Danone in CIS
Danone in CIS Yves Legros
Agenda
CIS: Opportunities in a Growth Region Danone Unimilk: the right growth platform “One Company” Plan and Ambition
–2–
Russia is back to solid growth after the crisis Russian economy stands at the 7th place of GDP calculated on the basis of the purchasing power parity (€bln., 2010) USA China
47%
10 941 7 614 3 196
32%
India
3 131
164%
2 195
Real GDP1 (€ bln.)
2000
2005
2009
2015
38%
Russia
1 655
100%
Brazil
1 627
72%
UK
1 609
40%
France
1 590
39%
Italy
1 369
26%
Growth rate 2010/2000
GDP based on PPP per capita1 (€ per capita) 4.44%
5.20%
2000
2005
(1) Calculated in 2005 prices (2) Estimate based on the data from EIU and Global Insight –3–
4.20%
4.82%
242%
Japan
Germany
Starting from early 2000s Russian GDP grew at a steady rate of approximately 5% per year
2009
2015
CIS fresh dairy market has been growing consistently Fresh Dairy Market Size Growth (mln Euro) vs Y-1 Market estimation by Euromonitor
CIS Fresh Dairy Market: - Doubled in 6 years - Sensitive to crisis, but fast recovering
CIS Total Dairy Market: - Steady growth of per capita consumption 2000-2010 at 4% CAGR - Market Valorization
(1) Fresh Dairy Market includes: Yoghurt and Sour Milk Drinks, Chilled and Shelf Stable Desserts, Chilled Snacks, Cream, Fromage Frais and Quark –4–
Still a market with low fresh dairy consumption per capita
CIS Dairy and Fresh Dairy Market: - Growing Purchasing Power - High potential market for Fresh Dairy * Data on Fresh Dairy Consumption by Euromonitor ** GDP growth PPP 2010-2015 (source EIU) –5–
GDP Growth 2010-15
Key trends on CIS market
Switch from bulk consumption
BRANDS
Highly ‘branded’ market Value-added categories growth
Naturality, Purity and Tradition trend
NATURALITY
Cooking at home
MODERN TRADE
–6–
Growth of Modern Trade Consolidation of main players Regional expansion
Agenda
CIS: Opportunities in a Growth Region Danone Unimilk: the right growth platform “One Company” Plan and Ambition
–7–
Danone + Unimilk Snapshot
Danone entered Russian market in 1992
Unimilk established in 2002
4 plants in CIS
25 plants in CIS
Annual sales* 2010 : 700 mln €
Annual sales* 2010 : 1.3 bn €
Focus on “blockbuster” brands; developing mainstream modern category
Numerous brands allowing the company to address the vast majority of the market
Russian Fresh dairy market**
Russian Fresh dairy market**
- 25.6% market share - #1 player
- 13.9% market share - #3 player
* Based on 2010 exchange rate : 40.31 RUR/€ ** Source: Nielsen Retail Audit, National Urban, FM 2011 –8–
Marrying Activia with Prostokvashino… Activia
Prostokvashino
Activia #1 brand for Danone Russia
Prostokvashino #1 brand for Unimilk
Leader of Active Health
Tradition & Quality
Brand #1 for women
Family Brand
Modern Categories and Kefir
Leader in Traditional Categories
Strong drive through Media support
Strong and well-recognized ambassador – Matroskin
Bifidus and health as consumption trigger Growing through innovations
- Adjacent categories - New consumption occasions
- 2009 – Brand of the Year Award/EFFIE - #2 Brand in Russia 2010 (FMCG) by Forbes* Growing through innovations - PET bottled Milk - Granulated Cheese
* Based on 2010 exchange rate : 40.31 RUR/€ ** Domik v Derevne, main competitor on #6 with x2 advertising budgets –9–
An alliance of 2 complementary geographies Russia, Total Dairy, FM 2011 estimated Value Market Share
Western Russia Population 73 % COMBINED ~27%
Eastern Russia Population 17% COMBINED ~30%
Source: AC Nielsen FM 2011 – 10 –
Danone-Unimilk: complimentarity drives synergies Portfolio
Regions
Distribution
Industrial & supply chain Best-in-class practices
Focus on Premium and Health
Focused on “the West”
Modern retail and Direct RTM
Focus on traditional with reach to all SELs
Focused on “the East”
Presence in traditional channels
+ Large network
= Revenue synergies: +10% additional sales over 3 years DANONE UNIMILK
Cost synergies: + ~ 200 bp margin over 4 years
– 11 –
Agenda
CIS: Opportunities in a Growth Region Danone Unimilk: the right growth platform “One Company” Plan and Ambition
– 12 –
From Collaboration to Integration Phase 1. Collaboration
Phase 2. Integration
7 selected collaboration project in key business areas:
Building organization with focus on:
- SAP implementation in Unimilk - Finance reporting in Unimilk - Joint Sales Operations (RTM-pilot) - Key Account Management - Purchasing Synergies - Product Localization and Industrial - Logistics Identification of most potential areas of Danone and Unimilk best practices implementation
- Growth - Profitability - Sustainability Full scope integration - Strategic Plan - Operating Models - Change Plan
03/2011
12/2010 09/2010
07/2010
Deal Collaboration approval initiatives
Deal announcement
– 13 –
Joint Sales Team Pilot
Days of Change
Agenda
CIS: Opportunities in a Growth Region Danone Unimilk: the right growth platform “One Company” Plan and Ambition
–2–
Russia is back to solid growth after the crisis Russian economy stands at the 7th place of GDP calculated on the basis of the purchasing power parity (€bln., 2010) USA China
47%
10 941 7 614 3 196
32%
India
3 131
164%
2 195
Real GDP1 (€ bln.)
2000
2005
2009
2015
38%
Russia
1 655
100%
Brazil
1 627
72%
UK
1 609
40%
France
1 590
39%
Italy
1 369
26%
Growth rate 2010/2000
GDP based on PPP per capita1 (€ per capita) 4.44%
5.20%
2000
2005
(1) Calculated in 2005 prices (2) Estimate based on the data from EIU and Global Insight –3–
4.20%
4.82%
242%
Japan
Germany
Starting from early 2000s Russian GDP grew at a steady rate of approximately 5% per year
2009
2015
CIS fresh dairy market has been growing consistently Fresh Dairy Market Size Growth (mln Euro) vs Y-1 Market estimation by Euromonitor
CIS Fresh Dairy Market: - Doubled in 6 years - Sensitive to crisis, but fast recovering
CIS Total Dairy Market: - Steady growth of per capita consumption 2000-2010 at 4% CAGR - Market Valorization
(1) Fresh Dairy Market includes: Yoghurt and Sour Milk Drinks, Chilled and Shelf Stable Desserts, Chilled Snacks, Cream, Fromage Frais and Quark –4–
Still a market with low fresh dairy consumption per capita
CIS Dairy and Fresh Dairy Market: - Growing Purchasing Power - High potential market for Fresh Dairy * Data on Fresh Dairy Consumption by Euromonitor ** GDP growth PPP 2010-2015 (source EIU) –5–
GDP Growth 2010-15
Key trends on CIS market
Switch from bulk consumption
BRANDS
Highly ‘branded’ market Value-added categories growth
Naturality, Purity and Tradition trend
NATURALITY
Cooking at home
MODERN TRADE
–6–
Growth of Modern Trade Consolidation of main players Regional expansion
Agenda
CIS: Opportunities in a Growth Region Danone Unimilk: the right growth platform “One Company” Plan and Ambition
–7–
Danone + Unimilk Snapshot
Danone entered Russian market in 1992
Unimilk established in 2002
4 plants in CIS
25 plants in CIS
Annual sales* 2010 : 700 mln €
Annual sales* 2010 : 1.3 bn €
Focus on “blockbuster” brands; developing mainstream modern category
Numerous brands allowing the company to address the vast majority of the market
Russian Fresh dairy market**
Russian Fresh dairy market**
- 25.6% market share - #1 player
- 13.9% market share - #3 player
* Based on 2010 exchange rate : 40.31 RUR/€ ** Source: Nielsen Retail Audit, National Urban, FM 2011 –8–
Marrying Activia with Prostokvashino… Activia
Prostokvashino
Activia #1 brand for Danone Russia
Prostokvashino #1 brand for Unimilk
Leader of Active Health
Tradition & Quality
Brand #1 for women
Family Brand
Modern Categories and Kefir
Leader in Traditional Categories
Strong drive through Media support
Strong and well-recognized ambassador – Matroskin
Bifidus and health as consumption trigger Growing through innovations
- Adjacent categories - New consumption occasions
- 2009 – Brand of the Year Award/EFFIE - #2 Brand in Russia 2010 (FMCG) by Forbes* Growing through innovations - PET bottled Milk - Granulated Cheese
* Based on 2010 exchange rate : 40.31 RUR/€ ** Domik v Derevne, main competitor on #6 with x2 advertising budgets –9–
An alliance of 2 complementary geographies Russia, Total Dairy, FM 2011 estimated Value Market Share
Western Russia Population 73 % COMBINED ~27%
Eastern Russia Population 17% COMBINED ~30%
Source: AC Nielsen FM 2011 – 10 –
Danone-Unimilk: complimentarity drives synergies Portfolio
Regions
Distribution
Industrial & supply chain Best-in-class practices
Focus on Premium and Health
Focused on “the West”
Modern retail and Direct RTM
Focus on traditional with reach to all SELs
Focused on “the East”
Presence in traditional channels
+ Large network
= Revenue synergies: +10% additional sales over 3 years DANONE UNIMILK
Cost synergies: + ~ 200 bp margin over 4 years
– 11 –
Agenda
CIS: Opportunities in a Growth Region Danone Unimilk: the right growth platform “One Company” Plan and Ambition
– 12 –
From Collaboration to Integration Phase 1. Collaboration
Phase 2. Integration
7 selected collaboration project in key business areas:
Building organization with focus on:
- SAP implementation in Unimilk - Finance reporting in Unimilk - Joint Sales Operations (RTM-pilot) - Key Account Management - Purchasing Synergies - Product Localization and Industrial - Logistics Identification of most potential areas of Danone and Unimilk best practices implementation
- Growth - Profitability - Sustainability Full scope integration - Strategic Plan - Operating Models - Change Plan
03/2011
12/2010 09/2010
07/2010
Deal Collaboration approval initiatives
Deal announcement
– 13 –
Joint Sales Team Pilot
Days of Change
