BRINGING HEALTH THROUGH FOOD TO AS MANY PEOPLE AS POSSIBLE Economic and Social Report Welcome to our factory DANONEeconomic and social report 08

Interview with A BUSINESS FOCUSED 100% ON HEALTH, WITH CLEAR PRIORITIES Special report: Nature NATURE, OUR PATH TO THE FUTURE Strategy FOR ALL? DANONE 2008 To our readers 2008

Annual reports often focus attention on earnings and num- 23 au 26 bers. But a business is much more Juillet 2009 than that. It’s about people and - the way they go about things; www.evianmasters.com it’s about values and challenges, a shared culture and a common project. Which is why Danone 08 looks beyond the figures in the hope of sharing with you some of what makes our experience a special adventure.

The editorial team

Danone 08 is also on www.danone.com Selected texts, insider news, photos and films—meet the people who are the real subject of Danone 08. More information to carry on the adventure.

Danone 2008 —— 03 Contents 2008

Introducing a delicious dessert 06 FRANCK RIBOUD 62 DANONE FOR ALL? BRINGING HEALTH THROUGH FOOD TO AS MANY PEOPLE AS POSSIBLE A business 100% focused on Nearly 2 billion people DANONEeconomic and social report with all the goodness of . health, with clear priorities. around the world have 08 access to at least one Danone product. 16 HIGHLIGHTS Achieving organic growth

           of 8.4%, Danone confirmed 72 INTERVIEW               its targets—a roundup of Bernard Hours talks about            the initiatives and products the Danone business model that set their mark on and levers for growth. DPWFS!! 2008. Jo!3119!Ebopof!tufqqfe!vq! jut!qsftfodf!jo!Kbqbo!boe!sbjtfe! jut!nbslfu!tibsf!jo!gsfti!ebjsz! 78 OBUVSF-!PVS!QBUI! qspevdut!uispvhi!Bdujwjb!)tpme! voefs!uif!obnf!Cjp*/!Ebopof! 34 THE HUNT FOR UP!UIF!GVUVSF! jt!bmtp!Kbqboftf!nbslfu!mfbefs!jo! (GOOD) BACTERIA The quality of Danone cpuumfe!xbufst/ Health—a place apart in products reflects not only the food industry. the effectiveness of science and know-how, but also the value of natural resources. 43 INTERVIEW Sven Thormahlen explains the priorities for R&D and 91 GOVERNANCE the way it operates at sees Danone. Danone as the “point of convergence of the interests of all stakeholders.” 46 A QUESTION OF CULTURE Danone’s corporate culture— an attitude that makes the 97 KEY FIGURES difference summed up in 7 key words. 99 INTERVIEW Pierre-Andre Térisse reviews 60 INTERVIEW 2008 results and looks ahead NewActiviaIntenselyCreamyisadeliciouslythickandindulgentyogurt. Muriel Pénicaud explains to 2009. why investment in people It contains the unique culture Bifidus Actiregularis and actually aids digestive is an investment in business. health by improving transit.* Try it, it’s a little treat that does you good.

*When digestive transit is slower and at least one pot is eaten every day for 14 days as part of a healthy balanced diet and lifestyle. Danone 2008 —— 05 FRANCK RIBOUD Our sound results in 2008 show that our staff members have A BUSINESS FOCUSED lost none of their agility and commitment—which is what really 100% ON HEALTH, WITH counts in the current context. What do you have to say about 2008 for Danone? Franck Riboud:!Fwfo!cfgpsf!uif!foe!pg!uif!zfbs-!fwfszpof-!ftqfdjbmmz! CLEAR PRIORITIES po!uif!ßobodjbm!nbslfut-!ibe!tijgufe!uifjs!gpdvt!up!311:/!Cvu!J!uijol!juÖt! xpsui!ubljoh!b!dmptfs!mppl!bu!3119/!Uifsf!bsf!tpnf!jnqpsubou!mfttpot!up! cf!esbxo!gps!uif!ofbs!gvuvsf-!jo!qbsujdvmbs!bu!Ebopof/! Uif!ßstu!qpjou!jt!uibu!xf!bdijfwfe!pvs!ubshfut!podf!bhbjo-!xjui!pshbojd! Key figures DANONE TURNED IN A SOUND PERFORMANCE IN 2008, CONFIRMING tbmft!hspxui!sfbdijoh!9/5&+-!nbshjo!vq!64!cbtjt!qpjout+-!boe!fbsojoht! Sales qfs!tibsf!vq!26/2&++/!Pg!dpvstf!uibu!qbsumz!sfàfdut!pvs!sfdpse!:/7&+!tbmft! (€ millions) THE POTENTIAL FOR PROFITABLE GROWTH OF A GROUP THAT IS 100% hspxui!gps!uif!ßstu!tjy!npouit!pg!uif!zfbs-!cvu!J!uijol!xf!dbo!mfbso!npsf! FOCUSED ON HEALTH AND WELL PREPARED TO STAND UP TO TESTING gspn!efwfmpqnfout!jo!uif!tfdpoe!ibmg/ 15,220 Uif!fdpopnjd!dsjtjt!uppl!ipme!fwfszxifsf!evsjoh!uif!tvnnfs!pg!3119-! 12,776 CONDITIONS. cvu!pvs!lfz!cvtjoftt!joejdbupst!ifme!po!b!ßsn!usbdl!uispvhi!up!uif!foe!pg! 12,068 uif!zfbs/!Hspxui!jo!uif!gpvsui!rvbsufs-!xifo!uif!fdpopnjd!fowjsponfou! xbt!wfsz!votfuumfe-!xbt!tujmm!b!wfsz!tpvoe!7&+/!Xijdi!epftoÖu!nfbo!uibu! Ebopof!jt!jnnvof!gspn!sfdfttjpo-!cvu!ju!epft!efnpotusbuf!uif!sfbm!tpmjejuz! pg!pvs!cvtjoftt/!Xf!ibwf!cvjmu!uibu!vq!pwfs!uif!zfbst-!esbxjoh!po!pvs!lfz! 2006 2007 2008 sftpvsdft;!uif!tusfohui!pg!pvs!csboet-!pvs!dpotjtufou!tusbufhz-!cvtjoftt!mjoft! boe!hfphsbqijdbm!cbmbodf/!Uif!sftvmut!bmtp!tipx!uibu!pvs!tubgg!nfncfst! Organic growth ibwf!mptu!opof!pg!uifjs!bhjmjuz!boe!dpnnjunfouÒxijdi!jt!xibu!sfbmmz!dpvout! +8.4%* jo!uif!dvssfou!dpoufyu/! (Volume up 2.8% and value up 5.6%*) It looks like Numico also made an important contribution to the quality of results. FR:!UibuÖt!uif!tfdpoe!mfttpo!J!xbou!up!esbx;!uibu!uif!bdrvjtjujpo!pg! Positions OvnjdpÖt!cbcz!ovusjujpo!boe!nfejdbm!ovusjujpo!cvtjofttft!xbt!uif!sjhiu! tusbufhjd!dipjdf!gps!Ebopof/!Uif!sftvmut!bsf!uifsf-!jo!ufsnt!pg!tbmft!hspxui-! nbshjo!boe!tzofshjftÒdptu!tzofshjft!xjmm!cf!fwfo!ijhifs!uibo!uif!€56!njm. worldwide mjpo!xf!fyqfdufe!jo!3119!boe!uif!€26!njmmjpo!gpsfdbtu!gps!311:/!Nptu! no.1 jnqpsuboumz-!uif!sftvmut!bsf!uifsf!jo!ufsnt!pg!uif!tvddfttgvm!joufhsbujpo!boe! for fresh dairy products ijhi!mfwfm!pg!tubgg!npujwbujpo-!xjui!ufbnt!po!cpui!tjeft!epjoh!bo!pvutuboe. no. 2 worldwide joh!kpc/!UibuÖt!tpnfuijoh!xf!dbo!cf!qspve!pg/!Uif!sftvmut!dpoßsn!uif! qspnjtf!pg!pvs!uxp!ofx!hmpcbm!cvtjofttft-!cvu!uifz!bmtp!tipx!uibu!xfÖwf! for bottled water bwpjefe!hfuujoh!jo!uif!xbz!pg!hspxui-!boe!ibwf!qspwjefe!ofx!npnfouvn! uipvhi!uif!joufhsbujpo!qspdftt/!Joufhsbujoh!b!ofx!tvctjejbsz!jt!bmxbzt!sjtlz-! no. 2 worldwide cvu!jo!uijt!dbtf!J!uijol!xf!dbo!tbgfmz!tbz!ju!ibt!hpof!wfsz!tnppuimz!boe! for baby nutrition fgßdjfoumz/! no. 1 in Europe for medical nutrition The new Danone has four business lines. How did they perform individually? FR:!Uif!nptu!jnqsfttjwf!qfsgpsnbodf!ibt!dpnf!gspn!uif!uxp!ofx! cvtjofttft!J!kvtu!nfoujpofe-!xjui!pshbojd!hspxui!sfbdijoh!28&+!gps!Cbcz! Ovusjujpo!boe!bmnptu!24&+!gps!Nfejdbm!Ovusjujpo/!Cvu!bu!uif!ifbsu!pg!pvs! hspvq-!Gsfti!Ebjsz!Qspevdut!uvsofe!jo!bopuifs!spcvtu!qfsgpsnbodf!xjui! tbmft!vq!ofbsmz!9&+-!up!upq!€9!cjmmjpo/!Uijt!ejwjtjpo!jt!pvs!sfbm!qpxfsipvtf-! nbljoh!bo!vonbudife!wpmvnf!dpousjcvujpo!pg!€511!njmmjpo!up!hspxui/! Xbufs!tbmft!xfsf!vq!2/:&+-!bo!pwfsbmm!ßhvsf!uibu!dpncjoft!sftvmut!gspn! uxp!wfsz!ejggfsfou!xpsmet/!Po!uif!pof!iboe!xf!ibwf!gpvs!mbshf!boe!nbuvsf! nbslfutÒGsbodf-!Tqbjo-!uif!VL!boe!KbqboÒxifsf!tbmft!pg!cpuumfe!xbufs! ibwf!efdmjofe!gbjsmz!nbslfemz-!cvu!pvs!pxo!nbslfu!tibsft!bsf!ipmejoh!vq! 6iXdchiVcihXdeZd[Xdchda^YVi^dc VcYZmX]Vc\ZgViZh# xfmm-!fwfo!sjtjoh/!Uifo!uifsf!jt!uif!sftu!pg!uif!xpsme-!xijdi!bmsfbez!bddpvout! 7VhZYdcY^ajiZYcZiZVgc^c\h gps!pwfs!ibmg!pg!pvs!tbmft!boe!xifsf!xf!bsf!tffjoh!epvcmf.ejhju!hspxui/! dcdgY^cVgnWjh^cZhh!egd[dgbV#

06 —— Danone 2008 Danone 2008 —— 07 INTERVIEW/ FRANCK RIBOUD

The growing role of emerging countries is the consequence of the strategy we adopted a decade ago, going for growth where we could find it and extending our geographical reach.

Fybnqmft!bsf!Bshfoujob-!Joepoftjb-!Dijob!boe!Nfyjdp-!xijdi!jt!tfu!up! cfdpnf!pvs!mbshftu!tjohmf!nbslfu!gps!xbufs!xjuijo!gpvs!ps!ßwf!zfbst/! 4 businesses for health Geographically, emerging markets appear to be the main sources of growth. 57% FR:!Zft-!uifz!bsf!tujmm!uif!nptu!wjhpspvt/!Uifz!bmsfbez!bddpvou!gps!pwfs! Fresh 19% 51&!pg!hspvq!tbmftÒboe!tjodf!uifz!bsf!hspxjoh!gbtufs!uibo!puifst-!uifjs! Dairy Waters xfjhiu!dbo!pomz!jodsfbtf/!Tbmft!jo!Btjb!xfsf!vq!27&+!boe!hspxui!xbt!jo! Products epvcmf!ejhjut!jo!uif!sftu!pg!uif!xpsme-!xijdi!nbjomz!nfbot!uif!Bnfsjdbt! gps!Ebopof-!sfbdijoh!24&+/!Cvu!uif!pwfsbmm!sftvmu!gps!Fvspqf-!xijdi!tbx!b! sjtf!pg!6&+-!xbt!opuijoh!up!cf!btibnfe!pg-!fwfo!jg!dpoejujpot!xfsf!bmsfbez! upvhi!jo!tpnf!dpvousjft/!Xibu!zpv!ibwf!up!cf!dmfbs!bcpvu!jt!uibu!uif!txjoh!up! fnfshjoh!nbslfut!ibtoÖu!kvtu!ibqqfofe/!JuÖt!uif!dpotfrvfodf!pg!uif!tusbufhz! Bringing health through food to as many people as possible also means a need for nutrition xf!bepqufe!b!efdbef!bhp-!hpjoh!gps!hspxui!xifsf!xf!dpvme!ßoe!ju!boe! information and labels identifying the health benefits associated with Danone products. fyufoejoh!pvs!hfphsbqijdbm!sfbdi/! Above: infant formula in an Italian supermarket. 18% — — 6% Baby Nutrition Medical Doesn’t the growing weight of these new markets also mean risks, Nutrition for example margin dilution and instability? FR:!Npwjoh!joup!b!ofx!dpvousz!jt!bo!jowftunfou/!Boe!bu!uif!cfhjoojoh-! Contributions jo!uif!ßstu!gfx!npouit-!ju!dptut!npsf!uibo!ju!csjoht!jo/!Cvu!uibuÖt!uif!pomz! esjolt!xifsfbt!pvs!tusbufhz!jt!opx!dmfbsmz!dfoufsfe!po!obuvsbm!xbufst/!Xf! to 2008 sales xbz!up!cvjme!uif!gvuvsf/!Boe!bo!jnqpsubou!uijoh!up!opuf!jt!uibu!nbshjo! xjmm!ofwfs!tfmm!b!tusbufhjd!cvtjoftt!kvtu!up!tqffe!vq!sfevdujpo!pg!efcut!uibu! sbuft!bmsfbez!frvbm!pvs!hspvq!bwfsbhf!po!nboz!fnfshjoh!nbslfutÒboe!uibu! bsf!qfsgfdumz!voefs!dpouspm/! jodmveft!tpnf!xifsf!xfÖwf!pomz!sfdfoumz!bssjwfe/!Cvtjoftt!jo!Btjb!fwfo!cfbu! Organic sales uibu!bwfsbhf!jo!3119/!Bt!gps!jotubcjmjuz-!juÖt!efßojufmz!b!sjtl!boe!xf!ibwf! up!efbm!xjui!ju/!Up!ep!uibu-!xf!bsf!dbsfgvm!up!ejwfstjgz!pvs!qsftfodf-!xijdi! On the subject of China, how is your dispute with your associate in growth opu!pomz!tqsfbet!sjtl-!cvu!bmtp!qvu!vt!jo!b!qptjujpo!up!tfj{f!pqqpsuvojujft! Wahaha beverages going and, more generally, what is Danone’s current (like for like) bt!uifz!bsjtf/! position there? FR: Fwfo!xjuipvu!Xbibib-!xf!bsf!b!mfbejoh!qmbzfs!po!uif!gppe!nbslfu!jo! +17% Dijob/!Xf!ibwf!wfsz!tuspoh!qptjujpot!jo!cbcz!ovusjujpo!xjui!uif!dpvouszÖt! Baby Nutrition Will you be continuing investment in emerging markets despite the upq!csboe-!Evnfy-!boe!jo!xbufs!xjui!uif!Spcvtu!boe!Ifbmui!csboet/!Boe!xf! 90 years’ focus on health economic crisis? bsf!opx!gvmm!pxofst!pg!pvs!ofx!ebjsz.qspevdu!cvtjoftt-!xijdi!jt!mbvodijoh! +12.7% 2009 is the 90th anniversary FR:!Xf!xjmm!dpoujovf!up!ublf!bewboubhf!pg!mpdbm!pqqpsuvojujft-!fwfo!jg!uifsf! Bdujwjb!qspevdutÒCjp!jo!DijobÒjo!Tibohibj!boe!Hvboh{ipv/!Jo!3119-!pvs! of the Danone brand, Medical Nutrition jt!op!sfbtpo!up!fyqfdu!boz!nbttjwf!ps!tqfdubdvmbs!bdrvjtjujpo/!Xf!xbou!up! upubm!tbmft!jo!uif!dpvousz!sptf!cz!ofbsmz!41&-!fwfo!uipvhi!uif!cvtjoftt!ibe! launched in Barcelona lffq!npwjoh!joup!ofx!obujpobm!nbslfut!fbdi!zfbs-!fwfo!jg!xf!bsf!opu!hpjoh! opu!zfu!tubsufe!vq/!Bt!gps!pvs!joufsftu!jo!Xbibib-!ju!jt!op!mpohfs!tusbufhjd. in 1919. Its inventor, Isaac +7.7% bcpvu!ju!bt!bhhsfttjwfmz!bt!xf!njhiu!jo!dbmnfs!ujnft/!Cfdbvtf!xf!ibwf!b!evuz! bmmz!jnqpsubou!gps!Ebopof/!Ju!ibt!cffo!bddpvoufe!gps!voefs!uif!frvjuz! Carasso, used it for the Fresh Dairy Products up!hp!po!jowftujoh!gps!uif!gvuvsf/!Uibu!jt!xibu!xf!bsf!epjoh!jo!Lb{blitubo! nfuipe!jo!pvs!ßobodjbm!tubufnfout!tjodf!Kvmz!2-!3118/!Xf!bsf!fyqfdujoh! yogurts he was the first to boe!xjmm!tppo!cf!epjoh!jo!Tpvui!Lpsfb/! uif!Bscjusbujpo!Jotujuvuf!pg!uif!Tupdlipmn!Dibncfs!pg!Dpnnfsdf!up!iboe! develop with the support +1.9% epxo!jut!efdjtjpo!jo!Nbz!ps!Kvof-!cvu!pvs!nptu!mjlfmz!pqujpo!jt!jo!boz!dbtf! of the research findings Waters up!tfmm!uif!joufsftu-!bmuipvhi!xf!bsf!jo!op!ivssz/!Pvs!fyqfsjfodf!pwfs!uif! of the Pasteur Institute on Looking in the opposite direction, are you planning any divestments, ufo!zfbst!gspn!2::7!up!3117!xbt!wfsz!xpsuixijmf!boe!sfxbsejoh!gps!cpui! lactic ferments. Carasso to trim debt for example? Ebopof!boe!Xbibib!boe!jut!tubgg/!Cvu!xfÖwf!npwfe!po!opx/! drew special inspiration 6iXdchiVcihXdeZd[Xdchda^YVi^dc FR: from the work of Elie VcYZmX]Vc\ZgViZh# !Xf!hpu!joup!efcu!up!cvz!Ovnjdp-!cvu!zpv!ibwf!up!sfnfncfs!b!gfx! uijoht/!Pvs!efcu!sbujp!sfnbjot!dpnqmfufmz!nbobhfbcmf-!ftqfdjbmmz!dpotjefs. Metchnikoff, winner of the joh!pvs!dbqbdjuz!up!dpotjtufoumz!hfofsbuf!pwfs!€2!cjmmjpo!jo!gsff!dbti!àpx-! Danone is one of the world’s top two bottled-water companies, but in Nobel Prize for Medicine in zfbs!bgufs!zfbs/!Tfdpoemz-!xf!nbef!b!cpoe!jttvf!up!sbjtf!pwfs!€4/9!cjmmjpo! developed countries the segment has been criticized for its price and 1908. In 1929, his son Daniel po!buusbdujwf!ufsnt/! environmental impact. (photo above, left) brought Uif!ofyu!qbznfou!pg!€2/3!cjmmjpo-!evf!jo!Efdfncfs!3121-!jt!dpwfsfe-! FR:!Uifsf!bsf!b!mpu!pg!vodsjujdbm!bttvnqujpot!cboejfe!bcpvu!po!uif! Danone to France. Now over sfhbsemftt!pg!boz!ejwftunfout/!Pg!dpvstf-!ejwftunfout!dpvme!tqffe!vq!sfqbz. tvckfdu/!Gjstu!pg!bmm-!njofsbm!xbufs!jt!opu!bo!fdpmphjdbm!bopnbmz/!Po!uif! 100 years old, Daniel Carasso nfou-!cvu!qvsfmz!ßobodjbm!dpotjefsbujpot!xjmm!ofwfs!cf!pvs!ßstu!sfbtpot!gps! dpousbsz/!Opuijoh!dpvme!cf!npsf!obuvsbm-!jo!uif!nptu!ejsfdu!nfbojoh!pg! is Honorary Chairman of uibu!ljoe!pg!efdjtjpo/!Up!ublf!bo!fybnqmf-!xf!tpme!pgg!Gsvdps-!b!cfwfsbhf! uif!xpse-!uibo!njofsbm!xbufs/!Uifsf!jt!opuijoh!up!ßmufs-!opuijoh!up!ijef-! Danone’s Board of Directors. mfbefs!jo!Ofx![fbmboe-!cfdbvtf!ju!gpdvtft!po!àbwpsfe!esjolt!boe!fofshz! opuijoh!up!bee!boe!opuijoh!up!tvcusbdu/

08 —— Danone 2008 Danone 2008 —— 09 INTERVIEW/ FRANCK RIBOUD

Nobody would deny that the year ahead will be challenging, but wringing our hands won’t get us anywhere. In this kind of situation, what counts is attitude, courage, and commitment.

Ju!dpnft!gspn!uif!efquit!pg!uif!fbsui-!xifsf!ju!jt!qspufdufe!bhbjotu!bmm! gpsnt!pg!qpmmvujpo-!boe!ju!voefshpft!op!usfbunfou-!ftqfdjbmmz!op!difnjdbm! usfbunfou/!JuÖt!fwfo!cfuufs!uibo!pshbojd/!Boe!uibu!nfbot!uibu!njofsbm.xbufs! qspevdfst!bsf!bmtp!uif!nptu!efufsnjofe!efgfoefst!pg!uif!fowjsponfou!jo! uif!sfhjpot!xifsf!uifz!pqfsbuf-!gps!uif!tjnqmf!sfbtpo!uibu!op!puifs!cvtjoftt! ibt!tvdi!tuspoh!jodfoujwft!up!qspufdu!jut!jnnfejbuf!fowjsponfou/!Xifo!J! tbz!uibu-!J!bn!opu!uszjoh!up!epehf!uif!jttvft!sfmbujoh!up!uif!fowjsponfoubm! jnqbdu!pg!njofsbm.xbufs!qbdlbhjoh!boe!usbotqpsu/!Cvu!uifsf!bhbjo!zpv! offe!up!mppl!bu!uif!gbdut/!Up!ublf!bo!fybnqmf-!uxp.uijset!pg!uif!efmjwfsjft! “Evian will be nbef!cz!Ebopof!Xbufs!GsbodfÒxijdi!dpwfst!pvs!Wpmwjd-!Fwjbo!boe!Cbepju! csboetÒbsf!cz!sbjm!ps!cbshf/!Ipx!nboz!cvtjofttft!ep!zpv!uijol!ibwf!tvdi! our first carbon- bo!fowjsponfou.gsjfoemz!sfdpse!po!usbotqpsu@!Bt!gps!uif!cpuumft-!uifz! neutral product bsf!211&!sfdzdmbcmfÒxijdi!jt!nvdi!npsf!uibo!dbo!cf!tbje!pg!nptu!puifs! qbdlbhjohÒboe!uif!voju!xfjhiu!jt!efdmjojoh!gspn!pof!zfbs!up!uif!ofyu/!Boe! by 2011” gps!uif!qbtu!gfx!npouit!xf!ibwf!ßobmmz!cffo!bmmpxfe!up!vtf!vq!up!36&!pg! sfdzdmfe!nbufsjbmt/!Mbtumz-!Fwjbo-!uif!xpsmeÖt!ovncfs.pof!njofsbm!xbufs-! Evian, the world’s xjmm!cf!pvs!ßstu!dbscpo.ofvusbm!qspevdu!cz!3122!)tff!tjefcbs!uijt!qbhf! number-one mineral boe!qbhf!96*/! water brand, is backed by unrivalled experience in the conservation of water What would you reply to people who say that it’s irrational to choose resources, with care of the bottled water since tap water serves the same purpose? catchment area for its own FR:!Uifsf!bsf!tfwfsbm!qpjout!xpsui!nbljoh/!Gjstu!pg!bmm-!efwfmpqfe!dpvo. spring a priority. Evian is usjft!ibwf!uif!fopsnpvt!hppe!gpsuvof!up!ibwf!ofbs.vojwfstbm!bddftt!up! also looking at the broader esjoljoh!xbufs-!xijdi!jt!gbs!gspn!cfjoh!uif!dbtf!jo!bmm!qbsut!pg!uif!xpsme/! picture with a drive to Jo!b!ovncfs!pg!dpvousjft-!uif!obuvsbm!xbufs!Ebopof!qspwjeft!jt!uif!pomz! reduce its environmental bggpsebcmf!pqujpo/!Tfdpoemz-!xfÖsf!ubmljoh!bcpvu!uxp!ejggfsfou!uijoht/!Jg! impact through xibu!zpv!nfbo!cz!cpuumfe!xbufs!jt!njofsbm!xbufs!ps!tqsjoh!xbufs-!uifo!ju! optimization of energy jt!b!sbujpobm!dipjdf!gps!qfpqmf!xip!sfgvtf!up!dpnqspnjtf!po!xbufs-!uif! consumption, packaging pof!bctpmvufmz!joejtqfotbcmf!ÓgppeÔ!gps!mjgf/!Njofsbm!xbufs!pggfst!sfmj. and transport. The target bcmf!rvbmjuz-!dpotjtufoumz!qmfbtbou!ubtuf-!boe!dpoufou!uibu!jt!tfu!pvu!jo!dmfbs! is to halve its carbon efubjm!po!uif!cpuumf/!JuÖt!uif!sjhiu!dipjdf!gps!wvmofsbcmf!qpqvmbujpot!uibu! footprint from 2000 to dboÖu!bggpse!sjtlt-!mjlf!cbcjft-!uif!tjdl!boe!uif!bhfe/!EpoÖu!njtvoefs!tuboe! 2011, and Evian is backing nf;!xf!ibwf!opuijoh!bhbjotu!ubq!xbufs/!Cvu!xifo!zpvÖsf!xbmljoh!uispvhi!b! initiatives to offset the tvqfsnbslfu-!tjuujoh!jo!b!dbg-!ps!tuboejoh!jo!gspou!pg!b!wfoejoh!nbdijof-! remainder. This includes the njofsbm!xbufs!jtoÖu!dpnqfujoh!bhbjotu!ubq!xbufs;!juÖt!dpnqfujoh!bhbjotu!puifs! support it will be providing cfwfsbhft/!Uiptf!puifs!esjolt!bsf!vtvbmmz!txffu!boe!bmxbzt!mftt!obuvsbm!uibo! from 2009 on for the njofsbm!xbufs/!UifzÖsf!bmtp!npsf!fyqfotjwf-!boe!uifz!ibwf!b!nvdi!cjhhfs! rehabilitation of wetlands, fowjsponfoubm!jnqbdu!uibo!cpuumfe!xbufs/!Jo!b!dpvousz!mjlf!uif!VL-!gps! which act as natural carbon fybnqmf-!xifo!dpotvnfst!dvu!cbdl!po!njofsbm!xbufs!ju!jt!hfofsbmmz!jo!gbwps! traps, in association with pg!txffu!cfwfsbhft/!Xibu!xf!offe!up!ep!ßstu!jt!sfwjwf!uifjs!ubtuf!gps!xbufs/! the Ramsar Convention and IUCN (International Union for Conservation To return to Danone, how do you see prospects for 2009? of Nature). See page 85. FR:!Opcpez!xpvme!efoz!uibu!uif!zfbs!bifbe!xjmm!cf!dibmmfohjoh-!xjui! !ejgßdvmujft!sbohjoh!gspn!ijhi!fydibohf.sbuf!wpmbujmjuz!boe!sjtjoh!vo!. fnqmpznfou!up!tpgufojoh!dpotvnfs!efnboe!po!fnfshjoh!nbslfut/!Xf!ibwf! op!npsf!dfsubjoujft!bcpvu!ipx!uijoht!xjmm!tibqf!vq!jo!ejggfsfou!dpoufyut! uibo!bozpof!fmtf/!Boe!xf!epoÖu!ibwf!boz!nbhjd!tpmvujpot-!fjuifs/!Cvu! xsjohjoh!pvs!iboet!xpoÖu!hfu!vt!bozxifsf/!Jo!uijt!ljoe!pg!tjuvbujpo-!xibu! dpvout!jt!buujuvef-!dpvsbhf-!boe!dpnnjunfou/!

10 —— Danone 2008 INTERVIEW/ FRANCK RIBOUD

What about product innovation? Will the strict new European regulations on health claims mean new obstacles or risks? FR: Xf!bsf!pcwjpvtmz!hpjoh!up!lffq!joopwbujoh/!Tfuujoh!uif!qbdf!jt!qbsu! Executive pg!xibu!nbslfu!mfbefstijq!jt!bmm!bcpvu-!boe!J!xpvme!cf!ufnqufe!up!tbz!uibu! Committee joopwbujpo!dpnft!obuvsbmmz!up!vt/!Pvs!S'E!ufbnt!wfsz!dfsubjomz!nblf!ju!b! lfz!hpbm/!Cvu!xfÖmm!cf!b!mjuumf!npsf!gpdvtfe!boe!xfÖmm!qbz!npsf!buufoujpo!up! Franck Riboud qsjpsjuj{joh!ofx!qspevdu!mbvodift/!Bt!sfhbset!uif!ofx!sfhvmbujpot!po!ifbmui! 53, French, dmbjnt!dpnjoh!joup!gpsdf!jo!Fvspqf-!xf!cfmjfwf!uibu!uifz!bsf-!po!uif!dpousbsz-! Chairman and CEO b!tufq!jo!uif!sjhiu!ejsfdujpo/!Pg!dpvstf-!uifsf!xjmm!cf!b!offe!gps!tpnf!ßof! Emmanuel Faber (see p. 93) uvojoh!up!tubsu!xjui-!bt!qfpqmf!jo!uif!joevtusz!mfbso!fybdumz!xibu!bvuipsjujft! 45, French, fyqfdu!jo!uif!xbz!pg!tdjfoujßd!epdvnfoubujpo!boe!xibu!dsjufsjb!uifz!vtf!up! Co-Chief Operating Officer ublf!efdjtjpot/!Uifsf!jt!mjlfmz!up!cf!rvjuf!b!mpu!pg!up!boe!gsp!pwfs!uif!ßstu!gfx! npouit-!cvu!b!nvuvbm!mfbsojoh!dvswf!jt!jofwjubcmf!jo!b!ofx!ßfme!mjlf!uijt/!Uif! Bernard Hours (see p. 72) hspvoe!svmft!xjmm!jo!boz!dbtf!cfdpnf!dmfbsfs-!xijdi!xjmm!fobcmf!cvtjofttft! 52, French, uibu!bsf!hfovjofmz!jowftujoh!jo!tdjfodf!boe!sftfbsdi!up!tuboe!pvu!gspn!uif! Co-Chief Operating Officer dspxe!xjui!dmfbsmz!efßofe!dmbjnt/!Jo!uijt!bsfb-!Ebopof!ibt!npsf!uibo!b! Jordi Constans (see p. 20) ifbe!tubsu!xjui!pvs!2-311!S'E!tubgg!boe!91!dmjojdbm!tuvejft!qvcmjtife!pwfs! 44, Spanish, sfdfou!zfbst/! Executive Vice President Fresh Dairy Products Western Europe You recently announced plans for a fund to finance the development of Thomas Kunz (see p. 24) what you call Danone’s eco-system. Could you tell us what the plan 51, Swiss, involves and where the idea came from? Executive Vice President FR:!Uif!jefb!tubsufe!xjui!b!tjnqmf!pctfswbujpoÒuif!gbdu!uibu!cvtjofttft!boe! Waters uifjs!jnnfejbuf!fdpopnjd!fowjsponfou!bsf!jodsfbtjohmz!joufsefqfoefou/!Uibu! Felix Martin Garcia ibt!cfdpnf!qbjogvmmz!pcwjpvt!xjui!uif!dvssfou!epxouvso-!xijdi!ibt!tipxo!ipx! (see p. 20) fwfo!qsptqfspvt!cvtjofttft!dbo!tveefomz!cfdpnf!wvmofsbcmf!jg!uifjs!fdpopnjd! 48, Spanish, boe!tpdjbm!fowjsponfou!efufsjpsbuft/!Xijdi!tipvme!sfnjoe!vt!uibu!ju!jt!jo!uif! Executive Vice President joufsftu!pg!cvtjofttft!uifntfmwft!up!mppl!bgufs!uibu!fowjsponfou-!xibu!J!ibwf! Fresh Dairy Products, Central and Eastern Europe, Africa/ dbmmfe!cz!bobmphz!uifjs!Ófdp.tztufnÔ/!Tp!uibuÖt!uif!jefb!cfijoe!uif!gvoe/! Middle East, Asia and Oceania Developing countries are making a growing contribution to Danone’s business, accounting for no less than 52% of water sales, for example. Xf!ibwf!bmsfbez!tfu!vq!b!ovncfs!pg!tusvduvsft!up!cbdl!mpdbm!fdpopnjd! In 2008, capital expenditure totaling €706 million was in large part used to back geographical expansion and growth on emerging markets such efwfmpqnfou!jo!ejggfsfou!qbsut!pg!uif!xpsme-!cvu!xf!cfmjfwf!uibu!uifsf!jt!opx! Flemming Morgan as , Argentina, China and Indonesia. (see p. 29) — — b!offe!up!cspbefo!uibu!bqqspbdi!boe!qmbdf!ju!po!b!npsf!tztufnbujd-!npsf! mbtujoh!cbtjt/! 53, British, Foujsfmz!ßobodfe!cz!Ebopof-!uif!gvoe!xjmm!cf!tfu!vq!xjui!bo!jojujbm!bmmpdb. Executive Vice President ujpo!pg!€211!njmmjpo!boe!upqqfe!vq!xjui!uif!dpousjcvujpo!pg!2&!pg!pvs!ofu! Medical Nutrition fbsojoht!fbdi!zfbs/!Ju!xjmm!qspwjef!ßobodjoh!gps!xpsuixijmf!qspkfdut!jefouj. Christian Neu (see p. 27) Boe!zpvs!bcjmjuz!up!tuffs!zpvs!xbz!po!b!tmjqqfsz!tvsgbdf/!Zpv!offe!up! ßfe!cz!pvs!tvctjejbsjft!jo!uif!sfhjpot!xifsf!xf!ep!cvtjofttÒgps!fybnqmf-! 52, German, ibwf!rvjdlfs!sfàfyft-!cf!npsf!buufoujwf!boe!sfbez!up!ublf!uif!jojujbujwf/!Tp! qsphsbnt!up!efwfmpq!uif!lopx.ipx!pg!mpdbm!tvqqmjfst-!up!ifmq!dsfbuf!sfmbufe! Executive Vice President xf!bsf!bqqspbdijoh!uif!zfbs!xjui!sfbmjtn-!lffqjoh!b!wfsz!dmptf!fzf!po!uif! cvtjofttft!tvdi!bt!njdsp.foufsqsjtft!gps!gppe!ejtusjcvujpo-!ps!up!jnqspwf! Baby Nutrition % cbmm/!Xjui!wfsz!dmfbs!qsjpsjujft/!Uif!ßstu!pg!uiftf!jt!up!fotvsf!uif!ijhiftu! fnqmpzbcjmjuz!jo!dpnnvojujft!ofbs!pvs!gbdupsjft/!Ju!xpoÖu!cf!bo!fnfshfodz! Muriel Pénicaud (see p. 60) 52 qpttjcmf!mfwfm!pg!fgßdjfodz!jo!fwfsz!bsfb/!Jo!b!epxouvso-!uifsfÖt!fwfo!mftt! gvoe!ps!b!sfdbqjubmj{bujpo!gvoe-!tjodf!jut!bjn!jt!jotufbe!up!qsfwfou!dsjtft!cfgpsf! 53, French, of sales are outside sppn!gps!uif!Óbmnptu!sjhiuÔ/!Tfdpoemz-!xf!bsf!hpjoh!up!dpoujovf!jnqspwjoh! uifz!ibqqfo/!Ops!xjmm!ju!cf!vtfe!up!ßobodf!boz!qmbot!up!foibodf!uif!dpn. Executive Vice President Western Europe. pvs!nbshjot-!bjnjoh!gps!b!21&!mjlf.gps.mjlf!jodsfbtf!jo!ejmvufe!fbsojoht! qfujujwfoftt!pg!pvs!tjuft/!Boe!pg!dpvstf!juÖt!opu!b!tpmvujpo!up!fwfsz!qspcmfn/! Human Resources qfs!tibsf/!Cfdbvtf!uibu!jt!ipx!xf!dbo!hfofsbuf!jowftunfou!dbqbdjujft!boe! Ju!jt!tjnqmz!nfbou!up!sfjogpsdf!uif!fdpopnjd!gbcsjd!uibu!xf!bsf!qbsu!pg-!xijdi! Pierre-André Térisse qpufoujbm!gps!gvuvsf!hspxui/! jt!gpvoefe!po!nvuvbm!efqfoefodf/! (see p. 98) rd Bu!Ebopof-!xf!cfmjfwf!uibu!jt!qbsu!pg!uif!qvsqptf!pg!b!cvtjoftt/!Boe!tpnf. 42, French, uijoh!xf!dbo!ep!up!cbdl!pvs!pxo!efwfmpqnfou!pwfs!ujnf/! Executive Vice President 3 place And growth? Finance Danone headquarters FR:!Xjui!dpotvnfs!efnboe!trvff{fe-!xf!xjmm!cf!mppljoh!gps!hspxui! Sven Thormahlen placed 3rd for the xifsfwfs!xf!dbo!ßoe!ju!boe!bddfmfsbujoh!ju!xifo!xf!ep/!Bu!uif!tbnf!ujnf-! So, the final question—what do you expect Danone to be like five years (see p. 43) quality of working xf!bsf!opu!hpjoh!up!xfbs!pvstfmwft!pvu!uszjoh!up!bdijfwf!hspxui!jo!tjuvbujpot! from now? 52, German, conditions in the “Great xifsf!juÖt!vosfmjbcmf!ps!tjnqmz!jnqpttjcmf/!Zpv!ibwf!up!dipptf!zpvs!cbuumft-! FR:!Cfgpsf!xf!ep!bozuijoh!fmtf-!xf!offe!up!gpdvt!po!uif!qsftfou!boe!tuffs! Executive Vice President Place to Work” survey boe!gps!vt!uibu!dmfbsmz!nfbot!hpjoh!gps!ijhifs!nbslfu!tibsf/!Opx!jt!uif! pvs!xbz!tbgfmz!uispvhi!uif!spvhi!xbufst!bifbe/!Cvu!uibu!bmtp!nfbot!uibu!xf! Danone Research of businesses with more ujnf!up!xjefo!pvs!mfbe!po!dpnqfujupst!boe!JÖn!dpowjodfe!uibu!Ebopof! ibwf!up!cf!dmfbs!bcpvu!xifsf!xf!xbou!up!hp!boe!mppl!up!uif!nfejvn!ufsn/!J! Dirk Van de Put (see p. 20) than 500 employees. jt!xfmm!frvjqqfe!up!ep!uibu/!Xf!ibwf!uif!sjhiu!dvmuvsf!gps!ju-!boe!pvs! epoÖu!uijol!uibu!Ebopof!jo!3123!ps!3126!xjmm!ofdfttbsjmz!cf!wfsz!ejggfsfou! 48, Belgian, 

12 —— Danone 2008 Danone 2008 —— 13 2008/ DANONE WORLDWIDE Sales: €2 .2 ale 5 S s: € 67.6% WESTERN EUROPE 1 b .3 19,370 employees 4 i đ l

l

9.4% i b o đ No. 1 for fresh dairy products

91.1% i Sales: n l € l

i 7 20.5%

o .2 đ No. 2 for bottled water 5.4% n 7 55.7% b 2.5% đ No. 1 for baby nutrition

i 3.5% l

l

16.0% i đ No. 1 for medical nutrition o

19.5% n đ 36 plants DANONE— 8.8% GLOBAL REACH

Over the past ten years, our concentration  ŏŏ on health-focused business with global đ 11,190 employees potential has gone hand in hand with đ No. 1 for fresh dairy products rapid geographical expansion. đ No. 1 for medical nutrition đ 18 plants This expansion has combined two approaches to business development:

đŏ !2!.#%*#ŏ(+ (ŏ.* /ŏ3%0$ŏ*ŏ!/0(%/$! ŏ lead on their markets, with examples including Sales: €1 Blédina in France, Cow & Gate in the UK, Villa .9 68.1% 4 ASIA-PACIFIC del Sur in Argentina and Aqua in Indonesia; b i l đ 22,516 employees l

27.2% i

o n đ No. 1 for baby nutrition 2.1% Sales: €1 đŏ$!ŏ(1* $ŏ+"ŏ#(+(ŏ +* !,0/ŏ !*0!.! ŏ .8 đ No. 1 for bottled water 2.6% 5 on health benefits with universal appeal, 7.8% b đ 50 plants i l l

i

adapting brand names, recipes, flavors and 47.1% o prices to different countries. Activia thus 42.5% n stands for healthy transit and digestion, NORTH AMERICA 2.6% for natural defenses, Bonafont and đ 2,495 employees Font Vella for elimination of toxins and đ No. 1 for fresh dairy products waste, Aptamil for infant formula bolstering đ 7 plants immunity, and Fortimel (medical nutrition) for the correction of malnutrition.

 ŏ  ŏ đ 20,198 employees AFRICA AND đ No. 1 for fresh dairy products ŏ  ŏ Sales: đ No. 1 for bottled water €0 đ 4,374 employees .5 đ No. 2 for baby nutrition 77.9% 6 đ No. 1 for fresh dairy products b Business lines’ contribution đ 34 plants i đ 15 plants l

l

4.9% i

o to sales by region n 15.3% FRESH DAIRY PRODUCTS 1.8% WATERS BABY NUTRITION GROWTH ON NEW MARKETS ŏ   ŏ  ŏ

North America Latin America Africa and the Middle East Asia-Pacific Central Europe Western Europe Business in the region, representing Rapid growth set sales at €1.94 billion. Sales totaled close to €0.6 billion, with Sales in the area were up from Sales in the region rose a strong 24% Sales in the region totaled €7.27 billion sales of €1.34 billion, was on an uneven Argentina and Brazil were the main the Fresh Dairy Products division gaining €1.64 billion to €1.85 billion, a vigorous to near €2.3 billion. Growth was fastest against a backdrop of flagging track in 2008, with the economic crisis contributors to performance in the region, ground in Saudi Arabia and Egypt, where showing largely attributable to strong in and Poland, where both the consumer demand. The group’s main rapidly affecting the market in the US, where Danone holds the top places for fresh Danone is market leader, as well as in growth for the Baby Nutrition division, Fresh Dairy Products and Baby Nutrition markets are France and Spain, followed where Danone holds top places with the dairy products and packaged water. . The group also holds the particularly in China, and the Waters divisions turned in excellent by Germany, , the UK and the Dannon brand and the Stonyfield Farm number-one or number-two place for division in Indonesia. Another highlight performances. Benelux countries. organic range. Canadian sales surged with baby nutrition in Morocco, Tunisia, was the 40% rise in Fresh Dairy Products the success of Activia. and Turkey. sales in Japan.

14 —— Danone 2008 Danone 2008 —— 15 Highlights/ Danone met its 2008 targets, with 8.4% organic growth setting Sales by business line 57% 19% sales* at €15.22 billion and operating margin showing a like-for-like Fresh Waters Dairy rise of 53 basis points to 14.91%. This reflects in particular successful bopof! xbt! po! ubshfu! NEW FRONTIERS.!Mppljoh!bu!uif! Products Dxjui!pshbojd!hspxui!bu!9/5&!jo! hfphsbqijdbm!csfblepxo!pg!cvtj. integration of our two new worldwide divisions, Baby Nutrition 3119-!tfuujoh!tbmft!gps!uif!zfbs!bu!!! oftt-!b!gfx!dpvousjft!dpoujovfe!up! and Medical Nutrition. €26/3! cjmmjpo/! Uif! upubm! hbjo! esjwf!hspxui!jo!3119-!bnpoh!uifn! jodmvefe!b!3/9&!sjtf!jo!wpmvnft-! Svttjb-!Dijob-!Joepoftjb-!Csb{jm! 6aaÒ\jgZhVgZViXdbeVgVWaZhXdeZd[Xdchda^YVi^dcVcYXdchiVciZmX]Vc\ZgViZh# xjui!uif!sfnbjojoh!6/7&!sfàfdujoh! boe!Nfyjdp!jo!uif!ßstu!ibmg/!Uijt! jnqspwfe!qsjdjoh/! dpoujovft!b!dmfbs!usfoe!uibu!cfhbo! up!ublf!tibqf!bu!uif!cfhjoojoh!pg!uif! TWO KEY DEVELOPMENTS. 18% !Uif!ofx! efdbef/! 6% Baby zfbs!cfhbo!xjui!b!upubm!gpdvt!po! Upebz-!ofx!nbslfut!bsf!ubljoh!uifjs! Medical Nutrition ifbmui! gpmmpxjoh! joufhsbujpo! pg! qmbdf!bmpohtjef!pvs!usbejujpobm!cbtft! Nutrition OvnjdpÖt!pqfsbujpot!jo!uxp!gvmm. jo!Gsbodf!boe!Tqbjo-!xjui!Bshfo. àfehfe!ejwjtjpot-!Cbcz!Ovusjujpo! ujob-!Csb{jm-!Dijob-!Qpmboe-!Svttjb! boe!Nfejdbm!Ovusjujpo/!Uifo!dbnf! boe!uif!VT!uphfuifs!bddpvoujoh!gps! Sales by region uif!xpsmexjef!tmjef!joup!sfdfttjpo-! 41&!pg!tbmft/! 63% xijdi!tqmju!uif!zfbs!joup!uxp!ejtujodu! Europe 12% qfsjpet/! Uif! fbsmz! npouit! xfsf! GEOGRAPHICAL BALANCE.! Nbjo! Asia csjtl-!dpoujovjoh!uif!usfoet!pg!uif! tpvsdft! pg! npnfouvn! jo! 3119! qsfwjpvt!zfbs!xjui!tbmft!tipxjoh!bo! xfsf! Btjb-! xifsf! tbmft! xfsf! vq! pshbojd!sjtf!pg!pwfs!22&!jo!uif!ßstu! 27/4&-!boe!dpvousjft!voefs!uif! rvbsufs-!cvu!qbdf!uifo!usbjmfe!pgg!cz! Ósftu!pg!uif!xpsmeÔ!ifbejoh-!xijdi! tubhft!bt!uif!ßobodjbm!dsjtjt!tubsufe! dpmmfdujwfmz!qptufe!24/3&!hspxui/!Jo! up!iju!sfbm!fdpopnjft-!qbsujdvmbsmz! Fvspqf!bt!b!xipmf!hspxui!xbt!pomz! jo!joevtusjbmj{fe!dpvousjft/! 6/2&-! cvu! ju! sfbdife! 27/7&! jo!! Fbtufso!Fvspqf-!sfàfdujoh!spcvtu! STRONG SHOWINGS FROM NEW usfoet!jo!Svttjb!boe!Qpmboe/!Btjb!jt! Activities 25% DIVISIONS. !Cpui!uif!Cbcz!Ovusjujpo! bo!jodsfbtjohmz!tjhojßdbou!tpvsdf!pg! Rest of ejwjtjpoÒxijdi!dpncjoft!xibu!xfsf! hspxui/!Uif!Cbcz!Ovusjujpo!ejwjtjpo! the world qsfwjpvtmz!uif!pqfsbujpot!pg!Cmejob! bmsfbez! epft! ofbsmz! 41&! pg! jut! boe!Ovnjdp!jo!uijt!bsfbÒboe!uif! cvtjoftt!uifsf-!xjui!jut!Evnfy!boe! Nfejdbm!Ovusjujpo!ejwjtjpo!pvueje! THN! csboet! sbolfe! gjstu! jo! in 2008 ubshfut!jo!3119/!Uif!gpsnfs!pvu. Joepoftjb-! Nbmbztjb-! Dijob! boe! qbdfe!uif!nbslfu!xjui!b!28&!sjtf!jo! Uibjmboe/!Bmtp!jo!Joepoftjb-!uif! no.1 tbmft-!boe!pqfsbujoh!nbshjo!tipxfe! Xbufst! tvctjejbsz! dpoujovfe! jut! The world’s top Fresh Dairy Products/ Waters/ Baby Nutrition/ Medical Nutrition/ b!mjlf.gps.mjlf!sjtf!up!sfbdi!b!wjhps. jnqsfttjwf! hspxui-! xjefojoh! bo! producer of fresh pvt!28/62&/!Jo!Nfejdbm!Ovusjujpo-! bmsfbez!cjh!mfbe!xjui!pwfs!61&!pg! dairy products, no. 2 Growth for Bright promise tbmft!hspxui!dbnf!jo!bu!23/8&!boe! uif!nbslfu/! for packaged water international for growth pqfsbujoh! nbshjo! bu! 33/26&/! and baby nutrition, Uphfuifs-!uif!uxp!ejwjtjpot!bmsfbez! brands no.1 %00(!ŏû! 0! ŏ5ŏ $*#!/ŏ and Europe’s leading Danone’s Indonesian in the economic bddpvou!gps!35&!pg!dpotpmjebufe! medical nutrition A highly satisfactory 7.7% subsidiary Aqua is tbmft-!dpnqbsfe!xjui!68&!gps!Gsfti! specialist. rise in Fresh Dairy Product environment, Medical now the world’s Nutrition posted steady Ebjsz!Qspevdut!boe!2:&!gps!Xbufst/! sales confirms the success number one producer of leading brands today, growth, with 2008 sales of packaged water by at €900 million. Danone such as Activia, and the volume. promise of future drivers An exceptional is now a market leader in most parts of Europe and like Danacol. Three brands— Our and Evian year Activia, Actimel and its Nutrition brand is a brands both rank Sales reached €2.8 billion reference for the sector. Petit Gervais/Danonino— among the top five following the merger of together contributed no worldwide for bottled Numico and Blédina, less than €4.4 billion to water. placing Danone second the division’s total 2008 worldwide for baby sales of €8.7 billion. nutrition. In 2008, our new Baby Nutrition and Medical Nutrition divisions already HZZ/ accounted for 24% of Danone sales. lll#YVcdcZ#Xdb

16 —— Danone 2008 Danone 2008 —— 17 Highlights/ Danone Egypt carves out new Middle East oasis Fresh Dairy Products *(5ŏ0$.!!ŏ5!./ŏ"0!.ŏ%0/ŏ -1%/%0%+*ŏ+"ŏ %0Čŏŏ/)((ŏ")%(5ġ+3*! ŏ %.5ŏ,.+ 1 0ŏ company outside Cairo, Danone Egypt leads the fresh dairy product segment with 30% of the national market. Growth reflects the successful launches of three brands: Danone Core, a classic yogurt; Activia, a favorite with women; and Danette, which Growth/ momentum from innovation with top brands has opened up the dairy desserts segment. The subsidiary has also spurred growth with a more efficient distribution system to supply the 33,000-plus outlets selling Fresh Dairy Product sales came to €8.7 billion in 2008. Danone products. Over half the total for Europe was in the division’s main Activia/ markets, which are France, Spain, Italy, Germany, the Intensely Creamy, Benelux countries, the UK, Poland and Russia. In the rest intensely successful of the world, the US, Canada, Mexico, Argentina and In 2008 Danone UK launched Activia Intensely Brazil together accounted for more than a quarter . Creamy, an indulgent dairy dessert with all the benefits Growth in Fresh Dairy Product sales is driven by of Activia’s unique culture, Bifidus ActiRegularis®, innovation and the extension to new countries of top and only 3% fat. Available in different flavors, Danone brands offering health benefits directly perceived the product has been a hit with consumers and by consumers. Three brands—Activia , Actimel and industry observers alike. Trade magazine The Grocer Danonino (Petit Gervais, Danimals)—together generated chose Activia Intensely Creamy as best 2008 sales of €4.4 billion or more than half the division’s total. launch in its Yogurts and Fresh Desserts category, recognizing an intensive media, Internet and point- of-sale campaign. And with Communication/ Nielsen Homescan reporting New Web a repurchase rate of 46.1%, % 2,700 Intensely Creamy looks set presence for 24 for continued success. With sales up 24%, South Africa/ Responding to the Danacol Danone Canada Establishing needs of hotels Italy has launched a unique continues its rapid a presence in and self-service Brazil/ Activia Danacol campaign with growth by optimizing restaurants, Danone a joint Danacol-MSN its production and townships Netherlands launched now even more web site featuring an purchasing functions, In May 2008, Danone My Activia, a new affordable online game and a quiz and rolling out took a 70% stake in product concept Activia is now sold in highlighting the brand’s innovative marketing Mayo, a company that based on a 5-kg yogurt three versions in Brazil: benefits. In its first few strategies for Activia for the past 50 years has dispenser. Installed a single-serving yogurt weeks, the site drew and Silhouette. developed a business at the point of sale, priced at €0.30, less than a 165,000 visitors, fueling Actimel will launch model incorporating a the dispenser allows cup of coffee; a yogurt drink a 14% increase in Italian nationwide in unique distribution system consumers to make sold in a large bottle; and an sales for 2008. 2009 following an for disadvantaged areas, their own Activia overwhelmingly economy pack. In all, Activia particularly the townships. by adding the fresh rolled out 18 innovations successful test in Mayo yogurt drinks have fruit and cereals of Quebec in 2008. ranging from new flavors to won a leading place on their choice. A total a product combining cereal the market, opening of 2,700 machines will with fermented milk. The new scope for Danone be installed in Europe brand attracted 14 million to reach consumers in by 2010. new Brazilian consumers, varied income groups. pushing sales volume 31,200 up 45%. 53 €8.7 employees. plants worldwide. billion sales.

18 —— Danone 2008 Danone 2008 —— 19 Highlights/ Fresh Dairy Products Russia/ Danone bolsters strengths In 2008 we again strengthened our position in Russia, winning nearly 30% of the market for fresh dairy products and raising sales to a new record. This Results held firm across all regions strong showing was powered by innovative local adaptations of our flagship in 2008, with some big successes products. Examples include Activia in a new larger size, -flavored Actimel, to be remembered. The Fresh Dairy Danacol, and Dino Surprise, a Danonino product featuring collectible figurines with every 100-g serving. Taken together, these innovations accounted for 30% Product division’s three Executive Brazil/ Danoninho of the subsidiary’s results. Keeping pace with this growth and despite signs Vice Presidents Felix Martin Garcia, fortified with that 2009 will be more testing, Danone Russia has added five new production Jordi Constans and Dirk Van de Put calcium and lines to its Chekhov facility, raising annual capacity to 400,000 metric tons and look back on the year. vitamins making it one of the biggest and most efficient plants in the world. Danone Brazil has fortified its version of Danoninho—a fromage frais What’s the bottom line for 2008? Felix Martin Garcia, Executive Vice President, Fresh Dairy Products, Japan/ Bio boosts market share product for children—with Eastern and Central Europe, Africa/Middle East, Asia, and Oceania; calcium and vitamins D Jordi Constans, Executive Vice President, Fresh Dairy Products, Felix Martin Garcia: Jordi Constans: Western Two years after taking full control of its Japanese subsidiary, Danone holds a and E to compensate Western Europe; Dirk Van de Put, Executive Vice President, Fresh Given the overall context, European markets were Dairy Products and Waters, Americas. 4.4% share of the fresh dairy products market in Japan, up from 2.7% in 2007. for dietary deficiencies our 2008 performance very vigorous in the first Credit for this strong showing—nearly 40% growth in a market with many identified in a recent was satisfactory, with quarter, and then there was Danone study, the largest Russia, Japan and Egypt a sudden turnaround. We Dirk Van de Put: In competing brands—goes largely to Activia. Known as Bio in Japan, the brand ever conducted on the responding particularly well. focused on our strengths— the Americas, we had Top figures accounts for two-thirds of the subsidiary’s sales thanks to an expanded distri- nutritional needs of As soon as sales showed the superior quality of our two different years. bution network and successful adaptation to Japanese tastes, including a flavor Brazilian children. Over signs of leveling off, we products and the reliability The economic downturn for 2008 7.2 million youngsters now took action, working on of our brands—and backed hit some countries very with tomatoes, carrots, cabbage, pumpkin and 12 other vegetables. Danone have access to a custom- pricing and neighborhood them up with advertising early—the United States, for 70% Japan is promoting its products with a high-tech point-of-sale advertising formulated Danoninho for of the countries in the distribution outlets—which geared around consumer example, with Mexico on its campaign featuring commercials, medical information and customer testimonials less than 1 real per serving, account for 43% of sales in education. Because heels—but others held their region saw a rise in our and adaptation to local the region*—and playing authoritative support is ground very well. Canada market share by late 2008. broadcast via mini-televisions positioned along store aisles. needs has generated 8% up our brands. It worked. critical to our business, posted a record 24% rise, Felix Martin Garcia growth for Danoninho Eastern Europe performed we took an innovative and Argentina and Brazil Brazil. extremely well, with sales approach in this area. For continued to drive our 17% up 20%, and Africa and the example, sales benefited growth in Latin America. We had the best results in Middle East posted 16% when our representatives countries where per capita growth. began calling on consumption was lowest. Markets/ Essensis healthcare professionals. In 2008, sales were up 5% discontinued in Italy, 17% in the UK, and In 2008, 10% in the Netherlands. discontinued production of Jordi Constans What were the biggest successes of 2008? Essensis yogurt, with Italy, France and Spain to follow 50% We had Activia in the first quarter of 2009. Felix Martin Garcia: Jordi Constans: Dirk Van de Put: improvement in The performance of our several successful product has been a success in While the product’s productivity for Activia start-ups! In Egypt we lead launches that show our the Americas as well. health benefits—backed in Brazil has strengthened the market, though we’ve capacity for innovation Consumers see its benefits by a number of scientific our positions on the local only been there for two and our skill at adapting to very clearly, and there are studies—are not in market. doubt and it made a years, and Russia turned in local tastes. These include so many versions of the Dirk Van de Put a remarkable performance. Activia Intensely Creamy product that they can enjoy satisfactory market start, Overall, we’re seeing very in the UK, My Activia for it every day without getting the reduced purchasing power accompanying good results from our hotels and restaurants in tired of it. The best example 8ZcigVaVcY:VhiZgc:jgdeZ!6[g^XV$ blockbusters—Activia in the Netherlands, and an is Canada: regulations B^YYaZ:Vhi!6h^VVcYDXZVc^V the worldwide economic Japan, for example, and Activia yogurt drink in there allow only very broad downturn produced a deployment of Danacol in France and Belgium. Our health claims on television, sharp impact on sales. The Eastern Europe. And in a flagship brands have proven so we’ve had to innovate. group has thus decided to major internal achievement, their value and usefulness We’re directing consumers focus investments on top we doubled the number of wherever they’re sold, to printed sources and brands. training hours per employee but we need to continue the Internet for more in 2008. communicating their information on the proven benefits to consumers. benefits of our products. HZZ/ And it’s working. lll#YVcdcZ#Xdb

20 —— Danone 2008 Danone 2008 —— 21 Highlightss/ Fresh Dairy Products Highlightss/ Waters

Strategy/ Our Waters division has a clear focus on the benefits of natural waters The Waters division continued moves to center business on top brands for natural waters, developing value-added products that are easy to enjoy and naturally thirst-quenching. Innovations highlight specific properties that include mineral content, Danacol/ Global natural purity and elimination of toxins and waste. In promise 2008, 47% of division sales totaling €2.9 billion were in With sales nearing €200 million and growth Europe, 31% in Asia and 22% in the rest of the world topping 35%, Danacol is confirming its promise as (Americas, Africa and Middle East). one of the division’s star ,.+ 1 0/ċ 1* $! 0$%/ year in Argentina, Poland, Trends/ Neighborhood distribution model spreads to Austria and Slovenia, the brand is now sold in Europe 12 countries, averaging Distribution through small retailers—outside of hyper- and supermarkets—is 70% market share. critical to Danone’s strategy of affordability and accessibility. The group is now present at over a million points of sale, and independent neighborhood vendors Actimel, Activia/ contribute 40% of its annual growth, accounting for 25% to 30% of Fresh Clinical studies Dairy Product and Water division sales. Danone supports this fast-growing Few if any food products worldwide network by providing retailers with refrigerators and other display have been the object of cases compatible with our products—and not only in emerging countries. as many clinical studies as Actimel. Since 1994, As hypermarket traffic leveled off in 2008, Danone intensified coverage of a good 24 scientific small retailers in Europe’s more mature markets. Delivery tricycles now supply publications and studies over 1,000 bakeries and takeaway outlets in Paris; our products are being intro- representing tens of millions of euros in duced by stages in 750 Spanish drugstores; and consumers can now find research spending in ten Danone dairy products at their local vegetable markets in Portugal and at countries have confirmed butchers’ shops in Argentina. Actimel’s beneficial impact Aqua/ 50% of on natural defenses for the market people of all ages (the Aqua is Indonesia’s most recent studies having Colombia/ Danone opens first plant number-one brand for considered three target packaged water, with groups—children, adults Danone’s new plant, located near Bogotá in the Cajicá region, is a perfect +*0%*1%*# /1 !//!/ %* 0%* )!.%  a market share of 50%. and seniors). In all, four illustration of our three-pronged strategy for emerging countries: stay close Bulk containers account clinical studies and four Mexico, Brazil, Argentina and Uruguay are home to a growth model that has to markets, keep a firm grip on costs and supply, and work closely with the for a high proportion of pre-clinical studies were made Danone number one for packaged water in Latin America. In Mexico, its business. By volume, conducted in 2008. Activia local community and economy. Greater reliance on local suppliers enabled us Bonafont holds the lead in bottled waters, and we also have strong positions in Aqua is the world’s leading is the subject of similar to significantly reduce the cost of the 22,000-ton facility, inaugurated in Feb- home-and-office deliveries in large jugs. In 2008, the acquisition of Icoara, the brand, with six billion liters studies concerning its local spring and plant in Brazil, offered a base for the extension of the Bonafont ruary 2009. sold annually. benefits in terms of concept to a new country with huge growth potential. Danone is also the leader regularity. for bottled water in Argentina, where our main brands are Villa del Sur and Villavicencio, and is number one in Uruguay, too, with the Salus brand.

22 —— Danone 2008 Danone 2008 —— 23 Highlights/ Waters Volvic/ a dash of fruit and no additives Volvic Touche de fruit—natural Volvic mineral water with a dash of fruit and free of additives—was the main product innovation at Danone Eaux France in 2008. Reinventing the concept of flavored billion water, Volvic has overcome the two main obstacles to success: 18 liters of packaged perceived artificiality and sugar content consumers consider too water sold in 2008, high. More natural, with a fruit tang that sets it apart, Volvic Touche ranking Danone de fruit has no artificial flavorings or preservatives, and reduced number two worldwide. sugar. These qualities have already won it a place with 1.6 million French households, mostly made up of middle-aged people with no children, looking for a healthy alternative to unflavored still Thomas Kunz, Executive Vice water. In 2009, Volvic will be maintaining its focus on natural appeal President Waters with the launch of Volvic Touche de fruit with apple and mint/green tea flavors on the French market. In Germany, the apple flavor launched in 2008 is a best-seller for the range.

2008/ bridging the gap Volvic and Evian lead the field in Germany by Thomas Kunz, Executive Vice President, Waters Volvic and Evian reinforced their top places on the German market for still water, with sales up 3% in 2008—a remarkable performance considering the generally In 2008, there was a gap between emerging markets, with growth of nearly lackluster market trends in Europe. The success of Volvic’s range of flavored waters 15%, and mature markets in Western Europe, which held steady or lost ground. made an important contribution to this result. The continuing efforts of its sales Our local brands in Mexico, Argentina, Indonesia and China thus posted out- force and increased point-of-sale advertising were reflected in a 26% rise in the presence of the two brands on retailers’ shelves. standing growth, while Volvic and Evian ran into headwinds in the UK, Spain and France. Bottled waters had to contend with increased competition from sweetened beverages and sodas, as well as reduced consumer purchasing power and Ser 0% powder/ Markets/ sale Communication/ questions about our environmental impact. We responded energetically with a winning concept of Frucor What do you 84 plants a communications campaign stressing the unique character and benefits of our Mixed with water, In keeping with its know about the China/ powdered Ser yields a strategy of focusing worldwide. Mizone waters, and also stepped up our environmental responsibility initiatives. We are water you drink? broadens appeal tasty, sugar-free drink beverage business on now making bottles with 25% recycled PET, and Evian is moving toward carbon enriched with nutrients core mineral waters and This question is the banner for a campaign in with fruit neutrality, working with the Ramsar Convention, its long-time partner, and IUCN that include calcium, spring-water products, Repositioning Mizone magnesium and vitamins in February 2009, Danone defense of mineral water 9 billion (see page 85). Finally, we have taken steps to control costs and strengthen our €2. energy beverage for B9 and B12. It was finalized the sale of launched by the industry sales in 2008. everyday consumption health positioning, and we are expanding our product ranges and distribution launched on the subsidiary Frucor to association in France. The move is backed by has proved a success, with networks, focusing particularly on increasing away-from-home consumption Argentine market in May 1*0+.5ŏ %)%0! ŏ0ŏŏ 2008 sales up 20% on the 2007, and has made price of over €600 an internet site (http:// and more effective use of neighborhood sales channels. Against this backdrop, previous year. Peach- quick progress, with two million. Frucor is a leader leseauxmineralesnaturelles. com) where consumers 33,000 flavored Mizone alone we are heading into 2009 with determination in the tough markets, and enthu- more flavors added to on the Australian and can check their knowledge. employees accounted for 35% of 2008 siasm in emerging markets. the range in 2008, raising New Zealand markets for worldwide. sales. The brand is now the total to ten. With non-alcoholic beverages, Example: Mineral water and capitalizing on gains with reduced packaging, Ser with nearly all of its sales tap water are equally pure. a green-apple version. 0% powder is just half from flavored drinks, True or false? False! Mineral the price of bottled sodas and energy drinks. water is legally required to Villa del Sur adds fruit and market share flavored water, costing be pure from the start. Tap only around €0.20 a liter. water, in contrast, starts out Villa del Sur Levité, a natural mineral water with natural fruit, moved into first Another good reason for with pollutants in higher place for flavored waters in 2008. Volumes were up 45% from the previous year, success. or lower concentration, reflecting the appeal for the whole family of a range with a choice of grapefruit, requiring treatment to apple and orange flavors for healthy enjoyment, Also in Argentina, Danone make it safe to drink. And launched a new sugar-free, zero-calorie flavored water under the name Ser Vita tap water is nearly always Nutrientes, targeting women in particular. chlorinated.

24 —— Danone 2008 Danone 2008 —— 25 Highlights/ Baby Nutrition Numbers

No. 2 baby-food supplier Strong performance/ Baby Nutrition sales rose 17% in 2008 worldwide following the merger of Numico’s The Baby Nutrition division’s business covers milk business with Blédina’s. powder and formula for infants and more varied offer- 67% of sales in Europe, with ings for toddlers aged from 18 to 36 months. With sales main markets including France, the UK, Italy, Poland close to €2.8 billion in 2008, the division places second and Russia. worldwide in the field. It is number one in Asia, 28% of sales in the Asia-Pacific where it does 28% of its business with the Dumex area. and SGM brands.

China/ Dumex gains market share despite melamine crisis In September 2008, the melamine crisis struck the Chinese infant formula market— home to Dumex, Danone’s Baby Nutrition 2008/ Double challenge, double success in 2008 brand. As leading local brands were by Christian Neu, Executive Vice President, Baby Nutrition withdrawn from store shelves, Dumex In 2008 we had two jobs: completing the integration of Blédina and Numico, Christian Neu, Executive Vice launched a vigorous communications President, Baby Nutrition and achieving the group’s ambitious growth target. We succeeded by a wide campaign to maintain sales, reassuring margin in both. Baby Nutrition posted 17% growth with very healthy margins, parents quickly and effectively that Dumex and we now have a unified division with employees working together as if they Spain/ Blédichef formulas were not contaminated. gets a lift from had always been on the same team. 20 A press campaign and a television spot Marketing and R&D synergies are already beginning to pay off. This is a plants worldwide Milupa targeting the general public stressed the remarkable achievement, given that most acquisitions disrupt organization and serving the Baby In Spain, the Baby Nutrition quality and reliability of Dumex products, a message reinforced by flyers in Nutrition division. division has leveraged operations during the first year. Our teams have been very responsive, very store aisles and stickers on packaging. Finally, the brand reinforced its call recognition for its Milupa positive. Which is very encouraging for our continuing efforts to win and center, and maintained daily Internet surveillance to quash false rumors. This brand to win a place for consolidate market leadership wherever we do business, and in so doing further French brand Blédina’s well-coordinated response enabled Dumex to lift market share to 18% in €2.8billion innovations. Blédichef our mission: to help parents understand and meet the special nutritional needs December. sales in 2008. Milupa hit the Spanish of very young children, without forgetting that breast feeding is by far the best market with a new graphic option for babies. identity and brand image in September 2008 and scored an immediate Investment in French plant 11,100 success, rapidly achieving a employees worldwide In 2008 Danone earmarked €22 million for a new production line in southwestern 14% rise in sales. In 2009, the A healthy baby is a happy baby in 2008. division will expand the France, a move designed to improve efficiency and double production capacity for range and adapt it more Blédichef prepared foods. The brand is currently working to reduce packaging by Our Bebiko, Bebelac and Cow & Gate brands have been relaunched in some ten specifically to local tastes. 25% with a dual purpose: cutting costs through pallet optimization, and reducing countries, including the United Kingdom, Ireland, Poland, Austria, , Spain the environmental impact of Blédichef’s transport operations. With annual capacity and Russia. Centered on a new Complete Care concept, the relaunches emphasized of 14,000 metric tons, the new line will supply several European countries. the importance of optimizing nutrition for infants and strengthening their immune defenses. A new Complete Care label was added to product packaging, and a broad media campaign promoted the concept with the slogan, “A healthy baby is a happy baby.”

26 —— Danone 2008 Danone 2008 ——27 Highlightss/ Baby Nutrition Highlightss/ Medical Nutrition

Markets/ Danone, a new pace setter in Medical Nutrition Medical Nutrition sales came to roughly €0.9 billion in 2008, making Danone the market leader in Europe. Less exposed to economic trends than other types of Turkey/Mega launch for Milupa business, the division continued to post brisk growth, organic fruit juices not only in Europe which accounts for 82% of sales, but In May 2008, the new Milupa range of organic also in Asia, accounting for 5% and the rest of the world, fruit juices for infants, sold in 200-ml mini-cartons, collectively accounting for 13%. hit the Turkish market with a launch campaign Blédina/ a faithful following making full use of media In France, Blédina’s “petit pots” and “Idées de Maman” offerings increased and below-the-line communications including market share by five percentage points in 2008, with sales up 12.5% in value—a 2008/ Strong performances, innovation and direct outreach via e-mail strong performance grounded in the brand’s continuing popularity. geographical expansion and messaging services, Blédina’s petit pot mini-jars—delivering “Blédina’s full range of nutrition and mass distribution by Flemming Morgan, Executive Vice President, Medical Nutrition expertise for less than €1”—are a favorite with mothers, who appreciate the of samples to families Business performance was exceptionally strong in 2008, with sales up 12.8% and doctors. By the end safety of its glass-and-metal packaging, the wide variety of recipes, and above and margin rising by no less than 149 basis points like for like. All segments of the year, Milupa had all its pricing—the lowest in the savory foods category. helped establish the contributed to growth, with our international brands , Fortimel, Neocate “Idées de Maman” products, packaged in a convenient plastic bowl, offer infant beverage category and Nutrini taking the lead. Our sales force successfully consolidated its bases in Turkey and held a children a texture similar to that of food puréed by hand. Nine out of 10 mothers through increased familiarity with patients and medical professionals, and we 93% market share heading choose this range as the closest to home-made. into 2009. confirmed our lead in science and innovation, in particular through two major achievements. Flemming Morgan, Executive The first was the launch of our compact formats for oral nutrition, represent- Vice President, Medical Nutrition United Kingdom/ Communication/ ing a real scientific and technical breakthrough, and the second the encouraging % Cow & Gate Bebiko, a brand initial findings of a study of our formula designed for Alzheimer’s patients. An- 20 launches new to treasure Sales of immunity- other result we can be proud of was the publication in Lancet Neurologyy of our building infant range of pastas Bebiko was named the clinical studies of a product for epileptic children, showing the recognition of the formulas were up Most Precious Polish no.1 and sauces for scientific community. Finally, we continued to expand outside Europe with moves 20% overall in 2008, Brand for 2008, an award Danone is now the with brands including babies France/ staff members see as into Colombia and Mexico, and recently started operations in markets including European leader for medical nutrition. Aptamil in the United Cow & Gate, the leading 51.7% market recognition for the best Brazil, China and the Middle East that are already among the main contributors baby nutrition brand in results on record. The Kingdom, Nutrilon in share to our earnings. Russia, and Dumex in the UK, has added five ranking is based on the Asia. Growth was in new sauces and three Blédina added two value of the brand (sales, 6iXdbeVgVWaZhXdeZd[ percentage points to its Xdchda^YVi^dcVcYXdchiVci double digits across new pastas to its range growth, etc.), recognition ZmX]Vc\ZgViZh# all regions, driven by of prepared baby foods. market share by value in and customer loyalty. recognition of proven Originally launched in 2008, breaking above the Early signs encouraging for Alzheimer’s patients benefits for the infant September 2008 as an 50% barrier to end the immune system. Asda exclusive, the new year with a record 51.7%. While there is still a need for caution, a specially formulated drink derived range appeared in the The brand also took from 10 years of research may show promise for Alzheimer’s disease, with Tesco, Sainsbury’s and the lead in all follow-on a first clinical study showing improvements in cognitive functions for some Boots retail networks in formula and growing-up patients. These encouraging results were presented at an international medical November. milk segments for the conference held in Chicago in July 2008, and a second clinical study, now under first time. way to confirm these results, could lead to useful developments in targeted medical nutrition. HZZ/ lll#YVcdcZ#Xdb

28 —— Danone 2008 Danone 2008 —— 29 Highlights/ Medical Nutrition R&D/ Ketocal pioneers epilepsy treatment Epilepsy strikes nearly one person in a hundred at some point in life, and young children are disproportionately susceptible to it. For patients with intractable epilepsy, seizures can cause brain lesions with lifelong consequences— high stakes for scientists in Danone’s Medical Nutrition division Brands/ Nutricia seeking a dietary treatment for the disease. adopts global Medical professionals now recognize that diet can be life- identity changing for patients with epilepsy that resists medical In 2008, Nutricia adopted a new visual identity to treatment. Ketocal, the first food designed specifically for raise its international epilepsy sufferers, has proven its effectiveness in patients, profile and awareness offering an additional treatment option to doctors and care of both its values and health positioning with providers. a more consistent global image. Nutricia Advanced Medical Nutrition is now the umbrella brand: its logo Innovation/ Fortimel Compact improves patient places a target alongside quality of life the Nutricia name, evoking the precision of the brand’s Disease-related malnutrition is a growing healthcare problem that now costs research and its highly developed countries far more than those associated with obesity. Nutritional specific response to each illness. Products are labeled Neocate/ the top supplements can make a significant contribution to balancing a patient’s diet, in white and purple to set milk alternative for increasing muscle strength, facilitating daily activities, and reducing medical Nutricia apart from its allergic children complications—yet nearly half of all patients are unable to consume supplements competitors. More than half a million in the quantities prescribed by their doctors. children with allergies to cow’s milk have grown up Nutrition/ focus on the needs of seniors in Spain In 2008, Nutricia offered a solution: Fortimel Compact, a specially formulated healthy with the help of drink that packs the calories and nutrition of a 200 mL bottle into a 125 mL With Spain’s elderly suffering high rates of malnutrition, the nation’s pharmacists Neocate, Medical Nutrition’s bottle. Combining higher nutritional density with less volume, Fortimel Compact 3 flagship brand. A non- and general practitioners are beginning to play a key role in improving patient Medical Nutrition puts vulnerable patients on a stronger footing—yet another breakthrough by allergenic amino acid—used diet. Better coordination between hospitals and outside practitioners can help plants worldwide. in place of milk and other Nutricia scientists in Medical Nutrition’s continuing drive to help patients manage all healthcare professionals become more closely attuned to the nutrition dietary components that their illnesses. allergic children cannot problems affecting this growing population. Nutricia is doing its part with a tolerate—makes Neocate dedicated sales force helping elderly patients leaving hospitals continue billion a safe, effective alternative €0.9 recommended to parents treatment by local doctors at home. sales in 2008. by health professionals. Production is restricted to plants that do not process cow’s milk to avoid any Nutricia looks east 3,500 possible contamination. Surging markets in the Far East account for only 10% of the division’s sales— employees worldwide Research, constant in 2008. innovation, and numerous below the group average—and continue to offer strong growth opportunities. clinical studies backing Leveraging favorable social and demographic trends and the strong presence of its health claims have Danone’s other divisions, Medical Nutrition is planning moves into several Asian generated annual growth markets and is also exploring eastern European and Middle Eastern markets with of 25%. Now the world’s high growth potential. leading brand, Neocate will celebrate its 25th anniversary in 2009.

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30 —— Danone 2008 Danone 2008 —— 31

Alice Dautry currently serves as Managing Director of the Pasteur Institute, where she has worked since 1977 and continues to head a laboratory. A cellular biologist, she is also in charge of Though our scientists a research unit associated with CNRS, France’s national research institute. Throughout her career, are skilled in other areas, she has combined research with teaching, research assessment, and scientific consulting, and has authored numerous publications. studying good bacteria is Her current research focuses on immune-system receptors and intracellular bacteria infections. the heart of their work at Danone Since 2004, Danone has renewed its historic partnership with the Pasteur Institute to study Research. The products of bacteria. — — the future will come from a thorough understanding of the role of pre- and * in human health. The hunt for )good* bacteria

34 —— Danone 2008 HZZeV\Z)* Danone 2008 —— 35 The hunt for )good*!bacteria

Evan Abrahamse, a Dutch biochemist at Jan Knol, a native of the Danone Research, has been studying the Netherlands, has a Ph.D. in gastrointestinal system for ten years. He is microbiology and is the leading the driving force behind new technology expert on the subject at Danone for intestinal simulation, a unique research Research, where he serves as tool for specialized nutrition products that scientific officer of the Microbiota enables Danone to study the action of and Gut Biology team. His probiotics and other bacteria at various primary research areas include points along the gastrointestinal tract of the study of interactions between both adults and children. bacteria and the human body, — — and the impact of nutrition on “A detailed understanding of intestinal metabolism these interactions. is critical to identifying the nutritional ingredients — — with the greatest health benefits.” “We’re starting to understand how bacteria influence health. And this is only the beginning!”

36 —— Danone 2008 Danone 2008 —— 37 The hunt for )good*!bacteria __ Gregor Reid is a doctor of microbiology and immunology, and head of the Canadian For Danone Research, 2008 opened new horizons as we began to Research and Development Centre for Probiotics. He has integrate our new Baby Nutrition and Medical Nutrition businesses, worked with Danone Fresh Dairy both highly reliant on R&D capacities. By the same token, it raised Products for nearly a decade. Danone Research has now new challenges—linking up with new research teams, overhauling teamed up with him to found a research chair in probiotics our organization, and redefining our priorities, while at the same in Canada that will significantly reinforce Danone’s links to time reaffirming an ambition that is unique in the food industry. academic circles in North America. A world expert in probiotics, Dr. Reid is convinced that bacteria can make an important contribution to health. His research includes studies on the use of a lactobacillus to prevent female urogenital infections, and he also helped found a community kitchen in Tanzania to produce probiotic yogurts for people infected with HIV. — — “No medical product on the market can match bacteria for range of effectiveness.”

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38 —— Danone 2008 Danone 2008 —— 39 The hunt for )good*!bacteria

Health governance/ The right changes formula in 2008 In 15 different countries, Responsibility we have adapted the A year after adopting our formula for our Danonino 100% health focus and range to fight dietary integrating new divisions deficiencies identified by into the group, Danone local medical practitioners. has to live up to additional A new version launched responsibilities. Any last September in Brazil is business dealing with a prime example. Gluten- nutrition for the aged free and fortified with and sick, for infants, for vitamins A, B9 and D, pregnant women and for along with calcium, iron, nursing mothers must The Danone business that is most closely linked to health and research—thus helping to Brazil. 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40 —— Danone 2008 Danone 2008 —— 41 The hunt for )good*!bacteria pas INTERVIEW Good bacteria: Bacteria—good and bad—are the oldest form of life on Earth, and no other life forms could exist without them. In the human body, they form an __ How probotics work indispensable ecosystem of their own: the intestinal flora. Some of these bacteria are beneficial for human health, and they are called probiotic bacteria. The human body The intestine contains 70% of the body’s immune cells. These cells are responsible for fighting off attackers, such as bad bacteria, viruses, and harmful fungi. DANONE HAS TAKEN UP THE CHALLENGE OF COMBINING FUNDAMENTAL AND APPLIED RESEARCH, AND ALLOWING FOR FRICTION AND DIALOG BETWEEN THEM. Sven Thormahlen, Executive Vice President, Danone Research

Though some microorganisms Everything we eat passes through An immune cell prepares to defend are harmful to humans, the majority the digestive tract, which breaks the body by neutralizing an attacker. are not. down food and absorbs nutrients. ow would you friction and dialog between them. What about the prospects for sum up 2008 Scientific research is naturally for the Danone Research in 2009? Intestinal flora Hfor Danone Research? long term, whereas development is ST: In 2009, we’ll be extending Sven Thormahlen: It was a very about bringing out new products over synergies between our research Though everyone’s flora are unique, they play the same role for all of us. Residing in the digestive tract, intestinal flora help the eventful year, with the integration the year ahead. But when you bring teams in France and in the body fight off hostile microorganisms and digest foods that cannot be broken down by the stomach or the small intestine. of research teams from Numico the two together, you force them to Netherlands. And bringing out the providing a lot of opportunities interact. Danone is now organized first results in terms of product to meet people and exchange into four divisions with Research innovation, particularly in baby information and viewpoints. When and Development teams working nutrition. At the same time, Nutricia’s our teams from Palaiseau in France in tandem—and it’s been a success. teams will be moving ahead with a and Wageningen in the Netherlands second clinical study to confirm the first met up, people were a bit wary, How does Danone Research benefits of certain nutrients in slowing with everyone wondering how they share its approach to science? the development of Alzheimer’s would get along. As it turned out, ST: We realized last year that disease. It’s a complex question, and we quickly found we had a lot in we hadn’t been doing enough to caution is the watchword, but the common. Science is like music and let others know about what we first results available to the scientific An entire population of tiny living The bacteria in our intestinal flora The bacteria in our intestinal flora sport: it’s universal, and it brings were doing and we needed more community are encouraging. Finally, creatures—more than a thousand help the body digest fiber that help protect the body from people together. We shared a lot of transparency. For too long, we’d we will continue to work on the different species of bacteria—live cannot be processed in the upper attackers. the same concerns and we had a lot taken it for granted that publishing documentation that we’ve submitted inside the intestine. portion of the digestive tract. to learn from each other. Now, a year our results in scientific journals for to the European Food Safety Agency* on, we have set up an international specialists was enough. But however on the health claims we make for our organization with twin centers to important these may be, they don’t products. It’s a new procedure for Probiotics get the best from the findings, the reach opinion leaders, journalists everyone involved, and while it will methods and the roots of each. or, even less, consumers. So we make the ground rules clearer, it will Probiotics are living microorganisms that benefit human health when consumed in sufficient quantities. From the start, we had highly decided to find ways to share our probably need some fine-tuning, like These active ingredients spring into action when they reach the intestine. complementary skills and knowledge; findings with a broader audience. For a lot of things that are new. In any now that we’ve teamed up, we make example, with seminars designed for case, Danone is in a better position to a pretty formidable combination. journalists as well as scientists. We meet this challenge than anyone else. also started to develop educational What synergies have been achieved programs within the group so that all ;dgbdgZ^c[dgbVi^dc!k^h^illl#Z[hV#ZjgdeV#Zj around Danone’s four main divisions? Danone staff members have a basic ST: Danone’s research model is idea of the science behind the health one of a kind. In most cases you benefits we claim for our products. find a barrier between research We have to show the outside and product development, but here world that our scientific approach is they are integrated into a single relevant and there are good reasons Probiotics were first discovered Probiotics travel through the entire Probiotics fight disease-causing in yogurt. digestive system, reaching the microorganisms and help educate organization. Danone has taken up for what we do. That’s the only way intestine alive. It is here that they the immune system. the challenge of combining pure and to gain wide recognition for the begin to have an effect. applied research, and allowing for validity of our research and findings.

42 —— Danone 2008 Danone 2008 —— 43 The hunt for )good*!bacteria

The Daniel Carasso Research Center (far left), located south of Paris in Palaiseau, France, employs a staff of 500. Together with their colleagues at the Wageningen Research Center in the Netherlands, they form the heart of Danone R&D. — —

The Arch of Microorganisms exhibit (left), held in November 2008 at the Grand Palais in Paris, introduced the public to the benefits of bacteria and the intestinal flora for human health. — —

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44 —— Danone 2008 Danone 2008 —— 45 A question of culture

Danone employs 80,143 people worldwide, with about half working at production sites like our atebT ayashi plant in apanJ (above). In 2009, our in-house opinion poll, Danone People Survey, will ask each and every one to express iewsv on their management, their company, and the group. — —

46 —— Danone 2008 Danone 2008 —— 47 :me‚Y^i^dcVjA question ofXÃjg cultureYZaVegdYjXi^dc

Bonafont’s Icoara plant in Brazil. Building on the success of its health revolution—La revolución saludable— inex Mico, Bonafont has expanded into Brazil. In 2008, the randb acquired the coaraI spring and ottlingb plant near ãoS Paulo. — —

48 —— Danone 2008 Danone 2008 —— 49 A question of culture

Our Poços de Caldas plant in Brazil won two awards in Danone’s 2008 dairy Our atebT ayashi plant in apanJ (top) is located 70 km north of Tokyo and Our phmAion plant in rancF e (bottom) bottles natural Evian plant challenge, a group-wide competition that recognizes quality, safety and produces 50,000 metric tons of dairy products a year. Four of its six production mineral water. In 2008 Amphion employees participated dedication in our FDP plants. lines are dedicated exclusively to Activia, sold as Bio in parts of Asia. in The Experts, a new training program (see page 59). — — — — — —

50 —— Danone 2008 Danone 2008 —— 51 A question of culture __

“What would you do if you could change the rules?” “Is there any reason to stop explor - ing?” “How can a multinational corporation think like a small business?” Dipptjoh!rvftujpot! ENGAGEMENTFwfsz!puifs!zfbs!tjodf!2:::-!fnqmpzfft!uispvhi. pwfs!qspopvodfnfout-!EbopofÖt!ofx!joufsobujpobm! pvu!uif!hspvq!boe!jut!tvctjejbsjft!ibwf!qbsujdjqbufe! sfdsvjujoh!dbnqbjho!ubshfut!tuvefout!boe!zpvoh! jo!bo!joufsobm!tvswfz!pg!uifjs!pqjojpot!po!b!xjef! qspgfttjpobmt!xjui!uif!tmphbo!ÓTpnfuijoh!Tqfdjbm! sbohf!pg!jttvft/!Psjhjobmmz!mjnjufe!up!pvs!9-111! Jotjef/Ô! nbobhfst-!ju!ibt!cffo!fyufoefe!cz!tubhft!up!dpwfs! EbopofÖt!91-111!fnqmpzfft!xpsmexjef!boe!jt! Xibu!nblft!Ebopof!tqfdjbmÒuif!rvbmjuz!uibu! dpoevdufe!cz!Upxfst!Qfssjo-!b!tqfdjbmj{fe!sftfbsdi! nblft!bmm!uif!ejggfsfodfÒjt!opu!bmxbzt!ubohjcmf/! gjsn/!Dpoubjojoh!npsf!uibo!211!rvftujpot-!uif! 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Ebopof!tdpsft!pwfs!93&!hspvq.xjef-!boe!tpnf!pg! pvs!tvctjejbsjft!sbuf!fwfo!ijhifsÒxijdi!ifmqt!up! fyqmbjo!uifjs!sftqpotjwfoftt-!uifjs!sftjmjfodf!jo!upvhi! ujnft-!boe!uifjs!bcjmjuz!up!dpotjtufoumz!pvuqfsgpsn! uifjs!nbslfut/!Gsfodi!tvctjejbsz!Cmejob-!xijdi!uppl! uif!upq!tdpsf!gps!fohbhfnfou-!jt!b!qsjnf!fybnqmf/! In 2008 Danone launched a new international employer branding campaign entitled Something Special Inside. This turns the spotlight on our group’s unique culture, using a variety of visuals to highlight our dual commitment to business success and social progress, our health Gbdfe!xjui!b!tmbdl!fdpopnz!boe!b!nbuvsf!nbslfu! positioning, our openness, and our emphasis on employee initiative. xjui!uif!xpsmeÖt!ijhiftu!qfs.dbqjub!dpotvnqujpo!pg! — — cbcz!gppe-!uif!csboeÖt!fnqmpzfft!ibwf!fofshj{fe!uif! cbcz!gppe!tfhnfou-!jodsfbtjoh!nbslfu!tibsf!zfbs!bgufs! zfbs/!Uibolt!up!uifjs!fohbhfnfou-!Cmejob!sfnbjot! uif!nbslfu!mfbefs!gps!cbcz!ovusjujpo-!xjui!b!34.qpjou! mfbe!pwfs!jut!ofbsftu!dpnqfujups/ Nptu!pg!pvs!qsfwjpvt!bdrvjtjujpot!ibe!jowpmwfe!tnbmm.! up!nfejvn.tj{fe!obujpobm!dpnqbojft-!nbljoh!uif! We integrated Numico into Ovnjdp!usbotbdujpo!Ò!jowpmwjoh!24-111!fnqmpzfft! the group quickly and smoothly, boe!npsf!uibo!71!tvctjejbsjft!jo!47!dpvousjft!Ò!uif! with one clear goal: safeguarding R&D: a model for mbshftu!usvmz!joufsobujpobm!nfshfs!xf!ibe!fwfs!iboemfe/! the internal dynamics of Gspn!uif!pvutfu-!uif!joufhsbujpo!ufbn!ibe!b!dmfbs!hpbm;! each business and employee successful integration tbgfhvbsejoh!uif!joufsobm!ezobnjdt!pg!fbdi!cvtjoftt! motivation— their most powerful boe!uifjs!nptu!qpxfsgvm!esjwfs-!fnqmpzff!npujwbujpo/! R&D, which now has twice as many Ph.D’s on PRAGMATISMBu!Ebopof-!qsbhnbujtn!jt!b!xbudixpse/!Jo!pvs! Bmuipvhi!dpncjojoh!uxp!cvtjofttft!jofwjubcmz!sfrvjsft! driver. staff, was one of the first business functions to dvmuvsf!uifsf!bsf!op!joubohjcmf!ephnbt;!xf!cfmjfwf! dibohf!boe!bebqubujpo-!pvs!hvjejoh!qsjodjqmf!xbt! integrate Danone teams and personnel from the uibu!bmm!pg!pvs!qsbdujdft!boe!qsjodjqmft-!op!nbuufs! up!njojnj{f!npwft!uibu!xpvme!ejtsvqu!pvs!ufbnt! former Numico. As part of the transition, new ipx!xfmm!fousfodife-!dbo!boe!tipvme!cf!dibmmfohfe! voofdft!tbsjmz-!fwfo!jg!uijt!sftvmufe!jo!b!gfx!rvjslt/! cross-functional platforms were set up to support jo!uif!joufsftu!pg!bebqujoh!up!dibohf/!Pvs!bqqspbdi! the group’s four divisions, with key positions up!csboe!nbobhfnfou!jt!pof!pg!nboz!dbtft!jo!qpjou/! Pof!pg!uif!cjhhftu!dibmmfohft!xbt!qsftfswjoh!uif! assigned on the basis of skill profile. Remote Jo!b!iptu!pg!dpvousjft-!uif!hspvq!ibt!mfgu!ijtupsjdbmmz! sftpvsdft!uibu!ibe!nbef!Ovnjdp!tvddfttgvm/!Up!uibu! Lffqjoh!uif!gpdvt!po!pvs!qfpqmf!ibt!dmfbsmz!qbje!pgg/! teams were also assembled, enabling researchers tuspoh!mpdbm!csboet!joubdu-!xjuipvu!buufnqujoh!up! foe-!xf!lfqu!pvs!joufhsbujpo!ufbn!tnbmm!boe!tipsu. Uifsf!xfsf!gfxfs!uibo!21!efqbsuvsft!pg!tubgg!xf!xpvme!ibwf! in Palaiseau, France to work with colleagues at gpsdf!uifn!joup!dpogpsnjuz!ps!tbdsjgjdf!uifn!up! mjwfe-!mjnjujoh!ju!up!b!iboegvm!pg!qfpqmf!boe!ejttpmwjoh! mjlfe!up!lffq!jo!uif!hspvq!jo!uif!xblf!pg!uif!bdrvjtjujpo-! the primary R&D center for the Baby Nutrition EbopofÖt!àbhtijq!csboet/!Jo!Bshfoujob-!gps!fybn. ju!bgufs!pomz!tjy!npouit/!Xf!bmtp!qbje!qbsujdvmbs!buufoujpo! boe!tvswfzt!pg!uif!ofxmz!joufhsbufe!ufbnt!tipx!uibu!b! and Medical Nutrition divisions in Wageningen qmf-!Mb!Tfsfojttjnb!ibt!sfubjofe!jut!jefoujuz!bt!uif! up!jefoujgzjoh!ubmfou-!usbjojoh!uif!ofx!bssjwbmt-!boe! mbshf!nbkpsjuz!pg!uif!fnqmpzfft!joufswjfxfe!tff!uif!npwf! in the Netherlands. Responsiveness to employee csboe!qsfgfssfe!cz!Bshfoujoft!gps!hfofsbujpot/! gpsnjoh!dsptt.gvodujpobm!xpsljoh!hspvqt!uibu!cspvhiu! bt!ibwjoh!cpui!tusbufhjd!boe!qspgfttjpobm!cfofßut/!Boe! aspirations and special expertise has encouraged pme!boe!ofx!fnqmpzfft!uphfuifs/!Gjobmmz-!xf!fnqibtj{fe! uif!pvutuboejoh!qfsgpsnbodf!pg!uif!Nfejdbm!Ovusjujpo! teamwork and favorable perceptions of Cvu!tvsfmz!uif!nptu!ufmmjoh!jmmvtusbujpo!pg!Ebopof! npcjmjuz!cfuxffo!Ovnjdp!boe!EbopofÖt!fyjtujoh! boe!Cbcz!Ovusjujpo!ejwjtjpot!jo!3119!jt!qsppg!uibu-!jo! a successful integration process. qsbhnbujtn!xbt!pvs!tnppui-!sbqje!joufhsbujpo!pg!uif! cvtjoftt!mjoft-!xjui!tpnf!71!nbobhfnfou!usbotgfst! dpousbtu!up!nptu!bdrvjtjujpot-!pvs!joufhsbujpo!pg!Ovnjdp! uxp!ofx!ejwjtjpot!bdrvjsfe!jo!mbuf!3118!xjui!Ovnjdp/! cfuxffo!pme!boe!ofx!ejwjtjpot!jo!pomz!pof!zfbs/ ibt!opu!ejnjojtife!ufbn!npujwbujpo/

52 —— Danone 2008 Danone 2008 —— 53 A question of culture

AGILITYJo!beejujpo!up!qsbhnbujtn-!EbopofÖt!nbobhfnfou! tuzmf!jt!hfbsfe!bspvoe!tqffe-!bhjmjuz-!boe!jogpsnbmjuz/! Xijmf!ftqfdjbmmz!fggfdujwf!jo!wpmbujmf-!dibpujd!nbslfut-! uiftf!usbjut!bsf!bmtp!xfmm!tvjufe!up!dpotvnfs!hppet-! b!gbtu.dibohjoh!tfdups!esjwfo!cz!joopwbujpo-!ofx! qbuufsot!pg!dpotvnqujpo-!boe!tveefo!sfwfstbmt!jo! mpdbm!fdpopnjft/!Boe!cfdbvtf!tqffe!boe!bhjmjuz! bsf!pgufo!jodpnqbujcmf!xjui!b!ijhimz!tusvduvsfe-! gpsnbm!ijfsbsdiz-!Ebopof!ibt!dpotdjpvtmz!diptfo! b!Ótipsu!djsdvjuÔ!npefmÒb!ofuxpsljoh!buujuvef!uibu! fodpvsbhft!fnqmpzfft!up!tibsf!cftu!qsbdujdft!gspn! dpvousz!up!dpvousz!boe!ejwjtjpo!up!ejwjtjpo-!opu! uispvhi!gpsnbm!diboofmt-!cvu!jo!ejsfdu!fodpvoufst! cfuxffo!dp.xpslfst/! Tvqqpsujoh!uijt!npefm!jt!XipÖt!Xip-!b!tjnqmf! jogpsnbujpo! nbobhfnfou! uppm! uibu! bmmpxt! pvs! fnqmpzfft!up!sbqjemz!jefoujgz!uif!dpmmfbhvf!nptu!mjlfmz! up!ibwf!gpvoe!b!tpmvujpo!gps!uif!qspcmfn!bu!iboe-! tfbsdijoh!b!xpsmexjef!ebubcbtf!jo!b!nbuufs!pg!tfdpoet/! ÓPvs!XipÖt!Xip!jt!mjlf!Xfc!3/1ÒjuÖt!b!nbobhfnfou! Wise is a state of mind. In Argentina, our Longchamps plant is 3/1-!tusvduvsfe!bspvoe!dpmmbcpsbujwf!tjuft!uibu!qvu!uif! on El camino de la seguridad—the Road to Safety. Each area of gpdvt!cbdl!po!uif!joejwjevbm-Ô!fyqmbjot!pof!nbobhfs/! the plant is symbolized by a cutout that takes one step forward Uijt!wjsuvbm!ofuxpsljoh!tqbdf-!tppo!up!cf!vqhsbefe! for every day with no accidents (see page 59). xjui!ofx!ufdiopmphz-!ibt!b!qiztjdbm!dpvoufsqbsu!jo! — — pvs!Nbslfuqmbdft!qsphsbn-!xijdi!csjoht!uphfuifs! nbobhfst!gspn!bspvoe!uif!xpsme!tfwfsbm!ujnft!b! zfbs-!bmmpxjoh!qbsujdjqbout!up!ÓcvzÔ!boe!ÓtfmmÔ!cftu! qsbdujdft/! Joufsobm!ofuxpsljoh!uppmt!ibwf!sfdfoumz!cffo! tvqqmfnfoufe!cz!Mfbsojoh!Fyqfejujpot-!b!ofx!tpvsdf! In 2008 we expanded our pg!joopwbujpo!mbvodife!cz!pvs!IS-!S'E!boe!Rvbmjuz! Wise safety program to include gvodujpot!xjui!fwfout!jo!Tupdlipmn-!Mpoepo-!Tbo! the group’s suppliers and Gsbodjtdp!boe!puifs!wfovft/!Uiftf!csjoh!Ebopof! subcontractors—a major advance. fnqmpzfft!joup!dpoubdu!xjui!ijhimz!joopwbujwf!dpnqb. The Danone World Cup brings over 11,000 of our employees together in a celebration of sharing and sportsmanship. In 2008 Miami, Florida hosted the worldwide final, which featured 800 players representing 76 teams from 45 countries. ojft!jo!puifs!ßfmet-!opu!pomz!up!jefoujgz!usbotgfsbcmf! — — cftu!qsbdujdft-!cvu!bmtp!up!esbx!jotqjsbujpo!gspn!sbej. dbmmz!ejggfsfou!buujuveft!boe!qpjout!pg!wjfx/ opuft-!ÓB!tbgfuz!cfmu!epftoÖu!ifmq!jg!zpv!epoÖu!qvu!ju!po/Ô! Xpslqmbdf!cfibwjps!jt!uivt!bttfttfe!cz!sfhvmbs!bvejutÒop! gfxfs!uibo!452!pwfs!uif!qbtu!uxp!zfbst/!Uif!fggpsu!ibt! Danone World Cup qbje!pgg;!cfuxffo!3117!boe!3119-!pvs!bddjefou!sbuf! )efßofe!bt!uif!ovncfs!pg!xpslqmbdf!bddjefout!sftvmujoh! Far from being a gimmick, the athletic performance is only a pretext, and the most successful then move jo!bu!mfbtu!pof!ebz!pg!tjdl!mfbwf!qfs!njmmjpo!ipvst!xpslfe*! biennial Danone World Cup is an since for many participants the Danone on to the worldwide final. Last year espqqfe!gspn!8/5!up!6/3-!b!52&!jnqspwfnfou/! institution that genuinely reflects World Cup is virtually the only time 800 players representing 76 teams SAFETYBmuipvhi!uif!gppe!cvtjoftt!jt!opu!qbsujdvmbsmz! our unique culture. In fact, internal they play soccer. The real goal is to give from 45 countries faced off in Miami, ebohfspvt-!lffqjoh!pvs!qfpqmf!tbgf!jt!opofuifmftt! Cvu! fwfo! uijt! mfwfm! jt! upp! ijhi! gps! EbopofÖt! opinion surveys show that our our people a chance to meet informally Florida. Though some feared the event pof!pg!EbopofÖt!qsjpsjujftÒb!gvoebnfoubm!pg!pvs! Fyfdvujwf!Dpnnjuuff/!Jo!3119!Xjtf!xbt!fyqboefe-! employees consider it the initiative and have fun together, since many would be canceled amid the first signs cvtjoftt/!Xf!qsbdujdf!uijt!qsjodjqmf!uispvhi!Xjtf-!b! qspwjejoh!usbjojoh!up!pvs!fnqmpzfft!jo!Btjb!gps!uif! that best embodies group values. have little opportunity to connect of the economic crisis in summer 2008, dvtupnj{fe!qsphsbn!mbvodife!jo!3115/!Bt!jt!pgufo! ßstu!ujnf/!Dijob-!Kbqbo-!Uibjmboe-!Nbmbztjb-!boe! A soccer tournament with a twist, it is with colleagues working in other the Executive Committee chose to go uif!dbtf!bu!Ebopof-!ipxfwfs-!Xjtf!jt!npsf!uibo!b! Joepoftjb!opx!ibwf!uifjs!pxo!bveju!ufbnt-!boe! open only to players employed by the locations. Former Numico employees through with the tournament—and qsphsbn;!juÖt!b!tubuf!pg!njoe-!b!nbobhfnfou!usbjojoh! jo!311:!fwfsz!pof!pg!pvs!cvtjoftt!vojut!xjmm!ibwf! group—and with over 11,000 direct have rallied enthusiastically behind the attend it—in the belief that the uppm!uibu!nblft!tbgfuz!tfdpoe!obuvsf!gps!bmm!pg!pvs! dpoevdufe!jut!ßstu!ps!tfdpoe!bveju-!fwfo!jo!sfhjpot! participants plus a host of organizers event, turning out in large numbers. motivation and pride inspired by the fnqmpzfft-!bmm!uif!ujnf/! xifsf!obujpobm!sfhvmbujpot!bsf!mftt!tusjohfou/! and fans, it is the business world’s As in most international tournaments, Danone World Cup are even more largest in-house sporting event. Actual teams compete at the national level, essential in tough economic times. Pwfs!:6&!pg!joevtusjbm!bddjefout!bsf!dbvtfe!cz! Jo!uif!mbtu!nbkps!efwfmpqnfou!pg!3119-!xf!fyufoefe! qfpqmf-!opu!nfdibojdbm!gbjmvsf/!Bt!pof!Xjtf!qspqpofou! uif!Xjtf!qsphsbn!up!pvs!tvqqmjfst!boe!tvcdpousbdupst-!

54 —— Danone 2008 Danone 2008 —— 55 A question of culture

pggfsjoh!bvejut-!bdujpo!qmbot-!boe!efqmpznfou!pg! Gjobmmz-!jo!sfhjpot!xjui!qsfttjoh!ifbmui!jttvft-! npefmt!bqqspqsjbuf!up!pvs!mphjtujdt!boe!usbotqpsu! Ebopof!jt!ßhiujoh!ejtfbtf!po!uif!gspou!mjoft/!Jo! qbsuofst-!ftqfdjbmmz!jo!Mbujo!Bnfsjdb!boe!Btjb-!xifsf! Tpvui!Bgsjdb-!Ebopof!Dmpwfs!jt!xpsljoh!xjui!bo!joef. usbgßd!dbo!cf!ebohfspvt/!Jo!beejujpo-!tpnf!Ebopof! qfoefou!ifbmui.dbsf!pshboj{bujpo!up!pggfs!!bo!!poznpvt! dpnqbojft!jo!uif!Bnfsjdbt!ibwf!bepqufe!spbe!tbgfuz! IJW!tdsffojoh!boe!dbsf!up!jut!fnqmpzfft-!wjfxjoh! qsphsbnt!gps!uifjs!pxo!qfstpoofm-!jodmvejoh!nfbtvsft! bdujpo!bhbjotu!uijt!obujpobm!fqjefnjd!bt!b!obuvsbm! tvdi!bt!àfyjcmf!tdifevmft!uibu!ifmq!lffq!fnqmpzfft!pgg! qbsu!pg!jut!sftqpotjcjmjuz!bt!bo!fnqmpzfs/!Tjnjmbsmz-! uif!spbe!evsjoh!svti!ipvs/ jo!Joepoftjb-!Brvb!qspwjeft!nfejdbm!dpwfsbhf!up! bmm!pg!jut!fnqmpzfft-!b!cfofßu!uibu!fydffet!jut!mfhbm! Up!voefstdpsf!uif!tusbufhjd!jnqpsubodf!pg!uiftf! pcmjhbujpot/ hbjot-!EbopofÖt!Fyfdvujwf!Dpnnjuuff!xjmm!sfxbse!uif! nptu!fggfdujwf!mpdbm!qsphsbnt-!ftqfdjbmmz!xifo!uifz!hjwf! fnqmpzfft!npsf!bvuipsjuz!boe!nblf!uifn!npsf!sftqpo. tjcmf!up!fbdi!puifs/!Uif!hpbm!jt!up!fodpvsbhf!fwfszpof! up!joufsobmj{f!hppe!buujuveft!boe!qsbdujdft-!sbuifs!uibo! tjnqmz!gpmmpx!jotusvdujpot/!ÓBt!tp!pgufo!ibqqfot!bu! Ebopof-Ô!tbzt!pof!sfqsftfoubujwf!pg!uif!qsphsbn-!Óuif! hpbm!jt!up!gptufs!jojujbujwf!boe!sftqpotjcjmjuz!jo!fwfsz! TRAININGEbopofÖt!usbjojoh!qsphsbnt!ifmq!fwfsz!fnqmpzff! joejwjevbm-!opu!jnqptf!b!upq.epxo!qspdftt/Ô jnqspwf!kpc!qfsgpsnbodf!boe!bewbodf!pwfs!uif! nfejvn!ufsn!cz!bdrvjsjoh!ofx!ufdiojdbm-!qspgft. tjpobm-!boe!nbobhfsjbm!tljmmt/!Usbjojoh!fwfout!ifmq! fbdi!fnqmpzff!hspx!bmpoh!xjui!pvs!cvtjoftt-!qspwje. joh!pqqpsuvojujft!up!ofuxpsl-!fydibohf!cftu!qsbdujdft-! boe!tibsf!uif!hspvqÖt!njttjpo-!dvmuvsf!boe!wbmvft/! Sometimes health at the workplace Xijdi!nblft!ju!obuvsbm!gps!vt!up!dpoujovf!jowftujoh! Drink 1, Give 10. For every 1 liter purchased, Volvic provides 10 liters of potable water to people who need it, working with UNICEF is a matter of life and death. Danone jo!usbjojoh-!fwfo!jo!bo!fdpopnjd!epxouvso/ to dig and maintain wells in sub-Saharan Niger. Clover is taking active steps to — — fight South Africa’s HIV epidemic Jo!uif!Vojufe!Tubuft-!gps!fybnqmf-!usbjojoh!ujnf! by offering anonymous screening gps!opo.nbobhfst!jt!vq!79&-!sjtjoh!gspn!2:!up!43! ipvst!qfs!qfstpo!qfs!zfbs!po!bwfsbhf/!Gps!Dfousbm! and care to its employees. boe!Fbtufso!Fvspqf-!Btjb-!Bgsjdb!boe!uif!Njeemf!Fbtu! dpncjofe-!xf!epvcmfe!boovbm!usbjojoh!ujnf-!xijdi! Danone Supporting Life sptf!up!35!ipvst!qfs!GEQ!fnqmpzff!jo!3119/!Boe!jo! Nfyjdp-!tqfdjbmj{fe!usbjojoh!gps!njojnbmmz!rvbmjßfe! Have you heard about Volvic’s sustainable in an economic downturn, proceeds from yogurt sales reached tbmft!qfstpoofm!tmbtife!uvsopwfs!gspn!211&!jo!3118! international Drink 1, Give 10 campaign? and there is no temptation to cut their R1.5 million. Over the five-year life up!41&!jo!3119/ Through this program, originally budgets, as might be the case with of the program, Danone Clover has launched in Germany, Volvic works purely charitable programs. By late contributed R7.3 million in construction HEALTHUiftf!tbgfuz!jojujbujwft!bsf!qbsu!pg!b!cspbefs!qsphsbn! Xf!ibwf!bmtp!fyqboefe!pvs!Ebopof!Dbnqvt!qsphsbn-! with UNICEF to dig and maintain wells 2008, we had identified around 120 expenses, building five new houses dbmmfe!Ebopof!Xbz!Gvoebnfoubmt/!Mbvodife!jo!3118-! xijdi!qspwjeft!dsptt.gvodujpobm!usbjojoh!up!vq!up!411! in communities with no access to safe candidates among initiatives from and helping some 25,000 children. ju!sfrvjsft!fbdi!tvctjejbsz!up!fwbmvbuf!jut!pxo!qfsgpsn. fnqmpzfft!bu!b!ujnf-!njyjoh!fnqmpzfft!gspn!ejggfsfou! drinking water, providing local residents 70 Danone subsidiaries around the Inspiration for the name “Danone bodfÒbhbjo!dvmujwbujoh!sftqpotjcjmjuzÒboe!voefsublf! ufbnt!up!tibsf!tljmmt-!cftu!qsbdujdft-!boe!hspvq!wbmvft/! with 10 liters of water for every 1 liter world. Today about 10 have earned Supporting Life” came from an initiative ofdfttbsz!jnqspwfnfout!jo!27!gvoebnfoubm!bsfbt-! Mbtu!zfbsÖt!dbmfoebs!jodmvefe!tfwfo!Dbnqvt!fwfout! sold in the developed world. In 2008 the Danone Supporting Life label, with launched by our Baby Nutrition division, jodmvejoh!ivnbo!sfmbujpot-!tublfipmefs!sfmbujpotijqt-! vojujoh!ufbn!mfbefst!gspn!bmm!mfwfmt;!uisff!Btjb!tfttjpot! a total of 388 wells supplied potable some 20 more soon to follow. Our which teamed up with the international tbgfuz!boe-!pwfs!uif!qbtu!gfx!npouit-!ifbmui/! jo!Dijob-!Kbqbo!boe!Joepoftjb

56 —— Danone 2008 Danone 2008 —— 57 Jo!sftqpotf!up!dsjujdjtn!pg!cpuumfe!xbufs-!Ebopof! Fbvy!Gsbodf!mbvodife!Uif!Fyqfsut!up!jogpsn!bmm! 3-811!pg!jut!fnqmpzfft-!gspn!dpsqpsbuf!ifbervbs. ufst!up!gbdupsz!àpps-!bcpvu!uif!vojrvf!qspqfsujft!pg! njofsbm!xbufst/!Uijt!qspnjtjoh!ofx!usbjojoh!qsphsbn! jt!b!qfsgfdu!fybnqmf!pg!sftjmjfodf!jo!bdujpo-!foibo. djoh!qspgfttjpobm!boe!ufdiojdbm!tljmmt!boe!sbmmzjoh!pvs! qfpqmf!up!uif!hspvq!njttjpo/

Training events help each employee grow along with our business, providing opportunities to network, Making safety a priority exchange best practices, and share the group’s mission, culture and In Danone plants, managers encourage all values. employees to appropriate our workplace safety policies and to suggest improvements—a practice that is especially common among line supervisors, who cultivate responsibility and initiative in their teams. Employees in Argentina have responded with a variety of new initiatives. INCENTIVES At the Longchamps dairy plant, our Wbsjbcmf!dpnqfotbujpo!gps!nbobhfst!ibt!cffo! 260 employees have taken an active role, ipumz!efcbufe!jo!uif!qbtu!gfx!zfbst-!jo!qbsu!cfdbvtf! suggesting ways to improve efficiency ju!jt!uipvhiu!up!fodpvsbhf!fydfttjwf!ßobodjbmj{bujpo-! through the Dueños program, also known npujwbujoh!cvtjoftt!mfbefst!boe!uifjs!fnqmpzfft!up! as Danowners. Management evaluates each gpdvt!tpmfmz!po!ßobodjbm!sftvmut/!EbopofÖt!dpnqfo. suggestion carefully, and an in-house bulletin tbujpo!tztufn!jt!eftjhofe!tqfdjßdbmmz!up!bwpje!uijt! board recognizes the author of each successful qspcmfn!cz!npujwbujoh!nbobhfst!up!qvu!uifjs!fofshjft! initiative, displaying names, photographs, and joup!puifs!gpsnt!pg!tvddftt/! before-and-after scenarios. Over the past two years, the plant’s efficiency rate has risen from Tjodf!3119-!wbsjbcmf!dpnqfotbujpo!gps!pvs!upq! 65% to 75%, and the number of suggestions 2-111!mfbefst!)hfofsbm!nbobhfst-!nbobhfnfou! has soared from 40 to 260 (see photo, page dpnnjuuff!nfncfst-!boe!dfsubjo!nbobhfst*!ibt! 55). Longchamps also gets high marks from cffo!ejwjefe!joup!uijset/!Pof!uijse!jt!cbtfe!po!uifjs! our Wise safety audits, and employees have tvddftt!jo!sfbdijoh!tpdjbm!boe!ivnbo!sftpvsdf!ubshfut! teamed up with local schools to increase jo!bsfbt!tvdi!bt!uif!fowjsponfoubm!boe!tpdjbm!jnqbdu! children’s awareness of safety at school and pg!pvs!pqfsbujpot-!boe!po!uifjs!bcjmjuz!up!efwfmpq-! work, explaining how the plant works and how qspnpuf!boe!usbjo!uifjs!fnqmpzfft/!Bopuifs!uijse! each employee contributes to safe operation. jt!cbtfe!po!tqfdjßd!nbobhfnfou!hpbmt-!boe!pomz!pof! uijse!jt!ujfe!up!ßobodjbm!ubshfut!tvdi!bt!tbmft-!nbshjo! At the Chacosmùs plant, where Villa del Sur boe!dbti!àpx/!Jo!beejujpo-!tjodf!3116!uif!ovncfs! water is produced, managers have taken the pg!tupdl!pqujpot!ejtusjcvufe!up!fbdi!upq!nbobhfs!ibt! Wise program one step further. After setting cffo!sfevdfe!voefs!b!tqfdjbm!tztufn!uibu!sfxbset! up a fire safety program complete with drills uifn!opu!pomz!gps!tipsu.ufsn!sftvmut-!cvu!gps!uifjs! and first-aid instruction for all employees, they qfsgpsnbodf!pwfs!b!uisff.zfbs!qfsjpe/! launched a road safety program in response to an alarming statistic: every day in Argentina, 22 people are killed in automobile accidents. It is just one more way to make safety a reflex, on and off the job (see photo above).

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Danone 2008 —— 59 A question of culture

INTERVIEW __

WHEN YOU INVEST IN EMPLOYEES, THEIR DEDICATION AND INITIATIVE INCREASE TENFOLD. Muriel Pénicaud, Executive Vice President, Human Resources

our HR strategy shows In 2008, the group mapped out There’s no top-down hierarchy in that even in tight an ambitious strategy for the next a virtual community! Employees Yeconomic times Danone still few years, with the goal of making are already working together invests in its people. What is Danone a “Great Place to Grow.” through collaborative intranets the thinking behind that? What commitments has the group like our Social Innovation Network Muriel Pénicaud: An economic made to its 80,000 employees? (SIN), which is dedicated to crisis is precisely the time to invest MP: In addition to our continuing social innovation projects, and Muriel Pénicaud: “The group’s mission motivates everyone, everywhere, and our dual focus on business in people—it’s a very powerful work on fundamentals like workplace Genius, where our flagship brands success and social progress inspires commitment. It makes work meaningful for everyone.” strategic option. It should set us safety and health coverage, we’re can share best practices. — — clearly apart from our competitors making three powerful tools Finally, our new HR policy and put us in a stronger position available to employees: People relies on a third tool to encourage when we come out of this testing Growth, New Ways of Working, engagement and responsibility period. We’re convinced that our * ŏ*+*!ŏ1,,+.0%*#ŏ %"!ċ and build strong relationships: the business can’t grow unless our People Growth reflects Danone’s *+*!ŏ1,,+.0%*#ŏ %"!ŏ(!(Čŏ3$% $ŏ to all of our Baby Nutrition and How do you keep Danone’s They need to be both engaged and people do. When you invest in aim to become the undisputed favors social innovation projects as an Medical Nutrition top managers for culture of engagement alive? open, willing to take responsibility employees, their dedication and standard setter for employee extension of our dual commitment to 2009. From now on, one-third of a top MP: As a result of strategic and able to act on their own, initiative increase tenfold, and development and opportunity by business success and social progress. manager’s variable compensation acquisitions and disposals, Danone without waiting for direction from they become an integral part of 2011. The core of our program is what This program supports Danone’s will be based on achieving social has a significant number of new other people. Finally, the culture of transforming your business. we call a development contract—a unique culture by promoting projects and employee-related goals, with employees—and yet our values relationship-building and initiative By investing in training, team- commitment by both parties to grow with a triple win: stronger brand the other two-thirds linked to are thriving, our mission is widely in our subsidiaries, our respect for building, safety and well-being with and for each other. We’ll identify image and financial performance, financial performance and specific shared, our culture has a very strong local cultures and for the individual, in the workplace, leadership at short- and long-term development benefits for local communities, business drivers. This is extremely presence, and there’s no shortage and our informal management all levels, and dissemination of goals and open up a wide range of and motivation for our employees. important, both psychologically of engagement. The alchemy of that style make for very strong bonds. corporate goals and culture, you’re new options. This new approach One well-established example is and operationally. The group’s top is hard to explain! First of all, the So I really do believe that Danone not wasting your money—on the will be conveyed to our employees Volvic’s Drink 1, Give 10 campaign in 1,000 managers now have a clear group has a mission that motivates has “Something Special Inside.” contrary. Our long-standing focus on by 15,000 team leaders, which partnership with UNICEF. For every responsibility to help their team everyone, everywhere, and our dual career development for our teams means anyone who heads a team, liter of water purchased, the company members grow. We’ve identified commitment to business success is part of our dual commitment even if he or she isn’t a manager. provides 10 liters of well water to a easily measurable criteria, such as and social progress inspires deep to business success and social New Ways of Working, our community with no access to safe the number of training hours their engagement. These are powerful progress. When times are hard, we second strategic tool, will use Web drinking water (see box page 57). employees receive, performance levers for engagement, because they want to use everything we’ve got. 2.0 technologies to accelerate on Danone Way Fundamentals* make work meaningful for everyone. We need to be able to count on our decision-making processes, One strong sign of Danone’s audits, workplace safety statistics, We also support and share our

all 80,000 of our employees, from making the group more agile and commitment to employee and CO2 reduction. If the executives values through major events like line operators to senior executives, responsive. These new tools—such development is the new don’t achieve their minimum targets, the Danone World Cup for our for their ideas, their initiative and as blogs, video chat, and wiki—will “ethical bonus” for executives. they will need to launch an action employees, and the Danone Nations their enthusiasm. We’ve got to get make Danone an even more How does it work? plan for significant, measurable Cup for children around the world. everybody on board. That’s the attractive employer by encouraging MP: Bonuses are subject to a rule improvement in the year ahead. Finally, when we recruit, we’re  9VcdcZLVn;jcYVbZciVah^hViddai]Vi VaadlhZVX]d[djgWjh^cZhhjc^ihidZkVajViZ only way to cultivate openness, idea-sharing and upending the of three thirds that we implemented careful to choose candidates with ^ihdlchjXXZhh^c^beaZbZci^c\&+eg^cX^eaZhd[ idea-sharing, and team spirit. traditional organizational chart. in 2008 and have now extended attitudes that match our culture. hjhiV^cVWaZYZkZadebZci#

60 —— Danone 2008 Danone 2008 —— 61 Danone for all?

JAPAN Akira Kano, age 23, and Ichiro Ikeda, age 22, PORTUGAL Tokyo Bruna Da Silva, — — age 3, Lisbon — —

Danone for all?

62 —— Danone 2008 Danone 2008 —— 63 Danone for all?

BRAZIL Cristiano Dos Santos, age 21, São Paulo —

64 —— Danone 2008 Danone 2008 —— 65 Danone for all?

RUSSIA Ksenia Ivanov, 10 months, and her mother in Moscow —

Danone 2008 —— 67 Danone for all? __

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68 —— Danone 2008 Danone 2008 —— 69 Danone for all?

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Up!ublf!kvtu!pof!fybnqmf-!gspn!2::9!up!3119! pvs!Gsfti!Ebjsz!Qspevdut!cvjmu!b!ovncfs!pg!mbshf-! ufdiopmphz.joufotjwf! qmbout! qspevdjoh! vq! up! 511-111!nfusjd!upot!pg!zphvsu!boe!sfmbufe!qspevdut! b!zfbs/!Uijt!jt!xfmm!tvjufe!up!nbuvsf!nbslfut!xjui! xfmm.pshboj{fe!usbotqpsu-!ejtusjcvujpo!boe!njml. dpmmfdujpo!tztufnt-!cvu!ju!jt!nvdi!mftt!fggfdujwf!jo! dpvousjft!xjui!àfehmjoh!nbslfut/!Jo!tvdi!dpvousjft-! b!mbshf!qmbou!xpvme!nfbo!b!sjtl!pg!mbtujoh!pwfsdbq. bdjuz-!xijmf!b!tnbmmfs!wfstjpo!pg!uif!tbnf!voju!xpvme! tujmm!cf!upp!dptumz!boe!qspevdujwjuz!opu!pqujnbm/!Tp! pvs!qspevdujpo!ufbnt-!jotqjsfe!cz!pvs!joopwbujwf! 4-111.nfusjd.upo! njdsp.voju! jo! Cbohmbefti-! eftjhofe!ofx!uzqft!pg!qmbou!uibu!bsf!opu!pomz!tnbmmfs! cvu!bmtp!npsf!npevmbs-!npsf!bebqubcmf-!boe!mftt! bvupnbufeÒxjuipvu!dpnqspnjtjoh!pvs!sjhpspvt! gppe!tbgfuz!tuboebset/!Uijt!xjmm!cf!uif!npefm!gps!b! ovncfs!pg!gvuvsf!vojut-!pof!fybnqmf!cfjoh!Tpvui! Egypt. In 2005, Danone Lpsfb-!xifsf!xpsl!po!b!ofx.hfofsbujpo!qmbou!xjui! bought a subsidiary of the Olait group close to Cairo, dsfbujwf!fowjsponfoubm.qspufdujpo!gfbuvsft!hpu! making plain yogurt with fruit voefs!xbz!jo!3119/! and dairy desserts. With an annual production capacity of approximately 25,000 metric tons and its own distribution fleet, the business has upgraded HELPING TO FEED MORE MEN, WOMEN AND CHILDREN operations to group standards IN THE COUNTRIES WHERE WE OPERATE ALSO MEANS and now markets products under the Danone brand. In 2008, EXPANDING OUR CONSUMER BASE Danone Egypt took a top Jo!Gsbodf-!Bshfoujob!boe!Tqbjo-!ofbsmz!fwfszpof! 30% share of its national market. jtÒps!ibt!cffo-!ps!xjmm!cfÒb!Ebopof!dvtupnfs/!Uif! — — tbnf!epft!opu!bqqmz!jo!dpvousjft!xifsf!pvs!qspevdu! dbufhpsjft!bsf!opu!xfmm!ftubcmjtifeÒbt!jo!uif!VT-! xifsf!qfs.dbqjub!dpotvnqujpo!pg!zphvsu!jt!kvtu!pwfs! 6!ljmpt!b!zfbs-!dpnqbsfe!xjui!npsf!uibo!41!jo!Gsbodf! boe!Tqbjo/!Uijoht!bsf!ejggfsfou!bhbjo!jo!fnfshjoh! cbm!dpodfqu!offe!opu!cf!vojgpsn/!Xijmf!bmm!Bdujwjb! bspvoe!uif!xpsme/!Gps!Ebojop-!uijt!jt!mftt!b!nbuufs!pg! nbslfut-!xifsf!uif!dibmmfohf!jt!opu!pomz!uibu!gbdfe!jo! mjoft!uispvhipvu!uif!xpsme!vtf!uif!tbnf!bdujwf!dvm. ubtuf!boe!ufyuvsf!uibo!pg!ovusjujpobm!dpoufou!up!nffu! Products matching uif!VTÒup!dibohf!ejfubsz!ibcjut!xjui!uif!bepqujpo!pg! uvsf!)Cjßevt!BdujSfhvmbsjt©*-!pggfs!uif!tbnf!ifbmui! offet!jo!ejggfsfou!dpvousjft;!jo!Bshfoujob-!gps!fybn. universal needs ifbmuijfs!gppetÒcvu!bmtp!up!pggfs!qspevdut!bu!qsjdft! cfofßut!jo!ufsnt!pg!sfhvmbsjuz-!boe!sfmz!po!uif!tbnf! qmf-!dijmesfo!offe!npsf!jspo!jo!uifjs!ejfut-!xijmf!Qpmjti! Aptamil qfpqmf!dbo!bggpse/! bewfsujtjoh!tusbufhz-!uifz!wbsz!tjhojßdboumz!gspn!pof! dijmesfo!offe!npsf!wjubnjo!E/!Ebopof!dsfbuft!boe! reported sales of €1 billion Malnutrition: Fortimel puts dpvousz!up!uif!ofyu/!Uivt!pvs!Svttjbo!tvctjejbsz! bebqut!sfdjqft!up!dpnqfotbuf!gps!uiftf!efßdjfodjft-! in 2008. 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THE SAME POLICY OF ADAPTING TO LOCAL MARKETS pggfs/!Xifsf!npuifst!bsf!mjlfmz!up!xpsl!pvutjef! a high reputation with Cholesterol: posting sales Pwfs!sfdfou!zfbst-!pvs!hspxui!ibt!cffo!esjwfo! APPLIES TO DANONINO, KNOWN AS PETIT GERVAIS AUX uif!ipnf-!uif!gpdvt!jt!po!sfbez.up.tfswf!cbcz! healthcare professionals. growth of 40%, Danacol is mbshfmz!cz!uif!tvddftt!pg!b!gfx!nbkps!dpodfqut!xjui! FRUITS IN FRANCE AND RASTISHKA IN RUSSIA nfbmt!dpousjcvujoh!up!b!cbmbodfe!ejfu-!xifsfbt!jo! well set to win its place as a hmpcbm!tdpqf-!tvdi!bt!Bdujwjb!boe!Ebopojop!jo!ebjsz! Jo!fbdi!dbtf-!uif!bjn!jt!up!pggfs!b!qspevdu!bebqufe! puifs!dpvousjft!xf!pggfs!gsff{f.esjfe!qspevdut!uibu! headline brand. qspevdut!boe!Bqubnjm!jo!cbcz!ovusjujpo/!Cvu!b!hmp. up!mpdbm!ubtuft!uibu!ifmqt!dijmesfo!hspx!vq!ifbmuizÒbmm! npuifst!dbo!dppl!bu!ipnf/!

70 —— Danone 2008 Danone 2008 —— 71 Danone for all?

INTERVIEW __

WHEN DANONE MOVES INTO A NEW COUNTRY, WE WANT CONSUMERS TO SEE A REAL DIFFERENCE IN PRODUCT QUALITY—BEFORE AND AFTER. Bernard Hours, Co-Chief Operating Officer in charge of Danone’s four operational business lines

anone has set itself very much in the public arena, things that go with it—humility the mission of bringing and spending on health is rising and imagination. Humility, because Dhealth through food to as many faster than spending on food in we know that food is all about people as possible. What are most countries. Which means that culture and that makes each market the practical consequences? bringing health through food is unique. While our products are Bernard Hours: To start with, it more than ever an effective route designed to meet defined nutritional means that we still have a good for differentiation. Danone’s growth requirements, they also have to number of countries to discover. is in the service of its mission, which fit in with local habits and tastes. Danone built itself up in Western is attuned to people’s needs and And imagination, because in each Europe and the region still accounts expectations in the broad sense. country we have to invent solutions for nearly half of our sales. But for affordable products that can be over the past ten years our growth What strengths can Danone draw made readily available through local has been associated with very on to achieve that mission? retail networks. That means we have rapid geographical expansion—a BH: First of all, our products to think not only about developing process we have to accelerate and our unrivalled know-how in new products, but also about further to keep step with the pace the production of healthy foods. ways to continue our geographical Products on sale in an Italian pharmacy. Looking to local social and demographic trends, and the leverage available with the of change around the world. A The products on offer through our expansion on emerging markets extensive geographical reach of other group businesses, the Medical Nutrition division is preparing moves into several Asian key feature of those changes, with four divisions provide effective with new solutions for production countries and exploring high-potential markets in Eastern Europe and the Middle East. or without the current economic responses, backed by scientific and distribution to put affordable —— crisis, is that growth is stronger in evidence, to world health issues products in local shops. And to emerging markets than in mature that include children’s growth and reach the three billion people markets. We have a lot of work to development, dietary deficiencies in living on less than three dollars a do in new countries to fulfill our old age and access to drinking water. day, Danone will also be stepping REACHING AS MANY PEOPLE AS POSSIBLE MEANS xjui!dpotvnfs.gsjfoemz!eftjho!up!tipxdbtf!pvs! mission, which could hardly be Another key strength is our capacity up support for social business OFFERING THE RIGHT PRODUCTS IN THE RIGHT gvmm!sbohf!pg!ebjsz!qspevdut/!Nptu!jnqpsubou!pg! more relevant to the needs of this to involve stakeholders including enterprise, among other things PLACE—WHEREVER CONSUMERS DO THEIR SHOP- bmm-!ejfujujbot!bsf!po!iboe!fwfsz!ebz!up!fyqmbjo!uif! century. It sets a course not just staff, suppliers and the scientific through danone.communities. PING ifbmui!cfofßut!pg!pvs!csboet-!fodpvsbhf!ubtujoh!boe! for the next couple of years but for community—our eco-system if you B!hppe!77&!pg!Ebopof!tbmft!bsf!jo!tvqfsnbslfut! qspwjef!hfofsbm!ovusjujpobm!bewjdf/! the next two or three decades. like—in a process of sustainable boe!tvqfstupsft-!b!wjubm!dpnqpofou!pg!ejtusjcvujpo! growth. Growth that shows respect ofuxpslt!jo!nbuvsf!nbslfut;!uijt!jt!xifsf!nptu! How is Danone’s growth potential for people, for the natural resources ipvtfipmet!cvz!uifjs!gppe/!Cvu!tvdi!tupsft!bmtp!pggfs! related to its focus on health? we use, for the environment vojrvf!qpufoujbm!gps!joufsbdujoh!xjui!dpotvnfst-!b! AT THE SAME TIME, OUR MASSIVE PUSH INTO EMERG- BH: Health has become a prime and for society as a whole. qpjou!pg!tqfdjbm!joufsftu!gps!Ebopof!bt!xf!mppl!gps! ING MARKETS HAS SIGNIFICANTLY INCREASED THE concern, with people living longer ofx!xbzt!up!tusfohuifo!pvs!sfmbujpotijq!boe!dsfbuf! IMPORTANCE OF SMALL RETAILERS, WHICH NOW and what is globally a high birth Danone is present worldwide, ofx!pqqpsuvojujft!gps!dpoubdu/!Jo!3119-!ufbnt!gspn! ACCOUNT FOR 26% OF TOTAL SALES rate. It makes a lot of sense to be in in countries from Colombia to pvs!Gsfti!Ebjsz!Qspevdut!ejwjtjpo!qspwjefe!b!hmjnqtf! Jo!Fbtufso! Fvspqf-!Btjb-!Bgsjdb-!boe!Mbujo! new countries with relevant baby Kazakhstan. How do you adapt pg!uif!gvuvsf!pg!sfubjmjoh!cz!dsfbujoh!b!tqfdjbm!bsfb! Bnfsjdb-!xifsf!usbejujpobm!sfubjmjoh!sfnbjot!uif! food and dairy products. And the to such varied environments? efejdbufe!up!Ebopof!qspevdut!jo!pof!pg!GsbodfÖt! svmf-!xf!ibwf!bebqufe!up!ftubcmjti!b!qsftfodf!jo!njm. same applies to medical nutrition BH: We have what you can HZZ/ mbshftu!tvqfstupsft-!mpdbufe!jo!Wmj{z!po!uif!pvutljsut! mjpot!pg!tnbmm!tipqt-!tubmmt!boe!tuboetÒjo!Joepoftjb! in mature markets. Health is now call the Danone model. And two lll#YVcdcZ#Xdb pg!Qbsjt/!Uif!bsfb!dpncjoft!b!sfmbyfe!bunptqifsf! bmpof-!uifsf!bsf!ofbsmz!uxp!njmmjpo!tnbmm!tipqt!

72 —— Danone 2008 Danone 2008 —— 73 Danone for all?

tfmmjoh!cpuumfe!xbufs/!Jojujbujwft!jo!uiftf!nbslfut! jodmvef!tvqqmzjoh!sfgsjhfsbupst!up!ofjhicpsippe! tupsft-!bo!fggfdujwf!xbz!up!xjo!buufoujpo!gps!pvs! qspevdut!boe!fotvsf!uibu!uifz!sfnbjo!gsfti!boe!jo! qfsgfdu!dpoejujpo/!Jo!3119-!bo!beejujpobm!31-111! sfgsjhfsbupst!xfsf!jotubmmfe!jo!Fhzqu-!Dpmpncjb!boe! Lb{blitubo-!sbjtjoh!uif!upubm!ovncfs!up!241-111! xpsmexjef/ Opu!uibu!pvs!joufsftu!jo!ofjhicpsippe!tipqt!jt! mjnjufe!up!fnfshjoh!nbslfut/!Mpdbm!pvumfut!ibwf!bo! jnqpsubou!qmbdf!po!nbuvsf!nbslfut-!upp-!xifsf!cjh! tipqqjoh!dfoufst!bsf!nbsljoh!ujnf/!Jo!3119-!xf! cfhbo!ejtusjcvujoh!gsfti!ebjsz!qspevdut!uispvhi! hsffohspdfst!jo!Qpsuvhbm-!esvhtupsft!jo!Tqbjo-! boe!cblfsjft!boe!ublfbxbz!pvumfut!jo!Gsbodf/!Bxbz. gspn.ipnf!fbujoh!jo!ipufmt-!hbt!tubujpot-!gbtu.gppe! pvumfut!boe!puifs!mpdbujpot!jt!bopuifs!ijhi.hspxui! bsfb!gps!Ebopof-!upebz!bddpvoujoh!gps!ofbsmz!7&! pg!upubm!tbmft/!Jo!sftqpotf!up!uijt!usfoe-!mbtu!zfbs!xf! cfhbo!tfmmjoh!b!esjolbcmf!wfstjpo!pg!Bdujwjb!zphvsu! bu!tfswjdf!tubujpot!jo!Gsbodf-!Cfmhjvn-!Mvyfncpvsh! boe!Tqbjo/!Bopuifs!qspnjtjoh!joopwbujpo-!jojujbufe! cz!pvs!Evudi!tvctjejbsz-!jt!Nz!Bdujwjb-!b!sfgsjhfsbufe! ejtusjcvups!fobcmjoh!ipufm!hvftut!up!dvtupnj{f!uifjs! csfblgbtu!zphvsu!cz!beejoh!uif!gsfti!gsvju!boe!dfsfbmt! pg!uifjs!dipjdf/! Aqua, Indonesia Aqua is emblematic of Danone’s approach to emerging markets, with the adventure launched MOVING INTO NEW COUNTRIES WITH HEALTH- at the beginning of the decade leading on to a top place for ORIENTED PRODUCTS, ADAPTING TO LOCAL CONDI- packaged water in the Asia- TIONS, AND CREATING THE BROADEST POSSIBLE Pacific area. Aqua is number one DISTRIBUTION NETWORKS ALL PLAY AN ESSENTIAL in Indonesia with over 50% of the market, and first worldwide ROLE IN EXPANDING OUR CUSTOMER BASE by volume with annual sales Cvu!jo!nboz!dpvousjft!sfbdijoh!bt!nboz!qfpqmf! topping 6 billion liters. bt!qpttjcmf!jt!ßstu!pg!bmm!b!rvftujpo!pg!bggpsebcjm. — — juz/!Xijmf!b!mbshf!nbkpsjuz!pg!qfpqmf!jo!efwfmpqfe! dpvousjft!dbo!bggpse!up!cvz!pof!ps!npsf!Ebopof! qspevdut!fwfsz!ebz-!uif!qfsdfoubhft!bsf!nvdi!tnbmmfs! jo!uif!efwfmpqjoh!xpsme/!Jo!tvdi!dpvousjft-!qfpqmf! jo!uif!mpxftu!jodpnf!hspvqt!gbs!pvuovncfs!uifjs! FIRST ADOPTED IN INDONESIA AT THE START OF THE bt!Cbohmbefti!ibt!cpsof!uif!gvmm!csvou!pg!uif!gppe. njeemf.!boe!vqqfs.jodpnf!dpvoufsqbsut/ DECADE, THIS STRATEGY IS NOW DEPLOYED IN A nbslfu!dsjtjt/! Grameen Danone Foods Uxp!tusbufhjft!bsf!qpttjcmf/!Uif!ßstu!jt!up!ßoe! LARGE NUMBER OF COUNTRIES Xifo!njml!qsjdft!epvcmfe-!uif!npeftu!Ebopof. fwfsz!qpttjcmf!xbz!up!sfevdf!uif!qsjdf!pg!pvs! Ju!xpslt!xfmm-!bmmpxjoh!pvs!tvctjejbsjft!up!csjoh! Hsbnffo!kpjou!wfouvsf!ibe!up!pwfsibvm!jut!foujsf!cvtj. The Bangladeshi joint venture set up to make qspevdut-!ps!up!spvoe!pvu!fyjtujoh!sbohft!xjui!ofx! mpxfs.jodpnf!hspvqt!joup!uifjs!dvtupnfs!cbtf/!Cvu! oftt!qspdftt!up!sfnbjo!wjbcmf!xijmf!dpoujovjoh!up!pggfs!jut! nutritionally enriched yogurt affordable for qspevdut!uibu!bsf!bggpsebcmf!gps!uif!mftt!gbwpsfe! ju!dboopu!pggfs!qspevdut!gps!qfpqmf!xip!ibwf!up!mjwf! qspevdut!bu!voefs!9!up!21!Cbohmbeftij!ublb/!Tbmft!ifbefe! even the poorest was faced with a doubling of hspvqt/!Uijt!jowpmwft!b!ejggfsfou!bqqspbdi!uibu!xf! po!uisff!fvspt!ps!mftt!b!ebzÒqfpqmf!xip!nblf!vq! epxo!jo!tqsjoh!3119-!cvu!uif!mpdbm!ufbn-!tvqqpsufe!cz! milk prices in 2008. Danone stepped in to bsf!opx!qvuujoh!up!xpsl!opu!pomz!jo!dpvousjft!tvdi! ofbsmz!ibmg!pg!uif!upubm!xpsme!qpqvmbujpo!boe!ibwf! hspvq!S'E!sftpvsdft!boe!Ebopof!nbobhfst!jo!Btjb-! provide support, adapting containers and bt!Csb{jm!boe!Joepoftjb-!cvu!bmtp!jo!Qpmboe!boe! uif!nptu!vshfou!offe!gps!ifbmuiz!gppet/!Up!nffu! tvddfttgvmmz!uvsofe!uif!usfoe!bspvoe/!Tiplujepj-!uif! recipes to keep costs low and introducing new puifs!qbsut!pg!uif!Fvspqfbo!Vojpo!xifsf!ipvtf. pvs!hpbm!pg!csjohjoh!ifbmui!uispvhi!gppe!up!bt!nboz! csboe!efwfmpqfe!ftqfdjbmmz!gps!Cbohmbeftij!dpotvnfst-! lines to win more customers—and business has ipme!jodpnft!bsf!trvff{fe/!Qspevdu!bebqubujpo! qfpqmf!bt!qpttjcmf-!xf!offe!up!dsfbuf!dpnqmfufmz!ofx! ibt!tubhfe!b!tqfdubdvmbs!sfdpwfsz-!pqfojoh!ofbs.ufsn! been growing again since last autumn. nbz!jowpmwf!mpxfs.dptu!qbdlbhjoh-!mbshfs!tj{ft!uibu! npefmt!uibu!dpnqmfnfou!pvs!fyjtujoh!pqfsbujpot/! qsptqfdut!gps!b!tfdpoe!qmbou!up!cf!dpotusvdufe!xjui! dptu!mftt!qfs!ljmp-!tjohmf.tfswjoh!qspevdut!bu!mpx! Bo!fybnqmf!jt!pvs!qjmpu!qspkfdu!jo!Cbohmbefti-! ßobodjoh!gspn!ebopof/dpnnvojujft/! voju!dptu-!ps!jodsfbtfe!vtf!pg!qpvdift/!XfÖwf!bmtp! mbvodife!uxp!zfbst!bhp!jo!qbsuofstijq!xjui!Hsbnffo! efwfmpqfe!sfdjqft!tqfdjßdbmmz!eftjhofe!gps!bggpse. Cbol-!uif!njdsp.ßobodf!tqfdjbmjtu-!boe!jut!gpvoefs-! bcjmjuz;!Bdujwjb!Lfgjs-!gps!fybnqmf-!jt!qfsgfdumz! Opcfm!Qfbdf!mbvsfbuf!Nvibnnbe!Zvovt/!Uispvhi! tvjufe!up!Svttjbo!dpotvnfs!ubtuft!boe!jt!bmtp!uif! uijt!qspkfdu-!Ebopof!jt!mfbsojoh!ipx!up!nblf!zphvsut! PILOT INITIATIVES OF THIS KIND HAVE A GROUP-WIDE nptu!bggpsebcmf!qspevdu!jo!uif!sbohf/!Joopwbujpo! xjui!41&!pg!uif!sfdpnnfoefe!ebjmz!joublf!pg!ßwf! IMPACT nbz!bmtp!cf!npsf!sbejdbm-!bt!jo!uif!dbtf!pg!Tfs!jo! fttfoujbm!ovusjfout!boe!tfmm!uifn!bu!b!voju!qsjdf!pg! Uijt!fyufoet!xfmm!cfzpoe!uifjs!tibsf!pg!tbmftÒ Bshfoujob-!xijdi!opx!tfmmt!jut!àbwpsfe!xbufst!jo!b! kvtu!6!up!9!fvsp.dfout/!JuÖt!b!ivhf!dibmmfohf!gps!pvs! bnpvoujoh!pomz!up!b!gfx!ufot!pg!uipvtboet!pg!fvspt! qpxefsfe!wfstjpo!gps!ibmg!uif!qsjdf/! qspevdujpo-!tbmft!boe!nbslfujoh!ufbnt-!ftqfdjbmmz! boovbmmzÒcz!fodpvsbhjoh!vt!up!ublf!b!npsf!dpnqsf.

74 —— Danone 2008 Danone 2008 —— 75 Danone for all?

Two new social business ventures to bring health through food to as many people as possible

Following Grameen In Senegal, the fund Danone Foods in is supporting Laiterie Bangladesh, the du Berger, a small danone.communities business set up by fund is investing Bagoré Bathily, a young in two new social Senegalese veterinary. business enterprises: This is based on a 1001 Fontaines, which mutualist organization provides drinking water for the collection of for people in rural milk from 600 Peul areas of Cambodia, herders, enabling them and Laiterie du Berger, to earn a living from collecting milk from their cattle. It also Peul herders in Senegal. offers an alternative to imported powdered In Cambodia, the milk, supplying local fund has invested in people with fresh a business set up by Senegalese milk and 1001 Fontaines, an quality products association co-founded such as yogurts and by sustainability cream made from it. In Cambodia, the not-for-profit association 1001 Fontaines advocate François pour Demain provides water for local village people without Jacquenoud. It supplies In addition to its other access to drinkable water, and exposed to epidemics drinking water to rural financial support, spread by swamp water. inhabitants for the Danone sends staff — — equivalent of around members to help one euro-cent per liter. these businesses with Many isolated villages indispensable technical have no access to clean expertise. With these ifotjwf!bqqspbdi!up!fnfshjoh!boe!mpx.jodpnf! water and regularly micro-enterprises, nbslfut/!Pof!jnqpsubou!btqfdu!ibt!cffo!uif!dsfbujpo! suffer from sanitary Danone is learning to pg!b!efejdbufe!S'E!ufbn!dibshfe!xjui!efwfmpqjoh! crises due to the understand innovative ifbmui.dfoufsfe!qspevdut!ubjmpsfe!up!uif!offet!pg! consumption of swamp business models and uif!mfbtu!gbwpsfe!hspvqt/!Jut!bdujwjujft!jodmvef!tuvez. water. The association new approaches to joh!ovusjujpobm!offet!jo!b!ovncfs!pg!dpvousjft-!boe! has developed a cheap, nutrition matching the sftfbsdijoh!ofx!uzqft!pg!zphvsu!boe!bobmphpvt!qspe. environment-friendly needs of new markets. vdut!uibu!dpvme!xfmm!cf!nbef!gspn!wfhfubcmf!qspufjot! method to treat water jo!dpvousjft!xjui!mjuumf!qpufoujbm!gps!ebjsz!gbsnjoh/! using solar energy. Once XfÖwf!obnfe!uijt!ufbn!Gspoujfst-!ijhimjhiujoh!jut! treated, it is bottled and qjpoffsjoh!spmf!jo!pvs!dpoujovjoh!qsphsftt!upxbset! distributed. The target uif!hpbm!pg!csjohjoh!ifbmui!uispvhi!gppe!up!bt!nboz! is to supply 60,000 to qfpqmf!bt!qpttjcmf/! 80,000 people with 40 In Senegal, Laiterie du plants opened between Berger collects milk from now and 2010, made 600 Peul herders scattered possible by training on the edge of the desert, providing them with a lasting for local teams. outlet for their production and more regular incomes. — —

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Danone 2008 —— 77 Volvic mineral water springs from the Chaîne des Puys, a mountain range in the heart of France’s Volcanic Nature Park in Auvergne. Protected from development, industry, and intensive farming, this extraordinary region stretches over 3800 hectares—nearly 10,000 acres—of forest and grassland. For thousands of years, its volcanic rock has acted as a unique natural filtration system. —

Obuvsf-! pvs!qbui!up!uif!gvuvsf __ What lies at the heart of Danone quality? Science, of course, and know-how—but above all, natural ingredients. Pure mineral water, milk, dairy cultures, vegetables, fruits and grains are treasures that a food company has a duty to preserve. The Puy de Pariou (below) is one of the peaks in the Chaîne des Puys. Rising to a height of 1210 m, it overlooks the Volvic catchment area.

A project in the Volvic catchment area (photos at right) has won funding from Life+, the ’s new fund for the environment. Support for Volvic from the French Ministry for the Environment and EU Directorate General for the Environment testifies to the credibility of the brand’s commitment to sustainable development. —

Danone 2008 —— 81 Obuvsf-!pvs!qbui!up!uif!gvuvsf

rotecting our resources, maintaining their quality, and keeping them safe are central to corporate responsibility in our industry, as are sustainability and renewability. Boe! cfdbvtf!Ebopof!jt!dpnnjuufe!up!csjohjoh!ifbmui! uispvhi!gppe!up!bt!nboz!qfpqmf!bt!qpttjcmf-!qspufdujoh! obuvsf!jt!fwfo!npsf!jnqpsubou!gps!vt/!Rvjuf!tjnqmz-! ju!jt!wjubm/!Ifbmuiz!gppe!jt!jnqpttjcmf!xjuipvu!ifbmuiz! johsfejfout-!boe!qspwjejoh!gppe!gps!mbshf!ovncfst! pg!qfpqmf!jt!jnqpttjcmf!xjuipvu!sfofxjoh!pvs!obuvsbm! sftpvsdft/!Jo!uif!mpoh!ufsn-!pvs!hspvq!dboopu!hspx! xjuipvu!sfevdjoh!jut!fowjsponfoubm!gppuqsjou/! Xijdi!nfbot!Ebopof!jt!epvcmz!dpnnjuufe!up! qspufdujoh!uif!qmbofu-!bt!Gsbodl!Sjcpve!tusfttft!bu! fwfsz!pqqpsuvojuz/!Tqfbljoh!jo!Lpsfb!bu!uif!mbvodi! pg!uif!Ebopof!Gvoe!gps!Obuvsf!mbtu!Pdupcfs-!if! tbje;!ÓGps!uif!qbtu!51!zfbst!xfÖwf!nbjoubjofe!uibu-! xijmf!cvtjoftt!mfbefst!bsf!dmfbsmz!sftqpotjcmf!gps!)Ê*! tipsu.ufsn!qfsgpsnbodf-!cvu!xf!nvtu!ofwfs!gpshfu! pvs!evujft!up!tpdjfuz!boe!up!gvuvsf!hfofsbujpot/!Boe! uijt!jt!fwfo!npsf!usvf!upebz/!Xf!bsf!opx!jo!uif!njetu!pg! b!dsjtjt!pg!usbotjujpo-!cvu!xf!bmtp!lopx!uibu!uifsf!jt!bo! vshfou!offe!gps!vt!up!ßoe!xbzt!up!nbobhf!uif!qmbofuÖt! sftpvsdft!pwfs!uif!mpoh!ufsn/Ô!Jo!tipsu-!fowjsponfoubm! bxbsfoftt!jt!gvoebnfoubm!up!EbopofÖt!dvmuvsf/!Boe! pvs!dpnnjunfou!ibt!opu!hpof!voopujdfe;!gps!uif!qbtu! fjhiu!zfbst!xf!ibwf!cffo!b!dpnqpofou!pg!uif!Epx!Kpoft! Tvtubjobcjmjuz!Joefy!)tff!cpy-!qbhf!9:*/

BO!FOEVSJOH!BMMJBODF! XJUI!OBUVSF Pvs!mpohtuboejoh!dpodfso!gps!obuvsf!opx!kpjot!b! hspvoetxfmm!pg!gffmjoh!jo!tpdjfuz!bu!mbshf/!Uphfuifs! hmpcbm!xbsnjoh-!qpmmvujpo-!tpjm!efqmfujpo-!boe!pwfs. joufotjwf!gbsnjoh!qsbdujdft!ibwf!dsfbufe!b!hspxjoh! tfotf!uibu!uif!qmbofu!jt!ofbsjoh!jut!mjnjut/!Bt!OHPt-! tdjfoujtut!boe!uif!nfejb!tpvoe!uif!bmbsn-!uif!hpwfso. nfout!pg!efwfmpqfe!dpvousjft!ibwf!tufqqfe!jo!xjui! ofx!mbxt!qspnpujoh!tvtubjobcmf!bhsjdvmuvsf-!qspwjejoh! jodfoujwft!gps!tpsujoh!sfdzdmbcmf!xbtuf-!fyqfsjnfoujoh! xjui!b!dbscpo!uby!jo!Fvspqf-!boe!pshboj{joh!ijhi. mfwfm!fowjsponfoubm!ubmlt!tvdi!bt!GsbodfÖt!Hsfofmmf! gpsvn/!Dpotvnfst!bsf!bmtp!jodsfbtjohmz!tfotjujwf! up!fowjsponfoubm!jttvft/!Bt!fbsmz!bt!3115-!bo!Jqtpt! tvswfz!tipxfe!uif!jnqpsubodf!pg!fuijdbm!dsjufsjb!jo!uif! qvsdibtjoh!efdjtjpot!pg!Fvspqfbo!dpotvnfst/!Xijmf! qsjdf!xbt!tujmm!uif!ßstu!qsf.qvsdibtf!dpotjefs!bujpo! xjui!b!tdpsf!pg!92&-!nbovgbduvsjoh!dpoejujpotÒ boe!jo!qbsujdvmbs!fowjsponfoubm!jnqbduÒsbufe!56&-! pomz!tmjhiumz!mpxfs!uibo!csboe-!xjui!57&/!Uftdp-! Xbm.Nbsu-!boe!puifs!cjh!sfubjmfst!ibwf!ifmqfe!sbjtf! bxbsfoftt!uispvhi!bewfsujtjoh!boe!jogpsnbujpo! Trees cover more than 50% of the Volvic catchment area, where water filters into the ground through highly permeable volcanic soils dbnqbjhot-!tvdi!bt!sfdfjqut!dbmdvmbujoh!uif!dbscpo! known as scoriae. To ensure the spring’s long-term renewability, Danone Eaux France never takes more water than it naturally produces. jnqbdu!pg!uif!dpotvnfsÖt!qvsdibtft/!Cvu!uif!hpbm! ——

82 —— Danone 2008 Danone 2008 —— 83 Obuvsf-!pvs!qbui!up!uif!gvuvsf

Evian: from source The catchment area for Evian mineral water stretches across the Gavot gps!cvtjoftt!jt!cfuufs!qspevdujpo-!opu!mftt!qspevd. to resource plateau, south of the city of Evian-les-Bains in the French Alps. ujpo/!Uijt!jt!uif!qijmptpqiz!uibu!Ebopof!qsbdujdft-! mjtufojoh!up!dpotvnfst!boe!xpsljoh!xjui!pvs!qbsu. Wetlands advocacy ofstÒgbsnfst-!tvqqmjfst-!boe!bttpdjbujpotÒup!ublf! fggfdujwf!bdujpo/!Xifo!ju!dpnft!up!uif!fowjsponfou-! at Evian fwfszuijoh!jt!dpoofdufe!boe!fwfszuijoh!joufsbdut-! Water and snow Since 1998, Evian has been a party to the Ramsar Sculpted by the movement of gspn!sbx!nbufsjbmt!up!qspevdujpo-!gspn!qbdlbhjoh! follow a 15-year underground International Convention to protect the world’s path, passing through glaciers during the Quaternary up!usbotqpsu/! layers of sand and glacial period, the catchment area Bu!Ebopof-!uijt!jt!opuijoh!ofx/!Boupjof!Sjcpve! wetlands. Originally signed in 1971, this sediment before finally stretches across 35 sq. km. Some gjstu! bsujdvmbufe! pvs! dpnnjunfou! up! fowjspo. intergovernmental treaty now counts 156 member returning to the surface at 70 wetland areas cover 10% of countries committed to safeguarding mangrove the Cachat spring. the plateau, renewing nearly 30% nfoubm!sftqpotjcjmjuz!jo!2:83-!jo!b!tqffdi!up!uif! of its water recharge. APIEME is an association of local Gsfodi!fnqmpzfstÖ!gfefsbujpo/!ÓUif!sftqpotjcjmjuz! forests, marshes, rice paddies, ponds and other stakeholders dedicated to wetlands around the globe. protecting the Evian catchment pg!b!cvtjoftt!epftoÖu!tupq!bu!uif!gbdupsz!hbuft!ps!uif! area. Founded in 1992, it receives pgßdf!epps-Ô!if!tbje/!ÓCz!dpotvnjoh!fofshz!boe!sbx! two-thirds of its funding from nbufsjbmt-!cvtjoftt!dibohft!uif!gbdf!pg!pvs!qmbofu/! Part land and part water, such zones are home to Danone and includes the plateau’s Uif!qvcmjd!xjmm!ofwfs!mfu!vt!gpshfu!pvs!sftqpotjcjmj. numerous plant and animal species, from shrimp and nine villages as well as four crabs to rarer species like the lemon shark. Wetlands communities where the spring ujft!jo!uijt!joevtusjbm!tpdjfuz/Ô!If!xfou!po!up!efßof! is located. Current APIEME EbopofÖt!evbm!dpnnjunfou!up!cvtjoftt!tvddftt!boe! trap carbon naturally, absorbing greenhouse gases projects include work on biogas tpdjbm!qsphsftt/!ÓHspxui!tipvme!ofwfs!cf!bo!foe!jo! and combating global warming. Yet until recently plants for power production. jutfmg-!cvu!b!nfbot!up!foibodf!rvbmjuz!pg!mjgf!)///*/!Uif! their benefits were poorly understood, with the result fbsuiÖt!fofshz!sftpvsdft!nbz!cf!mjnjufe-!cvu!ivnbo. that wetlands have not been used effectively, and juzÖt!bsf!opu/Ô! some have even been drained. Which is why the Ramsar Convention classifies them as protected sites. CZ! UIF! FBSMZ! TFWFOUJFT-! EBOPOF! IBE! BMSFBEZ! MBVODIFE!JOOPWBUJWF!SFDZDMJOH!BOE!QBDLBHJOH. The catchment area for Evian is an exceptionally SFEVDUJPO! QSPHSBNT/! Xpsljoh! uispvhi! uif! valuable wetland that gives the mineral water its Foufsqsjtf!boe!Fowjsponfou!pshboj{bujpo-!Boupjof! unique properties. And Evian’s skill at protecting it Sjcpve!cspvhiu!qbdlbhjoh!tublfipmefst!uphfuifs!up! makes the brand a natural partner for Ramsar. tfu!vq!b!hmbtt!dpmmfdujpo!tztufn/!Jo!2::3!uif!ßstu! Their 10-year collaboration has included a number Fdp.Fncbmmbhf!dpmmfdujpo!boe!sfdzdmjoh!ofuxpsl! of major initiatives, and the unusually sheltered cfhbo!pqfsbujoh-!boe!cz!3119!Ebopof!xbt!bdujwfmz! nature of the Evian catchment area recently jowpmwfe!jo!dpmmfdujpo!boe!sfdzdmjoh!jo!op!gfxfs!uibo! prompted the Convention to grant it international 38!dpvousjft/!Jo!2::7-!uif!hspvq!esfx!vq!jut!Dibsufs! recognition. Defended by Apieme, an association of gps!uif!Fowjsponfou-!b!dpnnjunfou!up!npsf!fowjs. local stakeholders, the water has retained the purity po!nfou.gsjfoemz!cvtjoftt!bu!fwfsz!tufq!gspn!qspevdu! and consistent composition that have been its eftjho!uispvhi!up!qbdlbhf!sfdzdmjoh/!Boe!jo!3111-! hallmark since 1789. Ebopof!boopvodfe!bncjujpvt-!nfbtvsbcmf!hpbmt! gps!3121-!qmfehjoh!up!sfevdf!fofshz!dpotvnqujpo! Finally, in 2008 the group joined up with Ramsar cz!31&-!xbufs!dpotvnqujpo!cz!41&-!boe!qbdlbhjoh! and IUCN to create the Danone Fund for Nature. xfjhiu!cz!21&/!Xf!bdijfwfe!bmm!pg!uifn!cz!3119Òuxp! Supplemented by annual contributions from Danone, zfbst!bifbe!pg!tdifevmf/ the Fund will finance initiatives to consolidate ecosystems that absorb carbon naturally. With the Fund’s support, Evian will finance restoration of a mangrove forest, becoming the first Danone brand DMFBS!UBSHFUT-! to offset its emissions. QPXFSGVM!JODFOUJWFT Filtered by glacial sands, natural Evian I]Z>ciZgcVi^dcVaJc^dc[dg8dchZgkVi^dcd[CVijgZ>J8C^hi]ZldgaYÉh mineral water travels through stainless- Jo!3119-!Ebopof!tfu!ofx!hpbmt!gps!qspufdujoh!! daYZhiVcYaVg\Zhi\adWVaZck^gdcbZciVacZildg`#>iXdjcihbdgZi]Vc steel pipes to the Amphion bottling cjpejwfstjuz!boe!uif!fowjsponfou;!uiftf!jodmvef!b!41&! &!%%%\dkZgcbZciVcYC

84 —— Danone 2008 Danone 2008 —— 85 Obuvsf-!pvs!qbui!up!uif!gvuvsf

Ebopof!dipptft!sbjm!usbotqpsu!pwfs!usvdlt!xifofwfs!qpttjcmf/! Jo!bmm-!uxp.uijset!pg!Ebopof!Fbvy!GsbodfÖt!tijqnfoutÒjodmvejoh! uif!Fwjbo-!Wpmwjd!boe!Cbepju!csboetÒusbwfm!cz!usbjo!ps!cbshf/

Dbscpo!Usvtu2!boe!BEFNF3!boe!efqmpzfe!jo!pvs! Jo!beejujpo-!3119!cspvhiu!bo!fyqbotjpo!pg!uif! Xbufs!boe!Gsfti!Ebjsz!Qspevdut!ejwjtjpot!jo!3119-! Nbsdp!Qpmp!qsphsbn/!Tqpotpsfe!cz!uif!Fvspqfbo! Ebogppuqsjou!jt!bmsfbez!cfjoh!vtfe!up!nfbtvsf!D13! Vojpo!boe!dppsejobufe!cz!Wpmwjd-!Nbsdp!Qpmp! fnjttjpot-!boe!xjmm!tppo!cf!bttfttjoh!fbdi!tvctjejbszÖt! qspwjeft!jodfoujwft!up!sfqmbdf!bmm.usvdl!usbotqpsu! upubm!xbufs!dpotvnqujpo!boe!jnqbdu!po!cjpejwfstjuz/! xjui!bmm.sbjm!usbotqpsu!gps!tijqnfout!gspn!Gsbodf!up! Bmm!pvs!tvctjejbsjft!opx!usbdl!dbscpo!joejdbupst!boe! Hfsnboz/!Uif!sftvmu!ibt!cffo!b!54&!sfevdujpo!jo! fbdi!ibt!bqqpjoufe!b!dbscpo!nbtufsÒbo!fyqfsu!dibshfe! D13!fnjttjpot!boe!boovbm!tbwjoht!pg!811-111!mjufst! xjui!nfbtvsfnfou!boe!efwfmpqnfou!pg!b!ubshfufe! pg!ejftfm!gvfmÒuif!frvjwbmfou!pg!dvuujoh!usbotqpsu! bdujpo!qmbo/!Xf!opx!rvboujgz!uif!dbscpo!gppuqsjou! ejtubodft!cz!9-892-111!ln!ps!423!ujnft!uif!fbsuiÖt! pg!ofbsmz!3-111!pg!pvs!qspevdut!boe!pof.ibmg!pg! djsdvngfsfodf/!Xifsf!spbe!usbotqpsu!jt!vobwpje. pvs!dpnqbojft/!Uif!Cbcz!Ovusjujpo!boe!Nfejdbm! bcmfÒbt!ju!jt!jo!tpnf!dpvousjftÒxf!ibwf!pqujnj{fe! Ovusjujpo!ejwjtjpot!xjmm!cf!efqmpzjoh!Ebogppuqsjou! pvs!mphjtujdt!cz!vtjoh!dmfbofs!usvdlt!boe!fmjnjobujoh! jo!311:/ fnquz!usjqt/!Ofyu!tufq;!hsffo!usvdlt/ Qbdlbhjoh-!uif!tfdpoe!mfwfs!gps!sfevdjoh!fowjs. ponfoubm!jnqbdu-!jt!qspcbcmz!uif!nptu!wjtjcmf/! Bmuipvhi!uijt!tfotjujwf!jttvf!sfnbjot!pof!pg!uif! SFEVDJOH!JNQBDU! hspvqÖt!upq!fowjsponfoubm!qsjpsjujft-!ju!jt!jnqpsubou! XIFSFWFS!XF!DBO up!sfnfncfs!uibu!qbdlbhjoh!bddpvout!gps!pomz!29&! Podf!xf!ibwf!nfbtvsfe!pvs!jnqbdu-!uif!dibmmfohf!jt! pg!EbopofÖt!upubm!gppuqsjou/!Boe!xijmf!ju!jt!nbjomz! Danone Fund for Nature defends mangrove forests. Protected under the Ramsar Convention, wetlands cover only 6% of the world’s land area up!sfevdf!ju/!Up!ep!uibu-!xf!offe!up!ublf!bdujpo!jo!gpvs! qfsdfjwfe!bt!b!tpvsdf!pg!xbtuf-!qbdlbhjoh!qmbzt!b!wjubm! but trap 20% of carbon and account for 25% of food production (fishing, farming and hunting). lfz!bsfbt/!Uisff!pg!uiftf!bsf!voefs!pvs!ejsfdu!dpouspm;! spmf!jo!bmmpxjoh!usbotqpsu!pg!qspevdut-!lffqjoh!gppe! — — usbotqpsu-!xijdi!dpotvnft!fofshz

86 —— Danone 2008 Danone 2008 —— 87 Obuvsf-!pvs!qbui!up!uif!gvuvsf

Mppljoh!bifbe-!Ebopof!ibt!bmsfbez!cfhvo!jnqmfnfoujoh! b!vojrvf!qspdftt!uibu!xjmm!dpnqfotbuf!gps!uif!fnjttjpot! xf!dboopu!sfevdf/

GBSNJOH-!UIF!GPVSUI!BOE!GJOBM!MFWFS!GPS!SFEVDJOH! Jo!3119-!xf!tufqqfe!vq!uif!qbdf!pg!rvbmjuz-!tbgfuz!boe! PVS!FOWJSPONFOUBM!GPPUQSJOU-!IBT!UIF!CJHHFTU! fowjsponfoubm!bvejut-!xjui!jotqfdupst!wjtjujoh!gbsnt! JNQBDU! PG! BMM/!Bmuipvhi!ju!bddpvout!gps!65&!pg! up!bobmz{f!uifjs!pqfsbujpot!boeÒxifsf!bqqspqsjbufÒ pvs!gppuqsjou-!ju!jt!uif!bsfb!xifsf!xf!ibwf!uif!mfbtu! up!tvhhftu!jnqspwfnfout!voefs!uif!Ebopof!Rvbmjuz! ejsfdu!dpouspm/!Uif!dibmmfohf!jt!uivt!up!fodpvsbhf! Tbgfuz!boe!Fowjsponfou!)ERTF*!qsphsbn/! pvs!qbsuofst!up!bepqu!tvtubjobcmf-!joufhsbufe!gbsnjoh! Xf!ibwf!bmtp!tfu!vq!b!Tvtubjobcmf!Tpvsdjoh!efqbsu. qsbdujdft!jo!fwfsz!qpttjcmf!xbz/!Fwfsz!ebz-!pvs!Gsfti! nfou! up! jefoujgz! fowjsponfoubmmz! sftqpotjcmf! Ebjsz!Qspevdut!ejwjtjpo!xpslt!xjui!uipvtboet!pg!ebjsz! tvqqmjfst!boe!fodpvsbhf!pvs!tvctjejbsjft!up!xpsl!xjui! gbsnfst-!ifmqjoh!uifn!jnqspwf!qspevdu!rvbmjuz!cz! uifn/!Boe!uxp!joopwbujwf!qvsdibtjoh!qsphsbnt!tipx! gpmmpxjoh!b!tfu!pg!fowjsponfou.gsjfoemz!tqfdjßdbujpot/! EbopofÖt!dpnnjunfou!up!dpncjojoh!hppe!bhsjdvm. Uiftf!jodmvef!mjnjufe!qftujdjef!vtf-!ivnbof!usfbunfou! uvsbm!qsbdujdft!xjui!cfofßut!gps!uif!mpdbm!dpnnvojuz! pg!mjwftupdl-!izhjfof!hvjefmjoft!gps!njmljoh!qbsmpst-! boe!uif!dpotvnfs;!pvs!àby.gffe!qsphsbn-!evccfe! boe!sftqpotjcmf!xbtuf!ejtqptbm/!Jo!Cbcz!Ovusjujpo-! Mjovt-!boe!pvs!hvn!bsbcjd!qsphsbn!gps!Bdujwjb/ Fvspqfbo!sfhvmbujpot!jnqptjoh!tusjdu!dpouspmt!po!cbcz! Mbvodife!jo!3117!cz!Ebopof!Gsbodf!bmpohtjef! gppe!dpoufou!ibwf!mfe!pvs!Gsfodi!tvctjejbsz!Cmejob! Cmfv!Cmbod!DÐvs-!bo!bttpdjbujpo!qspnpujoh!usbej. up!cvjme!vq!b!ofuxpsl!pg!mpdbm!bhsjdvmuvsbm!tvqqmjfst! ujpobm!bhsjdvmuvsbm!qspevdut-!uif!Mjovt!qsphsbn! nffujoh!sfmjbcmf!tuboebset/!Bmm!tjho!b!dibsufs!uibu! cvjmet!po!pvs!qbsuofstijqt!xjui!gbsnfst!jo!Opsnboez! sfrvjsft!uifn!up!gbsn!po!mboe!bxbz!gspn!bmm!tpvsdft! up!fodpvsbhf!uif!vtf!pg!àby!bt!b!obuvsbm!gpsujßfs!gps! pg!qpmmvujpo-!bobmz{f!tpjm!up!fotvsf!mpx!ojusbuf!dpoufou-! dpx!gffe/!Uiftf!dpxt!qspevdf!njml!uibu!jt!obuvsbmmz! Blédina France’s agricultural charter defines criteria for suppliers, among them the isolation of farmed areas from all sources of pollution boe!lffq!dspqt!gsff!pg!qftujdjef!sftjevf!boe!usbdft!pg! sjdi!jo!pnfhb.4!gbuuz!bdjetÒb!ovusjujpobm!cfofßu! Producers of apples, pears, quinces, potatoes and carrots in France’s southwest are regularly inspected for compliance. ifbwz!nfubmt/!Qspevdfst!pg!bqqmft-!rvjodft-!dbssput-! gps!dpotvnfstÒboe!hfofsbuf!bo!bwfsbhf!pg!21&!mftt! — — qfbst!boe!qpubupft!jo!tpvuixftufso!Gsbodf!bsf!sfhv. nfuibof!hbtÒb!cfofßu!gps!uif!fowjsponfou-!tjodf! mbsmz!bvejufe!gps!dpnqmjbodf/ nfuibof!fnjttjpot!bsf!bnpoh!uif!nbjo!fowjspo. nfoubm!jnqbdut!pg!mjwftupdl/! Uif!Kpdlfz!csboe!xbt!uif!ßstu!up!cfofßu!gspn!uif! POF!JNQPSUBOU!QBSU!PG!PVS!DPNNJUNFOU!JT!UIF! qsphsbn-!boe!upebz!Mjovt!dpwfst!41&!pg!uif!njml! EBOPOF!GVOE!GPS!OBUVSF-!TFU!VQ!JO!PDUPCFS!3119! qspevdfe!gps!Ebopof!jo!Gsbodf/!Uif!qsphsbn!ibt! XJUI!UIF!SBNTBS!DPOWFOUJPO!BOE!UIF!JOUFSOBUJPOBM! Actimel bottles recycled opx!cffo!efqmpzfe!jo!Tqbjo!boe!uif!Vojufe!Tubuft/ VOJPO!GPS!DPOTFSWBUJPO!PG!XBUFS!)JVDO*/!Gjobodfe!cz! Jo!b!tjnjmbs!tqjsju-!Bdujwjb!ibt!dibohfe!uif!psj!. Ebopof-!sfdphoj{fe!cz!uif!tdjfoujßd!dpnnvojuz-!boe! in France and Belgium hjobm!gpsnvmbujpot!gps!jut!ebjsz!esjolt!boe!gspnbhf! hvjefe!cz!uif!ufdiojdbm!fyqfsujtf!pg!bdujwf!Sbntbs!boe! The Dow Jones gsbjt!up!jodmvef!hvn!bsbcjdÒb!obuvsbm!johsfejfou! JVDO!nfncfst-!uif!gvoe!xjmm!ßobodf!jojujbujwft!uibu! Following the Waters division’s lead, Fresh Dairy © Products has stepped up efforts to reduce and Sustainability Index (DJSI) uibu!qspmpoht!uif!mjgf!pg!Cjßevt!BdujSfhvmbsjt -!uif! tujnvmbuf-!sftupsf-!ps!sfofx!fdptztufnt!xjui!bo!vovtvbmmz! recycle packaging. The Actimel bottle has shed a cfofßdjbm!dvmuvsf!dpoubjofe!jo!Bdujwjb/!Boe!cfdbvtf! ijhi!dbqbdjuz!up!bctpsc!dbscpo-!tvdi!bt!xfumboet/ third of its weight since launch, and is now being is one of three leading indexes tracking companies uif!hvn!bsbcjd!jt!ibswftufe!jo!uif!Tbifm!jo!qbsuofs. Bmuipvhi!uifz!sfqsftfou!pomz!7&!pg!uif!xpsmeÖt! recycled in France and Belgium—a step forward meeting sustainability criteria. (The two others tijq!xjui!TPT!Tbifm-!uif!qsphsbn!bmtp!dpousjcvuft!up! mboe!bsfb-!xfumboet!ßy!31&!pg!jut!dbscpo-!nbljoh! that would have been impossible only a few years are ASPI, the Advanced Sustainable Performance efwfmpqnfou-!dsfbujoh!kpct!boe!ifmqjoh!up!qsftfswf!uif! uiftf!uisfbufofe!fdptztufnt!b!qbsujdvmbsmz!fgßdjfou! ago. Danone is also harnessing the power of Indices, and FTSE4Good.) The DJSI is a basis for cjpejwfstjuz!uibu!jt!dsjujdbm!up!uif!sfhjpoÖt!gvuvsf/! qbsu!pg!uif!hmpcbm!fowjsponfou/!Uif!GvoeÖt!ßstu! innovation, studying biomaterials made from Socially Responsible Investment (SRI) funds, jojujbujwf!jo!311:!xjmm!cf!up!sftupsf!mbshf!bsfbt!pg! agricultural waste and working alongside suppliers which invest in companies chosen for their social nbohspwf!gpsftu!jo!Tfofhbm!voefs!uif!mfbefstijq!pg! to test new materials that are lighter than plastic. responsibility, respect for the environment Fwjbo-!uif!xpsmeÖt!ovncfs.pof!njofsbm!xbufs!csboe/! and governance as well as for their financial SFEVDF-! Uif!mbshf!rvboujujft!pg!dbscpo!usbqqfe!cz!uif!sftupsfe! performance. In 2008, the index manager awarded SFTUPSF-!SFOFX gpsftut-!dpncjofe!xjui!bo!bncjujpvt!dbscpo!sfevd. our group a score of 76%, up five points from Fwfo!xifo!Ebopof!bdijfwft!jut!3122!hpbm!pg!sfevdjoh! ujpo!qsphsbn-!xjmm!fobcmf!Fwjbo!up!bdijfwf!b!cbmbodfe! the previous year. Although SRI funds currently fnjttjpot!cz!41&-!xf!xjmm!tujmm!opu!cf!dbscpo!ofvusbm/! dbscpo!cvehfu!bt!fbsmz!bt!3122/ represent only 0.1% of financial investment Jofwjubcmz-!boz!joevtusjbm!pqfsbujpo!ibt!bo!jnqbdu!po! Jo!uif!gvuvsf-!Ebopof!xjmm!cspbefo!uif!tdpqf!pg! worldwide, since the early 2000s they have uif!fowjsponfou/!Boujdjqbujoh!uijt-!xf!ibwf!bmsfbez! uif!Gvoe!gps!Obuvsf-!beejoh!bhsjdvmuvsbm!jojujb. attracted increasing interest and now account for cfhvo!jnqmfnfoujoh!b!qspdftt!uibu!xjmm!dpnqfotbuf! ujwft!up!pggtfu!fnjttjpot!bttpdjbufe!xjui!pvs!gsfti! 11% of investment-fund assets in the United States. gps!uif!fnjttjpot!xf!dboopu!sfevdf/! ebjsz!qspevdut!ejwjtjpo/!Cz!tjnvmubofpvtmz!sfevdjoh!! In the last two years, SRI assets rose 18%, reaching fnjttjpot!boe!ßyjoh!dbscpo!xf!xjmm!dmptf!uif!djsdmfÒ $2.7 trillion in 2007. boe!ep!pvs!qbsu!up!nffu!pof!pg!uif!qmbofuÖt!hsfbuftu!! HZZ/ dibmmfohft/! lll#YVcdcZ#Xdb

88 —— Danone 2008 Danone 2008 —— 89 Sound governance is not only essential to efficient management, but also a source of strength in troubled times. GOVERNANCE For Danone this defines the way forward, calling for ever closer ties to stakeholders in pursuit of our mission of bringing health through food to as many people as possible.

Danone 2008 —— 91 GOVERNANCE INTERVIEW With the integration of our new Baby Nutrition and Medical Nutrition divisions, Danone is a business fully focused on food __ as a vector for health, making good corporate governance all the more important. AT DANONE, OUR BUSINESS LINES, MISSION AND POSITION AS A GLOBAL PLAYER THAT IS ALSO A LISTED COMPANY PLACE US AT THE CONVERGENCE OF THE INTERESTS OF ALL STAKEHOLDERS. Emmanuel Faber, Co-Chief Operating Officer in charge of Corporate Functions

he current economic crisis has shaken confi- qbsujdvmbsmz! wvmofsbcmf! hspvqtÒnfbot! uibu! xf! bsf! Tdence in many apparently sound business and financial ejsfdumz!dpodfsofe!xjui!gvoebnfoubm-!pgufo!tfotjujwf-! organizations, bringing fresh attention to bear on the qvcmjd.ifbmui!jttvft!uibu!bsf!jnqpsubou!up!tpdjfuz!bt!b! issues of corporate governance in civil society and the xipmf/!Jo!efbmjoh!xjui!uiftf!dibmmfohft-!xf!dpoujovf!up! public at large. Efnboet!gps!tusjdu!fuijdbm!tuboebset! ublf!b!qspbdujwf!bqqspbdi!uibu!ibt!qspwfo!jut!xpsui-! hat was the main for breastfeeding and then ensure our business to new conditions. But boe!usbotqbsfodz-!xjui!hpwfsobodf!qsbdujdft!pqfo!up! gbwpsjoh!ejbmph!boe!buufoujpo!up!bmm!tublfipmefst!jo!uif! thrust of corporate that young children have access the difficulties prevailing on global joefqfoefou!tdsvujoz-!bsf!npsf!qsfttjoh!uibo!fwfs/! tfbsdi!gps!dpowfshfodf!boe!qbuit!gps!tibsfe!qsphsftt! Wgovernance at Danone in 2008? to varied, complementary foods markets are also a reminder of the Bxbsf!pg!uiftf!offet-!Ebopof!ibt!nbef!fwfsz!fggpsu!up! )tff!uif!joufswjfx!xjui!Fnnbovfm!Gbcfs!po!uif!ofyu! Emmanuel Faber: Our 100% focus for a quality diet. And I hope that need to ensure that our products bqqmz!bqqspqsjbuf!svmft!boe!qspdfttft!uispvhipvu!pvs! qbhf*/! on health puts heavy demands on international organizations will take remain affordable and accessible and hspvq!fwfs!tjodf!uif!nje.2::1t/!Xjui!uif!gvmm!tvqqpsu! governance, since the credibility up our proposals for multi-partite thus create value for all our consumers. pg!uif!Cpbse!pg!Ejsfdupst!)tff!gpmmpxjoh!qbhf*-!uiftf! and health benefits of our products consultations on these issues to fggpsut!ibwf!mfe!up!uif!efwfmpqnfou!pg!b!gsbnfxpsl!boe! are now absolutely critical. Which find solutions for the problems that Did you adopt any new procedures uppmt!gps!tpvoe!hpwfsobodf!up!fotvsf!fggfdujwf!sjtl! makes it essential to reinforce the have been around for decades. or other tools in 2008? nbobhfnfou!boe!gvmm!sfhvmbupsz!dpnqmjbodf!jo!bmm!pvs! opuifs!nbjo!dpodfso!gps!dpsqpsbuf!hpwfso. processes underpinning credibility EF: We have had the tools to A and ensure that quality management You mentioned “the world ensure good corporate governance cvtjofttft/!Pqfsbujoh!voefs!uif!pwfsbmm!tvqfswjtjpo!pg! bodf!jo!3119!xbt!tpdjbm!joopwbujpo/!Uif!mbvodi!pg!pvs! uif!hspvqÖt!Sjtl-!Dpouspm!boe!Bveju!Efqbsunfou-!pvs! ebopof/dpnnvojujft!qspkfdu-!cbtfe!po!uif!dpncjo!bujpo! is fully integrated, every step of now taking shape.” Was that a for quite some time. In 2008, foufsqsjtf!sjtl.nbobhfnfou!boe!joufsobm.dpouspm! pg!b!tuboebse!jowftunfou!gvoe!)tjdbw*!boe!b!wfouvsf. the way—from product design reference to the financial and we took commitment to social ufbnt!fotvsf!befrvbuf!nbobhfnfou!tuboebset-!dpn. dbqjubm!gvoe!)GDQS*!mfe!vt!up!bepqu!bo!be!ipd!hpwfsobodf! to consumer feedback. economic crisis of 2008? innovation—a core component of our qmjbodf!xjui!pvs!Cvtjoftt!Dpoevdu!Qpmjdjft-!boe!bqqmj. tusvduvsf!)gps!npsf!bcpvu!ebopof/dpnnvojujft-!tff! EF: The crisis means that we are mission—a step further. We are very dbujpo!pg!hppe!qsbdujdft!uispvhipvu!Ebopof!bspvoe! qbhf!88*/!Tjodf!Bqsjm!3118-!uif!jowftunfou!gvoe!ibt! What is the defining feature of now even more committed to dialog aware of the issues facing societies uif!xpsme/!Uijt!dpousjcvuft!up!uif!sfmjbcjmjuz!pg!pvs! cffo!ifbefe!cz!b!Cpbse!pg!Ejsfdupst-!nptu!pg!xiptf! Danone’s approach to governance? with all our stakeholders. Because one today, which include the environment, ßobodjbm!jogpsnbujpo-!xijdi!jt!!qsfqbsfe!jo!bddpsebodf! nfncfst!bsf!gspn!pvutjef!uif!hspvq/!Tfqbsbufmz-!b! EF: In a word: dialog. Dialog among of its consequences has been to create work with low-income groups in poor xjui!uif!sfdpnnfoebujpot!pg!uif!BNG-!GsbodfÖt!ßobo. Tpdjbm!Joopwbujpo!Dpnnjuuff!csjoht!uphfuifs!tubgg! stakeholders is increasingly essential in distrust of business, particularly big countries, and our ambitions in terms djbm!nbslfu!bvuipsjuz-!vtjoh!b!tztufn!pg!tfmg.bttfttnfou! nfncfst!gspn!pvs!wbsjpvt!cvtjofttft!boe!joefqfoefou! the world now taking shape, and the businesses, in the general public and of health, which have now taken uibu!fobcmft!tubgg!bu!tvctjejbsjft!up!nfbtvsf!uif!rvbmjuz! qfstpobmjujft!sfdphoj{fe!gps!uifjs!fyqfsujtf!jo!tpdjbmmz! way we’ve built up Danone’s business in civil society. The financial crisis has on even greater force for Danone. pg!uifjs!pxo!qsbdujdft!boe!lffq!tufq!xjui!qsphsftt/!Uiftf! sftqpotjcmf! jowftunfou-! qbsujdvmbsmz! jo! efwfmpqjoh! makes it all the more critical for us. shaken confidence in the organizations Such issues call on us to invent new qsbdujdft!bsf!bmtp!npojupsfe!cz!Joufsobm!Bveju!ufbnt! dpvousjft/!Uif!Dpnnjuuff!sfwjfxt!jowftunfou!qsp. And dialog made good progress driving economic life. But people ways of working and new ways of uibu!dbssz!pvu!sfhvmbs!po.tjuf!fohbhfnfoutÒ61!jo! qptbmt-!xijdi!ju!nbz!uifo!qbtt!po!up!uif!nbobhfnfou!pg! over the year, reaching deeper and shouldn’t equate the economy with relating to society. So we are looking 3119Òup!difdl-!wbmjebuf!ps!dpssfdu!qspdfttft!bt!offefe/! uif!wfouvsf.dbqjubm!gvoe/!Nffujoh!podf!b!npoui-!jut! enabling us to develop solutions that finance. It is precisely because finance very closely at our organizations Uispvhipvu!uif!qbtu!zfbs-!b!qsjpsjuz!pg!uiftf!Sjtl-! spmf!jt!up!jefoujgz!qspkfdut!xjuijo!uif!tdpqf!pg!Ebopof! hold promise for the future—which took over control of the economy that and processes in the field. That is Dpouspm!boe!Bveju!vojut!xbt!up!tibsf!uiftf!hppe!hpw. bt!b!cvtjoftt!pqfsbujpo!boe!uiptf!uibu!dpncjof!uif! in turn consolidates our capacity to we are now seeing these painful and coordinated by our Social Innovation fsobodf!qsbdujdft!xjui!uif!tvctjejbsjft!pg!pvs!ofx! joopwbujwf!dibsbdufs!boe!tpdjfubm!qspnjtf!nbljoh!uifn! fulfill our mission over the longer term. partly structural readjustments around Committee, made up of Danone Cbcz!Ovusjujpo!boe!Nfejdbm!Ovusjujpo!ejwjtjpot/! tvjubcmf!gps!ebopof/dpnnvojujft/!Uif!Dpnnjuuff!uivt! With the acquisition of Numico, we the world. An economy is about managers backed by experts from civil ! bdut!bt!efdjtjpo!nblfs!boe!mfbefs!pg!tpdjbm!jojujbujwft! now produce food for the health of living together, and finance is only a society. At Board level, governance is sfmzjoh!cpui!po!EbopofÖt!njttjpo!pg!csjohjoh!ifbmui! babies and very young children, and tool for that, not an end in itself. We supervised by our Social Responsibility uispvhi!gppe!up!bt!nboz!qfpqmf!bt!qpttjcmf!boe!po!pvs! we have made concrete efforts to have to remember that a business Committee. I am convinced that dpodfqujpo!pg!b!evbm!fdpopnjd!boe!tpdjbm!gvodujpo!gps! ensure we can meet the challenges. only exists because it creates value social innovation is not a utopian psf!cspbemz-!uif!joufhsbujpo!pg!uiftf!ejwj. cvtjoftt/!Ju!xpslt!jo!dmptf!dppqfsbujpo!xjui!uif!Tpdjbm! This includes working for a consensus for society, and thus value for people. vision, but an urgent necessity. M on the application of the World Health Creating value for shareholders is tjpot-!nbljoh!Ebopof!b!cvtjoftt!foujsfmz!gpdvtfe!po! Sftqpotjcjmjuz!Dpnnjuuff!pg!uif!Cpbse!pg!Ejsfdupst-! ifbmui!uispvhi!gppe-!ibt!beefe!up!uif!jnqpsubodf!pg! xijdi!bmtp!sfwjfxt!bmm!qspqptbmt!gps!jowftunfou!uispvhi! Organization’s code published in 1981 both a necessary consequence and hppe!dpsqpsbuf!hpwfsobodf!gps!uif!hspvq/!Pvs!njttjpo! ebopof/dpnnvojujft!)tff!qbhft!:5.:6*/ and developing channels for dialog. a necessary condition of that. And in pg!csjohjoh!ifbmui!uispvhi!gppe!up!bt!nboz!qfpqmf!bt! On this point, I am convinced of 2008 we showed them that we have qpttjcmfÒxijdi!jodmveft!cbcjft!boe!fmefsmz!qfpqmf-!uxp! the need to provide added support the capacity to adjust and attune

92 —— Danone 2008 Danone 2008 —— 93 GOVERNANCE

uif!hspvq!boe!sfwjfxjoh!jut!tpdjbm!qpmjdjft/!Ju!bmtp!dpo. Jo!3119-!uif!Dpnnjuuff!nfu!gpvs!ujnft-!dpotjefsjoh! tjefst!sfqpsujoh-!bttfttnfou!boe!dpouspm!qspdfevsft!up! jo!qbsujdvmbs!uif!tbmbsjft!boe!cfofßut!gps!dpsqpsbuf! fotvsf!uif!sfmjbcjmjuz!pg!uif!opo.ßobodjbm!jogpsn!bujpo! pgßdfst!boe!nfncfst!pg!uif!Fyfdvujwf!Dpnnjuuff/!Ju! Activities of uif!hspvq!tvqqmjft/!Ju!sfwjfxt!opo.ßobodjbm!jogpsnb. bmtp!sfwjfxfe!Bgfq.Nfefg!sfdpnnfoebujpot!boe!uif! ujpo!qvcmjtife!cz!uif!hspvq-!jo!qbsujdvmbs!sfmbujoh!up! hspvqÖt!dpnqmjbodf-!bt!xfmm!bt!bmm!uif!ßyfe!boe!wbsjbcmf! fowjsponfoubm!boe!tpdjbm!cvtjoftt!nbuufst/!Ju!dpoevdut! dpnqpofout!pg!dpnqfotbujpo!gps!uif!gpvs!dpsqpsbuf! bo! boovbm! sfwjfx! pg! opo.gjobodjbm! sbujoht! pg! uif! pgßdfst! )nboebubjsft!tpdjbvy*! boe! bmm! nfncfst! pg! uif! the Board of Directors Dpnqboz!boe!jut!tvctjejbsjft!gspn!joefqfoefou!bhfo. Fyfdvujwf!Dpnnjuuff/!! djft-!boe!pwfstfft!dpnqmjbodf!xjui!uif!hspvqÖt!dpef!pg! fuijdt/!Tjnjmbsmz-!ju!bttfttft!uif!jnqbdu!pg!uif!hspvqÖt! tpdjbm!cvtjoftt!jojujbujwft!boe!dpnqmjbodf!xjui!hspvq! EbopofÖt!Cpbse!pg!Ejsfdupst!dpvout!24!nfncfst-!tfwfo!pg!uifn! qsjodjqmft!xifsf!jowftunfout!boe!bdujpo!jo!uijt!bsfb!bsf! sfmbufe!up!uif!hspvqÖt!cvtjoftt/!Ju!jt!buufoujwf!up!uif! Executive officers’ compensation.Fyfdvujwf!pgß. qspufdujpo!pg!uif!hspvqÖt!joufsftut!boe!bdut!up!bwpje!boz! dfstÖ!dpnqfotbujpo!qpmjdjft!bsf!gpvoefe!po!qsjodjqmft! joefqfoefou-!boe!ju!ibt!uisff!tqfdjbmj{fe!dpnnjuufftÒ! dpoàjdut!pg!joufsftut!cfuxffo!tpdjbm!cvtjoftt!jowftunfout! bqqmzjoh!up!bmm!hfofsbm!nbobhfst!boe!pwfs!pof!uipvtboe! boe!uif!hspvqÖt!puifs!bdujwjujft/!Jo!3119-!uif!Dpnnjuuff! nbobhfst!bspvoe!uif!xpsme/!Uif!wbsjbcmf!fdpopnjd! uif!Bveju!Dpnnjuuff-!uif!Tpdjbm!Sftqpotjcjmjuz!Dpnnjuuff! nfu!uisff!ujnft-!dpotjefsjoh!jo!qbsujdvmbs!tpdjbm!cvtj. qpsujpo!pg!dpnqfotbujpo!pg!uif!Dibjsnbo!boe!Dijfg! oftt!qpmjdjft!boe!sfmbufe!qspkfdut!voefs!xbz/!Ju!uivt! Fyfdvujwf!Pgßdfs-!Gsbodl!Sjcpve-!uif!Wjdf!Dibjsnbo! boe!uif!Opnjobujpo!boe!Dpnqfotbujpo!Dpnnjuuff/! jttvfe!b!gbwpsbcmf!pqjojpo!dpodfsojoh!uif!dpnqmjbodf! pg!uif!Cpbse!pg!Ejsfdupst!boe!Dp.Dijfg!Pqfsbujoh! pg!qspqptfe!jowftunfout!jo!2112!Gpoubjoft!boe!Mbjufsjf! Pggjdfs-! Kbdrvft! Wjodfou-! boe! uif! uxp! Dp.Dijfg! ev!Cfshfs!xjui!uif!ebopof/dpnnvojujft!hpwfsobodf! Pqfsbujoh!Pgßdfst-!Fnnbovfm!Gbcfs!boe!Cfsobse! dibsufs/! Ipvst-!jt!dpnqvufe!xjui!sfgfsfodf!up!hspvq!pckfdujwft! jo!ufsnt!pg!tbmft-!usbejoh!pqfsbujoh!nbshjo-!boe!voefs. mzjoh! fbsojoht! qfs! tibsf-! boopvodfe! up! gjobodjbm! nbslfut/!Ju!bmtp!ublft!joup!bddpvou!uif!hspvqÖt!tpdjbm! cvtjoftt!bjnt!boe!bo!bttfttnfou!pg!tusbufhz!efqmpzfe! Nomination and Compensation Committee.!Uif! pwfs!uif!zfbs/!Dpnqfotbujpo!qbje!up!nfncfst!pg!uif! Opnjobujpo!boe!Dpnqfotbujpo!Dpnnjuuff!dpvout! Cpbse!pg!Ejsfdupst!boe!Fyfdvujwf!Dpnnjuuff!jo!sftqfdu! uisff!nfncfst-!uxp!pg!uifn!joefqfoefou/!Jut!ubtlt! pg!uif!3119!ßobodjbm!zfbs!upubmfe!€28/:!njmmjpo/!Jo! jodmvef!tvcnjttjpo!pg!qspqptbmt!gps!uif!bqqpjounfou! 3119-!uif!gpvs!nfncfst!pg!uif!Cpbse!pg!Ejsfdupst!xip! he Board met eight times in 2008, with meet- udit Committee.!Uif!njttjpot!pg!uif!Bveju! pg!Ejsfdupst!up!uif!Cpbse-!qsfqbsbupsz!xpsl!gps!uif! bsf!bmtp!fyfdvujwf!pgßdfst!sfdfjwfe!uif!gpmmpxjoh!dpn. ings lasting 1 hour and 45 minutes on average and A T Dpnnjuuff!xfsf!efßofe!bu!nffujoht!pg!uif!Cpbse!pg! CpbseÖt!dpotjefsbujpo!pg!hpwfsobodf!jttvft-!bttfttnfout! qfotbujpo;! Gsbodl! Sjcpve-! Dibjsnbo! boe! Dijfg! attendance averaging 79%. Sfdvssfou!tvckfdut!gps! Ejsfdupst!jo!Efdfncfs!3117!boe!Kvmz!3118/!Uif! pg!uif!Cpbse!pg!Ejsfdupst!boe!puifs!Dpnnjuufft-!boe! Fyfdvujwf!Pgßdfs-!€5-174-139Bruno Bonnell(2), nbobhfst!gspn!tvctjejbsjft!bspvoe!uif!xpsme-!up!hbjo! ocial Responsibility Committee.! Tfu! vq! po! competitiveness cluster +ċŏ 0 ċ Emmanuel Faber S Bruno Bonnell(2), b!effqfs!voefstuboejoh!pg!dpnqboz!nbobhfnfou/ Efdfncfs!26-!3117-!uif!Dpnnjuuff!ibt!b!tfu!pg!joufsobm! sfhvmbujpot!efßojoh!jut!njttjpo!boe!pshboj{joh!jut! 50, Chairman, Robopolis SAS &#6ii]ZcYZeZcYZci9^gZXidg

94 —— Danone 2008 Danone 2008 —— 95 Danone Research Des partenariats mondiaux à la pointe de la recherche.

Paris, France 08 Recherches conjointes sur les effets des probiotiques sur la santé.

Washington University School of medecine, in St. Louis, U.S.A. Projet de recherche évaluant l’interaction Key figures des probiotiques avec la fl ore bactérienne __ intestinale. EbopofÖt!sftvmut!gps!3119!bhbjo!jmmvtusbuf!uif!tusfohui! pg!pvs!cvtjoftt!npefm/!Pshbojd!tbmft!hspxuiÒbu!dpotubou! tdpqf!pg!dpotpmjebujpo!boe!dpotubou!fydibohf!sbuftÒsfbdife! b!ifbmuiz!!9/5&!boe!usbejoh!pqfsbujoh!nbshjo!sptf! La recherche scientifi que au service de la santé par la nutrition 64!cbtjt!qpjout!up!25/:2&/!Qfs.tibsf!ejmvufe!ofu!jodpnf! po!dvssfou!cvtjoftt!)fydmvejoh!njopsjuz!joufsftut*!

100 ans d’expérience Des partenariats scientifi ques Des bénéfi ces santé cliniquement tipxfe!b!26/2&!jodsfbtf!gspn!uif!qsp!gpsnb!! Isaac Carasso, fondateur de Danone, dévelop- mondiaux démontrés pa ses premiers yoghourts en s’inspirant des Les 1200 collaborateurs de Danone Research Danone Research accorde une place prépon- ßhvsf!gps!3118/! recherches de l’Institut Pasteur. travaillent en partenariat avec la communauté dérante aux études cliniques dans ses investi- Un siècle plus tard, fi dèles à nos racines, nous scientifi que et les universités du monde en- gations scientifi ques. poursuivons dans cette voie par la recherche tier afi n de rester à la pointe de la recherche Ainsi, en 2008, nous menons plus de 50 étu- et l’innovation. et de la connaissance. des cliniques pour garantir les bénéfi ces de Ainsi, plus de 200 collaborations scientifi - nos produits tels qu’Actimel et Activia. ques sont menées sur le plan international.

8.4% Organic growth in Danone’s consolidated sales for 2008. Of this, approximately 2.8% was attributable to volume increases and 5.6% to improved pricing.

Recherche et Innovation sur www.danone.com CENTRE DANONE RESEARCH PALAISEAU96 - ——FRANCE Danone 2008 Danone 2008 —— 97 08 Key figures

INTERVIEW 2008/ A 53 basis-point rise in operating margin __ Trading operating margin on current business came in at 14.91% in 2008, Results showing a rise of 164 basis points, or 53 bp at constant scope of đŏ(!/ŏup 8.4% full year consolidation and exchange rates. In Baby Nutrition and Medical Nutrition, in 2008, rises in operating margins were up 230* and 149* basis points, respectively, +9.6% in the first half and +7.1% in the second half reflecting cost synergies linked to the integration of Numico following the merger plus productivity gains. Operating margin for the Waters đŏ%(10! ŏ 1..!*0ŏ*!0ŏ income per share WE HAVE CONSOLIDATED division, in contrast, slipped as a result of a rise in costs and lower cover attributable to the Group: for fixed costs. The Fresh Dairy Products division reported a rise attributable +15.1% in 2008** THE STRUCTURE OF OUR DEBT in particular to improved operating performance. Promotion charges đŏĂĀĀĊŏŏ0.#!0ŏĨ*!0ĩčŏ AND BALANCE SHEET. were up 20 basis points from 2007, a rise mainly attributable to the Fresh +10% like-for-like* Dairy Product and Baby Nutrition divisions. A^`Z"[dg"a^`Z!^#Z#!ViXdchiVci Pierre-André Térisse, Executive Vice President, Finance hXdeZd[Xdchda^YVi^dcVcY ZmX]Vc\ZgViZh 8dbeVgZYl^i]egd[dgbV'%%, ÒcVcX^VahiViZbZcih

hat were the You announced growth in circumstances, we are expecting main business a range of 8 to 10% for 2008. conditions to remain difficult in 2008 financial highlights Wdevelopments in 2008? And that’s what happened. developed countries, whereas Pierre-André Térisse: What is your forecast for this year? they should vary significantly in What obviously stands out is P-A T: Given the extent of emerging markets. Some will be 2007 2008 the completely exceptional the economic downturn, we facing severe monetary pressures, Net sales (€ m) 12,776 15,220 economic environment. are not aiming to equal last putting strains on their economies, Trading operating income (€ m) 1,696 2,270 The current crisis marks the year’s performance. Growth will But Asian markets should be Trading operating margin 13.27% 14.91% end of the growth model of remain robust in some sectors, more resilient and open up fresh Current net income (attributable to the Group) (€ m) 1,185 1,313 the previous ten years and including baby nutrition, medical scope for growth in 2009. the beginning of far-reaching nutrition and water on emerging Underlying diluted EPS (attributable to the Group) (€) 2.47 2.74 adjustments. In this context, markets, but others are likely to What will be the priorities Free cash flow (€ m) 984 1,183 we had to take a fresh look at suffer from the global slowdown. for the finance department a good number of management We are nonetheless aiming for in current conditions? parameters. In the end, the an overall increase in sales and P-A T: Our people had their Sales by business line in € millions commitment and cohesion of continuing improvements in work cut out for them last year, the new management team operating margin. We should get especially at crisis moments, such Medical Baby Fresh Dairy Waters enabled us to turn in good results, some added leverage for this with as on October 3 and 4 when the Nutrition Nutrition Products 2,874 meeting our targets and laying the easing in raw material prices. international financial system 854 2,795 8,697 the foundations for the future. seemed on the brink of collapse. ++'%*#ŏ0ŏ !2!(+,)!*0/ŏ At the end of 2008 you Not that we were ever at any within the group, the successful made a €1 billion bond issue. risk of not meeting our financing integration of Numico was clearly What were the reasons? needs, but we had to keep a very an achievement, and we can also P-A T: We wanted to further close eye on developments and be be very happy with the very strong consolidate our financial bases, very creative. And that is the way growth in our new businesses. beyond our needs for 2008 we will have to go on operating On the purely financial side, and 2009. The issue was a big to deal with the consequences of refinancing operations in the course success, demonstrating investors’ the current period of transition. of the year and the sale of our continuing appetite for bonds Frucor subsidiary helped to put our with quality signatures like ours, balance sheet on a more even keel. despite the difficult conditions Not only have we improved debt now prevailing on market. ratios, but we now have a sounder debt structure and greater room What geographical areas do you for maneuver. Finally, our investors’ think have most potential? seminar in November was the P-A T: In tough economic times, occasion for us to highlight drivers the food sector is in a better for continued growth and reinforce defensive position than most. HZZ/ dialog to build investor trust. While predictions are risky in the lll#YVcdcZ#Xdb

98 —— Danone 2008 Danone 2008 —— 99 08 Key figures

Financial highlights in € millions Net sales in € millions

Change Increase on Income Statement data 2007 2008 2007/2008 like-for-like Net sales 12,776 15,220 19.1% By business line 2007 2008 basis Organic growth(1) +9.7% + 8.4% - Fresh Dairy Products(6) 8,299 8,697 +7.7% Trading operating income 1,696 2,270 33.9% Waters 3,535 2,874 +1.9% Trading operating margin 13.27% 14.91% 53 bp(1) Baby Nutrition(6)(7) 809 2,795 +17.0% Current net income (attributable to the Group) 1,185 1,313 - Medical Nutrition(7) 133 854 +12.7% Net income (attributable to the Group) 4,180 1,313 - GROUP TOTAL 12,776 15,220 +8.4%

+6[iZggZXaVhh^ÒXVi^dcd[7a‚Y^cVhVaZh^c7VWnCjig^i^dc# Cash flow data ,>c'%%,i]Z7VWnCjig^i^dcVcYBZY^XVaCjig^i^dca^cZh^cXajYZYildbdci]h d[Wjh^cZhhViCjb^Xd!VXfj^gZYdcDXidWZg(&!'%%,# Cash flow provided by operations 1,430 1,699 - Increase on Capital expenditure (726) (706) - like-for-like (2) Purchases of businesses and other investments (12,100) (259) - By region 2007 2008 basis (3) Free cash flow 984 1,183 20% Europe 7,670 9,524 +5.1% Asia 1,643 1,854 +16.3% Financial position Rest of the world 3,463 3,842 +13.2% Net debt 11,261 11,055 - GROUP TOTAL 12,776 15,220 +8.4% Stockholders’ equity (including minority interests) 9,100 8,700 - Debt/equity ratio 123.7% 127.1% - Operating income in € millions Current per-share data (€) Underlying diluted EPS (attributable to the Group) 2.47 2.74 15.1%(4) Trading operating income by business line 2007 2008 Dividend per share 1.1 1.2(5) 9.1% Fresh Dairy Products 1,133 1,224 Waters 480 368 Market Baby Nutrition 74 489 No. of shares at Dec.31 (’000) 512,851,460 513,802,144 - Medical Nutrition 7 189 Share price at Dec.31 (€) 61.40 43.18 - Other items 2 - Market capitalization at Dec. 31 (€ millions) 31,500 22,200 - GROUP TOTAL 1,696 2,270

Personnel Trading operating income by region 2007 2008 Total employees at Dec.31 76,044 80,143 - Europe 1,107 1,496 Europe 30,428 30,560 - Asia 177 313 Outside Europe 45,616 49,583 - Rest of the world 412 461 GROUP TOTAL 1,696 2,270 &A^`Z"[dg"a^`Z!^#Z#!ViXdchiVcihXdeZd[Xdchda^YVi^dcVcYZmX]Vc\ZgViZh# 'CZid[XVh]VXfj^gZY# (8Vh]Ódl[gdbdeZgVi^dchaZhhX]Vc\Z^cldg`^c\XVe^iVagZfj^gZbZciaZhhXVe^iVaZmeZcY^ijgZcZid[Y^hedhVah# )GZaVi^kZidegd[dgbVXjggZcicZi^cXdbZeZgh]VgZ# *IdWZhjWb^iiZYidi]Z6ccjVa

Sales by business line Sales by region

18% 6% 25% 63% Baby Medical Rest of Europe Nutrition Nutrition the world

57% 19% Fresh Dairy 12% Waters Products Asia

100 —— Danone 2008 Danone 2008 —— 101 08 Key figures

Trading operating margin Sales by region and by business line (% worldwide)

In 2008, operating margin stood at 14.91%, 164 basis points above 2007. At constant scope of Centr consolidation and exchange rates, group margin was up by 53 basis points. al E u 67.6% r o Weste 9.4% p rn e E Change on 55.7% u 20.5% r like-for-like o 16.0% p 2.5% Trading operating margin by business line 2007 2008 basis 19.5% e Fresh Dairy Products 13.7% 14.1% +49 bp 8.8% Waters 13.6% 12.8% –153 bp Baby Nutrition 9.1% 17.5% +230 bp Medical Nutrition 5.3% 22.1% +149 bp GROUP TOTAL 13.3% 14.9% +53 bp

Change on like-for-like Trading operating margin by region 2007 2008 basis Europe 14.4% 15.7% +57 bp Asia -P a Asia 10.8% 16.9% +166 bp c 7.8% i fi Rest of the world 11.9% 12.0% +1 bp 47.1% c GROUP TOTAL 13.3% 14.9% +53 bp 42.5% 2.6% North A m e 91.1% r i c 5.4% a Workforce 3.5% fric A a/M At December 31, 2008, Danone had 80,143 employees, including 30,560 in Europe, id d 22,693 in the Americas and 26,890 in the rest of the world. 77.9% l e at 4.9% E in a

A s

m 15.3% t 68.1% e r i Employees by business line Employees by region c 1.8% 27.2% a 2.1% 4% 2% 6% 11% 2.6% Medical Corporate Africa/ France Nutrition Functions Middle East FRESH DAIRY PRODUCTS WATERS BABY NUTRITION ŏ   ŏ  ŏ 14% Baby Nutrition 39% 28% Fresh Americas 27% Dairy Rest of Products Europe Sales by region and by business line (% worldwide) in € millions 2008 Fresh Dairy Waters Baby Medical 18% 41% Rest of 10% Products Nutrition Nutrition TOTAL Waters Asia-Pacific China Western Europe 4,051 1,161 1,417 641 7,270 Central Europe 1,523 212 462 57 2,254 Asia-Pacific 144 874 789 47 1,854 North America 1,217 72 - 47 1,336 0%*ŏ)!.% ŏ āČăĂăŏŏ ĆĂĉŏ ąāŏ Ćāŏ 1,943 Africa/Middle East 439 27 86 11 563 TOTAL 8,697 2,874 2,795 854 15,220

102 —— Danone 2008 Danone 2008 —— 103 08 Key figures

2008 results in € millions Main stockmarket indices from December 31, 2007 to December 31, 2008

2007 2007 published pro forma 2008  100: December 31, 2007 Trading operating income 1,696 2,108 2,270 Other operating income and expense (150) 0 (83) Operating income 1,546 2,108 2,187 Cost of net debt (175) (424) (439)  Other financial income and expense (2) (46) (145) Income tax (410) (453) (443) Net income of companies included in consolidated accounts 959 1,185 1,160  Net income of equity-accounted affiliates 87 111 62 Net income of operations discontinued, sold or in the process of being sold 3,292 0 269 Net income 4,338 1,296 1,491 Minority interests 158 153 178  Attributable to the Group 4,180 1,143 1,313 -Net non-operating income of operations discontinued, sold or in the process of being sold (3,110) - (269)

-Net non-operating income from continuing operations 115 - 269  Current net income attributable to the Group 1,185 1,143 1,313         $  !  !  !      "      Diluted current net income attributable to the Group (EPS in euros) 2.47 2.38 2.74    ##     !   ## 

The cost of net debt reflects the full-year impact of financing for the Numico acquisition combined Almost throughout the year, Danone shares did better than the Paris market’s CAC 40 index and the with a rise in the average cost of debt. Dow Jones Euro Stoxx 50, performing in line with the highly diversified Dow Jones Stoxx Food and Beverage index. More narrowly, it proved more resilient than a number of indexes after the eruption of The current effective tax rate was 23.5% in 2008 compared with 27% in 2007. The decline was the financial crisis in September. mainly attributable to changes in the scope of consolidation combined with lower rates in the countries where Danone operates and a favorable balance across these countries. This trend continued into the closing months of the year, with the announcement of third-quarter results in October and the investors’ seminar in November helping Danone shares to deliver better Net income from discontinued operations representing business sold or in the process of being returns than indexes. sold and amounting to €269 million, mainly consists of the additional payment received in connection with the group’s sale of its interest in the joint venture General Biscuit Glico France.

The non-current net result reflects, among other things, an impairment charge for Danone’s Key market data at Dec. 31 2005 2006 2007(1) 2008 unconsolidated interest in Wimm-Bill-Dann and other non-recurring charges. in € millions Market capitalization at Dec. 31 23,252 30,000 31,500 22,200 Current net income attributable to the group rose 15% from the 2007 figure to stand at in € €1,313 million, while current net income per share after dilution was up 15.1%* to €2.74.* Closing price for the year 88.25 114.80 61.40 43.18 High for the year 96.30 121.10 64.17 64.00 +3ŏ"+.ŏ0$!ŏ5!.ŏŏ ćĈċĉĀŏ ĉĆċĂĀŏ ĆāċăĀŏ 38.60 thousands of shares Average number of shares traded daily 1,427 1,212 3,076 3,265 +15.1% &6[iZgild[dgdcZhea^idc?jcZ&!'%%,# Relative to pro forma current net income per share after dilution (attributable to the group)

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104 —— Danone 2008 Danone 2008 —— 105 08 Key figures

Dividend per share Danone share key data

đŏNUMBER OF SHARES AT FEB. 11, 2009: 513,802,144 2005 2006 2007 2008 đŏOMINAL VALUE: €0.25 per share (at Feb. 11, 2009) thousands of shares đŏŏSTOCK EXCHANGE LISTINGS: NYSE Euronext Paris, the SWX Swiss Exchange, and traded as Number of shares 264,235 260,865 512,851 513,802 American Depository Shares/Receipts (ADS/ADR) on the US market (1 share = 5 ADS). in € Net dividend per share 1.70 2.0 1.10 1.20(1)

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Identifiable holders of bearer shares Capital expenditure (in € millions) Capital expenditure totaled €706 million or 4.6% of consolidated sales At December 31, 2008 % capital in 2008. Investments were held at a healthy level during the year to back Institutional investors 726 geographical expansion in emerging markets, but eased in the closing quarter to allow for the slowing growth observed in some countries. France 31% 706 Of the total for the year, 40% was invested in countries with high growth UK 8% 621 potential (Argentina, Brazil, Canada, China, Indonesia and the US), Germany 4% while 3% was allocated to countries where we have only recently begun Benelux 4% operating, in particular South Korea. Rest of Europe 6% USA 22% Outlays in 2007 concerned primarily investments to raise capacity in countries where the group was already present, notably Russia, China, Rest of the world 5% Argentina, Mexico, Indonesia and the United States, and fresh dairy Individual shareholders and FCPE “Fonds groupe Danone” 13% product operations in countries where we had only recently begun Treasury stock 7% 2006 2007 2008 operating, in particular Egypt, Colombia and Chile. TOTAL 100%

7% Treasury stock

€1.20 + % 13% 20 dividend distributed Individual 2008 change shareholders to shareholders in in free cash flow. and FCPE respect of 2008*. *proposed to the General 80% Meeting of shareholders Institutional on April 23, 2009. investors

106 —— Danone 2008 Danone 2008 —— 107 08 Key figures

2008 SOCIAL AND ENVIRONMENTAL INDICATORS Social indicators

2008 Cover(1) Environmental indicators Total employees at Dec. 31 80,143 100% +3,800 100% A selection of key indicators* for Fresh Dairy Products, Waters and Blédina in Danone’s 2008 sustainable development report* was reviewed in an investigation report by KPMG Audit.

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Fresh Dairy Products, Waters, Baby Nutrition, Fresh Dairy Products, aters, Blédina Production (’000 metric tons) 21,944 Production sites Total number Cover rate Total number of sites certified compliant with

Total amount of waste generated (’000 metric tons) 159 Total amount of waste eliminated through specific (’000 metric tons) 123 Proportion of waste eliminated through specific waste management path 77% Total water consumption (’000 cubic meters) Waste-water COD (chemical oxygen demand) in ’000 metric tons Significant emission incidents (chemical and hydrocarbons) 2 Emissions of greenhouse gases (CO in metric kilotons CO 406 22% 96.0%

SOX 1,693 NO Gases depleting the ozone layer (in kilograms CFC equivalent)

&;dghdbZWjh^cZhhjc^ih!i]ZhZÒ\jgZhbVnVahd^cXajYZad\^hi^Xh!cdiVWanl]ZcY^hig^Wji^dc^hVY_VXZciidVegdYjXi^dceaVci# ':mXajY^c\hajY\Z[gdblVhiZ"lViZgeaVcih# (LViZgXdchjbZYWneaVcih!ZmXajY^c\lViZgeji^cidWdiiaZhVcYXdciV^cZgh# )7VhZYdc.&d[h^iZhgZegZhZci^c\bdgZi]Vc..d[idiVa\gdje8D9# *.&d[h^iZhgZegZhZci^c\..d[hVaZh#

70,458 98.7%

25 98.7%

& IdgZÓZXiY^heVg^i^Zh^ci]ZhXdeZd[Xdchda^YVi^dcVcYi]Z^g^beVXidcgZedgi^c\!VXdkZggViZ^hXVaXjaViZY[dgZVX]hdX^Va^cY^XVidg0i]^h^hWVhZYdci]ZidiVa cjbWZgd[9VcdcZhVaVg^ZYZbeadnZZhVinZVg"ZcY'%%--%!&)(eZdeaZ# ':aZXiZYdgYZh^\cViZYWnVigVYZjc^dc# ( :aZkZc[ViVaVXX^YZcih^c'%%-XdcXZgcZYh^m9VcdcZZbeadnZZhVcYÒkZhjW"XdcigVXidgh^ci]Z;gZh]9V^gnEgdYjXih!LViZghVcY7a‚Y^cVhZ\bZcih#BdhilZgZ gdVYVXX^YZcih#I]ZYZiV^aZYbdci]angZedgiegdk^YZYWnhjWh^Y^Vg^Zh^cigdYjXZY^c'%%-ZcVWaZhjhidegdk^YZ\gZViZgYZiV^adcdjghV[ZinYViVi]^hnZVg# ):mXajY^c\7VWnCjig^i^dcVcYBZY^XVaCjig^i^dc!i]^hÒ\jgZlVh*'#

108 —— Danone 2008 Danone 2008 —— 109 For 90 years, Danone’s business has been your health.

FOR MORE INFORMATION:

Registration Document Sustainability Report For more pictures, information and films Downloadable at Downloadable at www.danone. taking you to the heart of Danone, visit: www.finance.danone.com com, under Sustainable www.danone.com Development, then Expert’s Corner.

Danone — 15 rue du Helder, 75439 Paris Cedex 09. Visitors: 17 boulevard Haussmann, 75009 Paris, tel. +33 1 44 35 20 20 — Corporate Communications, tel. +33 1 44 35 20 71. Toll-free number for shareholders: 0800 320 323 (from landlines in metropolitan France). Financial information: www.finance.danone.com - www.danone.com

This report is printed on recycled, wood-free paper approved by the Forest Stewardship Council (FSC), an international organization pro- In 1919, Isaac Carasso developed the first Danone yogurt and sold it in pharmacies moting sustainable forestry. Inks and coatings are vegetable based. The printer is certified under the Imprim’vert program, as well as by the FSC and under the Programme for the Endorsement of Forest Certification Schemes. in Barcelona. Ninety years on, the same passion drives the men and women at Danone whose daily efforts are devoted to making food our best ally for healthy living. Photo credits: J.Arndt/Getty Images, G. Beguin, C. Close/Getty Images, J. Damasse, V. Damourette/Sipa Press, A. Facelly/Sipa Press, Fotolia, J.-C. Guilloux, T. Haley/Sipa Press, R. Meigneux/Sipa Press, “1001 Fontaines pour demain”, M. Ralston/AFP, S. Stafford/Getty Images, J.Somehm/VisionsofAmerica, Tendance Floue, J. Witt/Sipa Press, D.R. - Graphics: IDE - Photoengraving: Graphic Partners - English text: Durban/Blake/Clementi - Design and production: (ref. RADA008). 1919 2009