5%32.5%26.6%26.6%

32.6%32.6% 32.9%32.9%

0%0%

10%10%

20%20%

30%30%

40%40%

50%50%

20002000 20012001 20022002 20032003 20042004 20052005

LATAM & CaribbeanLATAM & Caribbean

Latin America Foreign DebtLatin America Foreign Debt

600600620620640640660660680680700700720720740740760760780780800800

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 201020100%0%5%5%10%10%15%15%20%20%25%25%30%30%35%35%40%40%45%45%50%50%

Foreing Debt/GDPForeing Debt/GDPTotal Foreign Debt (U.S. $Bn)Total Foreign Debt (U.S. $Bn)

Leading to an increased purchasing powerLeading to an increased purchasing power

Source: Economist Intelligence UnitSource: Economist Intelligence Unit

Purchasing power growth in emerging markets 2002-2006Purchasing power growth in emerging markets 2002-2006

100100

125125

150150

175175

200200

20022002 20032003 20042004 20052005 20062006

Inde

x (2

002=

100)

Inde

x (2

002=

100)

Eastern Europe & RussiaEastern Europe & Russia Latin AmericaLatin America Middle East & North AfricaMiddle East & North Africa AsiaAsia

Source: AC Nielsen & Danone ForcastsSource: AC Nielsen & Danone Forcasts

Reflected in strong FDP markets growthReflected in strong FDP markets growth

00

500500

10001000

15001500

20002000

25002500

30003000

35003500

FDP Market size Evolution (volume)FDP Market size Evolution (volume)

20012001 20022002 20032003 20042004 20052005 2006 E2006 E

234 282 394 486 562

MEXICOMEXICO BRAZILBRAZIL ARGENTINAARGENTINA

+7.8% +6.3%+13.5%

+11.0%+13.7%

1,020891853831

538

783702627

800

408

850

461

242

FDP are consumed by all social classesFDP are consumed by all social classes

A, B15%

CC27%

D, ED, E58%

Source: Mexico: AC Nielsen & Danone coverage Forcasts, Brazil: Latin Panel TNS Sofres,Argentina: CCR - 4 th FMGC Meeting Nov’05

Source: Mexico: AC Nielsen & Danone coverage Forcasts, Brazil: Latin Panel TNS Sofres,Argentina: CCR - 4 th FMGC Meeting Nov’05

PopulationDistributionPopulationDistribution

Fresh Dairy ConsumptionDistributionin Volume

Fresh Dairy ConsumptionDistributionin Volume

27%

37%

36%

Source: Euromonitor – BR, MEX, USA and ARG corrected - 2005 Source: Euromonitor – BR, MEX, USA and ARG corrected - 2005

Dairy per capita consumptionDairy per capita consumption

But per capita consumption still can increase tremendously…But per capita consumption still can increase tremendously…

FRANCE

FRANCEGERMANY

GERMANYBELGIU

M

BELGIUM

AUSTRIA

AUSTRIAPORTUGAL

PORTUGALARGENTIN

A

ARGENTINA

USAUSA

MEXICO

MEXICO

BRAZIL

BRAZIL35.435.4

26.026.0

16.616.6 16.016.012.812.8

7.57.5 7.27.2 4.84.8

20.620.6

Danone’s market share has increased …Danone’s market share has increased …

Source: AC Nielsen, Sofres and Danone Coverage ForcastSource: AC Nielsen, Sofres and Danone Coverage Forcast

38%38% 39%39% 39%39%41%41%

43%43%46%46%

34%34%36%36%38%38%40%40%42%42%44%44%46%46%48%48%

20012001 20022002 20032003 20042004 20052005 2006 E2006 E

DANONE LATAM DairyDANONE LATAM Dairy

(Value Market Share)

…while delivering solid financial growth…while delivering solid financial growth

Source: Internal data. Danone LATAMData calculated in Euros. Index (2002=100)

VolumeVolume

8080

100100

120120

140140

160160

180180

20022002 20032003 20042004 20052005 2006 E2006 E8080

100100

120120

140140

160160

180180

20022002 20032003 20042004 20052005 2006 E2006 E

Net SalesNet Sales

CAGR+19%

CAGR+18%

8080100100120120140140160160180180200200

20022002 20032003 20042004 20052005 2006 E2006 E

EBITEBIT

CAGR+29%

8080

100100

120120

140140

20022002 20032003 20042004 20052005 2006 E2006 E

OFCFOFCF

CAGR+10%

Based on 5 simple strategiesBased on 5 simple strategies

Develop strong functional brands

Expand our numerical distribution

Have the best team

Excel in execution

Enter new countries

Develop strong functional brands

Expand our numerical distribution

Have the best team

Excel in execution

Enter new countries

And we have many other opportunitiesAnd we have many other opportunities

Expand our distributionExpand our distribution

Double number of stores to 1M by 2010

Strategic regional partnerships

Double number of stores to 1M by 2010

Strategic regional partnerships i.e. Zaragoza in Mexicoi.e. Zaragoza in Mexico

Have the best teamsHave the best teams

“Can do” entrepreneurial environment

Social & Economic objectives

Attract through culture, not money

“Can do” entrepreneurial environment

Social & Economic objectives

Attract through culture, not money

Excel in executionExcel in execution

Invest in capacity & quality

More sophisticated systems

“Perfect presence every time”

Invest in capacity & quality

More sophisticated systems

“Perfect presence every time”

Enter new countries while increasing operating marginEnter new countries while increasing operating margin

Started: - Chile - Uruguay - Guatemala - El Salvador

Evaluating: - Colombia- Venezuela- Dominican Republic

Started: - Chile - Uruguay - Guatemala - El Salvador

Evaluating: - Colombia- Venezuela- Dominican Republic

Double the LATAM Business

At (above average) increasing EBIT margins by 2010

Double the LATAM Business

At (above average) increasing EBIT margins by 2010

Our MissionOur Mission