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Danone and emerging countries. Danone and emerging countries. How can we bring health through food and beverages to the largest number of people ?. Stakes, challenges, methods and learning. Around 3 billion of people live with less than 2 € per day.

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Danone and emerging countries

Danone and

emerging countries


Danone and emerging countries

Danone and emerging countries

How can we bring health through food and beverages to the largest number of people ?

Stakes, challenges, methods and learning

Around 3 billion of people live

with less than 2 € per day


A strengthened presence in emerging countries

A strengthened presence in emerging countries

1996

2006

Emerging countries

Mature countries

Emerging countries

11%

89%

31%

Mature countries

69%


Addressing the whole population

Addressing the whole population

Worldwide Population

Breakdown of population per level of income

Population in millions / Class

Purchasing power

in US$

A

B

C

D

1.6%

Class A 55 - 100

>$ 20,000

30.0%

Class B 1,500–1,750

$1,500 - $ 20,000

Class C

$1,500

68.4%

Class C&D : 4,000

Class D

25,2%

< $1,500


Class a and b situations close to mature markets

Class A and B: situations close to mature markets


B c et d

B, C et D…

Population breakdown

Russia

Mexico

Indonesia

A

B

C+D

E

4%

6%

3.8%

A

B

C+D

E

A

B

C+D

E

11%

19.1%

25.8%

69%

45.0%

34.8%

32.1%

28.4%

21%


A large potential for growth

A large potential for growth

Mexico: B and C’s consumption increases to the Argentinian level = +300,000 tons

Mexico

Argentina

per Capita 6.9 Kg

per Capita 12.8 Kg

3.8%

19.1

A

B

C+D

E

A

B

C

D

19.0

7.6%

19.1%

12.7

16.6

15.3%

45.0%

7.8

44.2%

12.7

32.1%

33.2%

9.7

0.7


Poverty and malnutrition

Poverty and malnutrition

% of children, under 5 years old with a too weak weight

60

50

40

30

20

10

0

BANGLADESH

ETHIOPIA

INDIA

PAKISTAN

INDONESIA

VIETNAM

NIGERIA

PHILIPPINES

GHANA

TANZANIA

THAILAND

KENYA

EGYPT

CHINA

MEXICO

51020501002005001 0001 500

Annual average income (K$)


A major stake malnutrition

A major stake: malnutrition

Macro Nutrition

Health Problems

  • Energy-giving contribution deficiency

  • Proteins contribution deficiency

  • Growth retardation

  • Diarrhea

  • Various infections linked to a lack of hygiene

Micro Nutrition

  • Iron

  • Vitamin A

  • Iodine and zinc

  • Calcium


Questions we ask to ourselves

Questions we ask to ourselves

4 criterias

Can the category be

developed toward

the bottom of the pyramid ?

Is there a real need of a more accessible nutrition in the country ?

A

B

C+D

E

3.8%

19.1%

45.0%

Can Danone gain market shares toward the bottom of the pyramid ?

Is a profitable business model possible for Danone ?

32.1%


The pricing challenge

The pricing challenge

Unit of measure = 0.01 €

1 ct

1 ct

2 ct

3 ct

6 ct

Euro


The distribution challenge

The distribution challenge

A multitude of points of sales

% of sales realised in proximity sales

Total points of sales

99%

800,000

Bangladesh

98%

70,000

Algeria

95%

50,000

Morocco

25,000

90%

Tunisia

200,000

85%

Turkey

35,000

80%

Saudi Arabia

98,000

62%

South Africa

2,000,000

Indonesia

68%


The distribution challenge1

The distribution challenge

Morocco

Indonesia


The challenge of consumption s habits

The challenge of consumption’s habits

80% of consumers shop every day

5

4

1 to 3 times per month

6

5

Once per week

2 to 3 times per week

4 to 6 times per week

81

Every day

Total


The geographical challenge

9 days of delivery

The geographical challenge

Often gigantic dimensions and low level of infrastructures’ development

Tchekhov

Moscou

Irkourtsk

Vladivostok


The danone method a structured approach

The Danone method: a structured approach

Step 5

Step 4

Step 2

Step 3

Step 1

Definition of the objectives

Immersion and gathering of information

Firstimplantationthen setting up

Definition of the concept & business plan

Development

Objective: 1 to 2 years to reach step 5


Understanding the specificity of our consumers

Understanding the specificity of our consumers

Go outside our world…


Understanding the specificity of our consumers1

Understanding the specificity of our consumers


Sticking to local habits

Sticking to local habits

Yoghourt in Bangladesh:creamy, very sweet

Yoghourt in China:drunk with a straw


Bringing a real and useful innovation

Bringing a real and useful innovation

  • Milkkuat: the first nutritional and affordable dairy product launched in Indonesia

% of AJR 7-9 years old

Kids provided by 6 Milkkuat biscuits

Energy

7.6%

Proteins

5.4%

Calcium

12.0%

Vitamins B1, B2, B6

20%

Main deficiencies

in the country

Vitamin A

35.0%

Vitamin D

15.0%

Iron

24.0%

Vitamin B3

30.0%

Folique Acid (B9)

30.0%

Selenium

10.0%

Iodine and zinc

25.0%


The business model brings results

The business model brings results

Yogurissimo pack Argentina

Price: 13 cts €

95,000 tons

2006

Activia France120,000 t

Taillefine France75,000 t


Another challenge populations who live with less than 1 per day

Another challenge:Populations who live with less than 1 € per day


A very particular context the bangladesh

A very particular context: the Bangladesh

  • 41% of the population under 14 years old

  • 56% do not read and write

  • 5% has access to tap water

  • 80% de rural populations

  • Extreme density (>1000 people per km²)

  • 60% of the population live with less than 2$ per day


The challenge of distribution no organized trade

The challenge of distribution: no organized trade


The challenge of communication

The challenge of communication

Posters and brochures for nutritional education


Non negotiable processes criteria

Non-negotiable processes/criteria

It is accepted that our products/processes do not comply 100% with our standards.

Normal procedure is to have an action plan in place how to reach the standards

Some requirements however are so crucial for food safety reasons that we do not accept a non-compliance.


Definitions

Definitions

Non-negotiable Criteria:

Based on risk/Benefit-assessment

Acute effect on health for the consumer

Possible long term effect on health for the consumer / accumulation effect

Based on present/future legal requirements


Affordability project qfs

Affordability Project - QFS

Before producing any new affordability ranges

a risk assessment must be conducted to determine

Risk to consumers

Risk to plant and other products we produce in the plant

Risk to name and reputation

Risk / Benefit Assessment


Food safety criteria non negotiable

Food Safety Criteria – Non Negotiable


Food quality criteria negotiable

Food Quality Criteria – Negotiable.


Compliance for all products productions worldwide

Compliance for all products/productions worldwide

Products + Production must comply with..

CODEX+

NATIONAL LEGISLATION +

NON-NEGOTIABLE CRITERIA

Action plans must be in place to reach the Danone-requirements.

Action plans must be approved by central quality.


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