1. International competitiveness thru Innovation
Yves Rey
Corporate Quality General Manager Danone 1

2. From Breakdown to Breakthrough
International Competitiveness Thru Innovation
Focusing on “Research and Development”
Focusing on Stakeholders’ satisfaction
High quality products.
Free Trade ad Domestic Liberalization are the best way to encourage higher quality standards
Create a Quality Culture

3. International Companies
Social Pyramid
Danone Corporate Mission - Bring health thru food to as many people as possible
International Companies
Upper
Class
Middle
Class
Poor
National Companies
COFCO Corporate Mission - Offer nutritious and healthy foods and superior quality life services; - Establish industry leadership; and - Maximize the interests of customers, shareholders and employees 3 3

4. DANONE 2010 – Key Facts About Danone:
Danone is present in over 120 countries on 5 continents
More than 160 production plants
Around 100,000 employees
Sales of € 17 billions, of which half were in emerging markets

5. A world leader in healthy food industry
N°1 worldwide in Fresh Dairy Products
N°2 worldwide in Bottled Water
N°2 worldwide in Baby Nutrition
N°1 in Europe in Medical Nutrition

6. A coherent products portfolio covering needs and demands at every age
Growth/
Building Capital
Maintenance/
prevention
Ageing process/
Problem solving
High
Specific nutrition/ Food needs
Low
Infants/Children
Teenagers
Adults
Seniors 6

7. A unique mission based on 4 axes
Bringing health through food
to as many people as possible
Health
For All
Nature
People 7

8. Half of business in emerging markets
Top 10 countries FY 2010*
Sales breakdown in 2010*
49%
Emerging
markets
1. France
2. Russia
3. Spain
4. USA
5. Mexico
6. Germany
7. Indonesia
8. UK
9. China
10. Argentina
39%
Western
Europe
Account for 64% of the company growth 2%
Japan
+ ANZ
10%
North America
Innovation account for 40% of the Total sales over the past 3 years 8 8

9. Social Pyramid GDP/hab
Usually companies only target this part of the social pyramid
Gross Domestic Products
Rich
1 Billion
people
$25K $
Medium
0,95 Billion
people
< $10
Poor
4,75 Billion
people
Bringing health thu food to as may people as possible 9 9

10. Business Evolution Consumers are Ready to pay if there is a value
Danone is increasingly:
Tailoring its products for emerging-market consumers
Making the products in the markets in which they are sold
Adapting thee products to local nutritional requirements, tastes and … budget
Consumers are Ready to pay if there is a value

11. Covering the full pyramid with portfolio management
Dairy Romania
Baby Nutrition Indonesia
Price Points
280
180
100 70 11 11

12. Business Risk & Opportunity
Danone’s challenge
Work with local raw materials, source and produce locally
Guarantee product safety to these low-income consumers in countries where Quality & Food Safety processes are in their infancy
While supplying affordable products meeting Danone Quality standards to consumers…

13. Consumer’s hierarchy of needs
PRODUCT SUPERIORITY
Guarantee
Brand Superiority
Deliver
Quality
PRODUCT CONFORMITY
Commit to
Food safety
PRODUCT SAFETY

14. Food Security program in Emerging Countries
Non-Negotiable requirements
In Emerging countries, it is accepted that our products/processes do not comply 100% with our corporate standards.
Normal procedure is to have an action plan in place how to reach the standards
Some requirements however are so crucial for food safety reasons that we do not accept a non-compliance

15. Bringing Health thru food to as many people as possible
Codex / National Regulation / Danone Corporate Standards & Systems
Premium
Codex / National Regulation / Danone Corporate/Local* Standards & Systems
Value
Codex / National Regulation / Danone Non-negotiable criteria
Affordable
* Consumer Driven requirements

16. International competitiveness
International competitiveness is built up on:
Product quality
Ability to innovate
Capacity to adjust rapidly to customers' needs
Absence of restrictive practices in the labor market and local regulations
Warning
International norms, standards, rules, and practices may drive businesses toward harmonization…

17. What can create competitive edge
Innovation product quality and international competitiveness
Higher product quality helps differentiate and gain market share in “reference-priced” and “homogenous” products
Breakthrough innovation is especially relevant in creating new consumers’ experiences and ensuring consumers’ loyalty

18. Chinese Industry
Chinese industries have made tremendous progress since China opened its door to the world.
China’s national economic competitiveness has been improved significantly over the past 25 years.
Competition only based on lower labor cost will not put Chinese industry in a competitive position in long run.
What are the things that should be done to make Chinese industry stay competitive in the future world market?
Innovation and Product Quality

19. International Companies
Social Pyramid
International Companies
Upper
Class
Speed to innovate
Product Quality
Middle
Class
Poor
National Companies
From commodities to added value products 19 19

20. Provocative Questions
Is « Made in France » an international guarantee of high quality standards?
Has France still the capacity to innovate?
Do we have the educational infrastructure for supporting it
Is France a quality trend setter?... Just like Japan was
Do The Authorities help promote this image
“Due to the bad image of French politicians”…State-run companies don’t help promote “made in France” as label of quality
As French-based international companies, what do we do in this field?
Can IRIS play a role in this field?

21. Consumer Good Forum: The Consumer Goods Forum (CGF) is a global, parity-based industry network. It brings together the CEOs and senior management of over 650 retailers, manufacturers, service providers across 70 countries and reflects the diversity of the industry in geography, size and product category . Forum member companies have combined sales of EUR 2.1 trillion.
Global Food Safety Initiative
The Global Food Safety Initiative (GFSI) is a international multi-stakeholders platform collaboration bringing together the world's leading quality experts from retailer, manufacturer and food companies associated with the food supply chain.
It is coordinated by The Consumer Goods Forum

22. GFSI: A unique multi-stakeholder platform across the world
North America: 9
Europe: 5
Asia: 3
South America: 1 22

23. GFSI Board Members
9 Manufacturers
7 Retailers
2 Food Service 23

24. GFSI Technical Committee

25. GFSI Advisory Council