Health starts

with water

Thomas Kunz

Danone Waters: 23 countries; 19 bn Liters; € 2.6 bn

Argentina N 1

Indonesia

N 1

Turkey N 2

Germany N 1

Belgium N 2

Switzerland N 2

France N 2

UK N 1

Ireland N 1

Poland N 1

China

Japan N 1

Algeria

Iran N 1DAMAVAND

Uruguay N 1

Mexico N 1

Spain N 1

Brazil

Summary

Improving business trends, with developing countries

representing 50% of sales

Clear strategy focused on Category growth

Priorities: Category relevance, brand presence & costs

Volume growth is accelerating in 2009. . .

3.0%

9.8%

4.4%4.0%

5.8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Q3 08 Q4 08 Q1 09 Q2 09 Q3 09

Quarterly volume growth vs YA

. . .and sales value is returning to growth

4.6%

0.2%

4.1%

0%

1%

2%

3%

4%

5%

6%

-1.7%

-3.9%

-1%

-2%

-4%

-3%

-5%

Q3 08 Q4 08 Q1 09 Q2 09 Q3 09

Organic sales growth vs YA)

This covers two realities. . .

Mature Countries

Developing Countries

…

-10%

-5%

0%

5%

10%

15%

20%

-15%

-20%

14.4%

17.1%

11.8%

10.1%

16.4%

-3.4%

-14.6%

-17.1%

-7.4% -6.8%

Q3 08 Q3 09Q4 08 Q1 09 Q2 09

60% 40%

2005

E 2009

EBIT

Developing Countries: 50% of sales, 60% of profit

49%

51%E 2009

Mature Countries

Developing

Countries

41% 59%

2005

Sales

Our objectives:

Return Mature Countries

to growth

Accelerate

in Developing Countries

Three priorities across all geographies

1. Category growth

2. Presence

3. Cost

Per Capita Consumption

1. Category growth: Driven by Health Credibility &

Sustainability

…the original

purity of

our water

…our sources

Health Credibility battles Sustainability is at the heart of our model

Water

Natural

Water …the

environment

…water

resources

communities

Brands

The 3 Credibility Battles

Grow water category

in the beverage marketThe battle for water

Build relevance & visibility

of our brand benefitsThe battle

for

our brands

Differentiate natural waters

vs tap & purified watersThe battle for

natural waters

The main Battle is at the Base

The battle for water

The battle for

Natural waters

The battle

for

Our brands

1. Water is the healthiest

beverage to hydrate March 09

2. We don‟t drink enough waterMarch 09

360

360

The Battle For Water is our main battle

More water = less calories = better hydration

Daily liquid consumption analysis, France Consumption shifting analysis, UK

Soft drinks

74%

Tap & hot

beverages

26%

UK Bottled Water 2008 switching

analysis

(source: Nielsen consumer panel)

Consumption profile according to Plain water SS

Subject number

SS of Plain water

L/day

0,050,24

0,60

1,12

1,78

0,09

0,08

0,21

0,20

0,33

0,39

0,32

0,25

0,12

0,61

0,35

0,30

0,27

0,26

0,12

0,46

0,45

0,43

0,35

0,27

0,14

0,47

0,51

0,37

0,00

0,50

1,00

1,50

2,00

2,50

3,00

<10% <20% <40% <60% 60-100%

All other beverages

Alcoholic drinks

Milk beverages

Hot beverages

Fruit juice

CSD

Aquadrinks

Sparkling water

Tap water

Plain water

162242321179157

Heavy water drinkers drink

less sugary beveragesWhere did volume losses go to?

In France / UK, full category defence plans. . .

. . .are contributing to the re-start of the category

Q3 08 Q4 08 Q1 09

-3.8%

Q2 09

+4.6%

Q3 09

-3.6%

-9.4%

-7.9%-9.0%

Q3 08

-9.9%

Q4 08

-7.0%

Q1 09

+2.8%

Q2 09

+11.6%

Q3 09

(Source: Nielsen – Total Bottled Waters volume Great Britain) (Source: IRI– Total Bottled Waters volume)

France cat. Volume growthUK cat. volume growth

+10.2%

In developing countries:

Building the category with health authorities

Drinking water: one of the Mexican Ministry of Health„s

“5 STEPS towards a healthier nation” (5 PASOS) program

5. Share

with

family

& friends4.

Measure

2.Drink

water

3. Eat

vegetables

& fruits

1. Move

yourself

Promote the healthy life style, make people self- conscious

-1,1

2,9

5,0

10,1

-2

0

2

4

6

8

10

12

Q4 08 Q1 09 Q2 09 Q3 09

Mexico: Plain Still Water Volume growth in %

(Bottles <10L - Source: Nielsen)

32.4%34.1%

35.6%

2007 2008 YTD Sep09

Bonafont Volume share(Plain Still Water - Bottles <10L - Source

Nielsen )

38%

35%

32%

29%

26%

Developing countries:

Building the category with Health authorities

In Poland we started a campaign targeted at children

« Mum, Dad, I prefer water! »

under the sponsorship of the Polish ministry of Health

In schoolsIn stores

Category growth is accelerating

Zywiec is gaining share

0

2

4

6

8

10

12

14

2007 2008 YTD Sep09

Plain Still market volume growth(Source: Nielsen)

20.1%

21.8%

22.5%

2007 2008 YTD Sep09

Zywiec volume share (Source: Nielsen)

23%

22%

21%

20%

19%

18%

17%

16%

15%

Sustainability is at the heart of our model

…the original

purity of

our water

…our sources

…the

environment

…water

resources

communities

Sustainability achievements 2009

30 mln mangroves planted in 2009

(Danone Ramsar wetlands protection initiative)

-7% CO2 reduction achieved in 2009

On track for 50% rPET content by 2011

-10% water usage reduction in 2009

2. Presence:

Availability and visibility to consumers

Store coverage Jugs

On-the-go In homes

Proximity stores: A major growth driver

Controlled Proximity Outlets

(Index 100 in 2006)

100

118

147

186

2006 2006 2008 E 2009

Nb stores covered

Proxi45%

Other55%

Split by channel

% Growth 2009

Availability & visibility in homes:

HOD is a brand-building business model

A branded, affordable proposition

for daily home consumption

A packaging size that we market actively

An offer that strongly enhances brand visibility

A unique way to come closer to consumers

HOD is growing and profitable

HOD12%

PET

88%

HOD 12.4%

EBIT YTD oct09Sales YTD oct09

PET

87.6%

HOD insights from Developing Countries

translated to Mature Countries

More proximity, more affordability

Practical 3L size positioned for fridges– Convenient, easy storage

– Designed for fridge door

– More volume with less plastic per liter

Bigger 5L / 8L formats, for an

optimized CO2 footprint

3. Cost

Productivity efforts stepped up in 2009. . .

Transparent value chains

Packaging lightweighting

Supply chain re-engineering

DaMaWay performance gains

Strong benchmarking culture

COGS Productivity (in € mln and as a % of COGS)

2007 2008

5.3%

2005 2009E2006

4.4%

3.4%

3.3%3.1%

. . .allowing to decrease our COGS‟ weight

100.0

2007

6.0

103.5

2008

Net

price

-2.5

Re-

eng-3.0

97.0

E2009

Net

price-3.5

Re-

eng.

Index 100 in 2007, excl. mix & forex effects

As a conclusion. . .

“Drinking 2L of water a day

is a simple, but a decisive

attitude step

towards a healthy lifestyle”