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Business 34A41 Baf2 24/05/05 15:02 Page 36 Dairy Drives Success Health a Strategy Structured for Close Relationships with Consumers business 34a41_baf2 24/05/05 15:02 Page 36 > 037 BUSINESS DAIRY resh Dairy Products had a with strong showings from Italy, Spain and Highlights Dairy record year in 2004, confirming other countries to the south as well from the business line’s place as the the UK and Germany to the north. France BRAND AWARENESS Health driver for the Group’s growth. was something of an exception, since per- > In 2004, research institute Sales volumes showed the formance suffered from soft demand for GFK rated Danone the top brand fstrongest rise ever, putting on 8.8% or mass-market consumer goods as well as in terms of spontaneous, top-of- drives success close to 350,000 metric tons more than in the government-sponsored initiative for mind awareness (33%), placing 2003, as did sales revenues, up 10.5% to concerted retail-price reductions in the it well ahead of competitors. Fresh Dairy Products posted record growth in 2004, consolidating u6.9 billion or nearly half the consolida- second quarter. DANONE’s world leadership in the field. Momentum reflects the ted total. Operating income was up from ADDED SCOPE FOR success of product concepts and brands centered on health and u845 million to u947 million, setting the Asset brands— PARTNERSHIP WITH a strategy structured for close relationships with consumers. operating margin at 13.7%. Results reflect local know-how MCDONALD’S vigorous trends in several geographical for global concepts > Since March 2004, regions, in particular Latin America, where McDonald’s has offered Fruit & sales rose 22% overall. Major contribu- The main sources of momentum were the Yogurt, Europe’s first on-tap tions came from both Mexico and business line’s asset brands. These represent yogurt, in 6,200 European Argentina, where DANONE consolidated its four powerful concepts structured around restaurants as part of its move top place with a rise of 75,000 metric tons health benefits, backed by significant to expand its menus with more in sales volumes. Favorable trends conti- commitment to research and development emphasis on health. nued in North America, where the com- —each generating worldwide sales of several bined successes of Dannon and Stonyfield million euros and posting double-digit growth. A STRONG START Farm restored the Group’s number-one Each of these blockbusters offers distinct FOR DANACOL place on the market. Growth was similarly health benefits to people around the world, > Launched in April 2004, strong in eastern and central Europe, ave- although they may be sold under different Danacol is already a benchmark raging 25% overall and topping 50% in names from one country to the next. Thus for the French market. Enriched Russia. Alongside emerging markets where Activia, called Bio in France, favors healthy with vegetable sterols, a natural the Fresh Dairy Product sector is still taking digestion, while Actimel helps to reinforce ingredient that helps reduce shape, traditional markets, mostly in the immune system and Danonino, called levels of bad cholesterol, Europe, also made healthy contributions, Petit Gervais aux Fruits in France, ••• this new yogurt contributes effectively to the prevention of cardio-vascular disease. Danacol has since been deployed on other European markets including Spain, United States: a winning combination Belgium, Ireland and Portugal. When it bought a minority the company the benefit in cooperation with interest in Stonyfield Farm, of resources in areas Dannon. The results speak LEADING POSITIONS number one in the US for including research and for themselves: since WORLDWIDE* organic yogurts, and raised development, logistics DANONE acquired its first > No. 1: North Africa and this to a majority in and purchasing. interest, Stonyfield Farm the Middle East December 2003, DANONE Founded in the 1970s has more than doubled > No. 1: Argentina was not aiming to merge and still headed by the its sales and production. > No. 1: Belgium the new subsidiary with same manager, Stonyfield The combined market > No. 1: Canada its existing business Farm remains faithful share of Dannon and > No. 1: Spain including through Dannon. Instead, to its tradition of social Stonyfield Farm has also the Canary Islands its goal from the start was concern, donating 10% risen steadily and now > No. 1: Eastern Europe to preserve Stonyfield’s of its profits to selected exceeds that of their > No. 1: France distinctive character causes each year, and main competitor on the > No. 1: US and way of doing things, continues to apply its US market. > No. 2: Turkey so as to maintain own philosophy in * Based on sales volume for yogurts and assimilated products momentum while giving developing its business DANONE 2004 business 34a41_baf2 24/05/05 15:03 Page 38 INESS 038 > BUS DAIRY > INDONESIA: calcium enriching the most families. To AFFORDABLE natural milk-protein achieve this, DANONE QUALITY content. Plus a very combined rigorous Danone Indonesia’s affordable price—a cost control with the new drinkable yogurt crucial consideration resources of Danone helps children to grow up healthy and leader. Moufid yogurts in Morocco are SALES GROWTH* ••• got off to a vigorous in a country where Aqua, number-one in strong. Finally Vitalinea, also called Taillefine, another example. Sold at only one dirham start with 10 million 60% of people live on Indonesia for bottled +9.4% +9.6% +10.5% Vitasnella and Ser, depending on the country, a serving—less than one-tenth of a euro— bottles sold in just less than $3 a day. water, and its 90 days, reflecting a The 100 ml bottle sells nationwide distribution is a range of diet products for people keeping these are perfectly suited to conditions in combination of taste for just 1,000 rupiah— network (see also an eye on their weight. Clearly, these benefits a country where purchasing power is low appeal and nutritional the equivalent of p. 47). are not confined to any particular region, but where dairy products are a traditional quality, with five around u0.10—putting vitamins and added it within the reach of *10euro cents. but familiarity with local consumers has been mainstay of diet, as reflected in daily sales nonetheless essential to success. To take of 650,000 servings a day. an example, Danonino, originally launched in Western Europe, has won its place Looking ahead on emerging markets including Argentina, 2002 2003 2004 Brazil and Saudi Arabia, with a different ver- Affordable, adaptable products backed by sion for each country to target prevalent familiarity with local consumers have childhood nutritional deficiencies. Backed enabled DANONE to take its place on what by communications focused on scientifically are generally considered tough markets, SALES BY REGION proven health benefits, Danonino is now on and the Fresh Dairy Products business line offer in 35 countries and generates annual is now confident in itsability to step up the 75% Europe sales of close to u750 million. pace of expansion on new frontiers in While these four champion brands now China, Russia, Indonesia and other parts account for half of its total sales, the Fresh of the world where consumption of dairy 25% Rest Dairy Products business line remains products is still very low. Health will be a of World faithful to its local brands, which are an central theme, as it has been for recent essential part of its strategy to maintain and product deployments. These include strengthen consumer relationships. Here Danacol, a yogurt favoring the reduction the key to success is the precise identifi- of bad cholesterol levels, which got off to cation of needs and expectations to allow a strong start in France in April 2004. SALES BY SEGMENT rapid development of products to match. Successful launches in Portugal, Italy, the In the US, it thus took Dannon only a few UK and Belgium followed in the second months to develop its Light’n Fit Carb half of the year, providing a perfect 92% Yogurt and assimilated Control range, launched in January 2004 illustration of DANONE’s strategic emphasis products to meet the demands of the 60 million on health benefits.• 8% Baby food Americans on low-carb diets, a segment where the brand is now the uncontested OPERATING MARGIN 12.8% 13.7% 13.7% A winning smile The identity of Danone consumers see the Fresh Dairy Products Danone logo as a sign for has evolved with time, quality, trust and health. is being deployed and the logo must naturally Rounded at the edges, by stages for Fresh keep pace. the new logo displays Dairy Products in over The challenge for designers a smile suggestive of 40 countries. It is also was to combine warmth appetite, pleasure and used for other products 2002 2003 2004 and immediate appeal the well-being associated sold under the Danone in a format attuned to with health that shows. name, including the spirit of the times Backed up with the biscuits in Asia and without weakening signature “Smile from Taillefine/Vitalinea * like-for-like brand recognition, since within”, the new design waters. DANONE 2004 business 34a41_baf2 24/05/05 15:03 Page 40 SS > BUSINE > 040 ESS 041 DAIRY BUSIN DAIRY ey figures Products k R&D Fresh Dairy Probiotics, the benefits of science Research Recent months have seen a pioneer in the field, DANONE Increased concern for health number one for probiotics & Development surge in interest for probiotics has built up a unique store of and continuing scientific in Japan and Asia as a € millions u 2000 2001 2002 2003 2004 from both medical journals expertise through its research progress have made probiotics whole, makes for added TAILORING DANONINO TO and magazines for the general and the development of the most promising market momentum, with DANONE LOCAL NEEDS Sales 6 530 6 928 6 276 6 185 6 914 public in countries ranging groundbreaking ranges that segment in fresh dairy holding a 20% interest in > Like Actimel, Activia and Organic growth* +6.7% +6.8% +9.4% +9.6% +10.5% from the UK, the Netherlands include Activia—sold as Bio in products.
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