Danone // 2020 Universal Registration Document

Overview of activities, risk factors 2.6 Risk factors DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 24 DESCRIPTION MANAGEMENT MEASURES strong Fast changes in consumer preferences The fast evolution of consumers’ preferences and habits requires constant innovation and adaptation of Danone’s product range and overall supply chain. The diversification of tastes, eating and drinking habits as well as the increasing health, social and environmental awareness of consumers drive their purchases. Among the key trends in food and beverages, the most notable are: • nutritional quality of the product, including presence or absence of certain ingredients (for example sugar, protein, additives); • packaging circularity (see packaging risk above); • sustainable sourcing of ingredients with known social or envi- ronmental impact; • origin of products and transparency on companies behind the brand (strong trend on local). The Covid-19 pandemic crisis has overall accelerated many of these consumer trends, heightening the importance of health (health benefits e.g. immunity as well as naturality vs ultra-processed), local, transparency, and people in the food chain. Authorities and retailers are also paying increasing attention - to health, social and environmental concerns of consumers, princi- pally on (i) health benefits, (ii) local provenance, (iii) labeling of the nutritional quality and/or environmental footprint of products and packaging, as well as (iv) food waste. If Danone is unable (i) to anticipate rapidly enough changes in consu- mer expectations in terms of tastes, eating and drinking habits and environmental impacts, (ii) to identify such consumer trends, (iii) to translate such trends into appropriate product offerings and/or (iv) to keep pace with consumer preferences, the demand for the Company’s products and its sales could fall, the Company could incur losses and its activities, results and reputation could be negatively impacted. Danone’s unique frame of action One Planet. One Health and long- term strategy Danone 2030 Goals have been defined to adequately respond to the challenges and opportunities of the ongoing food revolution. Moreover, Danone has developed a large product portfolio focused on healthy categories. Its Research and Innovation capabilities allow the Company to offer a wide variety of products to respond to different diets, consumption needs and situations. As an illustration, through the acquisition of WhiteWave in 2017, the Company diversified its product portfolio into plant-based protein and organic products in response to growing consumer trends such as flexitarianism. In 2020, plant-based products represented over €2.2 billion of sales, representing around 10% of total Company sales and slightly below 20% of total EDP sales. In addition, Danone strives to foster ongoing dialogue with its consu- mers by adapting to new consumer expectations and behaviors, sha- ringmore transparently in particular through digital communication channels on its societal and environmental commitments (such as circularity of packaging & regenerative agriculture). Through its Manifesto Brand Model and its ambition towards the B Corp™ certification, Danone aims also to develop purpose-driven brands, and commits to the highest social and environmental standards. Finally, Danone has announced in November 2020 the study of a new organization, called Local First, that aims at increasing local agility to best capture the fast-changing consumer preferences and to address new growth spaces. For more information on product content and footprint, water stewar- dship, plastic packaging and sustainable sourcing, see section 5.3 Preserve and renew the planet’s resources and section 5.5 Promoting sustainable, inclusive growth with suppliers .