Laiterie du Berger, last update sept. 2011

La Laiterie du Berger, a Social Business in Senegal C Created in 2005 by Frank Riboud, CEO of Danone, and Muhammad Yunus, father of microcredit and 2006 Nobel Price for peace, danone.communities is an investment fund that aims at supporting, financing & promoting social business within Danone mission « Bring health through nutrition to as many people as possible ». danone.communities has started with 3 innovative projects : Grameen Danone in Bangladesh, 1001 Fontaines in Cambodia and, in 2008, La Laiterie du Berger in Senegal. La Laiterie du Berger ambition is to valorize the fresh milk collected locally, notably among Peul cattle herders, through production and distribution of quality affordable dairy products.

Some key facts about Senegal T Total population is 12,5 millions inhabitants on 196 722 km2 surface 50% of population lives in urban areas (Main town : Dakar = 2,6 Million inhabitants) Density in Dakar = 4500 inhab / km2 vs Tambacounda = 11 inhab / km2 Life expectation is 56 years. 45% of population is aged below 14 Fertility rate is 5 kids / woman Senegal is ranked 144 by UNDP (2010) in terms of human development (vs Bangladesh 129) 64% of population in Senegal lives on less than 2USD per day Senegal is highly dependant on imports for food : only 39% of food consumption comes from local production (EDS, 2007) Over 2 $ per day 1 to 2 $ per day Less than 1 $ per day Household income per day

A paradoxical milk situation S Senegal has a long breeding tradition : 30 % of the population, representing 4 million people, live on breeding Dairy products consumption is deeply integrated in local food habits : 90 % of families consume yoghurts on a weekly basis. Local fresh milk is barely distributed : farmers keep it for their own consumption or sporadically sell it on traditional markets 90% of the traded milk is imported, mainly reconstituted from powder milk

A local supply business model L La Laiterie du Berger mainly buys milk from cattle herders living 50 km around the plant, located in Richard Toll in the Peul region. Organising the milk supply is a big challenge as cattle farmers are spread in the bush and daily supply per farmer varies from 1 litre to 3 litres, very sensitive to seasonality. The milk collection is organised, twice a day, around 3 roads that reach over than 600 herders families . In 2010, 680.000 litres of fresh milk were collected, representing a 23% increase in comparison with 2009. Besides milk collection, La Laiterie du Berger is providing hygiene, feeding and veterinary advices as well as forage and feed during the dry season to help herders increasing the level of productivity, and therefore improving their living conditions. Herders can sell daily without travelling to the markets. They get more regular and higher incomes.

A factory rooted in the Peul region T The factory is rooted in Richard Toll, in the sahelian region, close to the milk collection area. It started operating december 2006. It was initially designed to process and pack liquid fresh milk, yoghurt, cream and fruit juices. Since the 2009 repositioning, it now focuses on yoghurts – mainly in the form of pouches - & cream. The factory created around 40 jobs. The factory yearly capacity is 3000T, when organised in 3 shifts. In 2010, it worked in 2 shifts and used approximately 50% of the 3 shifts capacity. The factory is benefiting from Danone technical assistance notably on R&D and quality.

Dolima, a dairy range garanteeing quality of imported brands with local prices D Dolima is the unique brand in Senegal proposing dairy products made of locally collected fresh milk. DOLIMA means in Wolof* “ Give me more” . Consumers buy it because they feel it is good for them in taste thanks to the ‘true’ natural milk, and also good for their country thanks to the use of Senegalese milk. Most of the children can afford this nutritional product : the take away product is a pouch sold at 100 FCFA (ie 15 euro cents). Yoghurts represent 99% of volumes, with 10 SKUs (from 90g pouch to 4,5 kg bucket) . Fresh cream is a profitable niche product representing 1% of volumes. The range is supported with professional marketing tools. *(major local language in Senegal)

A distribution system reaching small proximity shops L La Laiterie du Berger serves all categories of shops, from modern trade and petrol stations to small proximity shops in Dakar and Saint Louis regions. But the majority of shops are small proximity shops, usually equipped with a single fridge or freezer where all categories of cold chain products are stored together. In order to be able to deliver products in urban areas not having roads infrastructures, La Laiterie du Berger has developed a pouss pouss delivery service. In addition, La Laiterie du Berger has also created some dedicated shops.

Birth of the project T The Laiterie du Berger story started in 2004 with a family of believers. Bagore Bathily, graduated in Belgium in veterinary science. He was inspired by a first experience in Mauritania with the Peul cattle farmers and wanted to keep supporting them in his home country, Senegal. With passion, he enrolled two key members of his family : Ibrahima Kane, Engineer from Polytechnique & Ponts & Chaussées in Paris, senior manager in Nestle operations both in Europe and Africa, and Maryam Bathily, MBA from ESC Lille, manager of her own marketing events company in Senegal. In 2005, I&P (Investisseur & Partenaire pour le Développement), a private finance company, convinced by the project and the business plan, decided to invest as a long-term partner, with 25% equity stakes. The company was established in 2006. Step 0 2004- 2005 Step 2 2008 - June 2009 Step 3 July 2009 - Dec 2010 Step 1 2006 - 2007 Step 4 Jan 11 -

Start of the company Y Year 2006 was key in the company’s life. The core network of cattle herders was constitued, the milk collection process was designed and implemented . The factory was built in Richard Toll. The first range of products consisted in liquid pasteurized milk, set and stirred yoghurts, cream and juices. 2007 full year sales were 268 MioFcfa and 360 tons. Step 0 2004- 2005 Step 2 2008 – June 2009 Step 3 July 2009 - Dec 2010 Step 1 2006 – 2007 Step 4 Jan 11 - Set yoghurt Stirred yoghurts Juices Milk Cream

Joining of D danone.communities decided to be part of this social business in 2008, and invested in La Laiterie du Berger, with 25,5 % stake equity. In addition, danone.communities started bringing its know-how through various missions of technical assistance. The factory benefited from several missions related to industrial & quality control. Danone also supported the development and the optimisation of the distribution system, clustering the potential clients into different categories. A marketing approach was initiated to better understand the local consumers, position the brand and support sales. Step 0 2004- 2005 Step 2 2008 – June 2009 Step 3 July 2009 - Dec 2010 Step 1 2006 – 2007 Step 4 Jan 11 -

Launch of Dolima enabled a rapid growth T The products faced strong competition from products manufactured from imported milk powder. In 2009, the product range was refreshed and relaunched under the Dolima brand. The relaunch was an opportunity to improve the taste, texture, packaging and marketing support. Since then, sales have grown well : to 728 tons / 540 Mio Fcfa for full year 2009 & to 1270 tons / 990 Mio Cfa for full year 2010. Mid 2010, the range was reduced to focus on yoghurts and cream. 9 SKUs were dropped out (milk, juices and liquid yoghurts) This growth has been made possible in particular by the entry of two new shareholders, the Grameen Crédit Agricole foundation and the Phitrust foundation,and the provision of a long-term loan by BIO (Belgian Investment Overseas). Step 0 2004- 2005 Step 2 2008 – June 2009 Step 3 July 2009 - Dec 2010 Step 1 2006 – 2007 Step 4 Jan 11 -

2011 perspectives O The objective in 2011 is to develop sales up to 150T per month while making a significant step towards profitability Therefore some key operational challenges will be addressed throughout the year. The range will be simplified to lower the complexity level at all stages (production, supply chain and sales) and to reinforce the quality management. A project run together with Grameen CA , GRET & Coopération monégasque has started in order to develop milk collection capabilities. Organisation and processes will be reviewed to keep developing team empowerment and excellence in execution. Monthly steering committees are run together with I&P and danone.communities to align on strategic decisions and monitor technical assistance. Step 0 2004- 2005 Step 2 2008 – June 2009 Step 3 July 2009 - Dec 2010 Step 1 2006 – 2007 Step 4 Jan 11 -

Latest 2011 results are very promising x3! While downsizing & simplifying range since june 10 & despite quality issues Q1/Q3 2010 * xx Sales in tons +60% Thanks to advertizing, distribution & good company focus 188T

LDB’s social impact is already visible Status of herders vs neighbourhood Before LDB Conflicts as cattle eating in sugar cane or rice fields Today Structuring win-win relationship with Compagnie Sucrière du Sénégal & rice farmers Access to services Before LDB No access to bank services or limited link with development world Since 2009 Breeders have access to services (education, credit through bridge with bank = credit ligne of 35 Moi for the cooperative Breeders will benefit from GRET study about developing milk sector Nb of herders families with daily access to market Before LDB 0 2009-2011 600 Av. earnings from milk / month / family Before LDB 0 Fcfa 2009 -2011 22000 Fcfa jan 09 (37000Fcfa ie + 70% jan 2011) Access to veterinarian services & insemination Before None of them 2010 All of them for vet services / 2500 cows inseminated Sedentarization Before LDB Need to transhume up to 800km during dry season Today Sedentarization  less precarity, continuous access to social services (education, health) … Community management of fields to ensure regular feeding (roufage availability during dry season) Access to cattle feeding Before LDB Access to cattle feeding but only on cash paiement Since LDB Access to cattle feeding for all 600 families on credit and with education

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Laiterie du Berger, last update sept. 2011

by danone communities on Sep 11, 2011

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