Danone // 2020 Universal Registration Document

Overview of activities, risk factors 2.4 Other elements related to Danone’ s activity and organization DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 18 Traditional market outlets Globally, and in the emerging countries particularly, a large portion of Danone’s sales is generated through traditional market outlets thanks to small-scale sales points networks. An in-house sales force and/or exclusivity agreements with wholesalers represent a competitive advantage for the Company in countries where traditional commerce and independent supermarkets continue to account for a significant share of food and beverage sales. Moreover, in Latin America and Asia, a significant portion of the Waters Reporting Entity’s products is directly distributed to consu- mers (Home & office delivery or HOD). Finally, in emerging countries, Danone is developing new local retail models through large networks of independent sellers. E-commerce, on-the-go and convenience stores Danone is stepping up its capabilities to serve e-businesses and satisfy growing consumer demand through this relatively new and specific business model. There are three different types of e-commerce: • brick-and-mortar companies (major retailers that have created an e-commerce activity); • pure players (companies selling exclusively through e-commerce); • direct to consumer (a proprietary Danone website that enables sales directly to consumers without intermediaries). In parallel, Danone focuses on the use of new growing distribution models, on-the-go and convenience stores, with an adapted offe- ring (including single serves) to meet increasing consumer desire for immediacy. Danone is growing in all these channels and gaining expertise. Specialized distribution channels (hospitals, clinics and pharmacies) In the specialized nutritionmarkets, a significant portion of products aremarketed in hospitals, clinics and pharmacies, through specialized distributors or following a tendering process. Danone alsomaintains an ongoing relationship with healthcare professionals through its medical representatives, who meet with general practitioners and specialists (pediatricians, nutritionists, etc.) as well as pharmacists. COMPETITION The packaged food and beverage sector is highly competitive due to the large number of national and international competitors. Danone is confident that its strategy for profitable growth is strongly supported by its products’ quality, taste, affordability and innovative aspect, and by the powerful brand image conveyed on health, nutrition or societal and environmental responsibility. Considering that success in this food and beverage industry is achieved through strong local market positions, Danone strives to be the market leader of each segment in every country where it operates, always in compliance with laws and regulations relating to competition. This strategy allows for a long-lasting, balanced and constructive relationship with major distribution networks, by mar- keting key products yielding growth and profitability for both parties. Reporting entity Category Competitive environment EDP Fresh dairy products (including Yogurts and Premium Dairy) Large multinational food and beverage companies (Nestlé, General Mills, Lactalis, Muller, Coca Cola), many predominantly local companies specializing in certain product lines or markets (Chobani, Wimm-Bill-Dann, Friesland Campina, Lala, Meiji, Arla, Fage, Organic Valley), and private labels. Plant-based products and beverages A few large international companies (Campbell, Hain Celestial, Nestlé, Unilever), predominantly local companies specializing in certain product lines or markets (Blue Diamond, Califia Farms, Triballat, Wessanen, Oatly, Valsoia, Chobani, Ne Moloko) and private labels. Coffee Creamers A few large food and beverage multinationals (Nestlé), predomi- nantly local companies specializing in certain product lines or markets (Hood) and private labels. Specialized Nutrition Early life nutrition Large early life nutrition companies (Abbott, Reckitt/Mead Johnson, Nestlé) and predominantly local companies and/or companies specializing in certain product lines or markets (Lactalis, Biostime, a2 Milk, Yili, Feihe). Adult nutrition Large nutrition companies (Nestlé, Abbott) and predominantly local companies specializing in certain product lines or markets (Fresenius). Waters Waters Historical beverage market leaders internationally (Coca-Cola, Pepsi, Nestlé) and predominantly local companies (Mayora in Indonesia, Kang Shi Fu in China, Cristaline in France, Epura in Mexico).