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Business Partnership Activities with Groupe Danone of France

April 2005

Based on the Strategic Partnership Agreement signed between the two companies, Yakult Honsha Co., Ltd. (President, Sumiya Hori) has decided to jointly enter the market in India with Groupe Danone of France (Chairman and CEO, Frank Riboud).
The development of the Yakult Group’s overseas business, beginning with entry into Taiwan in 1964, and has extended to presently include 25 countries and regions around the world where over 25 million people a day enjoy the health benefits of drinking “Yakult.”
India, the focus of our recent study, has a population of one billion people which has showed steady growth trends in recent years and which has a long tradition of consuming dairy products. Consequently, our company and Groupe Danone have determined that there is a great potential for the creation and subsequent expansion of a Probiotic market in India, and have thus decided to start our collaborative business there.
Initially, activities will center on sales of “Yakult,” and both companies will work toward the establishment of their joint venture company as a leading Probiotic company in India.
Furthermore, at meetings of the Global Probiotics Council held in Tokyo and Paris, both companies have examined and exchanged ideas for supporting consumer awareness activities and government lobbying for the field of Probiotics, and objective-specific working groups have been established to iron out detailed partnership activities.
An overview of the plan for collaborative entry into the Indian market and of the activities of the “Global Probiotics Council” is as follows:

 

1.Overview of the Plan for Collaborative Entry into the Indian Market

 

  1. Method of Entry: Establishment of a joint venture company by Yakult Honsha and Danone Asia Pacific
  2. Overview of the Local Business Unit 
    (1)Company Name: YAKULT DANONE INDIA PRIVATE LIMITED (tentative name)
    (2)Location: Delhi
    (3) Managing Director: Mr. Kiyoshi Oike
    (4)
    Company Registration: Within the Year 2005
    (5)
    Initial Investment: Approx. 3,400 million yen within first 5 Years
       
    *Investment Ratio between the Two Companies: 50:50
  3. Product: “Yakult”
    *Future sales of Danone products will be studied
  4. Planned Retail Price: 8 Rupees (About 20 yen)
  5. Sales Area: India, all regions
  6. Sales Channels: Focus will be on home delivery but will also include store sales in supermarkets and other retail outlets
  7. Projected Sales: By the 5th year, 500,000 bottles per day.
    *After the company is established, products will be imported from Indonesia in order to start sales until factory construction in India is completed.
  8. Overview of India
    (1)Population: Approx. 1,073,000,000 (March 2004)
    (2)Area: 3,280,000 square km (Approx. 8.4 times the area of Japan)
    (3) Capital: New Delhi
    (4)
    Ethnicity: Indo-Aryan (72%); Dravida (25%)
    (5)
    Currency: Indian Rupee (Approx. \2.45; as of April 20, 2005)
    (6)
    GDP Per Person: US $563 (2004)
    (7)
    Growth Rate of GDP: 5.6% (2001), 4.0% (2002), 8.2% (2003), 6.9% (2004)
    *Danone is present in India in the biscuit category through market leader Britannia. Danone participates through a joint venture with the Wadia Group, representing a long-standing and valued relationship.
 
2.Overview of Partnership Activities for the Field of Probiotics
 
  1. Our company and Groupe Danone have created the Global Probiotics Council with the goal of “promoting the worldwide awareness and understanding of Probiotics for the purpose of expanding the Probiotics market” and have established working groups through the activities of the Council.
  2. Themes of working groups are as follows:
    (1)Validation of the Effects of Probiotics Products
    (2)Research for Safety Guidelines of Probiotics
    (3) Activities to Spread Probiotics Overseas
  3. The members of the Council selected from each company are active in pushing the main themes of the working groups’ activities. In particular with respect to theme (3), which is spreading the concept of Probiotics, both companies are engaged in detailed activities in North America, such as the establishment of an advisory committee by leading experts in the Probiotics research field and the holding of Symposiums.
 
3.Future Partnership Activities
 
Our company and Danone are also currently examining extending collaborative entry activities into both America and Russia, as well as business alliances in Europe and Indonesia. 
 
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