DANONE UNIQUENESSDANONE UNIQUENESS

HEALTH & NUTRITION LEADERSHIP

HEALTH & NUTRITION LEADERSHIP

Bernard HOURS

Health and nutrition, at the core of the Group’s history and brands

19191919 19641964

19961996

TodayToday

1st fat-free ’fromage frais’

1st fat-free ’fromage frais’

1st Danoneyoghurts sold in Barcelona

chemists

1st Danoneyoghurts sold in Barcelona

chemists

Isaac Carassodraws on the work of Elie Metchnikoff and the InstitutPasteur on lactic cultures

Isaac Carassodraws on the work of Elie Metchnikoff and the InstitutPasteur on lactic cultures

17891789

Discovery of the benefits

of Evian natural

mineral water

Discovery of the benefits

of Evian natural

mineral water

18461846

1st LU biscuits rich

in cereals

1st LU biscuits rich

in cereals

Refocusing on 3 product

categories with a strong

nutrition/health positioning

Refocusing on 3 product

categories with a strong

nutrition/health positioning

Regular launches of

products with nutrition/health

benefits

Regular launches of

products with nutrition/health

benefits

19911991

Founding of first Danone

Institute

Founding of first Danone

Institute

16 DanoneInstitutes around the world today

16 DanoneInstitutes around the world today

Health and nutrition, at the core of the Group’s mission and strategy

75% of product portfolio reported as healthier products (JP Morgan Analysis - Jan. 2006)Flagship brands, ambassadors of our commitment to health and nutrition, leading our growth (e.g. Vitalinea, Actimel, Activia, Danonino: 25% of turnover 2005, average growth rate 2005: +15%)

75% of product portfolio reported as healthier products (JP Morgan Analysis - Jan. 2006)Flagship brands, ambassadors of our commitment to health and nutrition, leading our growth (e.g. Vitalinea, Actimel, Activia, Danonino: 25% of turnover 2005, average growth rate 2005: +15%)

Portfolio

“Providing health through food to the greatest number of people”“Providing health through food to the greatest number of people”Mission

Focus on 3 healthy food categoriesAdapt offers to local nutritional needs & tastes and to the public health context: from weight management to nutritional deficiencies

Focus on 3 healthy food categoriesAdapt offers to local nutritional needs & tastes and to the public health context: from weight management to nutritional deficiencies

StrategyFresh Dairy Products

51%

Biscuits27%

Beverages22%

Groupe DANONE’s actions and commitments for Health and Nutrition

Nutrition is a global issue, the food industry should be part of the public health solution by proposing an extensive portfolio of healthy products and making it affordable, by communicating clearly and responsibly, by promoting physical activity and a balanced diet.

Nutrition is a global issue, the food industry should be part of the public health solution by proposing an extensive portfolio of healthy products and making it affordable, by communicating clearly and responsibly, by promoting physical activity and a balanced diet.

2Enhance

nutritional profile

of products

1Develop

healthy and tastynew products

3Make them affordable

4Information

&Education

Nutritional improvement: the example of LU France1999-2006: less sugar, less fat, more cereal and fibre

55

00Cereals (%)Cereals (%) Complex carbsComplex carbs

(g/100g)(g/100g)Total sugarsTotal sugars

(g/100g)(g/100g)Fibres (g/100g)Fibres (g/100g) Fat (g/100g)Fat (g/100g) of which saturatesof which saturates

(g/100g)(g/100g)

10,8

3,1

19,1

37,9

28,2

39

8,8

17,3

3,5

31,734,5

44,7

1010

1515

2020

2525

3030

3535

4040

4545

5050 + 15%+ 15%

+ 12%+ 12%- 9%- 9%

- 9%- 9%

- 18%- 18%

1999199920062006

Information and education: promoting good dietary habits and physical activity

A charter to reaffirm our convictions and commitments to health and nutrition

Managing the governance with our stakeholders

CBU

R&D

CorporateAffairs

DanoneInstitutes

Advisory BoardsScientific Consultations

Advisory BoardsScientific Consultations

Publicor

PrivatePartnerships

Publicor

PrivatePartnerships

CEO &

Experts Meetings

CEO &

Experts Meetings

Monitoringprograms

Monitoringprograms

Institutional & trade

consultations

Institutional & trade

consultations

Meet and share data & experienceMeet and share data & experience

Validation ofinformation &

communication

Validation ofinformation &

communication

Sharing of industrial constraints

with stakeholders

Sharing of industrial constraints

with stakeholders

Research forconsensusResearch forconsensus

ScientificKnowledge improvement

ScientificKnowledge improvement Adaptation of

product offerAdaptation of product offer

Consumer AssociationsDialogue

Consumer AssociationsDialogue

DANONE Science and Research at the service

of Health & Nutrition

Science and researchat the core of Groupe DANONE

Key R&D capabilities

Daniel Carasso Center, an innovation catalyser for all the Groupe’s brandsDaniel Carasso Center, an innovation catalyser for all the Groupe’s brands

500 people = 60% of the Groupe’s R&D resources

200 scientists = 100% Groupe’s research dedicated to advanced applied research

250 engineers dealing with Development, Food Safety, Quality and services

100 people from purchasing and marketing in order to boost innovation

A complete range of specialists in the fields of Science and Technology to deliver scientifically proven health benefits, always associated with superior taste preference:

Nutritionists; physicians; gastro-enterology - cardiovascular - immunity specialists; microbiologists; molecular biologists; biochemists; food engineers; food safety experts; consumer behaviour and sensory evaluation specialists…etc

500 people = 60% of the Groupe’s R&D resources

200 scientists = 100% Groupe’s research dedicated to advanced applied research

250 engineers dealing with Development, Food Safety, Quality and services

100 people from purchasing and marketing in order to boost innovation

A complete range of specialists in the fields of Science and Technology to deliver scientifically proven health benefits, always associated with superior taste preference:

Nutritionists; physicians; gastro-enterology - cardiovascular - immunity specialists; microbiologists; molecular biologists; biochemists; food engineers; food safety experts; consumer behaviour and sensory evaluation specialists…etc

Danone ResearchDanone Research

Key R&D capabilities

A R&D community of 800 people worldwide

R&D Budget: 1% of Groupe sales or 130 m€ / year

110 Nutrition and Health professionals deployed worldwide

A R&D community of 800 people worldwide

R&D Budget: 1% of Groupe sales or 130 m€ / year

110 Nutrition and Health professionals deployed worldwide

Our Research model

An innovation funnel process at the heart of our strategic focusAn innovation funnel process at the heart of our strategic focus

R&D innovation funnel process

Fundamental: Achieve consumer preference with tasty products meeting consumer expectations

Fundamental: Achieve consumer preference with tasty products meeting consumer expectations

To provide nutrients through our products to fight deficiencies + Enhance their nutritional

composition

To provide nutrients through our products to fight deficiencies + Enhance their nutritional

compositionNutri

tion

Nutri

tion

Plea

sure

Plea

sure

--> 600 products being renovated

To bring health through food and beverages

To bring health through food and beveragesHe

alth

Heal

th

To bring health to the greatest

amount of people through

food and beverages

To bring health to the greatest

amount of people through

food and beverages

Intrinsic health benefits of our key raw materials, health ingredients

--> 5 current health benefits ; exploration of new benefits

Sugars, fat, nutritional density, cereals and fruits

New economic modelNovel ingredients &Technology

Health Claim Development case study

Consumerhealthbenefit

Identifyrelevantefficacymarkers

Evaluate alternate

activeelements

Defineproduct &

positioningmix

Nutrition & health efficacy

studieswith product

Research: ingredients & cultures, Sensory identity, Technology, Food Safety

Construct scientificevidence dossier

go/n

o go

...

‘‘Helps reduce bad

cholesterol’’

LDL- cholesterolHumans

Phytosterols

Product & Claim : OKNeed for human study

1 animal study4 on going

human studies

Proven & credible claim

Our Research model

An innovation funnel process at the heart of our strategic focusAn innovation funnel process at the heart of our strategic focus

A focus on core scientific expertisesA focus on core scientific expertises

DANONE Research focuses on core scientific expertises

Functionalities& health potentialsof raw material and

food ingredients

Human nutrition & physiology

Sensorial Analysis

Formulationengineering

Scientific demonstration of health claims

Fermentsand probiotics

Consumer behavior knowledge

Focus on Nutrition and health core expertises

Clinical studies• Test design & procedures

Cardiovascular health• Cholesterol • Oxidative stress• Protective molecules

Immune functions• Intestinal system• Inflammation• Probiotics & nutrient effects

Digestive functions • Physiology and flora• Probiotics, prebiotics• Barrier function

Scientific CommunicationSharing, consensus and valorization

of scientific results with key opinion leaders and consumers

Energy metabolism &Weight Management• Food intake regulation• Meal patterns • Satiety• Obesity

General nutrition• nutritional profiling • situations in countries

Nutritional Neuro-sciences

Bone health

• Danone Research scientists • Network of 110 nutritionists

• International network of independentexperts & collaborations

Our Research model

A strategic balance between internal and external research expertises; over 200 International Research Collaborations

Work with the best expertsStay open and up-datedIn-tune with society’s expectations & market needs

A strategic balance between internal and external research expertises; over 200 International Research Collaborations

Work with the best expertsStay open and up-datedIn-tune with society’s expectations & market needs

An example: probiotics collaborations case studyAn example: probiotics collaborations case study

An innovation funnel process at the heart of our strategic focusAn innovation funnel process at the heart of our strategic focus

A focus on core scientific expertisesA focus on core scientific expertises

Building credibility through scientific networking and partnerships with the best experts throughout the world

Building credibility through scientific networking and partnerships with the best experts throughout the world

Probiotics case study: private and public partnerships at the service of Health and Nutrition

Pasteur Institute - France: 4 collaboration focuses: Resistance to infections (viral, bacterial), prevention of allergy, modulation of inflammation, genetic profile analysis

Pasteur Institute - France: 4 collaboration focuses: Resistance to infections (viral, bacterial), prevention of allergy, modulation of inflammation, genetic profile analysis

INRA - France: transcriptomics for our lactic strains INRA - France: transcriptomics for our lactic strains

Lactic Bacteria Research Center of Tucuman (CERELA)– Argentina: probiotics contribution to natural defences in the gastro intestinal system

Lactic Bacteria Research Center of Tucuman (CERELA)– Argentina: probiotics contribution to natural defences in the gastro intestinal system

Nizo – NL: screening of lactic strains, physiology characterisation & testing in-vivo modelsNizo – NL: screening of lactic strains, physiology characterisation & testing in-vivo models

University of Washington - USA: novel investigations of the impact of intestinal microflore on metabolism & healthUniversity of Washington - USA: novel investigations of the impact of intestinal microflore on metabolism & health

3 innovative R&D toolsdeveloped to serve « governance »

1. DANONE Nutripack: Science-based mappings of health and nutritional information to understand and meet local public health issues (17 countries)Content: identify nutritional habits and preferences, nutritional deficiencies or excesses, public health nutrition-related issuesGoal: help business lines develop products and educational programs adapted to local

1. DANONE Nutripack: Science-based mappings of health and nutritional information to understand and meet local public health issues (17 countries)Content: identify nutritional habits and preferences, nutritional deficiencies or excesses, public health nutrition-related issuesGoal: help business lines develop products and educational programs adapted to local

2. International Nutritional Framework: Guidelines for all products categoriesContent: nutritional recommendations, aligned on WHO & FAO requirements, regarding sugar, fat, vitamins, minerals…Goal: give adaptation guidance to worldwide teams with manufacturing profiling data to respect

2. International Nutritional Framework: Guidelines for all products categoriesContent: nutritional recommendations, aligned on WHO & FAO requirements, regarding sugar, fat, vitamins, minerals…Goal: give adaptation guidance to worldwide teams with manufacturing profiling data to respect

3. Brand Nutritional Platform: Brands’ identity fact sheets - identity card and nutritional card - ensuring global coherence to local brand productsContent: brand architecture, positioning, product’s characteristics, health and nutrition benefits, scientific rationales…

3. Brand Nutritional Platform: Brands’ identity fact sheets - identity card and nutritional card - ensuring global coherence to local brand productsContent: brand architecture, positioning, product’s characteristics, health and nutrition benefits, scientific rationales…

NUTRIPACK: the tool for a unique local approach to a global health challenge

10.5% overweight <20y10.5% overweight <20y

United StatesUnited States 1 million overweight < 16y32% overweight < 15y

1 million overweight < 16y32% overweight < 15y

United KingdomUnited Kingdom

14 million overweight <5y14 million overweight <5y

EuropeEurope

> 60% stunted and underweight <5y

> 60% stunted and underweight <5y

AngolaAngola

25% stunted <9y10.3% underweight17% overweight

25% stunted <9y10.3% underweight17% overweight

South AfricaSouth Africa

45% stunted <10y48% underweight15% overweight

45% stunted <10y48% underweight15% overweight

IndonesiaIndonesia

10% stunted < 5y6% underweight <5y14% overweight <18y

10% stunted < 5y6% underweight <5y14% overweight <18y

BrazilBrazil

18% stunted <5y15% stunted <12y7% underweight <5y18.8% overweight <12y

18% stunted <5y15% stunted <12y7% underweight <5y18.8% overweight <12y

MexicoMexico

12.2% stunted <5y3.9% underweight20% overweight

12.2% stunted <5y3.9% underweight20% overweight

TurkeyTurkey

14.3% stunted <5y7.8% underweight <5y40% overweight in urban area <6y12.4% overweight in urban area 6-18y

14.3% stunted <5y7.8% underweight <5y40% overweight in urban area <6y12.4% overweight in urban area 6-18y

ChinaChina

Example of Danonino’s compositions adapted to local micronutrient deficiencies

DANONE UNIQUENESSDANONE UNIQUENESS

Health & nutrition leadership BHHealth & nutrition leadership BH

A strong record of profitable growth AGEA strong record of profitable growth AGE

Wrap-up & questions FRWrap-up & questions FR

Steady high organic growth recordSteady high organic growth record

6.4%6.4%

3.1%3.1%

7.5%7.5%6.6%6.6%

8.1%8.1%

6.3%6.3%

5.4%5.4%

6.6%6.6%

5.7%5.7%

3.7%3.7%4.6%4.6%

4.1%4.1%4.2%4.2%

7.8%7.8%8.1%8.1%

7.9%7.9%

5.5%5.5%

8.5%8.5%

7,6%7,6%7.1%7.1%

6.8%6.8%

9.0%9.0%9.5%9.5%

8.9%8.9%

5.3%5.3%

9.8%9.8%

4.7%4.7%

6.6%6.6%

7.8%7.8%8.2%8.2%

9.4%9.4%

0%

2%

4%

6%

8%

10%

12%

T199

T299

T399

T499

T100

T200

T300

T400

T101

T201

T301

T401

T102

T202

T302

T402

T103

T203

T303

T403

T104

T204

T304

T404

T105

T205

T305

T405

T106

T206

T306

5 %

7 %

Since 1999 Groupe Danone has achieved 10 quarters itsLT guidance and 15 quarters above its guidance