Danone // 2020 Universal Registration Document

2 Overview of activities, risk factors 2.4 Other elements related to Danone’ s activity and organization DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 17 WATERS The Waters Reporting Entity offers a unique portfolio of mineral waters from natural sources, which are appreciated and consumed by millions of people worldwide, and flavored waters – also called aquadrinks – enriched or infused with natural fruit extracts, fruit juice and vitamins. The products are sold under international brands such as evian and Volvic and under many very strong local brands such as Aqua in Indonesia, Mizone in China, Bonafont in Mexico, Salus in Uruguay, Hayat and Sirma in Turkey, Fontvella and Lanjarón in Spain, Zywiec Zdroj in Poland and Aqua d’Or in Denmark. Its mission is to offer healthier hydration and safe drinking water throughout the world, in a way that preserves natural resources and impro- ves lives, today and for future generations. The Waters Reporting Entity’s strategy is based on the following principles, captured in its WeActForWater framework collective launched in March 2020: • promote healthier hydrationhabits: encourage people to hydrate better and offer them healthier beverages (sugar-free, reduced sugar or more natural alternatives). The nutritional benefits of hydration are mainly promoted (i) through partnerships with public health authorities and scientists and (ii) through direct interactions with people who buy products, especially the youn- gest generations, to encourage healthier hydration habits from a very early age. In particular, the Company runs the Hydration for Health annual scientific platform: in 2020, nearly 500 scientists and public health authority representatives fromaround the world met in this framework to share and promote scientific advances, the impacts on health and the challenges related to hydration; • getting products to people in the most sustainable ways by working continuously on the packaging and distribution: in response to growing concerns over the environmental impact of packaging and in keeping with the goal of protecting the planet, the Waters Reporting Entity announced new ambitious commitments. These include (i) halving its use of virgin PET and moving to 100% rPET across Europe by 2025, (ii) reducing the carbon footprint of its activity, and (iii) ensuring the collective of its water brands achieve the B Corp™ certification by 2022 (currently 46% B Corp™). The Reporting Entity and its brands are acting together to deliver on the commitments. For example, in 2020, it was announced that evian and Volvic were the first brands at Danone to be globally certified carbon neutral, Volvic was certified B Corp™ in March, and other brands across Europe and Latin America switched ranges to 100% recycled materials during the year. The Reporting Entity is developing more large formats and exploring ‘beyond plastic’ options; • invest in protecting and restoring water sources, particularly in water-stressed areas, with the help of an internal network of trained and certified hydrogeologists and by promoting local initiatives to protect biodiversity. These initiatives lead to impro- vements in ecosystems and carbon sequestration and more sustainable water resources. They apply to the 80 springs around which Danone operates, i.e. the equivalent of 5 million hectares; • promote access to drinking water by investing in innovative activities, technologies and infrastructures to facilitate affor- dable access to drinking water in poor areas of Asia, Africa and Latin America, with the help of the Danone Communities fund, an expert in this field for over 10 years. 2.4 OTHER ELEMENTS RELATED TO DANONE’S ACTIVITY AND ORGANIZATION DISTRIBUTION Although they vary to reflect local specificities, Danone’s distribution models reflect three main approaches: • distribution aimed at major retail chains; • distribution to traditional market outlets; • distribution to e-commerce, on-the-go and convenience stores. Moreover, a significant portion of the products in the specialized nutrition markets are distributed through more specialized distri- bution channels such as hospitals, clinics and pharmacies. Danone is constantly streamlining its logistics flows in order to improve service quality while reducing costs. This policy is based on an ongoing assessment of its organization, notably through out- sourcing of distribution in collaboration with specialized companies. Major retail chains Danone establishes global partnerships with its main distributors in order to help develop the sales of its products. These partnerships are based on jointly developed business plans that cover all aspects of the global collaboration and highlight the key growth pillars such as logistics collaboration, channel specific sales development, categories development, global sustainability projects such as food waste, recycling programs or food safety management. Matters involving pricing or promotional policies, which are up to each subsidiary, are not included in these agreements. In particular, Danone has taken several initiatives to work closely with large retailers in order to optimize the flow of goods and the inventory levels of its customers with the Efficient Consumer Response (ECR). approach. In addition to inventory management, automatic inventory replenishments and just-in-time delivery, ECR aims at working with distributors to better manage consumer demand and expectations at the sales points. To that end, the Company has implemented shared inventory management systems with its leading distributors that are used to coordinate inventory levels among stores, as well as at the distributors’ and Danone’s warehouses. Danone also works with its customers to develop specific marketing activities such as joint promotions that answer consumers’ needs in each channel.