Fresh Dairy Products General Strategy. Bernard HOURS

Transcription

1 Fresh Dairy Products General Strategy Bernard HOURS

2 World % The World Fresh Dairy Market 47,2 bn / 23,1 mn tones NORTH AMERICA % WESTERN EUROPE % 6.3 EASTERN & CENTRAL EUROPE +5.9% LATIN AMERICA % AFRICA & MIDDLE EAST % 0.9 ASIA PACIFIC +5.7% KG per cap Var Source: Euromonitor 2005

3 Some figures about Dairy Division 7.5 Billions euros 32 Countries 20.1% Market share Worldwide 35.7% Market share (in the countries we operate) tons additional every year 4 millions pots in 1 hour

4 Healthy Sales Growth Sales in billion 8 Reported figures E

5 Building share of market dominance +0.8 pts/an 17.7 % 20.1 % Source: Euromonitor 2005

6 Almost tripling our operating income over last 10 years Operating income in million

7 Dairy Profitable Growth Equation Sales +8.9% CAGR like-for-like Mix and Productivity Costs Reinvested 1/2 To EBIT ½ A&P EBIT Year on year margin improvement

8 Growth generates cash through structurally negative working capital Inventory DSO receivables Payables Capex Very low FG inventory Very low raw milk inventory days days average (milk paid within 1 month) Closely monitored

9 Operations Lower Cost of Good Sold despite strong inflation, thanks to Dairy s productivity methodology Higher line utilization, due to our Virtual Plant approach in Europe O.U. 81% Track Record COGS index In progress O.U. 74% E 06 Market+Inflation COGS / ton. After Productivity 300,000t of new installed capacity

10 Operations Purchasing Track Record Strong yields from our Productivity program Purchasing Productivity 4.2% 4.4% 4.2% E Direct Sourcing of 50% of fruit needs 50kt > 10% of savings over 2 years enhanced fruit quality

11 Operations Manufacturing Track Record Output/employee (t/fte) Operational Efficiency Manufacturing losses ( /t) E Line Simplification 14 km/shift 2 operators E E 24 km/shift 1 operator

12 Make our blockbusters affordable Inflation +3.7 % / year Net prices +0.5 % / year + 10 Pts Affordability vs inflation

13 Getting close to Sales in billion USD Bn 8,3 9,5 8 7 USD 6,1 7, ,4 3,3 3,5 4,0 3,8 3,9 4,3 4,4 4,1 4,6 4,9 3 2,3 2, ,9 1,0 1,0 1,0 1,3 1,5 1,8 1,

14 How big can be our ambition Be the fastest moving 10 Bn USD company Provide active tasty health solutions for everyone on earth

15 Our Growth Drivers Roll out BB to the limit Create new Blockbusters Enter New geographies GLOBAL = BACKBONE LOCAL = DRESS CODE

16 Our Growth Drivers Roll out BB to the limit Create new Blockbusters Enter New geographies GLOBAL = BACKBONE LOCAL = DRESS CODE

17 Our Blockbusters Growth Protection Transit Digestion Weight Management 800 M 1000 M 1300 M 900 M

18 Polishing our blockbusters Putting science into food Getting real critical size Constant renovation

19 2006: Fastest growing Blockbuster 661 % +46% Activia Turnover % % +36% +26% +28% +25% +7% YTD 2006

20 Global O.A.M. Model Organically Adaptative Marketing A model of knowledge which understands brands as a living entity, evolving and improving at every experience, sharing its success among countries

21 ACTIVIA GLOCAL MODEL LOCAL = DRESS CODE FRANCE YOGURT F. CHEESE POLAND YOGURT F. CHEESE MEXICO DRINKS YOGURT AUSTRIA YOGURT KEFIR

22 ACTIVIA GLOCAL MODEL THE LIVING ORGANISM SHOULD FIT THE ECOSYSTEM Respect the ecosystem at launching phase Change is feasible when strong position

23 Actimel DNA Diamond +11% +19% +31% +35% +30% +36% +50% +92% Actimel AU

24 Adapting the organism to US Ecosystem Brand name : DAN ACTIVE Clearer message on Active effect on health Moe Unique / less confusion with others brands Colour code: Stronger impact on a growing but still small fresh dairy shelf Actimel AU

25 Vitalinea & Danonino Sales E Sales M M E

26 Danone & Modern Trade Partnership for growing the Dairy category 1. Category management process execution 2. Blockbusters in store acceleration % Shelf Space TODAY >= Expected % Vol Sales Y+1 a) Active Health Segments grow faster b) -Sales/Kg. are higher c) Rotation are higher vs average Category Visibility double is better Assortment the right size % Shelf share INVEST IN SPACE Active Health Segments DESINVEST IN SPACE Space get our fair share Average Category Segments Declining Category Segments % Vol sales Promotion make offer unique Innovation speed up OSA

27 Proximity Route To Market: Deeper and controlled distribution and visibility A detailed 10 steps process giving strong results in 2006: + 100,000 new POS in % Contrib to growth vs 25% business weight PROXIMITY dominance ECE: 58% MODERN TRADE dominance LATAM: 66.1% AME: 62%

28 Strategic Brand Observatory: an Innovative Quality tool Targeting systematically consumer loyalty SBO Seeking continuously for better efficiency THROUGH OUT A TRANSVERSAL CROSS FUNCTIONAL WW NETWORK Delivering consumer critical criteria Assuring Nutritional Profiles Respecting Key Scientific Attributes

29 Our Growth Drivers Roll out BB to the limit Create new Blockbusters Enter New geographies GLOBAL = BACKBONE LOCAL = DRESS CODE

30 Preparing Tomorrow Diamonds Segmented Active Natural Tasteful Easy

31 Preparing Tomorrow s Diamonds Beauty Cardio??

32 Launch plan Q S1 07 S years process

33 Danacol 2006 CA 2006: 100 M Outstanding Growth: % Market leadership My anti-cholesterol partner Dominant Leader in the 8 countries we operate 38.4 % vs 29.6 % Nr 2 Close to leader in the 16 Cholesterol countries despite present in 8 out of % vs 34.8 % Nr 1 Strongest market share winner in 2006

34 Our Growth Drivers Roll out BB to the limit Create new Blockbusters Enter New geographies GLOBAL = BACKBONE LOCAL = DRESS CODE

35 3 - step model Sales / Step 1 Per cap. Launching Step 2 BB Building Step 3 Inventing the future Media + PR Distribution Media: GRP Health Marketing POS New PHOOD New media New Channels

36 Step 1: Launch of core Egypt PR launch : Danone WW expert Heavy media launch TV / Print / Outdoor POS dominance Distribution Build Up Porfolio management 2006 :Launch Core range 2007: Launch of BB

37 Step 1: Launch of Activia China Step 1: Launch of Activia China 2.5 Bio China Sales in M May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct t / day 7t / day

38 Step 1: Launch of Activia Japan Step 1: Launch of Activia Japan 4 Bio Japan Sales in M May-05 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May : TVC & promo : TVC & promo 4+2

39 Step 2: Russia + 72% % % Sales CAGR +30% SOM :15.5% 23.1% EBIT CAGR +75%

40 Step 2: Germany % + 158% % Sales CAGR +14% SOM :10.1% 13.6% EBIT CAGR +33%

41 Step 3: Spain Spain Push Involvement thru Credibility Actimel AU % Launch Of Essensis : Feb % 33 M Sales CAGR +4% New media & W.O.M Lab SOM : 60% EBIT CAGR +7%

42 Building our BB in the population pyramid Affluent 300 M Aspiring 1.2 B Striving 3.2 B

43 Production hubs Set Up a Production Hub wherever possible: 100 M$ Sales Average margin: 14% in Yr 8

44 Hub creates superior value within 6/10 years Sales EBIT Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Cash out Y1-Y3 20 / 30 M Capex and / or Goodwill Value Y8: 100 M +

45 Accelerating geographical expansion new countries / year 5 + new countries / year

46 Operations Outlook Deployment of the mini-plant modular concept in new Geographies Colombia 30kt capacity 3 product families Cups and bottle packaging capability Capex 15M

47 A company you live We develop our resources to support the growth 80% from our key positions worldwide are staffed internally, 88% of our GMs are promoted internally Personalized carrier paths for Key resources with international assignments. Engagement is a major asset: 87% of our managers are highly engaged, 92% are proud to work for Danone, 95% support our culture and values In some countries Danone is recognized as Number One Employer of choice in the Country-ex. Spain and Mexico With a distinctive culture and values

48 UNIQUE GLO-CAL ORGANIZATION MODEL: with a balance between local and WWBU At local level, Cbus: - Autonomy with full P&L responsibility - Presence of all functions - Proximity: with our consumers, clients, employees and local environment - Seeks to fit the specificity of the local field At the WWBU Level: Acceleration Units in charge of the blockbusters - Accelerate brands deployment & best practices, - Define brand vision and innovation plans Business Acceleration teams : - Foster transversal projects, focus on customer. Innovation central team & Incubators - Develop innovation Pipeline

49 Our vision for 2011: double our sales Two main levers: Accelerate profitable growth in existing businesses Expand our business model to new geographies 6.6 Bn 13 Bn Including acquisitions & New geographies