CREATING BRAND VALUE THROUGH SOCIAL INNOVATION

Global Marketing Summit, Tehran, 21st Nov 2015

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AN ECONOMIC OPPORTUNITY

•  Educated population

•  Good infrastructure

•  Low labour costs

•  Strategic access to markets

•  Internal stability and security

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FULL FOCUS ON ECONOMIC GROWTH

IR Iran’s Supreme Leader’s official website June 2015

Rapid, sustainable economic growth focusing on employment, mobilizing all capabilities and facilities of the country, such that 8% average growth is fulfilled through the plan

1980 - 2010 average

2012 – 2014 average

2016 - 2021 Government objective

10

8

6

4

2

0

-2

-4

Annual GDP growth Iran 1980 - objective 2021

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A LEAPFROG ECONOMY?

Long term annual growth rates (1980-2010)

GDP JOBS HDI CO2

3% 2.5% 1.6% 5-6%

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ECONOMIC CHALLENGES

Inequality

World Bank

Unemployment: 10.5%

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SOCIAL CHALLENGES

“The shocking statistics of crime”

More than 4m drug addicts Crime increasing

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Iranian consumers want brands to take action and contribute to solving pressing social problems

Report on Company’s Social Responsibility, Samsung Iran 2015

A VALUE OPPORTUNITY FOR BRANDS

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VALUE THROUGH LOCAL RESONANCE

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SOCIAL CHALLENGES

Poland 2002: •  Deep economic crisis •  High unemployment •  Many living in poverty •  Low trust in companies and brands

Consumers turned nationalistic: “buy Polish” Danone perceived as foreign and losing loyalty and share to local Polish brands

18.1 19.5 19.3 20.2 21.1

22.5

1.7 2.1 2.2 2.7 3.1 4.1

13.2

10.5 10.4

13 14.5

17.4

0

5

10

15

20

25

1996 1997 1998 1999 2000 2001

People living in poverty vs unemployment rate

Social minimum Subsistence minimum Unemployment rate

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#1 PUBLIC PARTNERSHIP

Danone’s challenge: •  Re-gain trust and win hearts •  Grow its business in lower socio-

demographic groups Solution: identified child malnutrition as a key social issue with business relevance Partnership with public authorities and civil society

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#2 BRAND INNOVATION

Launch of the SHARE YOUR MEAL campaign Major cause marketing initiative to promote awareness of the issue and engage citizens in a collective response On pack, PR and above the line campaign

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#3 PRODUCT INNOVATION

Development and launch of a new product range targeted at the Base of the Pyramid 30% of daily micro-nutrient needs of children Affordable price due to product design, supply chain and distribution

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POSITIVE OUTCOMES

The SYM program was an astounding success for Danone and wider society: •  More than 11 million meals financed •  Turnaround of the brand image into a

“local hero” brand •  Strong penetration increase overall

and in low socio-economic groups •  65 million units Milky Start sold in 5

years

70

53

57

66

49

30

0 20 40 60 80

The brand I buy

Company that cares about people

Helps to fight malnutrition among

hungry children

Jan 03 Oct 03

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VALUE THROUGH SUPPLY CHAIN INNOVATION

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AGRICULTURE IN NEED

Major challenges in the food supply chain: •  20% decrease in crop yield forecast

due to climate change •  40% of crop production at risk due to

water scarcity •  Crop yields are stagnating at a low

level •  Iran a net importer of agricultural

products

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#1 ADDED VALUE SUPPLY

Nespresso and its partners have helped coffee farmers deliver transformational improvements Working with agricuLtural NGOs and farmer organisations •  Yields up 26% •  Quality rejections down significantly •  Net income up 23% •  Ability to invest in labor, agro-inputs

and energy

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#2 LEADING FARM MANAGEMENT

The Nespresso AAA Sustainable Quality Program brings advanced systems and management to support farmers •  70 000 farmers •  9 countries •  300 agronomists •  Database of farm visits to monitor

training programmes and KPIs

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#3 LEVERAGING BRAND VALUE

AAA has become a major asset for the Nespresso brand •  Guarantee quality and supports

premium brand position

•  Unique in the category

•  Endorsed by leading NGOs

•  Driver of innovation and new product development

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POSITIVE OUTCOMES

Awareness of Nespresso AAA and recycling programmes drives net promoter score NPS is a critical driver of profitable growth for the business