Mexico Dairy Strategy

DANONE DE MEXICO
Didier LAMBLIN
Summary
1. Company history
2. Growth key drivers
3. Huge potential market
4. How will we capture the potential?
5. What will we do better as in the past?
1. Company History
Overview
Joint - venture in 1973 with Xala Industrial, Mexican Cy.
Creation in 1976 “1st Danone Company outside
Europe”.
A well balanced business 50/50
(Modern Trade/ Proximity).
A pioneer company in Corporate Social Responsability.
One only factory of 350,000 T “Irapuato” the third best
performer W.W.
30 years presence of Danone in the mexican market.
The main player
in a dynamic market
1. Company History
Value SOM
Trend
7.8
7.3
5.5
5.8
16.9
7.6
7.5
7.6
5.3
17.5
6.7
7.5
10.7
4.0
16.5
6.1
7.2
13.6
4.1
16.0
16.5
14.5
14.4
12.7
5.7
7.6
15.6
4.1
15.8
10.1
40.2
40.0
40.2
40.3
41.3
2002
DANONE
LALA
Source: ACNielsen
2003
NESTLE
YAKULT
2004
2005
YOPLAIT
OTHERS
YTD 2006
ALPURA
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1985
1980
1975
2. Growth Key Drivers
Innovation
Construyamos
sus sueños
T
o
n
s
3. Huge Potential
Market
Solid economic fundamentals
2001
102
6,100
-0.2
2006
107.5
7,960
+4.0
Inflation %
+4.4
+3.5
Exchange rate (MXN/USD)
9.34
10.51
Trade balance (US$bn)
International Reserves (US$bn)
-9.73
+45.00
-5.47
+75.00
External debt / GDP
12.91%
8.44%
Population (Million)
GDP per capita (US$)
GDP growth %
3. Huge Potential
Market
Favorable Demographics
The spend for kids and older population
will increase during the years
Population Pyramid 2005
Population Pyramid 2015
81 a 90
81 a 90
61 a 70
61 a 70
41 a 50
41 a 50
21 a 30
21 a 30
0 a 10
0 a 10
-30
-20
-10
0
10
20
30
-30
Less than 30 years:
2005: 60.3%
2015: 52.4%
SOURCE: CONAPO
-10
10
30
3. Huge Potential
Market
A dynamic market
Total market evolution – Fresh Dairy products
Volume (K'Tons)
2005
2006 E
Total Market (estimated)
702,000
783,000
Growth rate (estimated)
12.0%
11.5%
Danone Market Share
36.9%
38.0%
259,000
297,500
2005
2006 E
Total Market (estimated)
19,300
21,600
Growth rate (estimated)
12.8%
11.9%
Danone Market Share (estimated)
40.3%
41.3%
750
870
Danone Poposal volume
Value (M'$)
Gross Sales M$
CAGR 2007 / 2010
+ 12%
+1 point of share
CAGR 2007 / 2010
+ 13%
+1 point of share
3. Huge Potential
Market
Huge opportunity building FDP
consumption per capita
KG per capita
40
35.4
35
30
22.9
25
20
15
12.8
7.2
10
5
0
France
Spain
Argentina
Mexico
4.8
Brasil
3. Huge Potential
Market
Potential consumer Pyramid
(SEC / Population / Monthly Average Income)
Consumption per capita
AB / 3.9 M / >85,000
80,710 tons
20.5 Kg/hab
C / 19.9 M / 11,600 - 84,999
261,460 tons
13.1 Kg/hab
D / 46.8 M / 2,700 - 11,599
383,610 tons
8.2 Kg/hab
E / 33.4 M / <2,700
20,040 tons
0.6 Kg/hab
Total Market 745,820 tons
3. Huge Potential
Market
Market Share Potential
in 3 Regions
AREA 1
AREA 2
33.3%
Nielsen Retail
2006 (value)
31.0%
TOTAL MÉXICO
Danone Market Share
41. 1%
47.2%
49.7%
AREA 5
AREA 3
44.4%
AREA 4
33.5% AREA 6
4. How will we capture
the potential?
Leveraging the Fresh Dairy Products relevance for
consumers.
Pushing our “actual blockbusters” to the limit.
Accelerating innovation “International as local”
Fastening distribution conquest
Improving excellence in execution.
Implementing regional strategy “In Mexico & Central
America”
4. How will we capture
the potential?
Milk
Yogurts
Bones strength
Osteoporosis
Children growth
Keep you regular
Digestive problems
Energy
Immune system
Maintain the right weight
Athletic performance
Cleanses body
Average:
Leveraging the Fresh Dairy
Products relevance for consumers
41%
36%
35%
34%
30%
26%
24%
23%
21%
21%
29%
Bones strength
Osteoporosis
Children growth
Immune system
Sleep better
Energy
Mental performance
Athletic performance
Concentration
keep looking good
Average:
Source: Ipsos helath barometer – March 2006
Basis: total national population
Top 10 atributes Avg.
77%
69%
61%
31%
27%
26%
20%
17%
17%
14%
36%
50
Yogurt
Milk
40
30
20
10
0
Mexico
Spain
Argentina
4. How will we capture
the potential?
Pushing our “actual
blockbusters” to the limit.
3
Mexico
Argentina
Spain
Kgs. Per Capita
2,5
2
1,5
1
0,5
0
Petit Suisse
Light
Top santé
4. How will we capture
the potential?
Innovation
Only 3 of the global Diamonds
Actimel
Danacol
Room to INNOVATE !!!
4. How will we capture
the potential?
Distribution Conquest
High level of frecuency = more business for
Danone and better service level to customer as
better cash flow management to shopkeeper
Danone Mexico is testing ‘twice a week visits’
on a Proximity Route => + 29% Volume
4. How will we capture
the potential?
Excellence in Execution
Danone leader of “shelves space” continues developing the
category working on best visibility of FDP layout
2006 From 29.4%
to 33.5% Share of Shelf
2
4. How will we capture
the potential?
Excellence in Execution
GOAL 12/2007
PAINTED IN BLUE
2
4. How will we capture
the potential?
Regionalisation
It is necessary to prioritize our efforts by geographies
Norte
Strategy : Attack Lala & Sigma strongholds
Mode :
- Direct in bigger cities (Monterrey)
- Distributors & Alliance
- Push on Proximity & Convenience
Centro Norte - Centro Sur -Bajio
Strategy : - Defend against Lala & Yoplait
- Accelerate Proximity expansion
to gain market participation
Mode :
Direct, to ensure full control of PoS
Pacifico - Sureste
Strategy : Tactical opportunities to
gain positions in low pcc markets
Mode : - Direct in bigger cities
- Distributors in other zones.
5. What will we do
better as in the past?
Focus and consistency on company priorities.
Faster in POS execution
Excellence in POS execution
Better and faster in innovation
Excellence in forecast & customer service level
Optimal efficiency and utilisation of our industrial assets.
Bigger generation of mexican talents.