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Danone and Danone and emerging countriesemerging countries
Around 3 billion of people live Around 3 billion of people live with less than 2 € per daywith less than 2 € per day
Stakes, challenges, methods and learning
Danone and emerging countriesDanone and emerging countries
How can we bring health through How can we bring health through food and beverages to the largest number of food and beverages to the largest number of
peoplepeople ? ?
A strengthened presence in emerging A strengthened presence in emerging countriescountries
19961996 20062006Mature countries
89%
Emerging countries
11%
Mature countries
69%
Emerging countries
31%
A
B
C
D 25,2%
Addressing the whole populationAddressing the whole population
Worldwide PopulationWorldwide Population
Class B 1,500–1,750
Class C
Class D
>$ 20,000Class A 55 - 100
< $1,500
Purchasing power in US$
$1,500 - $ 20,000
$1,500
Breakdown of population per level of income
1.6%1.6%
30.0%30.0%
68.4%68.4% Class C&D : 4,000
Population in millions / Class
Class A and B: Class A and B: situations close to mature marketssituations close to mature markets
Population breakdown
B, C et D…B, C et D…
A
B
C+D
E
MexicoMexico
3.8%3.8%
19.1%19.1%
45.0%45.0%
32.1%32.1%
IndonesiIndonesiaa4%4%
69%69%
21%21%
6%6%A
B
C+D
E
RussiaRussia
25.8%25.8%
34.8%34.8%
28.4%28.4%
11%11%
AB
C+D
E
A
B
C
D
19.0
19.0
16.6
16.6
12.7
12.7
9.79.7
19.1
19.1
12.7
12.7
7.87.8
0.70.7
Mexico: B and C’s consumption increases to the Argentinian level = +300,000 tons
per Capita 12.8 Kg
per Capita 6.9 Kg
7.6%7.6%
15.3%15.3%
44.2%44.2%
33.2%33.2%
A A large potential for growth large potential for growth
ArgentinArgentinaa
A
B
C+D
E
MexicoMexico
3.8%3.8%
19.1%19.1%
45.0%45.0%
32.1%32.1%
8
Poverty and malnutritionPoverty and malnutrition
60
50
40
30
20
10
05 10 20 50 100 200 500 1 000 1 500
Annual average income (K$)
% of children, under 5 years old with a too weak
weight
INDIA
BANGLADESH
NIGERIA
ETHIOPIA
PAKISTAN
INDONESIAVIETNAM
EGYPT
MEXICO
GHANA
PHILIPPINESTANZANIA
THAILANDKENYA
CHINA
A major stake: malnutritionA major stake: malnutrition
Energy-giving Energy-giving contribution deficiencycontribution deficiency
Proteins contribution Proteins contribution deficiencydeficiency
Growth retardationGrowth retardation
DiarrheaDiarrhea
Various infections Various infections linked to a lack of linked to a lack of hygienehygiene
Macro Macro NutritionNutrition
Micro Micro NutritionNutrition
Health ProblemsHealth Problems
IronIron
Vitamin AVitamin A
Iodine and zincIodine and zinc
CalciumCalcium
Questions we ask to ourselves Questions we ask to ourselves
Is there a real need of a more accessible
nutrition in the country ?
A
B
C+D
E
3.8%3.8%
19.1%19.1%
45.0%45.0%
32.1%32.1%
Can the category be developed toward the bottom of the
pyramid ?
Can Danone gain market shares toward
the bottom of the pyramid ?
Is a profitable business model possible for Danone
?
4 criterias 4 criterias
1 ct1 ct
The pricing challenge The pricing challenge
EuroEuro 1 ct1 ct 2 ct2 ct 3 ct3 ct 6 ct6 ct
Unit of measure = 0.01 €Unit of measure = 0.01 €
% of sales realised in proximity sales Total points of sales
62%
80%
85%
90%
95%
98%
South Africa
Saudi Arabia
Turkey
Tunisia
Morocco
Algeria
Bangladesh
2,000,02,000,00000
9898,0,00000
3535,,000000
2525,000,000
5050,000,000
770,0000,000
200200,000,000
800,000800,000
Indonesia 68%
99%
The distribution challenge The distribution challenge A multitude of points of sales A multitude of points of sales
Indonesia
Morocco
The distribution challenge The distribution challenge
The challenge of consumption’s habits The challenge of consumption’s habits
1 to 3 times per month
Once per week
2 to 3 times per week
4 to 6 times per week
Every day81
5645
TotalTotal
80% of consumers 80% of consumers shop every dayshop every day
The geographical challengeThe geographical challenge
Vladivostok
Moscou
9 days of delivery
Irkourtsk
Tchekhov
Often gigantic dimensions and Often gigantic dimensions and low level of infrastructures’ low level of infrastructures’
development development
Step 4Step 3 Step 5Step 2Step 1
Definition Definition of the of the
objectivesobjectives
Immersion Immersion and gathering and gathering
of of informationinformation
Definition Definition of the of the
concept & concept & business business
planplan
Development Development
FirstFirstimplantatioimplantatio
nnthen setting then setting
upup
Objective: 1 to 2 years to reach step 5Objective: 1 to 2 years to reach step 5
The Danone method: a structured approach The Danone method: a structured approach
Understanding the specificity of our Understanding the specificity of our consumersconsumers
Go outside our world…Go outside our world…
Understanding the specificity of our Understanding the specificity of our consumersconsumers
Sticking to local habits Sticking to local habits
Yoghourt in Bangladesh:Yoghourt in Bangladesh:creamy, very sweet creamy, very sweet
Yoghourt in China:Yoghourt in China:drunk with a strawdrunk with a straw
Bringing a real and useful innovationBringing a real and useful innovation
Milkkuat: the first nutritional and affordable dairy product launched in Indonesia
Main Main deficienciesdeficiencies
in the in the countrycountry
Main Main deficienciesdeficiencies
in the in the countrycountry
15.0%Vitamin D
10.0%Selenium
30.0%Vitamin B330.0%Folique Acid (B9)
25.0%25.0%Iodine and zincIodine and zinc
24.0%24.0%IronIron
35.0%35.0%20%
12.0%5.4%7.6%
% of AJR 7-9 years oldKids provided by 6 Milkkuat
biscuits
Vitamin AVitamin AVitamins B1, B2, B6
CalciumProteinsEnergy
The business model brings resultsThe business model brings results
Yogurissimo pack ArgentinaYogurissimo pack Argentina
Price: 13 cts €Price: 13 cts €95,000 tons95,000 tons
Activia FranceActivia France120,000 t120,000 tTaillefine FranceTaillefine France75,000 t75,000 t
20062006
Another challenge:Another challenge:Populations who live with less than 1 € per day Populations who live with less than 1 € per day
A very particular context: A very particular context: the Bangladeshthe Bangladesh
41% of the population under 14 years old
56% do not read and write
5% has access to tap water
80% de rural populations
Extreme density (>1000 people per km²)
60% of the population live with less than 2$ per day
The challenge of distribution: The challenge of distribution: no organized tradeno organized trade
The challenge of communicationThe challenge of communication Posters and brochures for nutritional educationPosters and brochures for nutritional education
Non-negotiable processes/criteria
• It is accepted that our products/processes do
not comply 100% with our standards.• Normal procedure is to have an action plan in
place how to reach the standards • Some requirements however are so crucial for
food safety reasons that we do not accept a non-compliance.
Definitions
• Non-negotiable Criteria:– Based on risk/Benefit-assessment
– Acute effect on health for the consumer– Possible long term effect on health for the
consumer / accumulation effect– Based on present/future legal requirements
Affordability Project - QFS
Before producing any new affordability ranges• a risk assessment must be conducted to
determine– Risk to consumers
– Risk to plant and other products we produce in the plant
– Risk to name and reputation
Risk / Benefit Assessment
Food Safety Criteria – Non Negotiable
Food Safety Criteria
ProductBrand
Microbiology ContaminantsNutritionalTolerableDeviation
Foreign Material
Premium Corporate Standards Apply
Value Corp StdCodex or
Local Regs or Corp Std
Codex orLocal Regs or
Corp Std.Corp Std
Affordable Corp StdCodex or
Local Regs orCorp Std
Codex orLocal Regs or
Corp StdCorp Std
Food Quality Criteria – Negotiable.
Food Quality Criteria
Brand SupplyChain
Control
RawMaterialQuality
PackagingMaterialsQuality
Distribution
Premium Full SCC Corporate Specification
CorporateSpecification
Global
Value Full SCC -Category 1
Corporate + Local
Specifications
Corporate + Local
Specifications
Local Mainly + Global (with
QFS Approval)
Affordable To Local Standards and
Legislation
To Local Standards and
Legislation
To Local Standards and
Legislation
Local OnlyQFS Approval Required for
Global.
Compliance for all products/productions worldwide
• Products + Production must comply with.. CODEX +
NATIONAL LEGISLATION +NON-NEGOTIABLE CRITERIA
• Action plans must be in place to reach the Danone-requirements.
• Action plans must be approved by central quality.