A story begins

In October 2005, Danone CEO and Muhammad Yunus (founder of the Grameen micro-credit institution and now Nobel Prize for peace) decided to create a « social business model » in Bangladesh. This company aims at maximizing social value – nutrition to the poor and poverty alleviation – while being profitable enough to be sustainable. For Muhammad Yunus, this is “the next big idea”. For Danone it is a new way to fulfil its mission to bring health through food to the largest number of people. This project started in 2007 with the opening of a first plant in Bogra producing a highly nutritional yogurt at a very low price (€6 cents).

This project was a starting point to the decision by Danone to take another important step in this direction with an innovative social responsibility initiative on a worldwide scale. Danone intends to put its resources and capacity for innovation to work to favour the emergence of solutions that are viable over time in areas such as malnutrition and the access to safe drinking water where it can make a significant contribution. This is why Danone sponsored a mutual fund named danone.communities (1) which focuses investments on business projects with a significant social impact and consistent with Danone's mission of bringing health through food to a the largest number of people. The projects are and will be in areas where Danone can concretely add value by mobilizing both its resources and the competencies of its staff and partners.

The social impact of projects on local communities is assessed on the basis of indicators that include their contributions to public health, to the reduction of malnutrition, and the alleviation of poverty. The fund is particularly attentive to the quality of partnerships as well as the social efficiency of capital investments.

The fund's first investment was to support the development and deployment of the Grameen Danone project in Bangladesh. Looking ahead, the fund aims to be in a position to make a limited number of investments each year in highly innovative ventures in different parts of the world.

danone.communities is the first social business fund initiated by an industrial group. It is open to Danone’s shareholders, its employees, individual investors and institutions sharing an interest in this approach to development.

The fund's Board of Directors is presided by Franck Riboud, Chairman and CEO of Groupe Danone, and Muhammad Yunus, founder of Grameen Bank, is its Vice Chairman.

For more information: visit our blog www.danonecommunities.com

danone.communities: Invest in Social Business for Human Development

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danone.communities mutual fund (1)

The danone.communities mutual fund was launched in June 2007 thanks to €20 million from Groupe Danone and the support of industrial investors to the tune of €30 million. It is managed by IDEAM, a subsidiary of the Crédit Agricole, which takes care of the marketing. The prospectus approved by the AMF (Autorité des Marchés Financiers - French Financial Markets Authority is available from IDEAM or from the AMF website. The mutual fund involves a minimum 90% investment in a selection of instruments in the eurozone, privileging socially responsible investments. It owns -representing no more than 10% of its assets- shares of the danone.communities venture capital investment fund which invests in social entrepreneurship companies. The mutual fund is open to Danone shareholders and also Danone employees, consumers and any other investors, be they institutions or individuals. The ambition of danone.communities is to create a large community of a new kind of investor, driven by the desire to match finance with sustainable development, and promoting social innovation by supporting the development of social entrepreneurship in line with Danone’s mission to “improve healthy eating for the greatest number of people.” Above all else, these companies want to improve their social and environmental value and help the poorest countries develop their economy.

The first 3 projects

Grameen Danone Food Ltd

Grameen Danone Foods (GDFL) started to operate in February 2007. It aims at improving the diet of Bangladeshi children with a yoghurt fortified in micro-nutrients (iodine, zinc, iron and vitamin A). This diet is very accessible in price (7 BDT for 60g, or 5 BDT for a pouch of 40g) and contributes to the development of local populations by creating a long-lasting business activity. The first micro-plant (2500 tons capacity) opened in Bogra, 250km north of the capital. Milk is collected locally and proximity sales are taken care of by small shops in the surrounding cities and by the Shokti Ladies in the rural areas.

Grameen Danone Foods produces 80,000 cups everyday and employs 177 people. Volumes have been multiplicated by 10 between 2008 and 2010. This has been made possible by the rapid growth of sales in Dhaka capital city as well as in smaller cities. At the same time, a sales network has been developed of around 800 sales ladies that distribute successfully door-to-door in rural areas. Profits are still negative in 2010 but are imporving as Bogra reaches full capacity and as the product mix is being improved, including with the launch of the 5 BDT pouch in September 2010. Profits are expected in the course of 2013 when the second factory to be built around Dhaka will use its full capacity.

Profits are expected in the course of the year 2014. A second factory is starting to be built near Dhaka in 2011.

With 26 million yoghurts sold in 2010, representing a 40% penetration rate in the area’s villages, the Grameen Danone project could have a real impact on the health of children living in the region. This is currently being measured through a study led by John Hopkins University and GAIN (Global Alliance for Improved Nutrition). First results have been published in June 2011.

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1001 Fontaines – safe drinking water to improve the health of Cambodia’s rural communities

The “1001 fontaines” adventure began with a simple observation: in towns, people have access to drinking water but “here in these small villages, there is little chance that the inhabitants will ever see the water network get here, or if it does it’ll take decades,” explains François Jaquenoud, co-founder of the association “1001 fontaines pour demain”. In the countryside, the only alternative for villagers is swamp water, with consequences in terms of child mortality and diarrhoeal illnesses.

The association’s mission is to improve the health of rural populations by giving them sustainable, long-term access to totally safe drinking water in sufficient quantities to cover their daily requirements. The teams from “1001 fontaines” have developed an ultraviolet water treatment procedure which kills bacteria present in the water and makes the water safe to drink at a very low cost. With pilot projects set up in 46 villages in Cambodia between 2005 and 2010, today this system means that 30,000 people can have 2 litres of totally safe drinking water every day.

After an initial immersion phase to help the experts better understand the challenges facing “1001 fontaines” and its projects, the danone.communities mutual fund decided to invest in the project in 2008. The objective of this partnership is to accelerate development with the opening of 23 new sites in Cambodia by 2010; it will also help the association progressively develop its ability for self-financing which will in turn ensure its sustainability. At this stage, between 60,000 and 80,000 people will have access to healthy and safe drinking water.

In the field, danone.communities is mobilising Danone talents for water distribution and helps organise local teams with people from “1001 fontaines” to operate the fountains themselves. Jean Claude Vidal (former technical director of Danone’s water division) provides his expertise on how to improve the filtration system and provides his useful experience about prolonging the lifespan of the various installations. Here lies the difference of the projects initiated by “1001 fontaines” which “integrate supply and operation of the installations, teaching operators, information and education of the people who will benefit from them, all this until the production site has created a sufficient “market” to be financially self-sufficient. At that point, they are genuine entrepreneurs at the service of the community,” explains François Jaquenoud.

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La Laiterie du Berger – encouraging the production of fresh milk in Senegal and improving the situation of Fulani farmers

The “Laiterie du Berger” (literally, the Shepherd’s Dairy) is a family business created by Bagoré Bathily, a young Senegalese vet. His aim is to improve the situation of the Fulani farmers by providing them with a fixed source of income.

“90% of milk in Senegal comes from imported milk powder. This is an aberration because 30% of the population lives from dairy farming,” explains Bagoré Bathily. “La Laiterie du Berger set up a fresh milk collection network, operating twice a day, in a 50km radius of the factory in Richard Toll in northern Senegal. This network enables 600 farmers to live exclusively from their production. Since it opened in 2006, the Richard Toll factory has grown from 1,200 to 6,000 litres in daily production, all products included. It produces yoghurts. After 3 years in operation, “La Laiterie du Berger” already has nearly 1 000 outlets.

Bagoré also supplies farmers with food for their cattle and offers training on how to improve productivity. Farmers who work with “La Laiterie du Berger” have seen their income increase three-fold. “One advantage of our work with La Laiterie is that we don’t have to leave animals to go and tend others,” comments Idrissa Sow, President of the Mbane Dairy Cooperative. I&P is a private investment company working with small and mid-sized businesses in Western Africa and micro-credit institutions; it has been investing in “La Laiterie du Berger” since the very beginning. For its Chairman Patrice Hoppenot: “it’s a real entrepreneurial project totally devoted to its task. We are delighted that danone.communities is joining the I&P and Bathily family and providing Groupe Danone’s wealth of experience. Judging by the project’s ambitions, their help is extremely welcome!”

danone.communities has invested in 2008 in la Laiterie du Berger.

Emmanuel Marchant, General Delegate Director of danone.communities, explains that “with this investment, danone.communities is providing financial assistance as well as organising genuine corporate “expertise” patronage, mobilising a team of Danone experts in the fields of quality, production and marketing.”

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These projects are all about the people.We focus on two talented social entrepreneurs with unusual career paths

Bagoré Bathily: co-founder of “La Laiterie du Berger”

36 years old, Bagoré Bathily is the founder and Chief Executive Officer of “La Laiterie du Berger“

Veterinary surgeon Bagoré is a graduate of Liège University in Belgium where he specialised in quantitative genetics and optimising animal production. During his degree, he worked in Mayenne, France, where he practised as a rural vet, living with and understanding the concerns for farmers and their herd. After a year with a Mauritanian NGO where he was responsible for the technical supervision of farmers supplying milk (from camels, cows and goats) for a local dairy, Bagoré learnt a great deal about how semi-nomad populations farm in the Sénégal River area.

On the cusp between farming and industry, Bagoré quickly found his legitimate place with the Fulani farmers when he offered to create a network for collecting their milk.

“The originality of this Dairy in the Senegalese context is to be the only one exclusively working with their collected milk which is a kind of trademark…a dairy managed by a vet who devotes himself to working with collected milk!”

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Lo Chay: co-founder of “1001 fontaines”

Lo Chay is project manager of “1001 fontaines” in Cambodia since 2005, and Director of the Cambodian NGO “Teuk Saat 1001” since 2007.

Co-founder of the “1001 fontaines pour demain” association, Lo Chay comes from a small village in north-west Cambodia. His parents have two hectares of rice paddy but do not have the finances to pay for their children’s education, even though they know how important it is.

Lo Chay began his education in a pagoda in Serei Saophoan. After doing very well at A-level in June 1996, has was supported by the association “Children of Mekong” which enabled him to continue his studies at Phnom-Penh. In September 2007, he passed the entrance exams for the Cambodia Institute of Technology and graduated as a Rural Engineer, with a grant enabling him to continue his engineering studies at the National Rural Water and Forest Engineering School in Paris. As part of his studies, Lo participated in several work placements involving setting up mini water networks.

Very bright and open-minded, Lo Chay feels close to his country and his rural roots. Aware of the insecurity of life in these areas, this project is very important to him as it will benefit the rural populations. He works in the field sharing his knowledge and experience.

Chay Lo is the first Cambodian to be recognised by the Junior International Chamber as one of the ten “most remarkable young people on the planet”.

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Acceleration of danone.communities in 2010

Historical projects reinforced in 2010

3 historical danone.communities projects showed positive developments in 2010:

- 80 000 yogurts are sold every day at Grameen Danone Food in Bangladesh (which corresponds to a doubling of sales) Grameen Danone Food works to open a second factory in Bangladesh.

- Up to 6000 liters of milk collected daily at La Laiterie du Berger in Senegal- And nearly 80% of the 30 of the ‘1001 Fontaines’ stations in function in 2010 in

Cambodia have already achieved financial balance.

Two new projects in 2010 for more impact

In 2010, danone.communities accelerated by investing into new projects, in two new countries:- Naandi Community Water Services in India: its mission is to bring safe drinking water in remote villages of India. Treatment systems and distribution are managed directly by the villagers. It is a project that increases alone the impact of danone.communities: Naandi distributes 30 million liters per month for 0,3 euro cents per liter to about 600 000 beneficiaries, and has created 500 direct and indirect jobs.- ISOMIR in France: the project’s mission is to accompany, in France, farmers in developing their activities in a short circuit, through modular transformation workshops, in addition to technical assistance. To date, nearly 31 projects of farms have been identified.

With these new projects, danone.communities strengthens its impact to more than 1 million people.

10 projects overall in 2011

Beyond the five d.c projects, danone.communities teams and their partners are preparing the establishment of five other new projects.

- Some contine to strengthen the themes of child nutrition and access to sage and drinkable water;

- Some will reveal other new thematics on health and poverty, such as the distribution of essential packaged goods to poor rural communities in emerging countries or the support of agricultural production.

Through these new projects, danone.communities continues to invent new models of partnerships. Danone.communities counts among its new partners: The Naandi Foundation, ADIE, GRET, ENDA GRAF, the French Red Cross, le Croissant Rouge and CARE.

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Naandi Community Water Services

Naandi Community Waters Services, launched by the Naandi Foundation in 2006, has one precise mission: Catalyze inclusive access to safe drinking water through professional service provision at a sustainable price point.

Since 2010, danone.communities has invested in this hybrid model and currently provides assistance in five areas quality, marketing, supply chain, HR, and IT. Treatment systems and distribution are managed directly by the villages.

The project has 3 social objectives:Social equity: “Clean water is for all”, with a majority of women and childrenHealth Impact: Reduction of disabilities and morbidity, which mostly affect women and children. Generate income for all related employees (water center assistants, distributors, Naandi Water’s employees)

In 2010, Naandi is present in more than 400 villages and gives safe water access to 2.4 million people. About 30 millions of liters are distributed per month, at e very low cost : only 0,3 $/liter. Moreover, 771 new units are about to be launched.

Based on current projections, the objective of “2,300 villages served by March 2015” would provide water access to 11.5 million people.

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