Water: Back to Growth - danone-danonecom danone-danonecom-prod.s3.· (Danone Ramsar wetlands protection

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  • Water: Back to Growth Thomas Kunz

  • Summary

    Significant topline growth is back

    Our crisis strategy clearly worked and has helped to give

    the category new relevance and meaning

    Input costs are a challenge. Our productivity mindset goes

    a long way to compensate, but pricing action has been

    inevitable

    Aquadrinks become an increasingly important growth driver

    – 2 –

  • Reminder 2009: Our objectives

    – 3 –

    Accelerate

    in Developing Countries

    Return Mature Countries to growth

  • Reminder 2009: Three priorities across all geographies

    – 4 –

    1 2 3

    Per Capita Consumption

    CATEGORY GROWTH BRAND PRESENCE COST BASE

    http://www.kerignard.com/blog2/uploaded_images/dollar-791751.jpg

  • Growth has returned

    – 5 –

    5% 5%

    4%

    9% 8%

    8%

    11%

    2007 2008 S1 2009 S2 2009 S1 2010 S2 2010 Q1 2011

    6%

    2%

    -2%

    4% 4%

    7%

    13%

    2007 2008 S1 2009 S2 2009 S1 2010 S2 2010 Q1 2011

    Volume Value

    Growth trends 2007-2011

  • The pricing/mix impact is going back to normal

    – 6 –

    1%

    -3%

    -6%

    -5% -4%

    0%

    3%

    2007 2008 S1 2009 S2 2009 S1 2010 S2 2010 Q1 2011

    Difference Value-Volume 2007-2011

  • The turn around is mainly carried by mature countries

    – 7 –

    20.2%

    13.4%

    10.9%

    16.9%

    14.2% 13.7%

    19.2%

    2007 2008 S12009 S2 2009 S1 2010 S2 2010 Q1 2011

    Mature countries Emerging countries

    Value growth

    1.0%

    -7.2%

    -11.8%

    -7.2% -5.3%

    0.5%

    5.7%

    2007 2008 S12009 S2 2009 S1 2010 S2 2010 Q1 2011

  • Sorecard: Our objectives

    – 8 –

    Accelerate

    in Developing Countries

    Return Mature Countries to growth

  • Managing the cost inflation issue O

    v e ra

    ll C

    o s t o f g o o d s I n fl a ti o n 2

    0 1 1

    = m

    o re

    t h

    a n

    1 0

    %

    1

    2

    3

    4

    Productivity

    Growth

    Mix Management

    Pricing

  • The way forward

    – 10 –

    1. Category growth

    2. Brand Presence

    3. Cost Base

    4. Aquadrinks opportunity

    S E C U R E O N - G O I N G , S T R O N G TO P L I N E G R O W T H

  • We are active in the high growth NAB categories

    – 11 –

    • Water remains the fastest growing big Category

    • Flavored Water is now nearly as big as Sports Drinks but growing 3x faster

    • CSD’s have low growth as health concerns neutralize dynamic emerging

    markets growth

    8%

    16%

    9%

    2% 3%

    6% 5%

    17%

    Water Flavoured Water

    RTD Tea CSD Juices Juice drinks

    Sport Drinks

    Energy Drinks

    42%

    1.3% 5%

    32%

    6%

    12% 1.6%

    1% Energy drinksSportdrinks

    Juices

    CSD

    RTD Tea

    Flavoured water

    Water

    Fruit based

    CAGR Volume 2000-2009

  • – 12 –

    Growing the Water Category

  • 96 mln mangroves planted since 2009

    (Danone Ramsar wetlands protection initiative)

    22% CO2 reduction achieved since 2008

    The first bottle 100% from R-Pet

    21% water usage reduction in 2009-2010

    Sustainable development remains at the heart of our model

    The first (partial) Bio bottle for water

    Key achievements

    http://www.caddolakeinstitute.us/images/Ramsar.jpg http://www.iucn.org/

  • Our Marketing battles for category and Brand growth

    The battle for WATER

    The battle for

    NATURAL WATER

    The battle for

    our BRANDS

    The battle for

    WATER

    Grow Water share of throat

    Grow our brands

    Promote NW superiority

  • 1. Water is the healthiest

    beverage 2. We don’t drink enough

    Water

    The battle for WATER The battle for

    WATER

    The Way Forward – Category Growth remains key focus

  • Building the Category – Partnering

    – 16 –

    Make water a solution for public policy Integrate Water into the food pyramid

  • Targeted Activities

    Building the Category – Consumer Action

    – 17 –

    EducationCommunication

    ../../../../../Local Settings/Temp/Health Marketing/Evian GM meeting Sept 09/Health Marketing/Aquaboard update/Aquaboard 170709/danonewatersCS3.exe

  • Building our share as we build the Category

    – 18 –

    Example Mexico The challenge: 2L a day

    P&L moms, babies

    Education

    17.4

    21.8

    25.9

    28.0

    31.2

    25.8

    17.7

    14.7

    21.6

    4.3

    6.5 11.6

    5.7

    2007 2008 2009 2010 MAR 2011

    BFT Competitor 1

    Source: Nielsen, Volume share total plain water

    Competitor 5Competitor 4Competitor 3

    Competitor 2

  • BR w/o SP

    17.9%

    2008 2010 Diff.

    Source: Latin Pannel – TT Brazil sem GSP e GSP – Up to 9,99L still YTD October

    SP 20.8%

    Water Market Penetration

    We know how to build the Water Category

    – 19 –

    Example Brazil

    20.6% +2.7pp

    SP 18.1% +18.1pp0%

    39.1% +18.3pp

    0%

    8%

    16%

    21%

    27% 26% 25% 28%

    34% 30% 31%

    36% 37%

    40% 41%

    27%

    11%

    0,1

    set-08 nov-08 jan-09 mar-09 mai-09 jul-09 set-09 nov-09 jan-10 mar-10 mai-10 jul-10 set-10 nov-10 jan-11

    Market Share (SP City Direct Channel)*

    Competitor 1

    Competitor 2

    Competitor 3

    http://images.google.com.br/imgres?imgurl=http://www.fuelled.co.nz/Challenge/F4SToolkit/~/media/F4S/Images/Artbox09/WaterBottle.jpg&imgrefurl=http://www.fuelled.co.nz/Challenge/F4SToolkit/ArtBox.aspx&usg=__si3nAxS6r3R6TU4Ed4edx4RAkuE=&h=1085&w=639&sz=69&hl=pt-BR&start=8&um=1&tbnid=Yr0cq0Mji1W3YM:&tbnh=150&tbnw=88&prev=/images?q=water+bottle+illustration&hl=pt-BR&um=1 http://images.google.com.br/imgres?imgurl=http://www.fuelled.co.nz/Challenge/F4SToolkit/~/media/F4S/Images/Artbox09/WaterBottle.jpg&imgrefurl=http://www.fuelled.co.nz/Challenge/F4SToolkit/ArtBox.aspx&usg=__si3nAxS6r3R6TU4Ed4edx4RAkuE=&h=1085&w=639&sz=69&hl=pt-BR&start=8&um=1&tbnid=Yr0cq0Mji1W3YM:&tbnh=150&tbnw=88&prev=/images?q=water+bottle+illustration&hl=pt-BR&um=1

  • Aqua Indonesia grows and grows and…

    – 20 –

    2007 2008 2009 2010

    Every year,

    we add the

    VOLUME of: x0.6

    Indonesia Volume growth

    + 753 ML

    + 780 ML

    + 842 ML

  • – 21 –

    Exploiting the Aquadrinks Opportunity

  • Aquadrinks – a key contributor to our growth

    – 22 –

    Aquadrinks - Growth vs year ago

    59%21%

    12%

    8%

    Segment weight (2010, value)

    Plain still PET

    Plain sparkling

    HOD

    Aquadrinks

  • Aquadrinks – two main development categories

    – 23 –

    Enhanced Water

    • Water based Drink with flavor

    and other ingredients (Vitamins,

    Minerals…)

    • Specific Brand

    • Hydration plus additional (soft)

    functionality

    • Mostly positioned in-between

    Flavoured Water

    • Water with flavoring ingredients

    (flavors, juice, tea extracts..)

    • Based on Water Brand

    • No additional functionality

    on top of hydration

    • Mostly positioned for meal usage

    Drinkable Natural Hydrating

  • …sourcing from other NAB’s, not from Water

    – 24 –

    Example Argentina (ctn’d)

    Flavoured Water grows at the expense of CSD (2007=100)

    50

    100

    150

    200

    250

    300

    350

    2007 2008 2009 2010

    Flavoured water Reg CSD Light CSD

    1%

    35%

    64%

    2003: Segment Market shares

    Juices

    Flavoured water

    CSD

    2010: Segment Market shares

    Juices

    Flavoured water

    CSD

    8%

    35% 57%

  • An success story in more and more countries

    – 25 –

    Aquadrinks growth (indexed, 2007=100))

    Mexico Germany

    Poland UK

  • Mizone China: An emerging Blockbuster

    – 26 –

    Mizone China: Net Sales (2007=100)

    CAGR

    39%

  • – 27 –

    Healthy Brands for

    Healthy Growth