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Overview of activities, risk factors
2.7 Risk factors
DANONE
REGISTRATION DOCUMENT 2015
25
Other risks
Other risks that could adversely affect the Company in the future may exist, even though the Company was unaware of them or considered
them immaterial as of the date of this Registration Document.
Description of principal risk factors
Risks associated with Danone's image and reputation
Danone's good reputation and the quality image of its brands and products are essential to its success. They may be affected at any time.
RISK IDENTIFICATION
RISK MONITORING AND MANAGEMENT
Risks associated with product quality
Its activity exposes Danone to the risk – known or merely
perceived, anticipated or alleged – of product contamination
or that its products are harmful.
This quality risk may arise through the actual or alleged exis-
tence of (i) chemical and microbiological contaminants (even
in infinitesimal amounts) in raw materials and packaging, (ii)
cross-contamination with allergens, and (iii) non-compliance
with the safety measures of finished products when they leave
the factory and throughout the distribution chain. These actual
or alleged contamination risks could also potentially occur (i)
upstream fromDanone's activity (with suppliers or while being
transported by suppliers), and (ii) downstream from its activity
(by clients or distributors or during the transportation phase
by its distributors).
The materialization of such a risk could have multiple
consequences:
•
Danone's sales and results related to these products could
be severely affected;
•
this impact could then extend beyond just the products
involved to include other products of the same brand;
•
givenmedia coverage and the development of social networks,
this impact could also spread to other geographic areas
than the ones initially involved;
•
the combined impacts could therefore have a significant
adverse effect on Danone's overall sales and results;
•
in addition to the immediate financial impact, the reputation
of Danone, its brands and products as well as its quality
image could be adversely affected over the long term, thereby
exacerbating the financial risk for Danone.
Danone's priority is to avoid any contamination risk.
To that end, Danone applies an uncompromising food quality and
security policy, which is implemented through a quality orga-
nization at both central and local levels and makes it possible
to achieve the targeted level of food quality and security. The
Company has establishedmeasures and procedures to limit the
contamination risk, in particular through the implementation
of multiple controls on the production lines and throughout the
distribution chain as well as regular audits of its sites:
•
the risk of product contamination is classified into four
categories (microbiological, chemical, physical and allergic)
and depends on the nature of the products;
•
it is controlled at each stage of the production and selling
cycle: at the time of the purchase and delivery of rawmate-
rials, the production process, the packaging of products, the
storage and delivery of finished products to distributors and
food retailers, the storage and shelving of finished products
at the final sales points.
Danone has also prepared and implemented a procedure at each
subsidiary that organizes (i) measures for halting production
and withdrawing or even recalling products in certain cases,
together with the relevant institutions, and (ii) systematic,
in-depth controls and inquiries to determine whether Danone
has liability exposure.