Ladies and gentlemen, thank you for standing by, welcome to the Kerry Group preliminary results 2019 conference call. At this time, all participants are on a listen-only mode. After the speaker presentation, there'll be a question and answer session. To ask a question during this session, you'll need to press star and one on your telephone. I must advise you that this conference is being recorded today, Tuesday the 18th of February, 2020. I'll now turn the conference over to your first speaker today, William Lynch, Head of Investor Relations.
Good morning, everyone, welcome to Kerry Group's full year 2019 results call. I'm William Lynch, Head of Investor Relations, and with me is Edmond Scanlon, Group Chief Executive Officer, and Marguerite Larkin, Group Chief Financial Officer. Edmond and Marguerite will take you through a presentation capturing the key points of this morning's results update. Following the presentation, we will open the lines for your questions. Before we begin, please note the usual disclaimer regarding forward-looking statements. I will now hand over to Edmond.
Thank you, William. Good morning, everyone, and welcome to our full year results presentation. Turning please to slide four, and looking back at 2019, I characterize it as a very strong year for Kerry. We delivered a very good performance, while at the same time making significant progress right across our strategic growth priorities. For me, the three key highlights were, firstly, we delivered very strong overall growth. We grew revenue by 10% to EUR 7.2 billion, and trading profits by 12% to over EUR 900 million. Secondly, we delivered a number of innovations in partnership with our customers by leveraging our strong integrated solutions capability, and this drove significant growth across a number of end-use markets. I'll give you a little bit more detail on that shortly. Thirdly, we continued our strong track record of growth in developing markets with another year of double-digit volume growth.
We now have over EUR 1.6 billion of revenue in developing markets, which is a remarkable achievement given our expansion in these markets has almost been exclusively organic over the last 25 years. Now turning to slide five and looking at Taste & Nutrition business. we delivered good volume growth of 4%, with momentum building throughout the year, and with a really strong finish to the year. Our nutrition and well-being technology portfolio had a strong performance, and this was achieved through our integrated solutions incorporating our fermentates, our specialized protein portfolio, probiotics, botanicals, and natural extracts. This growth is reflective of consumers' increasing demands for enhanced nutrition as they seek better health and overall well-being. Moving on to foodservice, we achieved good growth of 5.5%, and this was underpinned by new menu development and nutrition-led innovations to help customers meet ever-increasing consumer demands.
From a margin perspective, we expanded our trading and EBITDA margins in the year, with our trading margin increasing to 15.3% and our EBITDA margin increasing to 18%. The key driver of our margin expansion was the enhanced product mix as we continue to add more value for our customers. Turning to slide six, and taking a moment to look at our performance by end-use market. We said before, we are a consumer-led, customer-centric organization, and we developed our growth strategies through the lens of end-use markets. This is aligned to how we partner with our customers to meet new and evolving consumer needs right across food, beverage, and pharma markets. As you can see from the breakdown on the right-hand side of the slide, we had an excellent performance across a number of end-use markets.
Starting with the meat end-use market, we delivered an excellent performance with volume growth in excess of 9%. Key drivers of growth here were clean label, natural preservation, and plant-based innovations. In snacks, we also had a very strong growth of 9%, with new launches focused on healthier snacking. Moving on to the dairy end-use market, with a number of innovations to meet consumer demands for healthier options in the ice cream category, we also made progress with our plant-based solutions to deliver dairy alternatives for our customers. On meals, volumes here were impacted by product churn within the category, particularly in North America. Within our beverage end-use markets, we had a very strong performance in Europe and APMEA, where we have been working with a number of customers as their nutrition and wellness partner, supporting them right across their beverage platforms.
I give you a little bit more detail on this later on in the presentation. Then finally on the pharma end-use market, again, we achieved good growth, and this was primarily driven by excipients. Moving on to slide seven and looking at our business through the regional lens. Firstly, looking at the Americas region. Volumes grew by 2.7% with an overall revenue of EUR 3.2 billion. North America achieved good growth driven by meat and snacks. In Latin America, we're pleased at our performance with good growth in Mexico and Brazil, and a solid performance in Central America. The recent acquisitions of Fleischmann's, Southeastern Mills, and Ariake also performed well, and we're really excited about the potential for these businesses and how they complement our authentic taste and clean label offerings.
Moving on to Europe, we delivered a solid performance with volume growth of 2% and revenue of EUR 1.5 billion. With the beverage, meat, and snack end use markets all delivering good growth. We are also pleased with our performance in Russia and Eastern Europe. We have strong growth in both beverage, within the foodservice channel. Moving on to APMEA, we delivered an excellent performance right across the region with volume growth of 10.3% and overall revenue coming to EUR 1.3 billion. We are particularly pleased with our performance in Southwest Asia and the Middle East, and we also continue to make strategic investments for growth right across the region. Moving on to consumer foods on slide eight. It has been a year of solid underlying performance with a volume growth of 0.9% against what we had as a soft U.K. marketplace.
Overall volumes were back 2.2%, reflecting the ready meals contract exit as previously reported. Trading margins improved by 10 basis points, with savings from the realignment program coming through as planned. In the second half of 2019, we successfully launched a number of meat-free offerings under Richmond brand, and also the Naked Glory brand. Finally, before I hand you over to Marguerite to give you some more detail on the financials, I'd just like to recap on our M&A activity for the year on slide nine. We completed a total of 11 acquisitions in the year for a total consideration of EUR 562 million. As many of you are aware, we were also involved in a well-publicized transaction process in our sector.
As you can see here from the slide, the acquisitions completed in the year were aligned to our strategic Taste & Nutrition, developing markets, and foodservice. For us at Kerry, M&A has always been a key part of our strategy. We believe we have a business model that has generated, and will continue to generate significant value for our stakeholders through M&A. With that, I'll hand you over to Marguerite.
Thank you, Edmond, and good morning, everyone. Over the next 10 minutes or so, I will take you through our financial performance in more detail. For the full year 2019, the group achieved revenues of EUR 7.2 billion, trading profits of EUR 903 million, and adjusted earnings per share of EUR 3.937. Overall, 2019 saw a continuation of our consistent delivery and has been a very good year of solid financial performance. To our financial highlights and our performance on each of our key financial metrics in turn. Firstly, we reported revenues of EUR 7.2 billion in the year, up 9.6%, including volume growth of 2.8%, impact of foreign currency, and the contribution from acquisitions. Trading profits of EUR 903 million, as I mentioned, which represented growth of 9.5% in constant currency. We delivered good margin progression with trading margin up 30 basis points.
We grew constant currency adjusted earnings per share by 8.3%. Return on capital employed of 11.8% was in line with expectations reflective of investments for growth and strategic acquisitions. Finally, we generated EUR 515 million of free cash flow, which represented 74% cash conversion. Now looking at our revenue growth performance on slide 12, and taking each of our key measures in turn. Our reported revenue grew substantially by 9.6% at over EUR 600 million in the year. This growth was driven by a number of key elements. Volume growth of 2.8%, as I mentioned, which was up over EUR 200 Taste & Nutrition. overall, group pricing was flat in the year. Translation currency was a tailwind in the year in the order of 2.1%. We had a strong contribution in the year of 4.7% from acquisitions, or just over EUR 300 million.
The most notable of these were Fleischmann's, Southeastern Mills, Ariake USA, and our expansion into the Middle East with AATCO. We are very pleased with the performance of these acquisitions, and particularly excited that Fleischmann's and Ariake USA have further enhanced our authentic taste and clean label technology capabilities. Overall, I would say a very good performance from a top-line perspective. On to slide 13 for a moment to look at our revenue volume performance by business. On the left-hand side, you will see our overall group revenue of over EUR 7 billion split by business. Within consumer foods, we had solid underlying volume growth of 0.9%, and an overall volume growth decline of 2.2%, reflective of the ready meals contract exit that we have spoken Taste & Nutrition achieved good volume growth of 4%, a strong performance against the backdrop of the softer market volume growth rates.
You will see on the right-hand side of this slide that firstly, this volume growth evolved across the course of the year. Secondly, we have continued to deliver consistent outperformance of market growth by more than 2%. Turning now to our margin performance and our group trading margin bridge. We are pleased to report good trading margin expansion of 30 basis points in the year. The key drivers were portfolio mix and operating leverage, which contributed in the order of 40 basis points. We continued to enhance our portfolio mix as we extended greater depth of technology into new products right across the globe. We also delivered operating leverage from the volume growth achieved in the year.
You will see in the middle panel within our Kerry Excel program, we delivered efficiencies of 30 basis points from supply chain, logistics, and functional cost savings, offset by investments for growth of 40 basis points. These included investments in the localization of commercial leadership, further strengthening our technology expertise and capability in developing markets, as well as the continued rollout of KerryConnect in North America. Acquisitions had a positive effect on group margin of 10 basis points in the year. In the final column of the margin bridge, as previously mentioned, we have grouped Brexit risk management costs of EUR 8 million or 11 basis points, and the effect of the transition to IFRS 16 leases, which had a positive impact on a like-for-like basis of EUR 3.4 million or circa five basis points.
All in all, we are very pleased with the overall group margin expansion of 30 basis points for the year, which was underpinned by portfolio mix enhancements and operating leverage. Turning now to free cash flow on slide 15. Another year of good cash conversion. We generated free cash flow of EUR 515 million and cash conversion of 74% in the year. Looking at some of the component parts. Firstly, trading profit was up EUR 97 million -EUR 903 million. Depreciation increased to EUR 191 million, reflecting increased capital expenditure and the impact of IFRS 16. Average working capital increased by EUR 89 million, reflecting the investment in stocks as part of our Brexit risk management program, the increase in contingency stocks in North America as we commenced the deployment of KerryConnect, and the increased working capital reflecting the increased scale of the business.
Finance costs and tax were both up, reflecting the increased size of the business and recent acquisitions. Capital expenditure of EUR 315 million or 4.4% of revenue during the year, which included upgrading and expanding our facilities in China, investing in our capabilities in the Middle East, and opening our new taste facility in India, which will serve our Southwest Asia market. We continued to be disciplined and align our investments to our strategic growth areas. Overall, a good free cash flow performance of EUR 515 million and cash conversion of 74%. Moving to our debt profile on slide 16. Net debt was EUR 1.9 billion at year-end, up from EUR 1.6 billion in 2018, reflective of acquisitions in the year and a very good net debt to EBITDA ratio of 1.8x .
In June, we completed our EUR 1.1 billion revolving credit facility, extended the maturity date to June 2024, and in September, we issued 10-year, EUR 750 million bond notes. Our debt profile is in very good shape with no significant debt repayments until 2023, and the weighted average maturity profile of our debt is 5.9 years. All in all, we continue to have a very strong balance sheet with a long maturity profile to enable our growth strategy. Finally, before I finish, I would like to cover off a number of other financial matters on slide 17. Finance costs increased by EUR 15 million, primarily due to acquisitions and the transition to IFRS 16 as mentioned. Our pension deficit of EUR 9 million is down from EUR 44 million in 2018, primarily driven by a strong return on assets, partially offset by the effect of the reduction in discount rates.
Nontrading items, a net charge of EUR 92 million, comprising two main items. Firstly, on acquisition integration and transaction-related costs, we invested EUR 48 million on the integration of acquisitions and incurred transaction-related costs of EUR 18 million, reflecting costs on the transaction process that Edmond referenced earlier. We are very pleased with our progress on the integration of acquisitions completed. Secondly, the consumer foods realignment program, as previously outlined, with a net cost of EUR 22 million, was completed during the year and delivered to plan. Moving to KerryConnect, we commenced the deployment in North America in the second half of 2019, and I'm pleased to say that this is progressing well and will continue through 2020. On raw materials, input costs overall were neutral in the year, with increases in cereals and proteins being offset by decreases in spices, citrus, and vanilla.
At this stage, the overall outlook is currently looking like low single-digit inflation for 2020. Finally, on currency, the translation impact on adjusted EPS in 2019 was a tailwind of 3.1%, and we are currently estimating a translation currency tailwind in the region of 2%-3% on the EPS for 2020. I'll just wrap up the financial performance update briefly, before I hand you back to Edmond. I would say overall, a period of very good consistent performance as we continue to deliver in a rapidly evolving market and Taste & Nutrition delivered good volume growth, particularly in developing markets, good overall group margin expansion of 30 basis points, and good cash conversion and growth in our adjusted earnings per share of 8.3% on a constant currency basis. With that, I'll hand you back to Edmond for outlook and future prospects.
Thanks, Marguerite. Before I share our outlook for 2020, I'd just like to take a couple of minutes to revisit the evolving marketplace and just put some color on how we're partnering with our customers to deliver on our growth strategies. Turning to slide 19, we've spoken previously about how everything starts at Kerry with the consumer. We've looked at how our marketplace and industry is changing rapidly, and how the accelerating consumer change is driving customer transformation and reshaping our entire industry. We've looked at different aspects of this change, and today I want to look at how sustainability is driving change right across the end-to-end supply chain, impacting consumers, customers, and suppliers, and how we at Kerry are embracing this opportunity and embedding sustainability into our strategies and also into our ways of working.
Now turning to slide 20 to look at our sustainability strategy. Since the beginning, sustainability has been rooted in Kerry's heritage and a central part of our company's growth and evolution. Our company started as a community-based cooperative, and this foundation set us on our journey to become the Taste & Nutrition company. our commitment to sustainable development and innovation, and our ability to create natural from-food-for-our-food solutions remains at the core of our business. We're very proud of the achievements we've made to date with our Towards 2020 program, but we know there's still much more to do. To give some context, we estimate that every day there are more than 1 billion products consumed that contain a Kerry solution.
This provides a phenomenal platform for us to innovate, to enable sustainable nutrition, which we can then use to co-create solutions with customers for their consumers. Examples are improving nutrition, using lower impact ingredients, extending shelf life, reducing emissions and waste through process technologies, and creating more value from byproducts. A recent example of this actually is where our enzyme technology was deployed as part of a solution to reduce food waste by almost 60% in a customer's leading baked product brands. When combined with our 2030 sustainability commitments, we will deliver a better impact for people, communities, and the planet. This all means a great deal to us at Kerry. It is core to our purpose and is all part of our aim to be our customers' most valued partner.
Now turning to slide 21, where we just wanted to share with you some insights on the global beverage market. We at Kerry are uniquely positioned as the nutrition and wellness partner, serving customers right across this dynamic market. This market is undergoing massive consumer-led change, with categories, subcategories, and niche markets all being redefined and reinvented. Central to all this is the heightened consumer demand for beverages that deliver better-for-you nutrition and wellness benefits. This is playing out right across all beverage categories, be it frappés, kombucha, teas, coffees, hard seltzers or soft beers and soft spirits, and the list goes on and on. On this slide, we've included a few examples, and one I'd just like to highlight is the oat frappé for foodservice.
We partnered with our customer and leveraged our enzymes, protein science, flavor, and texture capability. Combine this with our baristas and applications expertise. We created a great tasting, nutritious, and on-trend consumer solution for a subcategory that's forecasted to grow at double digits. Now while we focused on beverage as the example for today, similar dynamics are at play across a number of other categories, from snack to meat to dairy, and this all presents exciting opportunities for Kerry going forward. Now looking and turning to the outlook for 2020 on slide 22. Just before I talk about the overall business, I want to speak about the ongoing developments relating to the coronavirus in China. Let me start by saying that our priority, first and foremost, is the health and safety of our people and their families.
We have a really strong, experienced team in China, and we've been supporting them through this difficult time. In addition, we're working together with the Chinese authorities, our customers, and our suppliers as we navigate through this situation. As a result of these ongoing developments, we've included in our full-year guidance an estimated impact in relation to our China business for the first quarter. Now, turning to where we are overall as a business and looking out into the full year 2020. As we shared today, we had a very strong year in 2019, with volume growth building over the course of the year and a particularly strong finish in Q4. We're very excited about the opportunities Taste & Nutrition, we have strong growth prospects as we continue to further deploy our industry-leading business model.
We believe we're best placed to support our customers as their co-creation partner for sustainable nutrition. Within the consumer foods business, we'll selectively focus on growth opportunities. We've continued to invest for growth and pursue M&A strategies aligned to our overall strategic growth priorities. To close, and for the full year 2020, the group has a strong innovation pipeline, and we remain confident in our ability to continue to outperform our markets. Reflecting our estimated impact of the developments in China in the first quarter, we expect to achieve adjusted earnings per share growth of 5%-9% on a constant currency basis. With that, we'll open the line for questions.
Thank you. As a reminder, ladies and gentlemen, should you wish to ask a question, please press star and one on your telephone keypad. Your first question comes from the line of Arthur Reeves from Barclays. Please go ahead, your line is now open.
Good morning, everyone. Thanks for taking my questions. My first question is about your midterm guidance. You've several times this morning said that your performance was very strong, but in fact, volume growth was below the bottom end of your midterm guidance. Cash conversion was below your midterm guidance. Return on capital is below your midterm guidance. Is this a temporary thing caused by market circumstances, or actually, are you now looking for the bottom end of your midterm guidance to be a very strong performance? That's my first question. The second question, coming on to 2020, what sort of volume growth do you see supporting the EPS growth you've guided us to, please? Thanks.
Thanks, Arthur. I might kick off here and Marguerite might just come in after me. Maybe just to refer you back to the end-use market page on the deck, and just focusing on T&N for right now. The volume growth in that page, if you can see, there's a wide range of end-use markets there on the page with a wide range of growth. If you look at the beverage end-use market, the meat end-use market, the snack end-use market, and the pharma end-use market, each of them are performing really, really strongly. Meat at 9%, snack at 9%, beverage at 5%, and pharma at 6%. When I just take a step back and look at that performance, it certainly gives us a lot of confidence in terms of the growth trajectory of the business. This is our third time giving you these end-use market growth rates.
In 2017, we outlined what our expectations were for a five-year plan. In 2018, we gave you a full year look, and in 2019, another full year look. You can see there's quite a bit of variability there. That really gives us, I suppose, a good look at the challenges, but also the opportunities that are in front of us. I think by any stretch, looking at that list of end-use markets and recognizing that there are challenges in the market, we continue to be confident about reaching and achieving our midterm targets. In terms of 2020, look, we had a strong finish to the year. We feel we're very well positioned going into 2020.
As you're thinking about 2020, as we are six weeks into the year, maybe letting coronavirus aside for the moment, we'd expect our performance to be more or less in line with the 2019 performance.
Okay. Thanks very much.
Thank you. Your next question comes from the line of Jason Molins from Goodbody. Please go ahead. Your line is now open.
Hi, three questions, if you don't mind. Kicking off there with China, can you maybe give me a better sense of your exposure by channel in the region? I'm particularly interested around the food service channel, given what we've seen from the number of the QSRs in China and how they've had to close up a number of their sites and stores. On plant-based, your statement is littered with commentary on the performance around plant-based. Can you maybe talk a bit more about your capabilities compared to your competitive set, as such, where Kerry differentiating yourselves in this field? A final question, really, given the impending IFF- DuPont transaction. I appreciate the deal won't close until 2021, would welcome your thoughts on how you see that deal impacting the competitive dynamics in the marketplace, given the size of that combined business. Thanks.
Thanks, Jason. Maybe taking the last point first. I think, look, we're very confident about where we are as an organization. I think from a strategy perspective, it's business as usual for us. We've a great business, a great team of people. In terms of our integrated solutions capability, like I kicked off at the very beginning of the call, I feel we are well ahead of the game there. I think everybody else has to work really hard to catch up with us. Of course, we're not going to stand still where we are at. We're going to continue to evolve. We're not hugely concerned about how well our competitors and how our peers are performing or what they're doing. We're very focused on our business, feel good about where we're at. As I said, business as usual.
We've a great strategy, a strong team, and we feel we've great runway ahead of us. Maybe just to touch back in China, as you probably know, it's a region and a country that's very close to my heart. I'm in regular contact with the team there. We've a very strong team there, and that team is very focused in, I suppose, getting our business back up and running there. In terms of food service and channels and those types of things, we have said that our overall food service business represents 25%-28% of our business, and that's the same globally. There isn't a huge amount of difference in terms of that weighting. I would say then in terms of our plant-based performance, again, if you look at the performance in our meat end-use market, again, a growth rate of 9%.
That business almost represents a quarter of our total business. Our performance in plant-based is reflected primarily in that meat end-use market. If you think about the challenges that customers have and consumers have with plant-based alternatives, it's primarily around taste, nutrition, and texture. I believe we're extremely well-placed in terms of helping customers to improve the quality of those products across those three areas.
Okay. Thank you very much.
Thank you. Your next question comes from the line of Heidi Vesterinen from Exane BNP Paribas. Please go ahead. Your line is now open.
Good morning. A couple of questions. I think last quarter when you spoke, you were a bit cautious on North America, but that seems to have turned out better than expected, but Europe had a bit of a slowdown. Could you talk about what happened in both markets, please? Thank you. That's my first question.
Thanks, Heidi. Look, I wouldn't call out anything specific as such. I'd maybe call out timing as opposed to anything else. I think in terms of North America, we wouldn't say that from a market perspective, anything has really changed. Maybe about this time last year, we did see that inflation was impacting the marketplace. Nothing has really happened throughout the course of the year to change that. I think we had some good wins coming into the end of the year, and I feel we're well positioned going into 2020 as it relates to North America. In terms of Europe, again, look, I wouldn't call out anything specific. We don't see any structural changes as such in Europe. Again, I'd put it down to a little bit of timing.
As you remember, we have called out in the past that orders around seasonal offerings and things like that might change from time to time. Nothing out of the ordinary to report really on Europe either.
The next question is on T&N margins. You are currently lagging your midterm targets. Could you talk about why that's been, and what is the outlook from here? How do you think you'll be able to catch up? Thank you.
Good morning, Heidi. I might take the one on the T&N margins. Firstly, I would say we're very pleased overall with the expansion of the margins in the current year. As we look ahead to 2020, we do see continued opportunity to expand our margin, particularly on the portfolio mix in terms of layering in technologies, very much aligned with some of the examples that Edmond shared earlier. We see good opportunity to expand our margins in 2020, somewhere above 20%, in the region of 30%, before we take into account the impact of the coronavirus.
Last question, please. You talked about your involvement in a well-publicized transaction last year. Now that that's now gone, is that it for large M&A, or do you still have other sizable targets in the pipeline? Thank you. That's my last question.
Thanks, Heidi. I suppose, look, we've never made a secret of the fact that we run the rule across many acquisition targets or potential acquisition targets or merger targets. I think that strategy hasn't changed. I think we have the confidence, the capability, we have the business model to do acquisitions. We believe we're well supported from a shareholder standpoint. I think we have shown discipline. I believe we've shown a strong track record in terms of delivering value for our shareholders. Ultimately, that's the key measure here in terms of how we evaluate acquisitions. Look, we remain open-minded about any opportunities that turn up regardless of scale.
Thank you.
Thank you. Your next question comes from the line of James Targett from Berenberg. Please go ahead. Your line is now open.
Hello. Good morning, everyone. A few questions from me. I was just following up on the last question on M&A. I just wondered, regarding the DuPont acquisition, was it just a opportunistic moment for you to get involved in that deal? Has that process of being involved and seeing shareholder reaction, seeing the opportunities that that acquisition presented, fundamentally changed your view towards doing large deals for Kerry in terms of how successful they could be and your capabilities in doing that? Just on free cash flow. Obviously, the conversion is improving and the free cash flow is improving, but still below target. Could you maybe talk about what's holding that back?
If it's areas like working capital due to KerryConnect rollout and the Brexit mitigation program, is that got to reverse as we go into 2020, we should see that free cash flow conversion improve. Thank you.
Thanks, James. I think it's important to recognize that nothing has changed in terms of our strategy. When it comes to investments or acquisitions, I think, maybe just reiterating maybe the point I just made, that scale isn't going to frighten us here. Again, we're going to take a disciplined approach. We have a good track record of saying what we're going to do and doing it. We will ensure that whatever business we look at is fully aligned to our strategy and will deliver value for our customers and ultimately deliver value for our shareholders. That is really the metric through which we measure ourselves and we measure any opportunity that comes onto the table. I might let Marguerite touch on the free cash flow.
Sure. Good morning, James. Just taking your question on free cash flow. As you know, the cash flow performance in FY 2019 was very much in line with our guidance and reflected the impact earlier in the year of Brexit and as you mentioned, the investments on KerryConnect. As we think about the cash flow conversion for 2020, we're very focused on continuing that improvement trajectory, and we're focusing on improving the cash flow beyond the 74% closer to the 80% target. Just to mention, 2020 is a big year again for KerryConnect's rollout. We're extending KerryConnect across North America to over 20 sites in the year. However, having said that, we're focused on reducing the working capital investment throughout the year to improve the overall cash conversion, as I mentioned.
Thanks. Can I just also just one final one just to clarify on China. Can you maybe give some color on what you're baking in for your volume growth expectations in Q1 in that guidance because of coronavirus? Thanks.
Maybe I'll take that one as well on China. In the context of our assumptions, we are at this point considering an impact of 0.5%, roughly 0.5% of T&N revenues as a full year impact.
Okay, thank you.
Thank you. The next question comes from the line of Cathal Kenny from Davy Research. Please go ahead, your line is now open.
Good morning, folks. Two questions from my side. Firstly, on food service, it looks like Q4, there was a marked acceleration in volume growth. My math reckon somewhere between 6% and 7%. Just wondering, can we get some detail on the drivers of that, and is that sustainable? Secondly, just on the snacking end-use market, it looks like growth year-over-year there moved somewhere a little bit over 5% to 9%. Again, just can we get a little bit more detail on that market in terms of geography or channel as to what's driving that growth? Thank you.
Thanks, Cathal. Maybe firstly on foodservice, I might just refer you back to some of the examples we touched on in the presentation, let's say the oat frappé in foodservice. I think it's a very dynamic market. I think what we are seeing with the, whether it's the large QSRs, whether it's the coffee chains, there's a lot of activity in terms of improving the nutritional quality of their menus and bringing more variety. I think, as we look at the foodservice channel, we would say that the beverage market within the foodservice channel is probably most dynamic. I feel it's an area that we're very well positioned to be able to grow our business in that particular area. I wouldn't call out any region in foodservice as being a little bit stronger or anything like that.
Other than maybe North America is still a little bit subdued. With that said, within food service, beverage in North America would also be the most dynamic part of the menu. In terms of snacking, yeah, great acceleration on our growth in snacking across the year. A key driver of snacking is taste. It goes to our strength in authentic taste. Again, I would call it pretty global, I would say. From a premium standpoint, there might be some regional differences, but ultimately, if you consider snacks and small bite-size items, taste is such an important part. While nutrition is also important, taste, I would say, is most important in that end-use market. If you consider some of the acquisitions, whether it's Ariake in terms of that whole authentic taste area, that helps us.
It helps us put together a fantastic building block, clean label building block, as it relates to that end-use market.
Thank you.
Thank you. As a reminder, ladies and gentlemen, should you wish to ask a question, please press star and one on your telephone keypad. Your next question comes from the line of Faham Baig from Credit Suisse. Please go ahead. Your line is now open.
Morning, guys. A couple of questions from me as well, please. Can I start off with China? I think you just mentioned that you're expecting a 50 basis point Taste & Nutrition revenues. according to my math, that would suggest that your revenues in China in Q1 are down 30%. Would that be a fair estimate? Are you assuming that those revenues are lost and unlikely to be gained in the latter part of the year? That's my first question. Secondly, more of a housekeeping question. Restructuring charges as a percentage of free cash flow have went up in 2019 again. How should we think about that in 2020, but also in the medium term as well? Do you expect restructuring costs to be a part and parcel of your business?
The final question, if I could squeeze it in, capital expenditure, how should we think about that in 2020 as well? Thank you.
Thanks. I'll take the question on China. Your math is correct in terms of how you outlined it there. It's probably a little bit too early to say if there's going to be a bounce or anything like that at this stage. We have endeavored to measure the impact on Q1 and to be transparent on that. We continue to monitor the situation on a daily basis. We have five manufacturing facilities there. Those five manufacturing facilities are up and running as we speak. Now, I wouldn't say they're up full tilt or anything like that. From a people perspective, we still are running very much on a skeleton crew from a people perspective. Look, we're going to stay very close to it, and as things develop, we will come back if there's any change.
Right now, we've measured it as best as we can and shared that with you.
I might just take your two other questions. Firstly, on the non-trading items. As I mentioned earlier, the non-trading items in FY 2019 had a number of components, predominantly the M&A integration related costs, but also transaction costs in relation to the process that we mentioned. In 2019, we also had costs associated with the consumer foods realignment program. I think FY 2019 was slightly different to how we foresee FY 2020, and very much consistent with what we would have said in the past. Our non-trading items are very much dependent on the materiality of the acquisitions completed during the year. At this juncture, we are not necessarily calling out any significant acquisition-related non-trading item. Obviously, we'll update you as the year progresses. Sorry, your final question was just on capital.
On capital, again, consistent with our strategy, we continue to invest in a very disciplined manner in relation to our key strategic growth areas. As we think of capital for 2020, we're looking at in the region of 4.5%, maybe upwards to 5%, but in the region of 4%-5%.
Many thanks.
Thank you. Your final question for now comes from the line of Charles Eden from UBS. Please go ahead, your line is now open.
Hi, good morning, Edmond. Good morning, Marguerite. I just wanted to ask a question on the consumer foods business, please. Clearly you've had a negative impact on volumes from the lost private label contract. Will you be looking to win new contracts in this area going forward, or are you happy for this business to continue to shrink as a percentage of Kerry's overall business over time? Thank you.
Yeah, I think we've made no secret of the fact that the primary business in which where we'd be deploying capital will Taste & Nutrition business. that said, though, I think it's important to recognize that we had a really strong Q4 in our consumer foods business with volume growth of 1.6%. That consumer foods business, we've had very good business development in the year. Like we mentioned in the presentation, we launched three new plant-based offerings actually, all branded, two in the U.K. and one in Ireland. We're excited about that. Overall, look, the business is operating in a challenging environment, in a soft environment, primarily in the U.K. That said, it's performing in line with expectations and has a very strong team wrapped around that business.
Thank you very much.