118b2714-ccfd-438d-be22-83d0fef06b65

DANONE, GROUPE IN SOFT DRINKS (WORLD)
February 2016
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SCOPE OF THE REPORT
Scope
All values expressed in this report are retail/off-trade in US dollar terms,
using a fixed exchange rate (2015).
2015 figures are based on part-year estimates.
All forecast data are expressed in constant terms; inflationary effects are
discounted. Conversely, all historical data are expressed in current terms;
inflationary effects are taken into account.
Carbonates - 165.8 billion litres
Concentrates - 45.9 billion litres
Juice - 60.7 billion litres
Soft Drinks
Off-trade RTD
Volume
597.5 billion litres
RTD Tea - 34.3 billion litres

Bottled Water - 265.8 billion litres
RTD Coffee - 4.9 billion litres
Sports and Energy Drinks - 19.0 billion litres
Asian Specialty Drinks 0.9 billion litres
Euromonitor International
SOFT DRINKS: DANONE, GROUPE
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies opinions, reader
discretion is advised.
Danone continues to focus on

bottled water, and its key
development areas is what it
terms Aquadrinks flavoured
water and functional water. The
two categories progressed well
in 2015, giving Danone a good
value proposition. Danone is
strong in functional water and
flavoured water in certain
markets; however, there are still
plenty of opportunities to
explore. Danone needs to
address its weakness in the US,
Nigeria and India in the medium
term.
PASSPORT 2
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STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
BOTTLED WATER OPPORTUNITIES
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
Key company facts

Danone, Groupe
Headquarters:
Paris, France
Regional involvement:
Global
Bottled water, sports and
energy drinks, concentrates
Category involvement:
World soft drinks off-trade
RTD volume share (2015):
World soft drinks off-trade
RTD volume growth
(2014-2015):
4.0%
8.9%
Danone is one of the world's largest packaged

food and beverages companies, leading the
global dairy market by retail value and holding
a prominent position in bottled water. The
company has four principal divisions: Fresh
Dairy Products; Waters; Early Life Nutrition;
and Medical Nutrition.
According to its 2014 annual report, the
groups net sales from all of its business
divisions exceeded 21.1 billion in 2014,
growing by 5% on 2013. Its Waters division,
which represents its interests in soft drinks,
made up just under 20% of total net sales in
2014. It was the companys fastest growing
category in 2014, with growth of 12%. Fresh
Dairy Products continued to make up the
majority of the companys net sales, at 53%.
The company has two portfolios of brands:
premium international brands and local brands.
Danone has made few acquisitions in bottled
water over the past few years, and organic
growth appears to be its key strategy.
PASSPORT 4
All four businesses contribute to the groups growth in 2014

Danone reported that it made significant
gains in many markets, including Europe, in
2014. The company continued to build its
product portfolio and expand in high-growth
markets, particularly in Asia and Africa. All
four core businesses made a contribution to
the groups sales.
The US is a relatively new market for
Danones fresh dairy business. The French
dairy giant invested in capacity to meet the
growing demand for Greek-style yoghurt
and high-protein dairy products, which
Americans associate with health. However,
competition in this category is growing, with
an influx of brands.
Danones Waters division is paying
increasing attention to the materials used
for bottles and their design, such as
childrens products la Goutte devian. It
continues to actively promote flavoured
waters, which it terms Aquadrinks
(Bonafont, Volvic and others).
PASSPORT 5
Danone fmcg: Dairy is the key category

Danone is the worlds leading dairy player and has made a string of acquisition in this core category over
the past several years. Bottled water also continues to generate strong retail value sales. Emerging
markets accounted for 58% of Danones fmcg sales in 2014, while developed markets held the remaining
42%. The company has six priority markets for corporate business development: Mexico, Indonesia, China,
Russia, the US and Brazil. Each of these countries is approached differently. In the US, for example,
Danone is focusing on healthy yoghurt sales and the premium bottled water brand Evian. In China, Mizone
has grown rapidly over the past few years, and has become a significant contributor to revenues.
PASSPORT 6
SWOT: Danone, Groupe

STRENGTHS
Health and wellness

focus
Danone is entirely
focused on health and
wellness, and nutrition,
with bottled water
playing an integral part
in its health-focused
growth strategy.
WEAKNESSES
Emerging markets
Bottled water reliance
Danones water brands

command prominent
positions in major
emerging markets, and
this underpins the
companys strong value
prospects in the face of
shifting consumer
preferences
Danones soft drinks

Danones position in
presence is almost
water in the US is weak,
entirely reliant on bottled and this needs to be
water, with other health
addressed to improve its
and wellness-relevant
overall value
categories such as juice proposition.
largely ignored.
OPPORTUNITIES
THREATS
Emerging markets
Focus on origin
Concerns over the

quality of municipal
water supplies in
emerging markets will
underpin growth in
bottled water. Added
value drinks are also
growing in demand.
A focus on origin for

natural spring water
brands, such as Evian
and Volvic, offers
potential to support
growth and fend off
competition from
distilled water products.
US weakness
Tap water and filter

Macro economic
device
slowdown
Particularly in Western Geopolitical issues and
markets there is a
macro economic
growing tide of
slowdown can affect the
discontent with the
business environment.
environmental impact of China, Brazil and Russia
PET bottles
are expected to see
encouraging consumers slower growth in the
to return to tap water via next couple of years.
filter devices.
PASSPORT 7
Key strategic challenges and objectives

Aquadrinks
Grow value in Middle East and Africa
Danone, in order to expand its reach beyond still

bottled water, has been focusing on what it terms
Aquadrinks, which compete more closely with
carbonates and juice. The company launched
Bonafont con Jugo in Mexico and Villa del Sur
Levit in Argentina. Mizones success in China has
returned Danone to strong value sales in this
country. These products have extended Danone
more deeply into flavoured bottled water.
Danones focus in Asia Pacific and Latin America

continues to shift from high-volume, low-value
products to higher value bottled water. The
company is vastly underrepresented in the Middle
East and Africa, particularly Sub-Saharan Africa.
Early investment in markets such as Nigeria is
likely initially not to be profitable, but could pay
major dividends in the longer term.
Adapt to different consumption habits
Price-sensitive consumers
Packaging innovation is a key focus for Danones

R&D teams, as the design of a bottle can have a
great impact on consumer purchasing. Successful
designs include Mizones easy-drink opening and
comfortable grip in China, the Font Vella water
bottle for family consumption and the Mi Primera
bottle designed for babies in Spain. Danone offers
practical and economic solutions for bulk water , eg
Bonafont in Latin America and Aqua in Indonesia.
The emerging markets will drive growth in bottled

water. However, consumers remain price sensitive,
and budget constraints often deter them from
shifting from municipal water supplies to bottled
water. When bottled water is purchased, price is
the key factor in the decision, rather than branding.
In Africa, in particular, it may take a long time to
generate returns on investment, as unit prices are
generally low.
PASSPORT 8
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
TCCC supreme leadership in global soft drinks

In 2015, TCCC maintained the top spot in global soft
World Top 10 Soft Drinks Companies:
drinks, well ahead of second placed PepsiCo. However,
% Share RSP 2015
TCCC has seen its market share decline gradually over the
Company
% value
past few years, as has PepsiCo.
Coca-Cola Co, The
24.2
In 2015, PepsiCo held second place in sports and energy
drinks and in juice and carbonates in off-trade value terms.
However, both TCCC and PepsiCo have lost share in
sports and energy drinks over the past few years, in the
face of strong competition from Monster (in which TCCC
now holds a significant stake) and TC Pharm. The cola
giants weakness in the sports and energy drinks category
in China has negatively impacted their global status.
PepsiCo Inc
11.0
Nestl SA
2.8
Suntory Holdings Ltd
2.3
Dr Pepper Snapple Group Inc
2.1
Danone, Groupe
2.0
Suntory has emerged as a strong global player, with

reasonably good geographic and category coverage. It is,
however, weak in the Americas and Africa.
Red Bull GmbH
1.9
Monster Beverage Corp
1.4
Nestl and Danone have global coverage; however, their

product coverage is limited. As consumers are diversifying
their intake of drinks, Nestl and Danone are in a less
advantageous position. Nestl does, however, have
interests in RTD coffee and Nestea in RTD tea, while
Danone has no other strong category to fall back on within
soft drinks.
JDB Group
1.1
Asahi Group Holdings Ltd
1.1
PASSPORT 10
Competition pyramid: TCCC the clear leader

TCCCs clear focus on soft drinks
and its marketing muscle puts it in
a stronger position than PepsiCo.
The acquisition of Monsters nonenergy drinks has strengthened
TCCCs still drinks portfolio, while
PepsiCos portfolio of noncarbonated brands is less
compelling. Danones lack of a
presence in other categories
beyond bottled water limits its
global profile.
TCCC leads by some distance. Its main task is to

avoid stagnation in developed markets. Sustaining
consumers interest in carbonates, developing new
products and carrying a diversity of drinks will help
reinforce its overall position.
PepsiCo, Danone, Nestl and Suntory: Diverse
corporate businesses with interests outside soft
drinks. The consequent diluted focus means that none
of these is likely to be able to challenge TCCC in the
short term.
Red Bull, Asahi, JDB: Expanding but limited by either
product offerings or geographic spread.
Britvic, Eckes, Aje Group, etc: Small and mediumsized players. Expanding in certain regions but not on
a large scale. They represent a localised threat to
TCCC and PepsiCo.
PASSPORT 11
Danone outperformed all major soft drinks rivals in 2015

Danone outpaced its major
rivals by off-trade RTD
volume in 2015, with sales
strongly underpinned by its
performance in bottled
water sales in China. Both
TCCC and PepsiCo
underperformed the global
market, hampered by a
slowdown or decline in
carbonates sales. Chinese
companies Ting Hsin saw a
decline due to slow
economic growth
domestically. The risk for
Chinese companies is that
they focus strongly on their
domestic market, thus
there are no other
geographies for them to fall
back on when consumption
in China slows.
PASSPORT 12
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
MARKET ASSESSMENT
Danone strong in Asia but weak in Africa

Asia Pacific will be the global growth engine over 2015-2020, with an increase in off-trade RTD volume of
47 billion litres. Asia Pacific will continue to be an important market for Danone, underpinned by its strong
presence in China and Indonesia. The Middle East and Africa will see the fastest growth, with a CAGR of
8%, whereas Latin America will see a slowdown, resulting from Brazils economic difficulties. Prospects are
moderate in the developed markets of Western Europe, North America and Australasia, as a consequence
of market maturity. There are, however, still opportunities for Danone to explore the premium water
segment in the US, as some consumers are switching from carbonates to water. Danone might need to
address its weakness in Nigerias soft drinks market in the medium term.
PASSPORT 14
MARKET ASSESSMENT
Bottled water to the key driver in soft drinks

Danones presence is relatively limited, with a significant presence only in bottled water and sports and
energy drinks. Its presence in sports and energy drinks is based on the Mizone brand, with most of its sales
generated in Indonesia. The brand is also present in functional bottled water in China. It is unknown if
Danone will explore Mizone functional water in India, as the country currently has a highly underdeveloped
soft drinks market in general, with plenty of room for growth. In developed markets, Danones category
development mainly focuses on flavoured water, experimenting with a variety of flavours, and healthy
products such as reduced sugar flavoured water. At the global level, the company has no noticeable
presence in juice, RTD tea or carbonates.
PASSPORT 15
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
Danone continues to lead global water sales by volume

Danone leads global volume sales of
bottled water. Its Aqua brand is the
best-selling bottled water brand in offtrade volume terms, underpinned by
its dominant position in Indonesia.
Bottled Water: Global Top Companies, % Off-Trade RTD Volume

vs Off-Trade Value Share 2013
% off% offVolume
Value
trade
trade
Company
rank
rank
volume
value
8.8
1
8.9
3
TCCC ranks second in off-trade value Danone, Groupe
terms due to its focus on functional
Nestl SA
7.6
2
9.6
1
bottled water, with the Glacau brand.
Coca-Cola Co, The
6.1
3
9.3
2
Functional bottled water is an
important category in Asia, as these
PepsiCo Inc
3.2
4
3.5
4
beverages represent a step up from
Yangshengtang Co Ltd
1.7
5
1.9
5
still bottled water, as well as an
Acqua Minerale San
alternative to carbonates and juice.
1.2
6
0.7
11
Benedetto SpA
Nestls leading position by value is
Ting Hsin International
underpinned by its strength in the
1.2
7
1.0
9
Group
wealthier regions of North America
China Resources
and Western Europe.
1.2
8
1.3
6
Enterprise Ltd
Four Chinese companies are among
Alma Group, The
1.1
9
0.6
14
the top 10 by off-trade volume, thanks
Hangzhou Wahaha
to their strong positions in their
1.1
10
1.1
8
Group Co Ltd
domestic market. Bottled water
remains a growth engine in Chinese
soft drinks market.
PASSPORT 17
Danone outpaces Nestl in added value water

Still water is by far the most attractive growth category in
bottled water, in percentage as well as absolute terms.
Still water made up 81% of Danones sales by volume in
2015. Demand from Latin America has helped to drive
Danones market share in flavoured water globally, where
these drinks represent substitutes for carbonates and
juice. Danone leads flavoured water by off-trade volume,
with the number one position in Latin America, Western
Europe and Eastern Europe. By contrast, flavoured water
held only 4% of Nestls off-trade volume sales, and
flavoured water does not seem a core development area
for Nestl Waters. Nestl is a minor player in flavoured
water in Latin America. In North America, Nestl
accounted for nearly half of flavoured water volume sales,
thanks to its good penetration in still water.
Danone has a 36% volume share of functional bottled
water globally, and competes strongly with TCCCs
Glacau. The companys share of this category is
growing, particularly in Asia Pacific, where Mizone has
helped Danone reach a 68% volume share in the region.
Danone is benefiting from consumers in the region
trading up from still bottled waters to more expensive
flavoured and functional waters.
PASSPORT 18
Aquadrinks focus lifts value potential

Danones high share in functional and flavoured bottled
water reflects a concerted company effort to diversify its
beverage portfolio, while leveraging its strong presence
in still bottled water. These beverages, referred to by
Danone as Aquadrinks, combine the companys
history of still bottled water sales with beverages that
compete with carbonates, juice and RTD tea. The
company has stated that these beverages are at the
heart of the its health strategy.
Aquadrinks
Carbonat
es, Juice,
RTD Tea
Still
Bottled
Water
Whether positioned as superior hydration, as with

Mizone in China, or as healthy and flavourful, as with
Villa del Sur and Levit in Latin America, these
beverages command higher prices than still bottled
waters such as Bonafont or Aqua. This positions
Danone to increase value share, as consumers in
emerging markets move from cheap still bottled water to
more expensive but more refreshing flavoured
beverages. Volume sales of flavoured and functional
water are dwarfed by those of still water, but the
potential for Danone to increase the value of its sales
makes Aquadrinks a wise investment for the future. In
comparison, Nestl has no strong flavoured water and
functional water brands.
PASSPORT 19
Danone needs to address its US weakness

In France and Germany, Danone
and Nestl have comparable
market shares. Given the
maturity of the market in Western
Europe, Danone should look for
growth in North America and
emerging markets. In China,
Danone overshadows Nestl,
being strong in the functional
water category, from which
Nestl is absent. However,
Nestl dominates Chinas
booming RTD coffee category,
and has a local beverage brand
Yinlu. All signs show that Danone
and Nestl have different
strategies
towards
the Chinese
market. In the US, Danone is a minor player, while Nestl is a strong leader, with a 25% offtrade volume share. In 2015, Danone worked on improving its distribution system, and focused on selected
cities and regions. Sports sponsorship included the US Open tennis tournament. However, 2015 saw
Danones market share in water in the US water remain very small. Nestls Perrier brand outperformed
both Evian and Volvic, reflecting the stronger performance of carbonated water.
PASSPORT 20
Danone performs strongly in some core emerging markets

In 2014 and 2015, Danone saw strong growth in China, Indonesia and Argentina. In China, Mizone was
backed by strong marketing and flavour innovation. For example, Mizone blueberry saw a national launch,
with a dedicated app. In Indonesia, Danone has 18 factories, and the flagship Aqua brand is well
established. Given the soft economic conditions in much of Europe, Danone continued to see declines in
sales in Spain and slow growth in France and Germany.
PASSPORT 21
Danone yet to exploit Indias water potential

China, India and Indonesia are set to account for
over 90% of volume growth in Asia Pacific over
2015-2020. India is forecast rapid growth, albeit
from a low base. Sales of flavoured, carbonated
and functional water are still negligible in India,
despite several launches from Tata and Danone.
There is no significant threat to growth expected to
emerge, although some consumers are starting to
buy water purifiers which may affect bulk water
consumption. China is seeing a similar trend. The
Danone has a Qua, a premium still mineral water
and the functional bottled waters BLue and Qua
Vitamin Water. Danones decision to focus on the
premium segment may be a strategic decision to
stay out of the low margin and extremely
competitive still bottled water market. Premium
water consumption will be confined to high income
consumers for a long time, which will limit volume
sales. Without large-scale expansion at the lower
end of the market, Danone will remain a minor
player in Indias booming water market in the next
few years.
PASSPORT 22
Focus on value over volume in China with functional water

Danones Mizone has become a billion dollar brand, and
has secured its dominance in Chinas functional water
market. After the split from Wahaha, Danone relied on
Mizone and seized the opportunity in the niche of functional
water largely building the category from scratch. Thus far,
no other international brands have registered visible market
shares. Yangshengtangs Scream and Wahahas G-Vital
are not comparable to Mizone in terms of formulate and
marketing. Internationally, both TCCC and PepsiCo have
functional water brands, Glacau and Propel, respectively.
However, TCCC appears to be keen to introduce Monster
to China with no evidence of plans for Glacau.
Nevertheless, the strong growth of Mizone is not expected
to carry on forever, and the brand may well see growth
slow down as a result of the weaker economic performance
in China.
International premium brand Evian has performed strongly
over the past few years. Some international premium
brands, such as Perrier and San Pellegrino are available in
first tier cities sporadically; however, volume sales are
limited due to high prices. Danones local brands Robust
and Health have increased sales, in line with the overall
growth of the category.
PASSPORT 23
Long-term potential in Middle East and Africa

While Danones value strength in Asia
Pacific is tied to functional bottled water, it
could use its success in still bottled water,
particularly in Indonesia, as a blueprint to
grow volume sales in Nigeria, and Africa as
a whole.
Currently, the unit price of still bottled water
remains very low in the region. Investment
in bottled water in Sub-Saharan Africa
would require a long-term strategy that
would initially yield low value. However, as
consumer purchasing power across these
nations grows, companies that have
established their brands and distribution
networks stand to benefit greatly.
The current bottled water landscape in this
region, particularly Nigeria, presents a
similar opportunity to how Danone grew
share in Indonesia. Nigeria has a very
fragmented water market, with TCCC
holding a weak leadership. Numerous small
players are sharing the big and growing
pie.
Still Bottled Water: Average Retail Unit Price 2015

US$ per litre
World
0.35
Middle East and Africa
0.22
Nigeria
0.12
PASSPORT 24
Nigeria: An attractive booming market, but with high risks

The bottled water market in Nigeria is very fragmented in
terms of company shares. Since consumers cannot trust
municipal sources of water in the country, water sold
cheaply in bags is important in providing them with a source
of clean drinking water. Branding is important insofar as the
brand name connotes a product that is safe to consume.
The risk for producers is that the overall unit price of bottled
water is low and there are too many smaller brands. It may
take a long time to recoup investment.
Danones experience in Indonesia with multiple packaging
types could provide the blueprint to penetrating this market
in Nigeria. While it will prove difficult to match bagged water
in terms of price, emulating the plastic bag model could
raise the profile of the Danone brand, eventually moving
consumers up the packaging hierarchy to thin plastic wall
cups, larger bulk containers and, eventually, PET bottles.
In recent years, some mid-priced to premium water brands
have emerged, such as Lucozade Hydro and Cest Bon.
These are sold in modern supermarkets, but with limited
volume sales. In 2016, TCCC is planning to invest in
Nigerias largest local soft drinks company Chi, representing
a potential threat to other multinationals.
PASSPORT 25
Danone strength lies in flavoured water in Latin America

Danone is well ahead of Nestl in Latin Americas bottled water market, with an 11% share in 2015,
compared to Nestls 2%. Danones brands include Bonafont, (Mexico), Pureza Aga (Mexico) and Villa del
Sur (Argentina). Danones has strong leadership in flavoured water in Latin America, with a 42% share. All
categories are expected to continue to grow over 2015-2022, with flavoured water contributing around 6%
of overall bottled water growth.
In Brazil, Danone registered negligible share in flavoured water in 2015 while PepsiCo held a 82% share.
Danone should look to address this weakness.
In functional bottled water, TCCC holds top spot, with no other multinationals actively marketing in the
category. It is unknown if Danone will expand Mizone or create a functional water brand in selected Latin
America markets. PepsiCos Propel experienced significant share loss while TCCCs Glacau made good
progress.
PASSPORT 26
Opportunities in Western Europe biased towards still bottled water

Western Europe was Danones third most important region in
terms of off-trade RTD volume sales in 2015, making up 18%
of its sales. The opportunities in the region are biased towards
still bottled water. The challenge for Danone will be to add
value. The company has focused on origin as the basis for the
premium positioning of most of its Western European brands.
Volvic (Auvergne Regional Park, France), Evian (vian-lesBains), Badoit (Saint-Galmier, France) are examples of this
strategy. The company has engaged in activities to promote
the sustainability of its natural water springs and to protect
them from pollution and activities in the immediate vicinity. In
so doing it has helped to counter public concerns over the
environmental impact of bottled water.
The acquisition of Turkeys Sirma in 2013 gave Danone the
market leader position in the country. In 2015, both Danone
and Nestl sold around 1 billion litres of water by off-trade
volume.
Functional water is not a key core growth category for Danone
and Nestl in Western Europe. Currently, TCCC appears to be
more active in marketing Glacau and SmartWater in the UK.
Functional water may be battling with the traditional concept of
natural mineral water which already naturally contains
necessary minerals for human body.
PASSPORT 27
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
BRAND STRATEGY
Global, regional and local brand strategy

Danone's soft drinks portfolio is based primarily on its bottled water brands. In this category, the company
has a broad range of global brands, as well as local labels. Its truly global brands include Evian and Volvic,
which are bottled in France and exported to a large number of countries in both mature Western European
as well as emerging markets. These two global brands are positioned within the standard price segment in
Western Europe, but have a premium image in emerging markets, and are thus still very much niche
positioned there.
Many established fmcg brands have both mass-market and premium ranges, and this is also increasingly
the case for still drinks. Building dual-price platforms is a core strategy for major water brand owners. Massmarket brands rely on selling substantial volumes to generate revenues, compared to low volume but high
value sales of premium versions. Major players have stated that this strategy works well to cater to different
income groups. In emerging markets, where there is a sizeable middle class, premium water sales are
growing. Evian has posted strong double-digit growth in China over the past few years.
In emerging markets, Danone is present with a large number of local brands, which often enjoy strong
positions, not least because of their affordable price points. Examples of such highly successful local
brands are Aqua (Indonesia) and Zywiec Zdroj (Poland). Meanwhile, the company has expanded Bonafont
beyond its original country market Mexico to create a pan-regional brand, by expanding it into Brazil.
While a more streamlined global portfolio would have advantages, the strong local heritage of many of
Danone's brands, in emerging markets in particular, make a far-reaching rebranding and brand
rationalisation exercise unlikely.
PASSPORT 29
BRAND STRATEGY
Premium brands offer excellent value growth opportunities

Major bottled water companies have massmarket and premium brands to cater to
different consumers different income levels.
Danones Evian and Mizone have low
volumes; however their heritage and health
functionality give them a good value
proposition. If TCCC were to launch the
functional water brand Glacau in China, it
could be a serious rival to Mizone.
It is unknown if Danone is planning to try to
replicate Mizones success in other markets.
There has been little discussion of any such
plans in its annual reports.
Danone is launching a range of Evian bottled
waters designed to taste like cocktails, under
the name Evian Spirits. The limited edition
range includes Evian-jito (mojito), Eviancolada (pina colada) and Evian-politan
(cosmopolitan).
In late 2015, Danone launched a Star Warsthemed range of Volvic bottles, as part of the
brands tie-up with the new cinema film.
PASSPORT 30
BRAND STRATEGY
Growth engines: Aqua and Mizone

Aqua is Danones leading local brand,
with almost all of its sales taking place in
Indonesia. The country has been a key
driver of Danones global performance.
2015 saw Bonafont, the core brand in
Latin America, slow down whereas Aqua
continued to see double digit volume
growth. In India and Indonesia, consumer
demand is chiefly for cheap still purified
water. Sales premium functional water
remains small, in contrast with China.
In China, Mizone is supported by digital
interaction with consumers and ecommerce. The brand mainly appeals to
Chinas 18-35 year-old population. In
terms of value growth, it is one of the
most successful soft drinks brands
globally in recent years. Mizone has
some local Chinese rivals, including
Huiyuans isotonic drink brand
Freenergy, with 10% juice. However,
thus far, these competitors have not
threatened Mizones position.
PASSPORT 31
BRAND STRATEGY
Volvic outpaced major flavoured water brands 2015

Danones Volvic is one of worlds major flavoured water brands and is also part of Danones Aquadrinks
focus. Volvic flavoured water registers shares in around 10 markets, with the UK, Germany and France
jointly accounting for over 90% of off-trade volume.
Given consumers concern over sugarised drinks, reduced sugar content is a feature of new product
development. In 2016, Volvic Sugar Free Touch of Fruit Orange is being launched in the UK. This is the
third sugar-free flavour in the range, following strawberry, and lemon and lime. The new launch will be
supported by media activity and nationwide sampling during summer 2016. Danone plans to spend around
US$3 million on marketing in the UK to support the Volvic Touch of Fruit Sparkling range in 2016.
PASSPORT 32
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
OPERATIONS
Social responsibility and environmental initiatives important

Globally, Danone had almost 100,000 employees
in 2014. Danones Waters division includes 28 fully
consolidated companies, and accounts for 38% of
the workforce. The top 20 of these companies are
based across 16 countries and accounted for
nearly three quarters of sales for Danones Waters
division in 2012. These include Robust in China,
Danone Waters Deutschland in Germany,
Bonafont in Mexico and Danone Waters of America
in the US. In recent years, Danone has adjusted its
relationships with some of these companies to
address costs.
On the administrative side, Danone is continuing to
examine cost-cutting measures. At the beginning of
2013, Danone announced a cost-reduction
programme in response to deteriorating conditions
in the European market. Danone intends to reduce
the number of its management units by half,
combining teams from several countries into multicountry units. The proposed plan was created to
address the 900 or so administrative redundancies
across 26 European countries.
Danones focus on its social, societal and

environmental initiatives are a major part of its
efforts not only to comply with the Grenelle II
environmental law, but also to help foster
sustainable communities around all its business
divisions. The environmental issue is of particular
note as Danone relies on naturally sourced water
for many of its bottled water brands, but faces a
dilemma due to the amount of PET plastic bottles
the company produces. However, Danone reduced
its carbon footprint by 37% over 2008-2014.
The company aims to promote healthy hydration,
and has launched more than 200 campaigns to
reach around one billion people worldwide, raising
awareness of healthy hydration and the benefits of
drinking water, often in partnership with local
experts and authorities. It continues to invest in
scientific research on the correlation between
hydration and health.
The company shares knowledge and best practice
related to healthy hydration through its global
Hydration for Health Initiative.
PASSPORT 34
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
RECOMMENDATIONS
Developed and emerging market recommendations

An issue of focus in Europe and North America
As economies recover in Western Europe, Danone
is positioned for recovery as well. Its global brands
Evian and Volvic are well known and popular in key
markets such as France and the UK. These
products, which tout their sourcing from natural
springs, demand a premium in price one that
consumers across Europe are more willing to pay
as the economy recovers.
North American markets, particularly the US,
present a rather different scenario. Consumers are
typically less inclined to choose a bottled water
based on its sourcing. The growth of Coca-Colas
Glacau SmartWater brand demonstrates that
consumers want a functional component with their
water when paying a premium. If Danone seeks to
increase its share in the super-premium bottled
water segment, it should consider highlighting the
naturally healthy properties of its waters, or
pushing functional flavoured waters instead.
Premium, healthy beverages in small packaging
are increasingly appealing to US consumers.
Finding value through Aquadrinks in Asia

Pacific, Latin America and MEA
The Middle East and Africa represents a strong
opportunity for Danone. Nigeria, in particular, could
present a slowly developing area for growth, but
not without its fair share of obstacles. Danones
experience in promoting Aqua in Indonesia will be
helpful in terms of packaging.
Danone is already performing well in the still
bottled water category in key markets in Latin
America. However, it faces an uphill battle in Brazil,
as well as in China, as other global or regional
players have already established themselves.
Danone may want to consider exploring Mizones
potential beyond China and Indonesia in the
medium term. A renewed focus on appealing to
young consumers in emerging markets, combined
with a health-orientated strategy, should resonate
with these consumers, as they begin to expand
their beverage selections beyond still bottled water,
carbonates and juice.
PASSPORT 36
MARKET ASSESSMENT
BRAND STRATEGY
OPERATIONS
RECOMMENDATIONS
APPENDIX
APPENDIX: COMPETITOR ANALYTICS
Competitor Analytics tool

Competitor Analytics is a new tool from Euromonitor International that focuses on fmcg companies and
competitors. It visualises the retail sales footprint and performance of more than 25,000 companies by
geography and product category.
Competitor Analytics also maps the competitive landscape for each of these companies, allowing users to
see with whom each company competes and in which specific markets. To do this, the tool calculates a
numeric distance between competitors, allowing the user to track how the competitive landscape is
evolving and which companies are becoming strategically more or less similar.
For a detailed explanation of the graphics in each of Competitor Analytics four tabs Overview,
Competitors, Treemap and Overlap Matrices please refer to the following slides.
PASSPORT 38
Overview
The Overview tab (shown in the graphic below) provides a global snapshot of a companys sales footprint
and performance, highlighting where it is winning and losing by country and product category.
It shows company (GBO) retail value sales and absolute growth by countries and categories in current
terms and US dollars at a fixed exchange rate for the years spanning 2008 to 2014.
The grey bars represent value sales in the selected Start Year, while the green bars show the subsequent
absolute value sales increase between the user-selected start year and 2014. Red bars denote a retail
value decline over the same time period.
PASSPORT 39
Competitors
The Competitors tab (see graphic to the
right) plots the competitive distance
between the selected focal company (in
this case Unilever) and its competitors.
The vertical axis measures the size of
market overlap between two companies,
and is the metric for quantitatively
measuring competitive distance. The higher
a company is on the vertical axis, the bigger
a competitor it is for the focal company.
Meanwhile, the horizontal axis captures
each companys total retail value sales over
the selected time period, irrespective of
market overlap.
Flat lines (eg Nestl in the chart to the right)
indicate that a competitors total sales are
growing, but mainly in markets where the
focal company is not present.
Lines moving steeply upwards (eg Procter
& Gamble) show that competitive similarity
is increasing strongly over time relative to
overall retail sales growth.
PASSPORT 40
Market Overlap
Market Overlap is a measure of
competitive distance between two
companies in retail value terms.
It is calculated as the sum of the
smaller of the two companys
retail value sales in each of their
common country/category (aka
market) combinations. The sum of
these observations indicates a
total Market Overlap.
In 2014, Procter & Gamble and
Unilever were present in 711
common markets (see right)
across the global fmcg universe.
In US deodorants, Procter &
Gamble was the smaller of the
two, and thus defined the Overlap.
In US hair care, Unilever was
smaller and thus defined Overlap.
Replicating this exercise across
all 711 markets in which both
companies were present yields a
total 2014 Overlap of US$23,420.
PASSPORT 41
Treemap
Treemap (as shown in the graphics below ) shows either overlap with a competitor (the left graphic) or
individual company sales (the graphic on the right) by product category and/or country.
The size of each box indicates the proportional size in US dollars of a country, category or market relative
to the total overlap or sales for the geographies and industries selected.
The colour gradient reflects sales or overlap growth/decline over the selected time period. The darker the
green, the higher the growth, and the darker the shade of pink/red, the stronger the rate of decline.
PASSPORT 42
Overlap Matrices
Overlap Matrices (as shown in the graphic below) compare two selected competitors (Unilever Group vs
Procter & Gamble Co) in terms of their respective presence across countries and product categories.
The darker the colour shading, the higher the companys retail value share in that market. The graphic
below shows that Procter & Gamble has a strong share in hair care in China, whereas Unilever is weaker.
Overlap Matrices also highlight respective market gaps and potential white space opportunities. Dark grey
boxes indicate that one of the two companies shown is present in that market, but the other company is not.
A light grey box means that neither of the two selected companies is present.
PASSPORT 43
APPENDIX: INDUSTRY FORECAST MODEL
About Euromonitor Internationals Industry Forecast Model

The Industry Forecast Model is a new tool from Euromonitor International that integrates intuitive,
judgment-based forecasting with the quantitative techniques of an econometric Industry Demand Model.
The Industry Demand Model assesses the relationship between several historic quantifiable independent
variables (demand drivers) and historic retail volume sales for different markets that Euromonitor tracks.
In identifying these relationships, the model estimates elasticities for each statistically significant demand
driver, including income growth, changing retail prices, demographic trends and retail channel trends.
Multiplying these elasticities by corresponding year-on-year growth forecasts for each demand driver allows
the Forecast Model to build annualised retail volume and value forecasts for a market in a given year.
While estimated demand driver elasticities are constant, forecast demand driver growth can change over
time. For example, forecast GDP growth for a given year is regularly upgraded or downgraded in
Euromonitor Internationals Macro Model to reflect changing economic and sociopolitical conditions.
In turn, changing only forecast growth for GDP in this example allows the Packaged Food Forecast Model
to create multiple retail forecasts that capture the impact of these changing macroeconomic conditions.
Impact of Russia GDP Shock on Chocolate Confectionery Retail Volume Forecast in Russia
2015 real GDP %
growth forecast
Chocolate income
elasticity
Income effect on
chocolate growth
2015 chocolate %
volume growth
Baseline Forecast
(June 2014)
+1.43
0.37
+0.53pp
+1.41
Updated Forecast
(December 2014)
-3.82
0.37
-1.41pp
-0.55
PASSPORT 44
Soft drivers and the Industry Forecast Model

The power of Euromonitor Internationals forecasting methodology is that it blends statistical modelling with
local market observations reflecting local industry consensus. As such, retail market forecasts also rely on
the insights and expertise of Euromonitors global analyst network. Euromonitor analysts work closely with
the Industry Demand Model to ensure that it remains consistent with their empirical observations,
guaranteeing that quantitative and intuitive expectations fully complement each other.
Euromonitor analysts also capture all the demand drivers beyond the scope of the Industry Demand Model.
These soft drivers remain critical to future retail sales, but are either fundamentally unquantifiable or have
no globally comparable data with which to measure them.
Soft drivers are captured and measured exclusively by empirical research from Euromonitor analysts, and
their overall positive or negative impact is estimated on top of the results of the Industry Demand Model.
Demand Driver
Elasticities:
From Industry
Demand Model
Forecast Demand
Driver Growth:
From Passport
Soft Demand
Drivers:
From Country and
Industry Research
Industry Forecast Model

PASSPORT 45
Growth decomposition explained

To help understand and illustrate the impact of each demand driver to a markets retail growth performance
and prospects, Euromonitor International employs a graphical tool called growth decomposition.
The fundamental idea behind growth decomposition is that a product categorys retail sales performance
and future prospects can be explained through changes in underlying demand factors.
As explained above, the impact of demand driver change to retail market sales can be calculated by
multiplying a demand drivers observed elasticity by that demand driver rate of change over a period of
time. Multiplying demand driver elasticity by forecast demand driver growth yields the percentage points of
overall retail growth that that specific demand driver is contributing to the market forecast under review.
In addition, Euromonitor analysts estimate the impact of soft drivers to overall retail growth via their
empirical research. The relative impact and importance of soft drivers can be shown alongside that of the
measurable demand drivers identified by the Industry Demand Model.
In the growth decomposition visual below, the percentage points of growth that each demand driver is
contributing to overall market growth are illustrated in the coloured segments of the stacked bar charts.
PASSPORT 46
Significance and applications for growth decomposition

By attributing a fraction of overall retail growth to each contributing demand driver, overall category growth
can be decomposed. In doing so, an extensive picture of underlying market fundamentals and processes
on a category-by-category and country-by-country basis can be provided.
Ultimately, growth decomposition allows Industry Forecast Model users to:
Identify different demand drivers that affect historic sales, and will likely impact future market prospects;
Evaluate the relative importance of different demand factors over time and then identify which factors
generate the highest deviations in historic - and ultimately future - consumption;
Illuminate the underlying market dynamics for each product category;
Measure and predict the effects of demand driver shocks, either expected or hypothetical;
Facilitate scenario analysis by generating understanding of which demand factors can be influenced by a
manufacturer or retailer and which are beyond their control.
PASSPORT 47
Key applications for Industry Forecast Models
Quarterly Forecast Restatements

Regularly updated retail market forecasts to reflect latest macro expectations (ie,
quarter-on-quarter real GDP growth revisions) for all markets.
What If? Scenario Analysis

See and compare how a hypothetical event (ie Eurozone recession, China Hard
Landing, Grexit) stands to impact different market forecasts.
Growth Decomposition and Demand Driver Elasticities

Understand, compare and respond to the forces driving expected market growth
across different product categories and countries.
Assess Market Potential

See the ceiling on retail volume or value sales and growth, regardless of a specific
forecast scenario. How much more can that market really grow?
PASSPORT 48
FOR FURTHER INSIGHT PLEASE CONTACT

Hope Lee
Senior Beverage Analyst
hope.lee@euromonitor.com
Twitter, @HLee_emi
RELATED ANALYSIS
[Opinion piece: Danone vs Nestl: The Billion Dollar Health and Wellness
Businesses at a Glance, published on 19 Feb 2016
[Opinion piece: Cola Giants May Lose Out on Global Soft Drinks Growth as
Carbonates Declines in 2020, published on 12 Feb 2016
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PASSPORT 50

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DANONE, GROUPE IN SOFT DRINKS (WORLD)

SCOPE OF THE REPORT

RTD Tea - 34.3 billion litres

SOFT DRINKS: DANONE, GROUPE

Danone continues to focus on

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Key company facts

Danone is one of the world's largest packaged

SOFT DRINKS: DANONE, GROUPE

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All four businesses contribute to the groups growth in 2014

SOFT DRINKS: DANONE, GROUPE

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Danone fmcg: Dairy is the key category

SOFT DRINKS: DANONE, GROUPE

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SWOT: Danone, Groupe

Health and wellness

Bottled water reliance

Danones water brands

Danones soft drinks

Concerns over the

A focus on origin for

Tap water and filter

SOFT DRINKS: DANONE, GROUPE

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Key strategic challenges and objectives

Grow value in Middle East and Africa

Danone, in order to expand its reach beyond still

Danones focus in Asia Pacific and Latin America

Adapt to different consumption habits

Packaging innovation is a key focus for Danones

The emerging markets will drive growth in bottled

SOFT DRINKS: DANONE, GROUPE

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TCCC supreme leadership in global soft drinks

Suntory Holdings Ltd

Dr Pepper Snapple Group Inc

Suntory has emerged as a strong global player, with

Red Bull GmbH

Monster Beverage Corp

Nestl and Danone have global coverage; however, their

Asahi Group Holdings Ltd

SOFT DRINKS: DANONE, GROUPE

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Competition pyramid: TCCC the clear leader

TCCC leads by some distance. Its main task is to

SOFT DRINKS: DANONE, GROUPE

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Danone outperformed all major soft drinks rivals in 2015

SOFT DRINKS: DANONE, GROUPE

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Danone strong in Asia but weak in Africa

SOFT DRINKS: DANONE, GROUPE

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Bottled water to the key driver in soft drinks

SOFT DRINKS: DANONE, GROUPE

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BOTTLED WATER OPPORTUNITIES

Danone continues to lead global water sales by volume

Bottled Water: Global Top Companies, % Off-Trade RTD Volume

SOFT DRINKS: DANONE, GROUPE

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BOTTLED WATER OPPORTUNITIES