Groupe DANONE strengthens positions in North Africa and the Middle East

18/10/05 Groupe DANONE is strengthening its positions in North Africa and the Middle East through the acquisition of a fresh dairy-product business in Egypt and the signature of a partnership agreement in Tunisia for the development of biscuit business in Algeria.

In Egypt, Groupe DANONE is buying Olait, a maker of plain and fruit-flavored yogurts and dairy desserts. Created in 2003, the company owns a production plant near Cairo with an annual capacity of nearly 25,000 metric tons and backed up by a distribution fleet. Its products are to be marketed under the Danone brand in the near future.

The Egyptian market for fresh dairy products, representing some 110,000 tons in 2004, is growing at an annual rate of 4.5%. Prospects are very promising given average per-capita consumption of only 1.5 kg a year compared with 23 kg in Western Europe.

Groupe DANONE has also signed a new agreement with Tunisian company Sotubi, its partner since 1998, for the development of biscuit business in Algeria.

Groupe DANONE and Tunisian shareholders of Sotubi are setting up a joint venture in Algeria with respective equity interests of 51% and 49%. Groupe DANONE will be responsible for operational management, bringing the benefit of its know-how in marketing, technology and business operation, while Sotubi will contribute its knowledge of market and distribution channels developed over the past last five years. The new company will be investing in the construction of a new plant in Alger within a few months.

This agreement for expansion into the Algerian market is associated in Tunisia with a rise in Groupe DANONE's interest in Sotubi from 20 to 49%. Sotubi is the leading biscuit maker in Tunisia with over 60% of the domestic market. These transactions will further strengthen Groupe DANONE’s presence in North Africa and the Middle East, where it generates annual sales totaling over EUR 1 billion through shares in companies enjoying strong leadership positions on local markets:

Morocco (partnerships with ONA – Centrale laitière, Sotherma and Bimo): no. 1 in fresh dairy products, no. 2 in bottled water, and no. 1 in biscuits Algeria (partnership with Djurdjura): no. 1 in fresh dairy products Tunisia (partnerships with STIAL and Sotubi): no. 1 in fresh dairy products, no. 1 in biscuits Saudi Arabia (partnership with Al Safi): no. 1 in fresh dairy products Israel (partnership with Strauss): no. 1 in fresh dairy products Turkey: no. 1 in fresh dairy products, no. 1 in packaged water Finally, in Saudi Arabia, financial statements are consolidated under the equity method as from July 1st, 2005 following the signature of an agreement entrusting Groupe DANONE with the management of Al Safi Danone.