Proximity Communication Kit

March 2009

New Danone is the strategy for the years tocome. New Danone is not a new project on top,but an initiative that is at the heart of everythingwe do anyway. New Danone means a transfor-mation of what we are, and 6 working streamshave been identified as increased points ofattention for our business:

This proximity communication kit provides amonthly source of information on key topicsof interest for our employees in the BabyNutrition Division. This kit will facilitate your regular proximity events (i. e. face2facemeetings) with your employees. The informa-tion in this toolkit is a high-level update fromthe various areas of business such as:

Blue Ocean: Sometimes also called ‘Innovation’ this streamdescribes Danone’s ambition to be perceived as the mostinnovative company worldwide in health through food.Blockbusters: This stream is about boosting our international brands

Health: Sometimes also called ‘Health Credibility’ this stream shows that Danone’s concern - internally andexternally - is about bringing health to people

Nature: Showing Danone’s efforts to treat our planet and itsresources in a sensible and sustainable way

People: Our employees are the backbone of our company,and Danone wants to be the ‘Best Place To Grow’

Danone 4 All: Sometimes also called ‘Growth for all’ or ‘4Billion’ this stream is about providing all people with ourproducts - everywhere and affordable

Finance

Marketing

Sales

Medical

R & D

Operations

HR

Communication

s

& Other

Activities

About the Proximity Communication Kit

•Good market growth in February, this is something we can be proud of.

•March, as well, looks promising and positive, so, our business model seems to be working really well.

•However, we also see a clear decline of our markets, so we really have to actively grow our market. This is going to be vital.

Regards,

Christian

My PCK highlights for March

“

François Caquelin (francois.caquelin@danone.com)

FinanceKey Figures February 2009

* Positive percentage in expenses (v LY and v B) means higher expenses, hence lower ROP (and vice versa)

February Key figures February YTD

36.7 5.6 % (1.5)% 75.2 1.6 % 0.0 %

245.4 14.8 % 0.1 % 499.3 9.7 % 1.6 %

123.7 19.2 % 2.2 % 248.6 14.1 % 3.4 %50.4 % 189 Bps 104 Bps 49.8 % 193 Bps 90 Bps(30.4) 46.3 % (1.3)% (62.1) 14.1 % 1.6 %(41.3) 23.9 % 0.9 % (80.3) 15.9 % (1.2)%43.0 0.9 % 5.7 % 87.6 11.4 % 8.9 %

17.5 % (240)Bps 94 Bps 17.5 % 27 Bps 119 Bps

40.9 83.3

37.1 (119.3)% 94.7 % 83.6 25.1 % 98.2 %

% v B

Margin on Operations (CO)

% v LY % v BActual

Volumes (kg's)

CO/CANN(%)

Operating Income @ Real Rate

Operating Free Cash Flow (OFCF)

Overheads (Sales Force, H-O)

% v LYActual

Net Net Sales (CANN)

@ Budget rate 2009

Advertising & Promotions

Operating Income (ROP)ROP/CANN (%)

YTD Volumes YTD Cann YTD ROPAct % vLY % vB Act % vLY % vB

Northern Europe 10.3 6.3 % 4.5 % 72.8 7.0 % 3.2 %

Middle Europe 2.6 (11.0)% 11.1 % 24.7 7.0 % 6.8 %Southern Europe 22.2 (1.4)% 5.0 % 120.5 2.8 % 3.2 %Eastern Europe 9.3 (2.3)% (3.2)% 66.8 9.0 % (0.7)%ROW 8.0 1.2 % (0.8)% 59.1 2.1 % (4.3)%Asia Pacific 22.8 6.1 % (5.8)% 155.5 21.7 % 2.1 %

Total Baby 75.2 1.6 % (0.0)% 499.3 9.7 % 1.6 %

Alejandro Pinillos (alejandro.pinillos@danone.com)

MarketingNew Way of Working (NWoW)• See HR page in this PCK

Divisional results February 2009• Very good, especially in Milks.•Both Immunity and Superior Nutrition are growing•Latest Market share update: Strong global share momentum. Global market still showing signs of slowing-down, to be monitored

Milk Innovation Session•Cross-functional inspirational workshop to brainstorm on the innovation pipeline with ca. 30 participants 11 – 12 May 2009

Global Marketing TrainingModular training for Marketing staff in Baby Nutrition, will be rolled out in 2009, covering the 4 aspects: 1) Copy, 2) Media 3)Packaging 4) CRM. Details by James.Smith@danone.com

Global Marketing Team in place•All global Marketing vacancies have successful been filled now, putting a highly expertised team in place. Details and orga charts will be cascaded to the Marketing Team per separate communication beg. April.

OrganicUpdate on Organic, covering trends, consumer insight and different brand models, can be retrieved through emmanuelle.grimbert@danone.com, antje.schubert@danone.com or felix.goessl@danone.com

James Mayer (james.mayer@danone.com)

Sales

Customer Engagement

Through Thought Leadership and

Acceleration of Best Practices to deliver POP

control

Customer Engagement

Through Thought Leadership and

Acceleration of Best Practices to deliver POP

control

PeoplePeople

Cate

gory

Cate

gory

Custo

mer

Custo

mer

Investment

Investment

Availabilit

y

Availabilit

y

Baby Nutrition Sales Diamond

The customer environment is becoming tougher each month.The No1 focus now is price and trading terms. Ensure your key

accounts teams are prepared

Monitor the financial health of your retailers and distributors constantly to avoid bad debts

Make sure you are taking advantage of the Shopper Lab

training to help dominate in-store. Asia training in March

in Bangkok

Use the Danone Sales Competencies as a great tool to develop the team…

remember the sessions from the Sales Dir conferences fall 2008 or see Dan Sales.

The Pharmacy channel is the fastest growing channel in Baby YTD. Continue to develop your plans in this channel and also leverage the Medical team

Pauline Lee (pauline.lee@danone.com)

MedicalGlobal Medical Conference Athens March 5 - 6• Feedback from the delegates has been very positive; delegates rated the overall meeting

between good (35%) & excellent (65%).

Key Messages:• Continue the successful Immunity story --> credibility with HCPs is high and there are

more publications from MIPS to come.• Drive differentiation in Superior Nutrition brand --> Utilise current benefits,

differentiated messages, style and targeting. Don't wait for differentiated recipes which will come as soon as possible.

• Beat the Competition --> be quick to share market information & take cross functional approach

• Increase share of voice with Medical CRM --> use toolkit available & link HCP web pages to ‘eSymposia’

• Improve Medical Sales Effectiveness --> implement AFB, resource smartly &, improve competencies

• Help address the 21st Century Epidemic of Allergies --> with the benefits of our unique prebiotic mixture & well informed Medical Reps.

• Bring Medical influence to Grow the baby business beyond Infant Formula --> raise awareness of bad feeding habits & create relevance for our products.

• Maintain & build credibility of Danone Baby Nutrition --> manage KOLs effectively & align cross functionally.

Danone International Scientific Symposium 7 March Athens: addressed topic Diseases & Obesity. Attended by > 250 KOLsthe ranking of the speakers was extremely high, scoring between very good and excellent. 75% of delegates stated that the information presented will change their daily recommendation of infant nutrition, 100% will share that information with colleagues.

Florence Jeantet (florence.jeantet@danone.com)

R & DClinical studies• Clinical studies protocol approved now in china and Thailand for GIANT ( toddlers) : Great news we can move on !

OPENWAY• OPENWAY will soon replace OPERA and FREEWAY. More info with your respective R&D contact.

KOL visits Wageningen• Wagenigen remains a very attractive location to bring in KOL’s. Planned schedule 2009:

27 March          Tunisia & Maroc16 April Russia17 April Bosnia28 April Ireland15 May             Cyprus & Dubai19 May             Russia29 May             Italy11 June            UK18 June            Algeria18 September   Slovenia25 September   Spain9 October          Bulgaria12 November    UK13 November    Portugal

Speeches• Reminder to our medical colleagues : a very long list of speeches expected for R&D, all over the world. Can you

please liaise with the central medical team ? Thanks in advance for your understanding.

R & D Young talent programs• How can R&D accelerate the young talent carrier ?  R&D DBN participates in the 3 rd wave, starting as of 16

March .  For more information david.hindley@danone.com, our DBN R&D HR  person.

Vincent Maurice (vincent.maurice@danone.com)

Operations

Key take-aways • Wise performance in February: At our 22 manufacturing sites 19 people have been injured

already this year, forcing them to stay at home/ hospital. Next to behavioural causes, the uncontrolled introduction of new equipment and tasks as well as servicing/ trouble shooting production lines without shutting them down properly (or LOTO, Lock out tag out) caused many of these injuries.

• The major capex projects will be submitted very soon : Dwarf (RTF milk) in Steenvoorde, Installation of a 2nd Bag In Box line in Istra, a new boiler house in Istra.

 •  2 essential expertise network projects have just been kicked-off : one on EaZyPack with

the 5 production sites under Alexandre Grillet’s leadership. This project aims to improve the competitiveness of our EP production lines across the globe. The other one is on spray drying with all plants under the leadership of Antoon Jansen. This project will identify best practices in order to debottleneck the current spray drying capacity. 

 • Vacancies filled: Bruno Mahe is joining as VP Supply Chain EMELA, Neil Mc Cann is joining

as VP Supply Chain Asia and Kay Gorgus is also joining as Manufacturing Overlay Director Asia. 

Service Service LevelLevel COGS per TonCOGS per Ton ComplaintsComplaints SafetySafety InventoryInventory

4.592+ 1,1%MTD

4.693

BUD

+ 2,3%YTD

ACT€/T

4.592+ 1,1%MTD

4.693

BUD

+ 2,3%YTD

ACT€/T

97.2%

YTD

98.0%97.1%

TGTACT

97.2%

YTD

98.0%97.1%

TGTACT

19.3

YTD

16.6

BUD

20.3

ACT

19.3

YTD

16.6

BUD

20.3

ACT

6.6

TGT

8.8

YTD

9.9

ACT

6.6

TGT

8.8

YTD

9.9

ACT

261

TGTDec ’09

281

ACT

291

Dec ’08

YTD

M€

261

TGTDec ’09

281

ACT

291

Dec ’08

YTD

M€

Franck Aimé (franck.aime@danone.com)

HRWise• The Wise Safety programme includes all parts of our organization. Of course, Wise will be

rolled out at full scope in our Supply Points. In additon, special emphasis will be put on our sales units this year, focusing upon safety for people on the road.

• A specific roadmap has been defined for all Supply Points to be implemented in 2009.• Currently a likewise roadmap is being finalised for Sales and will be communicated in more

detail shortly.• A plan for supply chain / logistics is equally underway.• Actually, monthly Group Safety Reporting is being implemented for all business units. During

the coming month, special attention is required to make sure this reporting is put in place efficiently.

• 2nd edition of Wise DBN Steering Committee took place on 17 March in Brive, F, with the focus on the review of the Wise rollout in DBN, including deployment within the Sales Function. The Steering Commitee meeting in Brive was also an excellent opportunity to specifically review / challenge the Brive safety performance with the plant team.

Leadership College• Initiative with the aims of:

•Developing a distinctive leadership culture, reflecting the unique mission, culture, values of Danone, and inspiring all Danoners for the mutual growth of Danone & of themselves.

•Allowing expression of diverse leadership styles based on people’s strengths

New Way of Working (NWoW)• Strengthen initiatives such as Mentorship program or Leadership college

Dani Meyer (dani.meyer@danone.com)

Communications & Other Activities

Danone People Survey 2009• Has gone ‘live’ this week (16 March)•All Leaders are now asked to boost this initiative in order to achieve a very high level of participation.•Survey will run until 27 March 2009•Survey results are expected to be available at the beginning of June 2009 and will be sent to line management in the form of an ‘active Excel’ file

Global map of Danone supply points• As of April, a global map featuring all Danone supply points (all 4 WWBUs) is available from Corporate communications. This is a highly convenient visualization of all Danone production sites worldwide.•A pdf print version of that map will be distributed to Senior Management for further use and cascade.

Danone Anniversary•Danone celebrates its 90th anniversary in 2009, which will be commemorated through various initiatives and communication channels and serves as an invitation to include that anniversary in your respective (PCK)-communication as well. We will get back to you with a more detailed communication plan.

19191919 20092009

Please share your proximity (event) feedback with us (dani.meyer@danone.com)

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