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Headquartered in Paris, France, Danone is a multinational food company with diversified operations on six continents and in more than 100 countries. Danone is the largest food group in France, Italy and Spain, and is the third largest food group in Europe and one of the top six in the world. Its products are organized into three main production areas: fresh dairy products, beverages, cookies and fast food cereals. The main brands are: Danone (the world's number one fresh dairy brand), LU (the world's second largest cookie and fast food cereal brand), Evian and Volvic (two of the world's four most famous bottled water brands). These four brands realize 50% of the Danone Group's turnover. In addition, the Danone Group's following brands also hold significant positions in regional markets: Wahaha (No. 1 in the Chinese market and No. 2 in the world in terms of bottled water), Lepak's (China's leading children's dairy product) Aqua (No. 1 in the Indonesian market and No. 1 in the world in terms of bottled water), Dannon (a well-known brand in the United States), and Villa del Sur (a well-known brand in Argentina). Fresh dairy products In 2001, the world's total production of fresh dairy products amounted to 24 million tons, with a value of 42 billion euros. The Danone Group has an undisputed position in this market, occupying first place. Respecting the consumption and eating habits of each country and developing national brands, the Danone Group delivers high-quality dairy products to all parts of the world every year. For example, Actimel, which is marketed in 15 countries around the world, enjoyed 40% growth in 2000, with its main sales concentrated in the traditional countries (Europe), and is now being launched in Mexico, Poland and Argentina, among others. Liquid yoghurt has always been the Group's top fresh dairy product, thanks to its compliance with new consumer trends: Bio Drinks (Spain), Danimals Drinkable (United States), Danonino (Mexico) and the Petit Gervais brand, which is marketed in numerous other countries. Beverages Groupe Danone became the world's number one producer of drinking water (in terms of volume produced) in 2001, with turnover from this production activity alone growing by 7.1%. The main reason for Groupe Danone's success is the technological innovation of its brands: la Fontaine Volvic in 5-liter packs (France), la Fontvella in 5-liter packs (Spain), Brio (Argentina), and DANONE Activ calcium-added non-sparkling water (UK). Innovation, variety of flavors, health and nutritional benefits: these are the qualities that determine the success of Danone Group's drinking water in reaching millions of households around the world. Cookies Biscuits and cereals are an area of great potential. The Danone Group has developed a balanced food system that combines nutrition and pleasure, leisure and health. Once again, the dynamism and visibility of the Danone Group's brands is its winning formula: the internationally recognized LU brand achieved 50% of its sales outside the Asia-Pacific region. In addition to this, the Danone Group capitalizes on the strengths of its brands in certain regions or segments: Prince, a popular brand with children and teenagers, is sold in eight countries and has recently been successfully launched on the Russian market; Tiger has been a great success in countries such as India, Malaysia and Indonesia, and is the number one cookie brand in Asia. The Group's capacity for technological innovation is also a major trump card for success: the Taillefine / Vitalinea range of skimmed food products enjoyed 14% growth in 2001. Baby food France has the largest and most advanced baby food market in all of Europe, and Danone is the largest producer of baby food in France. French infants consume 145 kilograms of baby food per capita per year, the highest in Europe. The Danone Group's baby food business is mainly conducted through its wholly-owned subsidiary Diépal-nsa. Baby food under the brand name of Blédine, created in 1906, has been relied upon by French mothers for over 90 years. Other major brands include Blédina, Gallia, Alma and Phosphatine, etc. The Group's products cover all baby food categories: infant formula, special nutritional formulas for infants, cereals for infants, bottled purees of meat, fruits and vegetables for infants, bottled juices for infants, and cookies for infants. Danone's baby food products are all formulated with reference to internationally recognized standards (including FAO (Food and Agriculture Organization of the United Nations) and WHO (World Health Organization)), and are strictly regulated by the infant food laws of Europe and France. At the same time, each product is formulated according to the special needs of infants at various stages of growth, supplemented with different vitamins and minerals to provide the most appropriate nutrients. Danone's baby food products have been exported for more than 40 years to countries in Europe (including the United Kingdom, Ireland, Belgium, Italy, Spain and Portugal) and the Middle East. In addition, Danone's baby food is well established in Africa and other French-speaking countries. Research and Development The Danone Group considers research and development to be a major policy priority, reflecting its indispensable contribution to product innovation. Only by keeping abreast of the latest scientific developments will the Group be able to satisfy changing needs and consumer tastes, and in so doing gain market share. More than 1,100 researchers from all over the world currently work in the Danone Group's Research & Development Department (Danone Vitapole) in Palaiseau, France. Danone spends around 130 million euros a year on research.

Cooperation with China

China is an important part of Danone's global development strategy, and it is particularly well known for its Evian natural mineral water, which has long been the leading imported mineral water. In the early nineties, Danone started to set up factories in China and quickly achieved excellent results, with Danone branded yogurts leading the way in Guangzhou and Shanghai. Today, the Danone Group has seven factories in China, located in Shanghai, Guangzhou, Shenzhen and Jiangmen, producing yoghurt, milk, cookies, soy sauce and frozen confectionery, and exporting its products both locally and internationally. Since 1994, Danone has established a large and well-trained centralized sales force in China, with offices in Shanghai, Beijing, Guangzhou and Chengdu, to aggressively expand the Group's imported products and those from its joint-venture factories in the retail and catering sectors. At the beginning of 2000, RB Group signed a contract with Danone Group to form RB (Guangdong) Food & Beverage Co. On November 21, 2003, Danone Group Asia Limited increased its capital by 100 million yuan, the acquisition of Shanghai State-owned Assets Management Company's 3.85% of the national shares, a leap to Shanghai Bright Dairy's third-largest shareholder, and began the use of the bright brand to make China's market, and indirectly share the fruits of the development of China's dairy industry, the strategic process.

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