Danone

GROUP DANONE

One important strength for the success of global expansionwas still lacking – a corporate name with resonance. In June 1994, it was thus decided to drop BSN, the three letters that had until then been the group’s banner for operations in France and Western Europe, and replace it with the name Groupe Danone. Advantages included the strength of this top brand, already familiar in five continents. Global ambitions that suppose continued reinforcement of European bases have also led to a complete overhaul of management methods, which nonetheless remain rooted in our dual project for business success combined with progress for people. This has been stressed by Franck Riboud, noting that “the strength of a business does not lie in its organization or procedures, however necessary these may be, but with the people making it up.”

A global leader in healthy food

In 2007, Danone recorded an organic growth rate of nearly 10% — practical proof that its business growth model truly works. With its operating margin increasing for the 13th year running, the group further strengthened its global standing: world no. 1 in fresh dairy products, world no. 2 in bottled waters, world no. 2 in baby nutrition, world no. 3 in medical nutrition.

The group’s performance is the result of a balanced strategy that builds on international expansion, a growing commitment to innovation, and strengthening health-oriented brands.

In order to live up to its ambitions, Danone invests heavily in Research & Development — nearly €190 million in 2007. One hundred percent of projects currently in the pipeline focus on health and nutrition. Three centuries after the benefits of Evian mineral water were discovered, over a century after Blédine was first marketed, and nearly a century after the first Danone yoghurt was retailed in a pharmacy, health innovation remains more than ever a driver of the group’s business growth. In 2007 DANONE bolstered its focus on healthy food with the takeover of Dutch group Numico. With this move it incorporated into its strategy two profitable, fast-growing business lines: medical nutrition and baby nutrition. They naturally round off the group’s brand portfolio and are perfectly aligned with its mission to bring health through food to as many people as possible. Today Danone is the only food group to focus totally on health.

Key figures

€12.776 billion sales in 2007

World number 1 in fresh dairy products.

World number 2 in bottled waters

World number 2 and European number 1 in baby nutrition

World number 3 in medical nutrition

Trading operating income 2007: €1,696 (up 6.2%).

Trading operating margin: 13.27%.

Underlying net income: €1,185 million.

Workforce: 76,044.

Objectives 2008

Organic sales growth of between 8% and 10%. Growth in trading operating income that is higher than organic sales growth (by at least 30 base points). Growth in underlying net earnings per share of at least 15% based on the group’s pro forma statements.

Main brands

Fresh Dairy Products - Danone, Actimel, Activia, Danonino (Petit Gervais aux Fruits), Vitalinea (Taillefine, Vitasnella ou Ser dans certains pays), Danacol, Essensis

Waters - Evian, Volvic, Aqua, Bonafont, Font Vella, Lanjarón, Ser

Baby Nutrition - Blédina, Gallia, Nutricia, Cow & Gate, Milupa, Mellin, Dumex

Medical Nutrition - Nutricia, Nutrini, Nutrison, Fortimel, FortiCare, Fortisip, Neocate, Infatrini

Health: a historic Danone commitment

For DANONE health has always been an overriding concern, closely bound up with its history and brands. In the 1920s Danone yoghurt was sold exclusively in pharmacies. It was the product of the research by Nobel medicine laureate Elie Metchnikoff into lactic fermentation benefits (1908) and the subsequent work of Isaac Carasso. Since then the group has focused on healthy products – an outlook that has shaped innovation and strategy and prompted the company over ten years to divest and concentrate on four key lines: Fresh Dairy Products, Waters, Baby Nutrition, and Medical Nutrition.

The importance of nutrition and public health issues has prompted the group to elevate its health commitment to the rank of principle of governance. “Health governance” builds on three Group-wide value – scientific rigour, obedience to the principles of self-discipline, and constant dialogue with stakeholders, which translate into action in the field. One example is Danonino (Petit Gervais), reformulated with added vitamins and minerals to counter specific nutritional deficiencies affecting children in over ten countries. Another instance is Danone’s pledge alongside other major food companies to print transparent nutritional information on product packages. With the acquisition of Numico, Danone will now be bringing lifelong health through food to people worldwide, particularly those with weak health, children, and the elderly.

The Food, Nutrition and Health Charter

The Food, Nutrition and Health Charter, applied throughout the group's subsidiaries,

reflects our willingness to make public commitments. In addition to reaffirming five core values – balance, variety, pleasure, sociability and information – the Charter commits to:

- propose products adapted to needs and tastes

- dialogue with scientists.

- support research

- promote knowledge sharing

- heed public opinion

- communicate with clarity and transparency

- guarantee the scientific validity of the claimed benefits

- promote responsible advertising (for exemple the pledge on advertising aimed at children)

- encourage physical activity.