Danone Philippe Rich, Peter Huo, Christie Wei January 9th,

Agenda 1.Introduction Current Situation Scope of Review Investment Highlights 2.Key Decision Criteria 3.Valuation 4.Risks 2

Section 1 Introduction 3

Current Situation With a strategic focus on geographic presence, Danone has chosen to focus on expanding into Africa, where the growth has been stunning in recent years. Kenya has been identified as an interesting expansion area, given strong demographic trends Danone is considering 2 options for entry – Greenfield investment – Import 4

Scope of Review Review the strategic fit of Kenyian entry Comprehensive analysis of financial impact of both entry options – Sales and net income – NPV – Payback period Discussion of risks and mitigants on the chosen option Discussion of alternative options available for Kenyian entry 5

Opportunity Statement 1.Take Option A: Make greenfield investment and establish a subsidiary in Kenya 1.NPV of 481mn and payback period of 4 years 2.Kenya is a strong, untapped market with high growth 3.Kenya expansion aligns well with Danone`s geographic strategy and vision of improving people`s health 6

Company Overview Business SegmentsGeographic Segments Financial Summary Decline in sales growth rate and margin compression has lead to a decline in EPS in the past 3 years 7

Geographic Expansion Overview Geographic Segment GrowthKenya Danone Africa Overall, we are seeing higher growth in the ALMA region. We recommend Kenya as a key African market for Danone to enter given the 5% expected consumption growth rate and large potential market size. Europe: 2% North America: 5% Alma: 7% 6x growth in past 6 years 4 countries to 40 countries 44mm residents Median age of 19 years old High infant mortality of 50% of infants under 5 years old 5% expected consumption growth for Danone products forecasted 8

Section 2 Project Analysis 9

Key Decision Criteria – Expansion Expansion into Keyna aligns well with Danone`s strategy and will help accelerate sales growth and boost net income, although will come at additional risk and capital expenditure. CriteriaExpandNo Expansion Geographic presence+- Sales growth+- Earnings potential+- Risk-+ Capital Expenditure-+ 10

Key Decision Criteria – Option Comparison Given higher NPV of option A, we recommend it over option B. Although Option B has a lower payback period, given our long-term investment horizon, we prefer the higher NPV project CriteriaOption AOption B Revenue+- Net Income+- NPV$481m$239m Payback Period4 years2 years RiskHigherLower 11

Section 3 Valuation 12

Financial Summary 13

Kenya Market Share Projections 14

Valuation – NPV Option A Option A NPV: $481m Payback Period: 4 years (2019) 15

Valuation – NPV Option B Option B NPV: $238m Payback Period: 2 years (2017) 16

Financial Summary While option A has a slightly longer payback period, it generates higher value in the long-term 17

Section 4 Risks 18

Risks and Mitigants Risks are inherent in an expansion into a foreign country, especially in emerging markets, however, given Danones experience African markets,, mitigants exists. RisksDescriptionMitigants Supply Chain RiskHygene may be undermined given logistical distance Increase operational compliance and logistical control Geopolitical RiskUnfamiliar with local environment Already have established presence in 40+ African countries. Kenya is a relatively developed African country Foreign Exchange RiskCost and revenues are in local currency, while Danone reports in Euros Enter forward currency contract 19

Additional Considerations Expansion into Kenya presents an attractive opportunity, but Danone should review financing methods and forecast assumptions as well as consider other alternatives Investment Considerations Financing – Debt or cash on hand Assumptions – WACC may deserve a country risk premium Investment Considerations Joint venture – partner with an investor – Reduces financial commitment while retaining control and oversight over operations Licensing – Low risk and financial commitment – Limited return potential 20

Opportunity Statement 1.Take Option A: Make greenfield investment and establish a subsidiary in Kenya 1.NPV of 481mn and payback period of 4 years 2.Kenya is a strong, untapped market with high growth 3.Kenya expansion aligns well with Danone`s geographic strategy and vision of improving people`s health 21