Danone // 2020 Universal Registration Document

2 Overview of activities, risk factors 2.3 Description and strategy of the Reporting Entities DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 15 Adapting to a new world with Covid-19 Moving from mitigation to action, Danone announced in October and November 2020 a series of decisions to adapt to the new world with Covid-19. Building on the conviction that some trends promp- ted or accelerated by the Covid-19 crisis – local empowerment and decision-making, supply chain competitiveness and agility, trusted brands operating at scale, consumer-centric growth opportunities and structural channel shifts – will meaningfully transform the way companies can generate sustainable and profitable growth, Danone decided to shift from: • global categories to a country-first organization structured around 6 zones and cross-category country units; • a pyramidal organization to a delayered one, leaner, more efficient and with zero overlaps; • siloed to integrated and connected value chains leveraging the newly created End-to-End Design-to-Delivery function. The design and implementation of this new organization will be discussed with Danone’s social partners, in line with its tradition of social dialogue and engagement. The precise timing of its imple- mentation is still subject to validation, but initial discussions lead to believe that it could be effective over the course of 2021, after the relevant information consultation processes. Updated financial targets On November 23, 2020, Danone confirmed its mid-term ambition delivering superior sustainable profitable growth and updated the- refore its financial targets. Building on its unique health-focused product offering and portfolio of brands, the Company ambitions to reach, by 2022, a recurring operating margin above 15%. In the mid-term, its ambition is to deliver like-for-like sales growth in the 3 to 5% range and mid to high teens levels of recurring ope- rating margin. 2.3 DESCRIPTION AND STRATEGY OF THE REPORTING ENTITIES Starting from March 2020, all Danone entities had to adapt their ways of working in order to protect the health of Danone employees and ensure product availability. While this led to a number of short- term adjustments, on portfolio, operations and channels, Danone’s strategy remained unchanged, evolving around the One Planet. One Health frame of action. In 2020, Danone pursued the implementation of its strategy in a specific way for each Reporting Entity. ESSENTIAL DAIRY & PLANT-BASED (EDP) With over 100 brands distributed inmore than 120 countries, Danone is the worldwide leader for dairy and plant-based products. Since its first yogurt was made and sold in a pharmacy in Barcelona over 100 years ago, Danone has constantly endeavored to meet the needs of consumers by offering them healthy local products. Today more than ever, consumers look for great-tasting, natural and sustainably produced foods that support their health and immunity and that can be consumed at different moments throughout the day. These new expectations are fueling new consumption trends, such as flexitarianism (a diet that emphasizes more balanced consump- tion of animal and plant-based proteins), and a growing interest in immunity, fermented products, probiotics, and high-protein products. The EDPReporting Entity is positioned to cater to these trends, thanks to its broad, unique and balanced product portfolio of multi-local brands such as Activia , Danone , Actimel or Alpro , and strong local brands. This portfolio consists of: • essential dairy products , which include three main segments: • yogurts (classic and drinkable) including (i) trusted yogurt brands with strong heritage and local relevance such as Danone , Danonino , or Prostokvashino in Russia, as well as more recent brands like Light & Free that support consumers’ new lifestyles; (ii) functional brands sought by health-conscious consumers such as Actimel , as well as iconic global brands like Activia , which continues to develop products that support gut health; (iii) indulgence treats with Danette and Oikos in Europe, or Danissimo in Russia, for consumers who are seeking enjoyment in healthier ways and more convenient formats; and (iv) high-protein products that offer athletes and sports enthusiasts nutritional foods in a format that fits with their activities through brands like YoPRO ; • coffee creamers which includes coffee creamers (fresh or Ultra High Temperature processed), products sold under the International Delight , Dunkin’ Donuts (under license) and Bailey’s (under license) brands, as well as coffee beverages under the SToK brand that enable consumers to replicate the cof- feehouse experience at home or on the road; • milk (fresh or Ultra High Temperature processed - UHT), sold mainly in Russia, Brazil, Morocco, and in the United States where the Horizon Organic brand is a leader in the organic milk market. • plant-based products that offer consumers looking to diversify their sources of protein or that are lactose intolerant many nutritional and great-tasting options covering a broad spectrum of ingredients, ranging from almond, soy and oat to coconut, cashew and rice. While plant-based beverages and plant-based alternatives to yogurts represent the core product range, Danone is also strengthening its position in new fast-growing categories such as ice creams, frozen desserts, coffee drinks and nutritional powdered protein products. These products are sold in America, notably under the leading Silk and So Delicious brands and in Europe under the Alpro brand, as well as through iconic dairy product brands that offer new plant-based alternatives such as Activia , Actimel or Danette .