troductionmedia.corporate-ir.net/media_files/irol/95/95168/presentations/... · et segmentation to...

Investor MInvestor M

troduction troduction

mon ISRAELmon ISRAEL


ignificant progress achieved in buildingignificant progress achieved in building

Scale and dominance

Brands

People

Capabilities

A durable baseA durable base


ina… Danone has emerged as one of the rgest and most profitable FMCG companieina… Danone has emerged as one of the

rgest and most profitable FMCG companie


esia… a powerhouse of growth and profitaesia… a powerhouse of growth and profita

““DanoneDanone owns the street”owns the street”


3 X3 X

ced ourselves from competition in our twtegories in Asiaced ourselves from competition in our twtegories in Asia

3 X3 X

Water

Biscuits

VolumeVolume

Source: Zenith


lever of growth to explorelever of growth to explore


Today we have a platform in placdeliver sustainable superior grow

earnings and returns

Today we have a platform in placdeliver sustainable superior grow

earnings and returns


Focus on building dominant positions in the Focus on building dominant positions in the 3 most populated countries of the region….. 3 most populated countries of the region…..

China, Indonesia and IndiaChina, Indonesia and India

rategy remains consistent…rategy remains consistent…

2.6 billion consumers

Two of Danone’s four “New Frontiers”

Focused on health and nutrition

Selective investments elsewhere

2.6 billion consumers

Two of Danone’s four “New Frontiers”

Focused on health and nutrition

Selective investments elsewhere


levance of health and nutritionlevance of health and nutrition

driver of consumer choicedriver of consumer choice

Mass Market

igh awareness of nutritionally under consuminnt my children to have a better future than I h

Middle Class

Growing awareness of health issuesant and demand the best for my family and mys


standing who the 2.6 billion consumers arstanding who the 2.6 billion consumers ar

55 billion consumers live on less than €3 a d

llion in China 130 million in In725 million in India

ChinaChina IndiaIndia IndonesIndones

billionbillion 1.1 billion1.1 billion 220 milli220 millio


pplication of the right business model to acountry, or categorypplication of the right business model to acountry, or category

Mass market consuMass market consu

Middle class consMiddle class cons

ffordability Modelffordability Model

egmentation Modelegmentation Model

n co-exist within countries and within catego


ability Modelability Model

nant positions based on scale to drive down cong products affordable and accessible

ng the local low price players at their own gam

ess model delivers excellent margins ns despite low prices

nant positions based on scale to drive down cong products affordable and accessible

ng the local low price players at their own gam

ess model delivers excellent margins ns despite low prices

A unique understanding of affordability and its application to emerging markets


ntation Modelntation Model

“The new Chinese consumer”“The new Chinese consumer”

et segmentation to capture the rising aspiratand incomes of middle class consumers

ue for money remains important, consumers are

ue for money remains important, consumers are

More sophisticatedMore sophisticatedMore discriminatingMore discriminatingImage consciousImage conscious


y on the end gamey on the end game

Validation of strategy and business modelValidation of strategy and business model

Strategy + business models = Dominance

End GameEnd Game

tainable owthtainable

owthSuperior ReturnsSuperior Returns

Cash GenerationCash Generation!! !!

ealth check.. Sustainable competitive advantagealth check.. Sustainable competitive advantag


tent sales growthtent sales growth

7.7%7.7% 10.2%10.2% 10.4%10.4%

CAGR 00CAGR 00--03 = 9.4%03 = 9.4%

keth

1,951,952,0802,0801,9341,934

2001 2002 2003

os


mpact of Asia Pacific growth is diluted by rength of the Euro

mpact of Asia Pacific growth is diluted by rength of the Euro

M USD

M Eu1.961.96

2.232.232.082.08

1.931.93

1.981.981.771.77

20012001 20022002 20032003


Q1 '04Q1 '04 Q2 '04Q2 '04 Q3 '04Q3 '04 9 months9 months

erating in 2004erating in 2004

12.0%12.0%

+15.6%+15.6%+12.6%+12.6% +13.4%+13.4%

erly like-for-like sales growth


n has evolved strongly from the leverage oh, to be ahead of the average of the Grou has evolved strongly from the leverage o

h, to be ahead of the average of the Grou

+210bp+210bp

+140bp+140bp+100bp+100bp

14.14.13.3%13.3%

11.9%11.9%

9.8%9.8%

20002000 20012001 20022002 20032003

2000-2003:+ 450bp

2000-2003:+ 450bp


has declined has declined

6.4%6.4%7.3%7.3%6.6%6.6%

10.0%10.0%

20002000 20012001 20022002 20032003

% of Sales


by Geography 2003by Geography 2003

ChinaChinaIndiaIndia

AseanAsean

AustralasiaAustralasia

JapanJapan5%5%

13%13%

13%13%

14%14%

55%55%


by Category 2003by Category 2003

Beverages Beverages

OthersOthers

BiscuitsBiscuits

28%28%

68%68%

4%4%


are the risks?are the risks?

Material costs?Material costs?

Competition?Competition?

Foreign exchange?Foreign exchange?

Execution?Execution?


al Costsal Costs

rically offset by the leverage of our business modmproved product mixg upward pressure on PET… long or short term ?

rically offset by the leverage of our business modmproved product mixg upward pressure on PET… long or short term ?

rtant in the context of consumer affordartant in the context of consumer afforda

kRMB/ton

20022002

2004200420032003

4 0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

ET Price Trend


etitionetition

BiscuitsBiscuits…… largely local, price drivenlargely local, price driven

agesages…… a mix of international, Asian anda mix of international, Asian anders, largely Asian and local in our categers, largely Asian and local in our categ

Addressed through affordability and Addressed through affordability and segmentation modelssegmentation models


n Exchangen Exchangelar proxy for Asia Pacific currencies, so risk is largely lar proxy for Asia Pacific currencies, so risk is largely USUS

Balanced mix with medium to long term Balanced mix with medium to long term upside on Chinese RMBupside on Chinese RMB

RMBRMB

HKDHKDNZDNZD

AUDAUD

MYRMYR

IDRIDR

INRINROTHERSOTHERS

3%3%13%13%3%3%

3%3%

10%10%

13%13%5%5%

52%52%


tiontion

Consistent operational performanceDespite SARS

Quick turnaround when problems arise

Strengthened by new organisation in place

Consistent operational performanceDespite SARS

Quick turnaround when problems arise

Strengthened by new organisation in place

Solid M&A track recordBusiness integration

Achieving target returns

Solid M&A track recordBusiness integration

Achieving target returns


M&A likely…?M&A likely…?

gets less attractive in terms of valuation...

en our position… No need to pay strategic prem

me consolidation possibility in China going forw

keep an open mind

gets less attractive in terms of valuation...

en our position… No need to pay strategic prem

me consolidation possibility in China going forw

keep an open mind


cant qualitative improvement in businesslitiescant qualitative improvement in businesslities

nagement development and succession

D

P / DOM’s / Best practices

ustrial platform

tribution

nagement development and succession

D

/ DOM’s / Best practices

ustrial platform

tribution


acific Organisationacific Organisation

Chairman

SVP Beverages

SVP Biscuits

SVP Dairy

Chairman

Chairman

Chairman

Finance

porate Devpt

man Resources

Proximity to the business and countryProximity to the business and country


rch & Developmentrch & Development

esearch & Development centres serving a Pacific, all located in Chinabeveragebiscuit

esearch & Development centres serving a Pacific, all located in Chinabeveragebiscuit

nked to Vitapole and AP business unitsnked to Vitapole and AP business units

roximity to the businessrong product development capability

peed to market

roximity to the businessrong product development capability

peed to market


Themishemis

SAPSAP

Key driver of capturing the supply chain prize,Integrating DOMs and Best Practices

Key driver of capturing the supply chain prize,Integrating DOMs and Best Practices

SAPSAP

2004: 80% of Net Sales





ThemisThemis

everage expected return is above 40%

ayback period ranges between 1.5 – 2.5 yea

verage Project duration – between 6-7 mon

everage expected return is above 40%

ayback period ranges between 1.5 – 2.5 yea

verage Project duration – between 6-7 mon

Benefits flowing through nowBenefits flowing through now


rial platformrial platform

ChinaChina

IndonesiaIndonesia

IndiaIndia

7070

1515

33

Excludes contract-packers

trial platform establishedntralised to serve regional marketscome logistics hurdlesdown costs

trial platform establishedntralised to serve regional marketscome logistics hurdlesdown costs

No. of factoriesNo. of factories


Wahaha Wahaha 2 million store2 million storeOther businesses growing footprint rOther businesses growing footprint r

Aqua 1.3 million stoAqua 1.3 million stoBiscuits 900,000 Biscuits 900,000 Dairy (3 months) 260,000 > 9Dairy (3 months) 260,000 > 9

Biscuits 2.2 million stBiscuits 2.2 million st

butionution

ribution power building as reach extendsribution power building as reach extends

ChinaChina

IndonesiaIndonesia

IndiaIndia


Combining strengths to accelerate the Development of probiworldwideCombining strengths to accelerate the Development of probiworldwide

rategic Alliancerategic Alliance

To promote the cause of probiotics on a worldwide scaleTo promote the cause of probiotics on a worldwide scale

To identify and facilitate cooperation opportunitiesTo identify and facilitate cooperation opportunities

xchange of Board Membersxchange of Board Members

reation of a Probiotics Councilreation of a Probiotics Council

Creation of a Liaison OfficeCreation of a Liaison Office

Which create value for both parties

With priority given to the area of dairy probiotics outside Ja

Which create value for both parties

With priority given to the area of dairy probiotics outside Ja

R&D, entry into new markets, synergiesR&D, entry into new markets, synergies


tic market sharestic market shares

41%41%

Total market : Total market : €€ 4,290 million4,290 millionShare of market

11%11%

4%4%

29%29%

15%15%

#3 Global player

Local Asian players

Local others*

Investor MInvestor MSource: Euromonitor 2003- Market share value 2003 on probiotic dairy drinks

etet size: size: €€ 900 Million900 Millionwwww volume: 18%volume: 18%

wwww growthgrowth: 37%: 37%

t shares in Europet shares in Europe

14%

8%

21%

#3 Global player

Others


t shares in Latin Americat shares in Latin America

31%

16%#3 Global player

Others4

minates in Mexico and is strongly d in Brazil in Argentina

et size: et size: €€ 320 Million320 Millionwwww volume: 14%volume: 14%

wwww growth: 14%growth: 14%

Source: Euromonitor 2003- Market share value 2003 on probiotic dairy drinks


t shares in Asiat shares in Asia

53%

Local Asian players

1%#3 Glo

t size: t size: €€ 2,950 Million2,950 Millionwwww volume: 67%volume: 67%

wwww growth: 49%growth: 49%

Source: Euromonitor 2003- Market share value 2003 on probiotic dairy drinks


Yakult Co., LtdYakult Co., LtdYakult S/A Ind.Yakult S/A Ind.Hong Kong YakHong Kong YakYakult (ThailaYakult (ThailaKorea Yakult CKorea Yakult CYakult PhilippiYakult PhilippiYakult (SingapYakult (SingapYakult S.A. DeYakult S.A. De P.T. Yakult IndP.T. Yakult IndYakult Australi(Australia, NewYakult Australi(Australia, NewYakult NederlaYakult NederlaYakult BelgiumYakult BelgiumYakult UK Ltd.Yakult UK Ltd.Yakult DeutschYakult DeutschYakult ArgentiYakult ArgentiGuangzhou Ya(Shanghai, GuaGuangzhou Yak(Shanghai, GuaYakult (MalaysYakult (MalaysYakult EuropeYakult EuropeYakult InternaYakult Interna

Yakult Honsha Yakult Honsha 12345678910

1112131415

17

16

2

3

4

5

1

67

8

9

10 15

17

16

ries where Yakult is presentries where Yakult is present


gic significancegic significance

minant global position in the most value added tor of the fresh dairy industry

ographies and channels are complementary

es Danone a broad footprint in dairy in Asia ere we are under developed

minant global position in the most value added tor of the fresh dairy industry

ographies and channels are complementary

es Danone a broad footprint in dairy in Asia ere we are under developed

Significant value creation potentialSignificant value creation potential


about dairy in the rest of Asia?about dairy in the rest of Asia?

ty China .. market evolving rapidly

been increasing our stake in Shanghai Bright Dairet leader in fresh dairy products and licensee of ne brand

omics favour remaining integrated with a nationaplayer in the medium term, while scale is built it category

amining our position in Japan with a view to doi

ty China .. market evolving rapidly

been increasing our stake in Shanghai Bright Dairet leader in fresh dairy products and licensee of tne brand

omics favour remaining integrated with a nationaplayer in the medium term, while scale is built it category

amining our position in Japan with a view to doin


ointsoints

DanoneDanone is well positioned in the right marketsis well positioned in the right marketsand categoriesand categories

We have a clear view on our strategy, We have a clear view on our strategy, business models and end gamebusiness models and end game

We are building dominant positions whichWe are building dominant positions whichWill deliver superior returns over timeWill deliver superior returns over time

Our capabilities are evolving rapidlyOur capabilities are evolving rapidly

New New organisationorganisation in place to deliver the futurein place to deliver the future

troductionmedia.corporate-ir.net/media_files/irol/95/95168/presentations/... · et segmentation to...

Documents

Transcript of troductionmedia.corporate-ir.net/media_files/irol/95/95168/presentations/... · et segmentation to...