Thank you very much for joining. As you know, we talk about brands. What should we start with? A commercial break. All right, good afternoon. It's great to see you all here in person. Say it's slightly intimidating because most of the faces in this room I meet after interims results or full year results for private meetings where you grill me. I'm really glad that you can do it in public today and hunt as a pack. We'll give you the chance later on. Thanks also for those of you who joined this morning's call. Obviously, this afternoon is less about what we talked about this morning and much more about the future of PZ Cussons and why I'm more excited than ever about the future of this business.
I'll start with an overview of our renewed strategy, focusing on where we know we have a right to win. We'll then hear from three key members of the leadership team who will cover how we're innovating and building winning portfolios of locally loved brands, along with a deep dive into our Africa business. You'll also get to hear from our other managing directors in the U.K., Australia and Indonesia via video. Then I'll cover off the financials and how this translates into the delivery of sustainable shareholder returns. We expect the presentation to last around 2.5 hours with a break in the middle and the opportunity for questions at the end.
Following that, you'll get the chance to ask any of today's presenters, quite a few other members of the PZ family around the room who will be upstairs, where you'll also get a chance to see the latest and greatest innovation on St.Tropez. Obviously talked about that quite a bit this morning and also a chance to see a golden outlet where we have brought Lagos to London, albeit with better traffic and hopefully finished on time upstairs. They're working on it right now. We will find out, right? I should also note that Sarah, our outgoing CFO, will be available to participate in the Q&A as necessary. Save your hardest questions. It's her last outing for the business. I want to say a big thank you and acknowledge all she's done during her five years as part of the PZ family.
We're also joined today by Jan Bramall, our incoming CFO. Please take a moment to say hello to Jan, but I really want to stress she doesn't start officially till March 23rd. Grillings on the P&L and the balance sheet, please save for another day. Let's get on with this afternoon's content. These are the people who will be joining me to tell our story. Along with all members of the executive team, they have strong, relevant consumer experience, often gained at larger, more global competitors, so they know what good looks like from blue chip players and how such organizations can think and operate. Equally, though, many of the team have also worked for smaller, sometimes private, and often resource constrained businesses, forcing ruthless prioritization and the agility to win, seeking out opportunities around the big and smaller local players.
While some are newer to the leadership team, many have been with me on the journey of PZ Cussons over recent years. Given where we are on that journey now, I genuinely believe that we are better placed today to deliver sustainable value over time. Having driven significant change through the business and with the battle scars to prove some of the challenges that we've had to deal with. We have weathered the storms that have come our way, be they related to COVID, commodity crisis or the Naira devaluation. We have learned the lessons of those challenges and are putting in place mitigating actions, effectively guardrails, to minimize the risk to the company of future events such as devaluation. We can't ever prevent these events occurring, we can be well prepared to mitigate the risk and minimize the impact.
At the same time as dealing with the implications of such events, we have been hard at work moving to a more focused and more resilient portfolio. From the actions very early on in my tenure to dispose of the non-core food businesses, Nutricima and five:am, right through to the most recent disposal of our share in the non-core PZ Wilmar joint venture, we have shifted to a clearer focus on three core categories and four lead markets. Over the same period, we have also successfully acquired, grown and integrated Childs Farm, a bolt-on acquisition of a brand firmly in our core categories and one of our four lead markets, representing a possible blueprint for future inorganic activity.
Meanwhile, we have also put our focus and investment into the capabilities we need to win, developing our brand building muscle, strengthening our innovation capabilities, and building a stronger pipeline of innovation as the foundation of multi-year growth plans. Effectively, we've added strategy and targeted capabilities to PZ's historic strength of street fighting as we have shifted from short-term focus on trading to hit the quarter or to hit the year, to a longer term focus on brand building and innovation to sustain profitable growth over the longer term. Let me reassure you though, we haven't given up on the day-to-day tussle needed to win each and every purchase, each and every point of distribution, and every extra display. We have to be competitive. We have added the focus and investment to do so with stronger brands, better innovation, and more confidence in the longer-term pipeline.
As I said, it's about strategy and street fighting. Along with a strengthened balance sheet, now firmly back within our target leverage after a lot of heavy lifting post the Naira devaluation, we are well-placed to invest behind and deliver sustainable shareholder value as a more focused and more resilient business. If I translate where we are on the journey into a forward-looking view of where we're heading, you begin to see the investment case for PZ Cussons. As a business, we are now well-placed to win in the wake of external challenges, internal change, and the completion of our strategic review process. Our brands are the foundation of our business. We will come on to explain why we believe our winning portfolios of locally loved brands in our four lead markets are the essence of our competitive edge.
Combine these with our proven go-to-market capabilities and manufacturing scale and agility in our four lead markets, we see a right to win versus larger multinationals, as well as the smaller or more agile local players. We see a natural balance in our portfolio now, very broadly half of the business in developed markets, the other half in emerging markets, each playing their own role in delivering for the group. The focus on three core categories and four lead markets gives us the ability to prioritize resources and allocate our capital effectively, balancing investment in the business with a progressive dividend and, when appropriate, targeted M&A in our developed markets. When combined with ongoing productivity gains, some of which were demonstrated in our results this morning, we're targeting mid-single-digit like-for-like revenue growth to translate into double-digit total shareholder return.
Let me come on to take a closer look at the role of the different parts of the portfolio then. We operate with an attractive balance of developed and emerging market exposure with our core categories of personal, home, and baby care. Each category large and growing, especially in emerging markets. 85% of our revenue comes from just four markets, what we are calling our lead markets, U.K. and Australia, Nigeria, and Indonesia. They're large markets in which we have real scale, and we are clear on the role of the different elements of the portfolio. We're driving for growth and cash generation across the board, but there will be some differences reflecting the inherent dynamics of the markets. Over the cycle, we expect our developed markets to deliver low to mid-single-digit revenue growth, growing market share over time.
Our emerging markets, where higher and more volatile rates of inflation can occur, we target low to mid-single-digit revenue growth over and above inflation, meaning growth in real terms, with volume growth playing a critical role over time. Overall, our like-for-like revenue growth target for the group is mid-single-digit. Delivering this level of revenue growth, combined with a renewed focus on gross margin improvement and margin expansion through operating leverage, we expect to see high single-digit growth in EPS on a reported FX basis. This is after allowing for assumed adverse FX depreciation, but offset by the effect of financial leverage between operating profit and EPS and a reduction in interest charge. Along with a progressive dividend policy, we are targeting to deliver double-digit total shareholder return through the cycle. This won't necessarily be year in, year out.
We know and have learned that there is clearly potential for fluctuation in the impact of foreign exchange, which may create some lumpiness, please excuse the technical term, from one year to the next, up or down, but we have confidence in our ability to deliver double-digit shareholder return over the course of the cycle. I'll pick up on this more, in more detail later. First, let's take a closer look at our lead markets and why we have a right to win in them. As I've said, we have real scale in four markets. Many of you here in the room will be familiar with the attractive positions our brands hold in the U.K., whether that's Imperial Leather, established over 100 years ago, or Childs Farm, established just a decade ago. Our other lead markets also have portfolios with similarly strong brand equities.
From Morning Fresh in Australia, with its 50% market share of a category typically dominated by larger global players, to Stella in Nigeria, which has over 80% of the market and with the competition largely represented by lookalikes. For anyone who has witnessed an Indonesian parent going through the daily bathing routine with their children, you will know how integral Cussons Baby can be to that. Be it body wash or shampoo, it's a brand which has been passed down from generation to generation. Across four lead markets, the strength of our brands and our depth and breadth of distribution means that our products are widely available and present in many, many millions of households. Put simply, our locally loved brands are a part of everyday life for consumers and shoppers in our lead markets.
Within each of the four lead markets, we have a clear right to win based on three drivers of competitive advantage. Winning portfolios of locally loved brands, go-to-market capabilities, and manufacturing scale and agility. I'll talk you through each of these drivers, and then you'll hear directly from the business unit managing directors about how they come to life in their markets. First of all, locally loved brands. As I mentioned a moment ago, our brands are steeped in local heritage and have cultural relevance. Often built up over many decades, we have taken what we've inherited and strengthened it by focusing on locally relevant innovation.
While we absolutely can and do connect insights and technology platforms across markets, just look at Childs Farm Sleep range and Cussons Baby Cuddle Calm range, and with more innovation to come on sleep-related products elsewhere in our portfolio, we do not need to average out what we do to win across 20, 40, or 60 markets. We're focused on winning in each of our four lead markets and are therefore able to get closer to consumers in those markets than other larger players and innovate just for that given market. Take, for example, Cussons Baby in Indonesia. Along with other international players, we have product offerings and formats that will be recognized around the world, not least on Childs Farm, such as body wash, shampoo, or moisturizer.
We differ from those other brands by also formulating to play and win in formats such as baby cologne, hair lotion, or Telon Oil. What's Telon Oil? Some of you might be thinking. It's a fragranced warming oil that is applied after bath time that also keeps mosquitoes away for up to eight hours. Again, some of you might be thinking, warming oil in a high humidity environment where the temperature often exceeds 30 degrees. That's where getting close to consumers and innovating for one market can matter. Let me show you how and where more than 70% of Indonesia's 280 million or so population wash themselves and their babies. Dismiss mental images of showers and baths. This small, deep basin of cold water, not heated, is where most Indonesians wash themselves. If they want hot water, they need a kettle.
There's no fitted shower, but instead a gayung, which is like a plastic bucket or a scoop, right? They pour water over themselves or their little ones in the corner of the bathroom. Once dried off by their parent or grandparent, it's not surprising that a very young child could be standing, feeling chilly, maybe even shivering after the morning or evening bath routine, and hence why a touching, warming application of natural eucalyptus oil being rubbed in before putting school uniform or pajamas on can be cozy and comforting. To help make sure that our Indonesian team keep their feet firmly on the ground as they work on how to use such insights to strengthen our business, they have installed this typical type of bath in the foyer of the PZ office in Jakarta.
The local team and even passing visitors can stay firmly grounded in the realities of bath time routines. They don't look like the hotels we get put in in Indonesia. This is how the consumers live and bathe. What's the result? Well, Cussons Baby Telon Oil, only relaunched 18 months ago, has already achieved 11% household penetration, and revenue is growing by more than 50% a year. As part of our innovation pipeline, we're already bringing a new look to the range and have just introduced a new version of Cussons Baby Cuddle Calm Telon Oil with lavender and peppermint oil to soothe a cranky baby and give everyone a better night's sleep, something I'm sure any young parents of little ones in the audience will find appealing.
While we can never be complacent, and we always have more to do, we are pleased with recent progress on the overall Cussons Baby brand in Indonesia. It's growing revenue double-digit this year and with an accretive gross margin to the group average. Paul and Sharon will talk more about how we're tailoring innovation in a way which some of our peers wouldn't, giving us a clear competitive advantage. Secondly, our go-to-market capabilities. We have well-established operations on the ground in each of our four lead markets, whether the focus is on modern trade, less developed traditional trade, fast-growing e-commerce, or increasingly a blend of all those channels.
Both directly with sophisticated grocery retailers, some of whom you're going to hear from this afternoon, or through the indirect reach of our distributor networks to smaller neighborhood and village outlets, we're not only able to secure competitive levels of distribution, but also influence display and in-store activation to ensure the right pack sizes and promotions are turning up in front of the right consumers. Our teams are also able to develop brand campaigns that are tailored to win in their home markets, as well as activate them in locally relevant ways, often working with our retail partners. Whether that's Robb soothing muscle balm sponsoring the Lagos Marathon, Premier bar soaps turning up in the Big Brother Naija house.
For those of you who watch Big Brother Naija, I know there are some in the room, I can see them smiling straight away, or indeed, sponsoring Original Source sponsoring gym activities in London. You're gonna hear more. You'll see and hear from the business units this afternoon on how we're working with traditional and modern trade retailers to ensure our brands turn up the right way to win with shoppers wherever they shop. Thirdly, and an integral part of our competitive advantage in those four lead markets, is our manufacturing scale and agility.
We have in-house factories serving our four lead markets, meaning we can benefit from conversion costs comparable to our larger peers given the scale of those operations. We also have a network of third-party suppliers who might have production capabilities that we have chosen not to play in, or they can produce smaller batch sizes that it's simply not competitive for us to produce in-house. This blended supply chain gives us speed to market when it matters most, as well as cost competitiveness when we really need it. Our open innovation approach means we look outside as well as inside for expertise to help us innovate, and basing our R&D centers in our lead markets, we are always close to consumers and their habits.
This is especially true in Indonesia, where the R&D team are co-located in our manufacturing hub right alongside the live streaming studios that we have set up to support the rapid growth of e-commerce, such as TikTok Shop and other marketplaces, which grew revenue by 60% in our first half. To take a look at how these different elements of competitive advantage come to life in our lead markets, we're going to hear from our leaders in those markets along with the views of some top customers. First of all, let's head to Melbourne and hear from Al about our competitive advantage down under
Hello and welcome to Melbourne. My name is Al Smith. I'm the Managing Director of the Australia and New Zealand business. I've been with PZ Cussons about 18 years, but roughly 50/50 based in the U.K. in the Manchester head office and half based out here in Melbourne, working within our Australia and New Zealand business. To give you a couple of dimensions around our business here, our turnover is about GBP 90 million a year. We have about 65 employees working full time on our business here. The grocery market here in Australia is led by two key retailers making up roughly 70% of the total market, Coles and Woolworths.
Beyond Coles and Woolworths, there's a number of other players too, whether it be independent grocery, also Costco, Aldi continue to establish a foothold here and beyond a number of variety stores and also a strong pharmacy channel. Morning Fresh is the number one dishwashing liquid here in Australia, a locally loved brand that's been around since 1980, so almost 50 years old. It's been loved by the Aussie shopper. It equates to about 50% of the dishwashing liquid category here, almost 3x bigger than the nearest competitor. Our size and scale within dishwashing liquid has enabled us to launch successfully into the auto dishwashing tablet market, sitting alongside the liquids. We also play in the laundry category with a brand called Radiant. Radiant was also launched in the 1980s with the positioning of tough on stain, clever on colors.
Radiant has gone from strength to strength over the years and now sits as a clear number three within the category. A combination of our strength within dish, but also our strength within laundry, places us really strongly across the total home care aisle, giving us some real scale. We're now the fifth biggest supplier within the total home care area in the Australia market. Beyond the home care aisle, another of our locally loved brands is Rafferty's Garden. Rafferty's Garden is the number one baby food brand here in Australia with a clear positioning around real food and nothing else.
Trust is huge within this area of the store, and we play this out across not only our pouches, our wet food, but also across our snacking portfolio, which has enabled us to get to a really strong and growing share within a critical area of the store for the retailers. Finally, beyond our top three brands, accelerating growth within personal care is also a key focus for us, and we're leading that charge via acceleration with the Original Source brand. We have strong go-to-market capabilities locally with dedicated teams working across sales, marketing, category, but also supply. Critical to our success has been a deep understanding of the Aussie consumer. We bring this to life via insights and moving that through to innovation across our categories.
We do this through our local R&D and supply teams, manufacturing through a combination of in-house expertise, but also third party manufacturers who we feel are truly going to partner us around our innovation agenda. We're really excited about what the future holds for the Australian and New Zealand business. Our growth will be driven through a combination of momentum on the core business, but also growth beyond the core, whether that be Morning Fresh beyond the sink, acceleration within personal care or growth beyond our traditional channels. For now, I want to thank you for taking the time to hear a little bit more about the Australia and New Zealand business within PZ Cussons.
Some of the Morning Fresh, in fact, most of the Morning Fresh that you saw on the shelves there was made in our Jakarta facility. Let's go to Jakarta and see what Ningcy can tell us about Indonesia.
Hi, my name is Ningcy Yuliana, the managing director for PZ Cussons Asia. I'm responsible for leading our Asia business with Indonesia as our focus and most strategic market. PZ Cussons Indonesia has been operating in Indonesia for nearly 40 years. Indonesia is one of the most attractive consumer markets globally. Indonesia's macroeconomic remain favorable, recording at GDP stable growth rate of around 5% in 2025. More than 4.4 million babies are born each year offering potential opportunities for the personal care business. In financial year of 2025, our Indonesia business delivered around GBP 60 million in revenue with an 8% growth supported by more than 550 employees nationwide.
Our approach on the route to market in Indonesia through a combination of 46% large scale modern trade contribution, extensive general trade that reached 44% contribution, and rapidly we are expanding the e-commerce channels that now contributes 10% out of all our business. Cussons Baby, our flagship brand, stands out as a strong baby brand in Indonesia. Developed locally, Cussons Baby has maintained strong cultural relevance through the years, earning the trust of the Indonesian families across generations. The brand has successfully evolved to meet the needs of today's new mothers, modern and digitally engaged. Cussons Baby is a locally loved multi-generational brand with high consumer loyalty, strongly aligned with today's Indonesian mothers, who are increasingly informed and becoming selective. That trust is reinforced by consistent product quality and a complete portfolio spanning every baby's life stage.
Our go-to-market strength is underpinned by strong, dedicated teams and long-standing customer relationships across channels.
We have established a long-standing partnership with PZ Cussons, built on mutual trust and cooperation over the years. The Cussons Baby range is predominantly recognized as a leading brand in the market, with excellent visibility and availability.
E-commerce growth in Indonesia has been exponential over the last decade. Through e-commerce and live streaming, we engage directly with consumers, responding to their feedback and purchase intent in real time. The Tangerang manufacturing facility provides speed and flexibility to develop relevant, high-quality, and innovative products. Our factory is GMP, ISO, and Halal certified. We distribute through the best network based on many years of experience in global trade. Our product innovations sits at the heart of our growth, building trust and local pride, driving strong loyalty among mothers, underpinned by a robust innovation pipeline and a consistent growth strategy across our priority brands. With sustainability at the core of our strategy, Indonesia stands as a key growth engine for the group. It is our commitment to deliver meaningful and reliable strong growth performance as we have a high potential team.
We believe we are well-placed to compete in our four lead markets, where we're up against two types of competitor, both of which keep us on our toes: local, often smaller players, and the bigger global ones. The local players bring focus to the market. They take local insights and use their local knowledge to build their brands, often moving quickly and learning fast. Global players, on the other hand, have scale. They leverage their financial firepower and their centralized models to drive growth in large categories with proven playbooks to win across many markets. At PZ, we look to hit the sweet spot between the two. After all, we only need to win in four lead markets. We bring the focus of a local player and leverage the scale of a global player.
Against the local players, we bring scale and expertise, benefiting from customer relationships, our brand-building know-how, and our manufacturing capabilities. Against the global players, we bring focus. We're not trying to win everywhere, so we can focus disproportionately on each of the four lead markets without the need to average out insights or innovations across multiple markets as we seek to build our locally loved brands.
Good afternoon, everyone. It's an absolute pleasure to have the chance to share a bit more on this journey. It's great to see some familiar faces. I think some of you were with us July of 2023 in this very room when Sarah, myself, Andrew, the CMO at the time, and Katie Barker took you through some of the Childs Farm earlier days. It's great now to be here in the capacity of the chief growth and marketing officer to share with you, along with Sharon Goodall.
Hello. Lovely to meet you. I'm probably one of those newer faces that Jonathan mentioned at the beginning. I've been with PZ Cussons for a little over a year now, I thought I'd start by just sharing two of the key reasons why I'm excited about innovation and growth at PZ Cussons. One of them is the culture that Paul and the team are creating, so really understanding the value of an R&D and what we can bring, by effectively creating an environment where marketing are partnering with R&D. It's a fantastic model and one that's already starting to reap benefits. The second is something that we've already spoken about several times during the presentation, is the fact that our R&Ds are embedded locally in our lead markets.
That means we are closer to consumer, we are closer to product, and we're closer to being able to put that into action.
Sharon joined us, November a year ago, so it's a little over a year. Again, at that time, we've merged the marketing and the R&D teams. I sometimes refer to it as two in a box, to really accelerate. Let's look further at where that confidence comes from. Jonathan, Al, and Ningcy already gave us some examples. I'm gonna double-click, to use that term, on some of the how we bring this to life through our locally loved brand flywheel that I'll talk to in a second. We then really supercharge that with insights, and we'll show demonstrate a bit on how we're bringing insights faster and then fueling that further with true R&D investment. This slide you'll see probably not so unfamiliar in the FMCG world. It is a brand flywheel.
We call it our brilliance flywheel, and we're very proud internally of looking at the things saying, "That's brilliant. Are we being brilliant enough?" If you just follow the flywheel around, again, up in the upper left with the red section, it is about fundamentals, but brands are our biggest and strongest asset of the company, and we covet that, and it starts with those fundamentals. You saw that through the decades worth of fundamental building on the examples that you saw earlier. Product marketing and innovation is what's in the light green, and that I will say, Sharon and I are obsessed. You know, our consumers use our products. We're not a restaurant. We make products.
Yes, we have some services, but we are largely product-based, and we're obsessed with that marketing and innovation part of that and again, making that brilliant. That breeds itself down through the next chapter there, which we call brilliant content. I know a lot of companies will focus on, oh, it's digital first or social first. Of course. I almost think that's in the rear view mirror now. We often talk about it as audience first. Where, when is she or he most receptive to that message? That's where we wanna be. In the world of social, online, it's all one now. If you go down to brilliant shopping, you've seen some examples, you'll see some further in our U.K. business. We are superior here.
We do lead the way, and you'll hear that again with some of the retailers here in the U.K., of setting the tone, setting the chapter for our categories through what we call brilliant shopping execution. Now as I said, that is FMCG. There's no doubt that, but we wrap it in what we call locally loved, and we really believe, and you've seen some of the demonstration of that already, is when you take things like locally born brands managed by local marketers and innovators located in Manchester, London, Jakarta, Lagos, Nairobi, Melbourne, you're able to really bring that local loved to life. You then pair that with locally relevant claims through our NPD tailored to the needs. We saw that earlier again in some of the Cussons Baby examples. More to come.
You build local insights into your communication and of course the proximity in that absolute again tailoring and working closely with your retailers, we believe is the right formula built in a focus that will accelerate PZ. I wanna just give a few examples, and then Sharon's gonna show some insights and some ways that we're fueling the growth on innovation. Al mentioned it's a 50-share brand in Melbourne and in Australia. When you're a 50-share brand, and we think about the fundamentals of building and growing a 50-share, not a five-share, a 50-share brand, you can't stop. If you stand still for a second, the competition will go ahead, and that example on the left is we're revamping not only the formulas, but the claims, and that 50% cuts grease cutting claim is significant.
We will continue to invent and reinvent our core brands. You heard Leo mention first to market or first to category in Australia. That is the PZ way. You may see it on a shelf here in the U.K., you won't see that in Australia. PZ is leading the way with Morning Fresh. Sharon and I saw some of this coming right off the factory line just recently. This is a game changer and again, locally category first for Morning Fresh. We will wrap that in refreshed advertising, refreshed communication. If you are in Australia or have been there, you will know that the brand owns a very clear, audible jingle. I won't sing it, I promise. Again, that is again acting as a leader.
What we call the wall of white, whether that's at the end of an aisle in a Coles or a Woolworth or in the middle of the section of that shopping aisle, you see what we call our wall of white. I call it consumer obvious or shopper obvious. You can't miss it. You know, that's that locally loved brand wheel being brilliant. One more example is Cussons Baby, and we talked that earlier, Ningcy, in her examples. Again, a brand born in 1950. Hard to believe. Born in 1950, Cussons Baby. So that's many, many generations of continuing to reinvent itself in a relevant way. The team has just done that. That is some hot off the press latest packaging. You saw it in the videos, and Jonathan talked about the double-digit growth.
We're revamping and reinventing and growing. Cuddle Calm we're very proud of. As a matter of fact, those that would've been here in summer of 2023, at that time, we were talking about our new child, Childs Farm. We with the local team, Katie Barker and her team, had uncovered. I don't know if you know if we have any new parents in the room. Believe it or not, I have a sobering fact for you. You lose 596 hours of sleep in your first six months of that little humanoid joining your life, and sleep is an important thing not only for the child's development, but for you and us as parents, and we had come with Sleep on Childs Farm in 2023.
Again, it's that local relevancy and our focus as a company that we could quickly, and I mean quickly, get into bringing Cussons Baby and bringing what we called... We didn't call it Sleep, we called it Cuddle Calm. In Indonesia, that is a more relevant way to speak with the consumer. We didn't just bring the same products. In the U.K., a sleep mist is important, but over there it's the Telon Oil, and we were able to bring that with lavender and chamomile in the right fragrances that help the child and the parents. It goes beyond than the product. It is into being a part of their life. Their routine is not the same as it was before the child arrived. We actually termed momfluencers, right?
There's influencers, there's momfluencers, but really getting into the psychology and being with them as partners in their journey as new parents. Finally, not a wall of white, maybe a wall of pink and blue and lavender. We again win with superiority in the in-store, what we call that moment of truth when they are making the purchase, and the superior go-to-market execution bears that out. The other one I think Jonathan mentioned is the live streaming. You know, in Indonesia, the world of the channels and the devices and the omni shopping is exponentially growing, and we're a part of that on the forefront. It is Sharon and I, Jonathan. We've been there, we've seen it.
We now are live streaming 18 hours a day in our own facility, two different studios on TikTok and social selling, and that is where the consumer is. Again, that's being audience first and we're learning, and dare I say it's triple-digit quarter-on-quarter growth. I firmly believe within the next three years this will be 20% of the revenue of our Indonesian business, if not more.
I'll take you through a little bit of the journey of R&D. As Paul mentioned, it's been a bit of a pivotal year for us because as we've moved out of supply chain and into this one marketing and R&D model, we see our shift begin to focus to rebalancing the portfolio between renovation and innovation. You'll see on the slide, you know, in prior years we've been an organization very focused on renovating, obviously needing to protect against cost challenges, regulatory challenges, and providing that new news to tackle tactical decisions within our re-retailers. As we move into this one marketing model, we're seeing that shift now start to pivot towards and balancing with innovation. It is innovation that will bring that true incremental growth that consumers are willing to pay more for.
We will continue to push that balance, but noticing that we will need to do both jobs. Renovation is as important as innovation as we protect against continued regulatory pressure and cost challenges. As I say, going deeper with our renovations to make sure we bring benefits to new consumers that they're willing to pay more for. That balancing of the portfolio has also been backed and supported by a doubling of investment in R&D, and that investment goes straight into those locally embedded teams that we can then drive that acceleration and amplification of those innovations throughout our markets, which will then in turn bring that growth and also accelerate us in being able to achieve some of our sustainability goals, particularly in the area of packaging.
That doubling of investment has also been then validated and assured by a step change in our insights programs. What we've seen is that we are now getting faster, more quality-driven insights directly into the R&D and marketing teams. We are able to now have a dedicated insights team within each of the markets, locally embedded, ensuring we bring market, consumer, and shopper insights together. Whereas before we've been previously focused on the consumer unmet need, now that we can look at the whole path to purchase and really go and drive down into that reason to believe, and that decision-making in that shopper purchase. We can actually then get into the differentiation, what is that unmet need, and drive that through product, pack, and claim, and including the in-market execution content.
This has been enabled and fast-tracked by a number of new partners to the ecosystem at PZ Cussons, bringing in a number of digitally enabled platforms. That means we can turn our insights into action, not in months, not in weeks, but now sometimes in days and hours, including price elasticity studies, purchase intent results. This enables the teams to be more agile and get these innovations into market with more assurances that they're gonna drive that purchase intent.
Sharon, I have an example that last week I was with, if you look at the second logo there, Zappi, founded by Steve Phillips, a local gentleman, up in Camden. Yeah, Zappi is now reaching out globally, but their epicenter is here in the U.K., and we use them. Again, a part of what I believe is our competitive advantage is a British company working with another founder who is a British company. He said to me, he said, "Paul, the thing I like with PZ is you're willing to lean in, and we're doing some work in the A.I. field." I know that's a word that gets used everywhere, but it's true. On his data systems, our validation systems, how can we really go 1 + 1 = 3?
I said to Steve, "Well, but surely the other big guys are doing this too." He said, "It was interesting." He said, "You know, Paul, they immediately will often think, 'Well, I have to do this in-house myself,' and it may take them longer to do that." He said, "If we can continue to partner, we can be a step ahead." Again, that's what's in our sights is continuing to partner with, and all of these companies have local-based insights people working with our marketers and R&D teams. This would be an example. Now I personally I'm sure many of you have heard of HYROX. I will not be participating in the event on the 24th. Maybe Jonathan and for sure Oghale will be. This is a great example again of locally relevant insights.
Original Source, I often refer to it as our originally refreshing brand that's really around active refreshment. It fits an extroverted lifestyle, if you've experienced the brand. We can't fully mention because we have some new innovation coming that will be hitting the shelves just in a matter of weeks, and it will be, and I will disclose this, that will be a foray into the men's world. The thing I'm very proud about is the team has gone at it not just putting a black or orange label and calling it men's so that it can literally grunt at you when it goes...
when you walk down the aisle. No, doing that in a very relevant way. You'll see how they bring it to life partnering with. If you think about the world that, whether it be the fitness world or the whole recovery world and the lifestyle that goes into that, I am very confident Original Source is tapping into a real insight that's gonna be a winner in the market. Watch this space.
Okay. About a year ago, I said to Paul jokingly, "We need to put the R back into R&D," for which he's now got a little song for. We really needed to make sure that we have a multi-year plan and a program to be able to differentiate our products in the future and get out of our one-year lock. We set about a program of activities that were locally focused and targeted at some key areas to enhance our home care in Australia, ensuring that we research areas like surfactants and technologies. In Indonesia we've started a program around researching developing skin with pre, pro and postbiotics. The last of our locally relevant research programs is around African hair conditions and how we strengthen our African hair portfolio going forward.
As well as making sure we put research back into our R&D programs, we're also very focused, as Jonathan mentioned earlier, on open innovation and making sure we bring the outside in, and using and leveraging partnerships as we go forward to be able to accelerate these programs. We're very excited that this will then build the differentiated pipeline of the future. In final summary for me, our confidence around our ability to double the output of innovation in the midterm is centered around these three key aspects, around ensuring that every innovation that we start in PZ Cussons is first and foremost backed by insights all the way along that path to purchase, to ensure that we can bring differentiated, meaningful and validated consumer-proven innovations to life. We also mentioned, we need to be targeted, prioritized, focused.
That means we need to enable the team to move fast, fail early, and then get progressing on the most return of investment innovations that we can have in our pipeline. All of this will contribute to doubling the output of innovation in the midterm. We're excited to be on this journey, and we'll be very excited to invite all of you upstairs after the session to actually see some of these products come to life.
Thank you very much. Jonathan.
Thank you, Sharon. Thank you, Paul. You know, it's not just about raising the bar in terms of the brand building innovation, it's equally about filling a future pipeline. Not necessarily today, but you'll hear in the future we're talking a lot more about building multi-year growth plans so that we can have more confidence over what will be driving the revenue in terms of the branded building blocks that we're deploying around the world. We're about to come right close to home. We've had Australia, we've had Indonesia. We're gonna get an update on the U.K. now. Right. The bad news for the gentleman on the screen is, unlike Al and Ningcy, Rob is in the room. Okay? The good news for all of you is following this video is a break.
If you don't like what he says, you can tell him over a cup of tea. Let's hear from Rob.
Hello, I'm Rob Spence, managing director of the European Business Unit. I've had the privilege of working for PZ Cussons for over 25 years, and I've led business units in multiple geographies such as Indonesia, ANZ and for the last three years here in the U.K. The U.K. is our priority market within the European business, and it reported revenues last year of about GBP 175 million. We have approximately 250 employees in the U.K. business split across our locations in Manchester and London. We are the number two player in the washing and bathing category within the U.K., and we have a market share of around 20%, and we're proud of the fact that we have three major brands amongst the top 10 within the category.
We've closed the gap on the market leader over the last two years. Our clear ambition is to become the number one player within washing and bathing. Our products are sold in over 50,000 retail outlets in the U.K. We have over 250,000 million total distribution points. Practically, this means you'll find a PZ Cussons product in every grocer, high street or discount store that stocks washing and bathing products within the U.K. There are three strengths that we see within the U.K. business. The combination of them gives us a right to win against both the large-scale multinational players, where we can bring a focus. Against the smaller players, where we believe we benefit from scale. Firstly, our locally loved brands.
Our brands have significant heritage in the U.K. with deep cultural relevance. Carex is our largest brand by revenue and is the U.K.'s number one liquid hand wash. It has almost double the market share of its nearest competitor. It's been loved by consumers for over 30 years and effectively created the antibacterial hand wash category. Imperial Leather continues to be a truly iconic category favorite in the U.K., with a master perfumer heritage dating back to 1921. Sanctuary Spa began as a Covent Garden spa gifted to a ballerina wife, and today continues to embody that same spirit of care, indulgence, and meaningful gifting for women across the U.K. Sanctuary Spa arguably created the indulgent bath and gifting segment, a segment which continues to go from strength to strength today. Finally, two brands both celebrating their 30th anniversary this year.
Who doesn't love Original Source, which has developed something of a cult following with its bold packaging and marketing campaigns? Of course, St. Tropez, our premium sunless tanning brand, which created the category back in the 90s and is still a leading player today. Secondly, we have great go-to-market capabilities. We're really proud of the way our brands show up on shelf, what we call our in-market execution. A lot of this comes not only from the strength of the brands themselves or the scale of our distribution, but also the quality of our relationships with the major retailers. We get great feedback from our customers. They believe we're good to do business with. Our third key advantage is our local manufacturing with scale.
Our factory right here in Manchester produces around 150 million units per year and is focused almost entirely on serving our U.K. market. It's a lean, just-in-time operation, and given its scale and efficiency, conversion costs are comparable to those achieved by our global peers. The site is co-located with R&D, and our cross-functional collaboration allows us to be agile with regards to new product development, which allows us to bring these products to market within a matter of weeks. Together, with strengthened innovation plans, we believe we're in a strong position to continue to win, and the team are incredibly excited about the growth opportunities in the U.K. market and beyond.
Right, for the next stage on our whistle stop tour around the PZ world, we come to the last of our four lead markets, Nigeria. Now, as we conducted the strategic review that most of you know well, it was clear to see the underlying strength and resilience of our business on the ground there. With that in mind, I'd like to introduce Oghale, Managing Director of our Africa business, to talk all things Nigeria before I come on to talk all things to do with guardrails. Oghale, over to you.
Thank you, Jonathan. Hello, everyone. My name is Oghale Elueni, Managing Director of our Africa business. I've been in the FMCG world over 20 years with a focus on Sub-Saharan Africa. I did spend some time supporting the world's largest retailer by revenue, Walmart, based in Fayetteville, Arkansas. In the last 4.5 years, it's been my absolute privilege to serve as steward for our Africa business, being part of a storied legacy where PZ Cussons has been in Africa for over a century. Today, I stand before you ecstatic to talk to you about our plans to win in Africa now and for the future. Let's get into it. If I may, I'll ask you to keep three things in mind over the next 45-odd minutes and beyond. One, Africa, huge opportunities, huge potential, and with great favorable structural trends that set it up for long-term sustained growth.
Two, PZ Cussons absolutely has the right to win based on our cultural heritage and relevance, market-leading locally loved brands, and the competitive advantages we have on manufacturing and distribution. Three, we will win because we have a compelling growth strategy built around core, category, and Pan-Africa expansion. All of this is underpinned by a jointly owned, local and global, set of guardrails which will risk-proof this growth. Think about the Africa opportunity. It comes to me like this: Africa is growth. Africa is youth. Africa is digital. Africa is urban. Let me walk you through that a little bit using this chart.
When you think about the top left as part of the growth frontier narrative that is Africa, PZ Cussons, as you know, we're in the business of selling to consumers, so it's critically important that we're in the continent and the market with the world's fastest growing population. Over the next 25 years, Africa's population will increase by over 900 million. Yes, you heard that number right. It's gonna account for over half of the world's total population growth. Top right, again, part of the growth frontier narrative that is Africa. The combined GDP is $3 trillion. $3 trillion. PZ Cussons has to get more than its fair share of that pie. I get to bottom left. Sorry, bottom right, and I'm talking about the youth narrative. These trends interconnected and standalone.
Africa, 40% of its population is under 15, and it has the world's largest working population. We're talking of a consumer base that is self-replenishing, self-sustained, and increasingly middle class. Center bottom, digital. There's an increase in digital adoption in Africa. By 2030, 750 million mobile subscribers will exist in Africa. That provides a foundational platform that allows us to more efficiently, more effectively, swiftly, and urgently transmit our brand messages to our target consumer. Bottom left, urbanization. The urban population will double over the next 30 years. We're talking 1.4 billion people. This creates a vibrant clutter. Vibrant clutter that we can take advantage of because it's a perfect fit to the categories in which we play, personal care, home care, and baby care.
There'll be more need for hygiene, disinfection, baby products, advanced personal care range. As PZ Cussons, we have the solutions, right insight-driven products to meet those consumer need states. We mostly talk about Nigeria when we think about Africa. However, PZ Cussons is in 22 countries, has presence in 22 countries. Three of them, we have on-ground operations. That is Nigeria, Kenya, Ghana, powered by four manufacturing facilities. Three in Nigeria, one of which serves our electrical business, and one in Nairobi, Kenya. At the end of FY 2025, we had total revenues of GBP 141 million, a lot of that from Nigeria. Fun fact, 33% of that from our electricals business. Just to give you a sense of our footprint. We will spend the next 40 minutes talking more about Africa Family Care with a spotlight on Nigeria.
What I want you to take away from this slide at our large scale is a source of competitive advantage in the markets in which we operate. PZ Cussons has deep roots in Africa, playing there for over 100 years. Arguably, PZ Cussons as a corporate brand is more well-known in Nigeria than it is in the U.K. I realize I'm saying this to a U.K. audience. It's known as a trusted employer, a great place to work. Employee engagement scores that are touching the 1980s. Yes, I said that. You heard that right, 1980s. We've been there over 100 years. We've seen major players enter the market and do business and compete with us. More recently, with devaluation, we've seen some players, yes, exit. Some just switching to an import-only model.
What is important to take out is that the one constant, we stayed in the market, we stayed relevant, we stayed resilient, and over time, we've owned and honed our local know-how, our capabilities, our skill sets, which then gives us a competitive advantage that sets us up well for the future. Let's talk about the recent past. I joined PZ Cussons in FY 2021, and the business was going through challenging times. Performance had deteriorated over the recent years, exacerbated by the onset of COVID. As a Nigerian, I still saw enormous opportunities, especially because these brands, I'd grown up with them, and they were part of my personal development story. That is something I share with millions of Nigerians and Africans out there and back home, knowing there is potential.
Holding hands with Jonathan and Sarah, we crafted a strategy focused on sustained, profitable growth, drilling down on where the right areas to play, where we had a right to win, and with foundational platforms on brand building. Paul and Sharon talked about the brand building flywheel earlier, and executional excellence, which I'll come up to in a minute. Over time, we delivered sequential improvements in profitability. Came June 2023, devaluation. Yeah, I see you nodding. The Naira lost over 70% of its value. That had a seismic adverse material impact on our financial performance and caused a lot of challenges. What you will still see in this chart, though, is that we continue to grow revenue above inflation and through careful cost management. Continuous profit growth.
I acknowledge the massive financial impact that devaluation negatively affected the Africa business and the group as a whole. What I also want to show you with this chart is the deep resilience of PZ Cussons in Africa. This morning, Jonathan and Sarah, while reviewing the results, talked about Africa and talked about growth in Africa. I stand here united with the Africa team, showing that we're gonna complete that growth story in FY 2026 as a whole. I've talked about the large and favorable trends that set us up Africa for long-term growth. You look at the left of this chart, gross retail revenues for PZ in Africa and Nigeria, GBP 90 million. The total addressable market size in the categories in which we currently play, GBP 300 million.
If you extend into adjacent categories of skin, hair, male grooming, detergents, that goes to north of GBP 800 million. Showing you the headroom that we could travel and the size of prize that's on offer for us to take advantage of. On the right side is those structural trends that I talk about. At the top, personal care category growth. There's an emerging consumer base in Nigeria that is trend-aware and wants personal care products that meet their specific needs, and they're willing to pay more. We have the right product fit to deliver on that, and I will spend a little bit more time on this later. Made in Nigeria. There's a rise in patriotism, national identity, heightened sense of national pride in Nigeria that make the consumers there wanna take Nigerian products. Yes, this suit is not Italian or British, I'm sorry.
It is Nigerian. Our brands manufactured in Nigeria and campaigns and products coming from local insights steeped in local relevance are a perfect fit to take advantage of that structural trends. I will take points three and four together because it talks all about digital, which I mentioned. Q-commerce and e-commerce in Nigeria is GBP 9 billion in terms of size and growing double digits. The payment ecosystem digitally has exploded. We're talking at the end of last year, almost 50% of transactions being non-cash. As part of our route to market growth over the last few years in PZ Cussons, Nigeria, and Africa, we've developed strong analytics muscle, which puts us perfectly positioned to take advantage of this big trend and ride the way to success. Finally, growth in neighborhood retail. There is a huge shift in consumption.
55% of household spend and shopper consumption now happens in the neighborhood channel. This is great for us because neighborhood channel has been at the pole of our route to market growth over the last three to five years. It's also great for us because this channel brings us closest to shopper, and it's an opportunity to be able to premiumize our products because it's a price elastic channel, which is a fit to our P&L accretion ambitions for the future. I've talked about how Nigerian brands are steeped in local cultural heritage and relevance. Our brands hold market leading position mostly in the categories where we play. In fact, 70% of our revenues come from brands that occupy the number one positions in their categories.
I'm gonna quickly try to bring this to life for you, to give you a little bit of flavor on our brands and bring, like Jonathan said earlier, some of Lagos and Nigerian brands to London. Stella, our number one brand by revenue and profitability. Over 80% market share. Heard Paul talking about market share and 50%. 80% market share. The next brand, second brand is 11% market share. 11% market share. Let that sink in. It's a brand steeped in historical equity and relevance, huge in the northern part of Nigeria, and it's a great unlock for our export business. I've been talking about these numbers, but I'm sure some of you are asking, what is Stella, if I may know? Stella. Best way to put it, a skincare pomade that protects against dryness.
Also very huge in the seasonal Harmattan usage occasion. Before someone asks me what is Harmattan, it's Nigeria's version of winter, but not even close. Yeah. Let me tell you a story about Stella really quickly. Some of you might wanna take a Nigerian bride from the northern or eastern part of the country. If you wanna do that, the bride's parents will give you what we call the bride price list. List of products that you must present so that you can respectfully ask for the bride's hand in marriage. Stella is always at the top of that list. If you go back to the bride's family and you bring these products, but you don't bring Stella, I hate to break it to you, but you'll be going home single.
Is a tragedy, except that was all your game in the first place. Premier Cool, our second biggest brand by revenue and our most strategically important brand, especially as we look at how we wanna get into the future. Number one market share by volume. Critically, it straddles and wins in two demand benefit spaces, antibacterial protection and cooling. Arguably, to use Rob's words from his video, it invented the cooling category. Put this in perspective. In Nigeria, a temperature rise from between 25 to 35 degrees Celsius scales up to almost 44% at a high in the north. Beating is not just about freshness sometimes it's existential. For you, it's just the way you can refresh and take off stress and keep going. Premier Cool functionally sets up to deliver superior moisturization refreshment to keep people going. Morning Fresh.
Number one in its category. 56% share. Its closest player is at 30 points behind it in market share. Morning Fresh is at once one of our most global brands at PZ Cussons, but it's also, at the same time, very local. Two quick ways to bring that to life. One, any Nigerians in the room will know if you wanna live in the diaspora or you're traveling, amongst 30% of the products, top 30% of products you might take with you will take with you, Morning Fresh will be part of that. Why? We have a unique palette in Nigeria that I'm not ashamed to say leans towards very oily, greasy dishes. We cook with a lot of oil, simply put. The dish care, the pots and pans, has to do with getting that out for you to get them clean.
You can't find any other dishwash anywhere in the world that does that apart from the Morning Fresh we proudly make in Nigeria. Most Nigerian diaspora take that when they travel as a top item. Number two, Paul and Sharon talked about how the uniqueness and the success of our brand grow flywheel. We bring this to life on Morning Fresh, taking insights to superior product innovation and superior communication. Talk about insights in the kitchen. Nigerians dishwash via a process called dilution. They basically wanna stretch the brand for as long as they can and get cost savings. When they get a dish bottle, they take a little bit of it, put it in a empty bottle or container, and then pour lots of water. I think you might have walked through this already. You're nodding well.
You see they shake that, and they use it. How does that inform what we do? It means our design has to be about product formulation that still delivers superior efficacy despite that dilution. That understanding guides our design. That understanding informs and guides our communication, where we land claims like the power of one drop and superior grease cutting power. That's about Morning Fresh. Cussons Baby. Market leader. A brand that exists in multiple formats, a lot of formats, so it's a mega brand for us. We're number one in majority of those formats, being number one in baby soaps, baby oils, baby lotions. Ningcy and the Indonesia team talked a lot about this on Cussons Baby. Again, just like Morning Fresh, again, it's one of our biggest global brands in PZ Cussons, but also uniquely local.
Just like Ningcy said, we have lots of similarities, but we also separate. Formats. Our baby soap format is much bigger in Nigeria than it will serve in Indonesia. We also have uniquely dialed up hydration that caters to our hot, dry climate in Nigeria and takes care of babies' needs. Robb. Well established in the healthcare segment. A true mega brand, if I would mention. Huge in the North also, as well as the rest of the country, but especially huge in the North. Just like Stella, a huge unlock for our export business. I said it's a mega brand. It exists in multiple formats, whether it's a muscle salve balm to an inhaler to a prickly heat soothing powder. That I make sure I connect with you, let me try to bring it to life in a U.K. context.
It's as if you had a mega brand that had formats like when Tiger Balm meets Vicks VapoRub. That is Robb. After this session, I will be outside with no certification whatsoever. If you're brave and you dare, I will be giving personal massages with Robb as my tool. Distribution remains one of our most compelling competitive advantages. We strive to keep raising the bar on the quantity and the quality of our distribution with a framework, strategic framework that is built around more stores, better stores, better served stores. This chart shows how we've honed that over the years, now you're seeing that we are out-executing our competitive set, the majority of our competitive set, both in direct and indirect coverage.
We're bringing the products closer to the shoppers, which is good for us because we get to interact with them quicker, and we also get to play in price elastic channels like neighborhood groceries, where we can bring our premium products through. The eagle-eyed among you would say, "Yeah, there's one guy, but there's this one guy that's ahead of us." Part of that, and we respect them, but part of that is a different segment they play in which pools their distribution indirectly. That being said, we're committed to not resting until, in the immortal words of the legendary Sir Alex Ferguson, we knock them off their perch. I'm gonna give you a little bit more of me.
Yeah, if just the but, take a break from me for a couple of minutes and I'll show you some of my Nigerian colleagues, specifically Fisayo, Tolu, and Nicholas will immerse you in the retail and channel route-to-market ecosystem that is Nigeria. We'll do this really quickly. Welcome to the beating heart and soul of Nigeria's FMCG landscape, our open market. Here, everyday essentials meet daily needs. From soaps that care for our families, to home care and personal care products that make the lives of our consumers easier. We bring everyday essentials to every corner.
This is what a typical garden outlet store looks like in Nigeria. These are our resources. This is the Morning Fresh stand. We have the Morning Fresh original, zesty, and anti-bac.
SPAR Market is one of the vantage modern trade stores in Lagos, Nigeria, where we provide superior shopping experience for shoppers through very beautiful displays like this, amazing pricing that is unbeatable anywhere, with exciting promotions from time to time.
AIG Daily Mart store is a perfect example of a neighborhood store being covered by advanced sales rep here in Lagos. There are some examples of our products being shelved in this store. We have the Premier Cool brand, Carex, Joy, Morning Fresh, Robb Extra Menthol, and many more.
At PZ Cussons, we are absolutely delighted and proud to partake in this vibrant ecosystem. All right. Enough of that. Talking about competitive advantages, and we just showed you one of it, which is our distribution reach and route to market. Manufacturing is a significant competitive advantage for us. We're low cost, agile facilities. You've seen on the chart there Ikorodu, where we make the bulk of our products that are non-soap. Aba with soaps. We also have the electricals factory in Nigeria, and then the facility in Kenya. Yeah. What is critical to note here is that we drive conversion costs that keep us competitive against the biggest players in the market. We have well invested facilities with enough capacity to support our ramped up volume growth as we attempt to seize the future.
Now, I'm going to talk to you about how we intend to drive revenue growth above inflation, real terms, and the strategic framework with three growth pillars that will underpin this as we go forward. The three growth pillars are the core organic growth, category expansion into margin-accretive categories, and then expansion geographically across Africa, what we like to call pan-Africa growth. Let me start with core organic growth. These are the areas that we will continue to dial up, have helped us hold up our results so far, and we intend to relentlessly charge up for the future. We'll continue to dial up brand building. Paul and Sharon shared about the brand flywheel, and we will continue to leverage that. Executional excellence, crucial. I'll talk about that in a minute. Revenue growth management. Let me unpack that a little bit further.
Core growth, brand building. Last few minutes, I've talked about how our brands are steeped in local relevance, cultural heritage, market leaders in the categories in which we play. We make that happen by operationalizing the brand flywheel that Paul and Sharon talked about. Examples here, you think about Cussons Baby. It goes from local insights that feed our brand campaigns. On Cussons Baby, we understand that for pregnant and nursing moms, this is an uncertain period where they need information about what's best for their babies and themselves. That understanding informs us developing hospital programs at point of market entry, places where we educate, reassure, give tips on baby skincare and childcare to this consumer base.
With the Cussons Baby Hospital program, we reach one million moms on an annual basis and sample 250,000 of them, driving trial and awareness and connecting with them at a point of market entry. This has resulted in Cussons Baby driving both volume and value growth and is number one on both volume and value. The specific program over the last three years has de-delivered a 29% growth CAGR. Number two, Premier Cool. I talked about how the functional of this a few minutes ago. What we've evolved this to be now is apart from physical and functional, we've talked about how this connects socially and in terms of purpose-driven. We've driven differentiation and equity to have to own specific spaces, and the insight here is an evolving idea of masculinity in Nigeria, aspirational masculinity.
In that part of the world, men are the breadwinners. That hasn't fully changed, there's an evolution into the fact that men are allowed to be vulnerable. Men are allowed to have space to be sensitive, to share the pressure. We've tapped into that, owning spaces like men's health and International Men's Day and building campaigns around that that help us win. The International Men's Day campaign has delivered year-on-year 41% revenue growth, it continues to set us up well for the future in a way that positions Premier Cool as a brand that gets men in Nigeria physically and psychologically ready to excellently navigate the challenges of life and come out ahead. Overall, all our brands and all our campaigns, we strive for a clear, distinct positioning with clear communication, clear assets, and unique propositions that we land with the consumer through vibrant communication.
I've been talking to you about distribution as a competitive advantage. This one is close to my heart, having started my career in Nigeria driving the van. Our focus is the quantity and the quality of our growth underpinned by a strategic framework, which is about more stores, better stores, better served stores. Over the last five years, we've taken our distribution from under 40,000 stores to over 200,000 stores today. Not just increasing the quantity, but what we found in that is that once we move these stores, we get into more stores and move them from indirect to being directly covered, we get three times more revenue growth. We don't stop there. We're focused on the quality. For in the most high potential of stores, we'll dial that up and create what we call golden outlets.
What are golden outlets you may ask? They are stores where we out-execute competition. We ensure to do that, providing a broader product range and out-executing them on the shelf, winning shelf share, winning visibility, winning merchandising, communication, and claims. Bottom line, in our golden outlets, we intend to shock the consumer. I had to dial that up a bit. Not electrocution. In case you were worried. It's all about stopping, holding, and closing the shopper at the point of purchase. We find that when we convert from direct coverage to golden outlets, we get a further 30% increase in our revenues. We're gonna dial this up over the next five years, getting our coverage from over 200,000 to 350,000 stores, our direct coverage, and then our golden outlet creation from 10,000 stores today to 40,000 stores.
We continue to get closer to the shopper and deliver them quality products. As we go about our route to market and our distribution, we are relentless. We are forensic, nearly paranoid about how we drive that reach. Analytics helps us do that. You look at it from different planes. Analytics allows us to do three things. One, we select the best stores, the best potential stores to cover. We're able to look it through the lens of GDP, income level, store density, population, and then we can go to these stores leveraging our analytics. It also allows us to make the right logistic choices to cover these stores, whether we end up using a van to cover large stores with large revenue throughput in urban areas, or we might end up using a motorbike. You heard that right.
A tricycle to cover smaller stores with smaller revenue throughput in semi-urban and rural stores. One best way to bring this to life is what we've done with golden stores that I just described. With our analytics, we're able to see in real time how our assets are performing in the stores, whether they be freestanding display units, gondolas, checkout counter, countertops. We're able to see how they perform, the return on investment they give us, what's the best location in store that drives the most shopper traffic, and then we're able to make real-time interventions to be able to optimize business growth. This approach with analytics has helped our golden stores grow 13% in volume over the past year and 61% in revenue over same time year-ago. The final piece of our core growth strategy is revenue growth management.
Simply put, it's about how we get more value from our volume and optimize margin resilience. I'll try to tell the story through three buckets, pricing and price pack architecture. With devaluation over the last couple of years, we've had to do a lot of pricing, and we've gotten over GBP 12 million of benefit over the last two years coming from our strategic and intentional pricing actions. What is maybe less well known is what we've done on price pack architecture, where we've kind of played with our packs, our entry points across channels, across usage occasions, across consumer tastes to be able to optimize, and we've gotten five incremental gross margin points over the last few years. The second bucket is mix optimization, which is all about dialing up our margin-accretive brand SKU combinations and dialing down the margin-dilutive ones.
Best way to bring this to life is through Premier, where Premier Cool sits in and where Premier Classic Natural sits in, two different subformats within total Premier. I arrived at the business in 2021, Premier Cool was 25% of the total Premier business. Never mind that it was the more margin-accretive format. Through strategic and intentional activations, we've dialed that up over time to now being 63% contribution to our total Premier brand, unlocking over 12 incremental gross margin points over time. The final bucket is how we continue to drive cost efficiencies through our entire value chain, relentlessly identifying this and executing against it with urgency.
I'm talking whether it's in sourcing, where for like a palm stearin, we went to Ivory Coast, leveraging their ECOWAS supply corridor and the duty benefits we could get there to unlock GBP 700,000 benefit in margin, or the interventions we do across packaging, logistics, conversion, design in order to get more margin. We expect from those latter interventions to get an incremental GBP 1 million in margin in this fiscal year. That's core growth and the three elements I wanted to talk to you about core growth. I'm moving now to the second pillar that will drive our strategic growth for the future, category expansion, which for us is all about finding margin-accretive category spaces where we have a right to win. They can often be underserved, but we know that we have the capabilities to deliver on them.
In here, we've assessed that there are great opportunities across the home and the personal care spaces. Let me unpack that a little bit. Home care specifically. This one we've already made strides. In FY 2026, we launched Carex under the national rallying cry, "Win the war against germs." Executing the brand flywheel that Paul and Sharon talked about taking insights to product innovation as well as superior communication, we executed across all touchpoints, and we expect to generate an incremental GBP 3 million of revenue this fiscal year, reach 60,000, over 50,000 new distribution touchpoints across multiple channels, whether that's neighborhood, open market, as well as pharmacies. Importantly, the learnings we've gotten from Carex is something we're bottling and we're gonna use as we get into the new categories that we're about to expand into. Personal care.
This is one of those new categories. We're gonna take learnings from Carex to unlock. We're very excited about this one. Skin and hair care in Nigeria is over GBP 100 million in market size. It's growing over 20% year-on-year over the next five-year stretch. Through Venus, we plan to launch an advanced personal care range focused on the trend-aware, image-conscious, fashion-forward Nigerian woman to deliver and meet their need states in this category. It's going from insights to innovation. We're gonna deliver superior treatment, repair, protection, rejuvenation, and healing skin and hair products and formats for that modern Nigerian woman. The insights we've unlocked allow us to land products which are well in the pipeline that have superior functional efficacy. We're talking visible results in two weeks. We're talking category-leading hydration, 72 hours moisturization.
We're proud that we're making these products in-house in our manufacturing facilities. We're excited about where this could take us. We assess to deliver an incremental GBP 5 million of revenue over the next five years, and this is gonna be margin accretive to our current family care gross margins. Male grooming under personal care, another one that I'm tremendously thrilled about. It's a category growing double digits year-on-year over the next five years. What we wanna do here is through Premier Cool, remember I mentioned probably our most strategically important brand for our future. Through Premier Cool, we're gonna launch a Get Me Ready male grooming portfolio for the modern Nigerian man with an active lifestyle. It's multiple formats from shower gels, lotions, deodorants, beard oil. Yes, beard oil.
Again, the brand flywheel that Sharon and Paul talked about insights to superior product innovation comes in play here because we're able now to understand their needs and land things like a 5X refresh. Which is a very shorthand way of saying we take cooling technology, sometimes for the first time, into cleansing, hydration, and odor control. I'm not just saying this. The products here have been clinically tested and dermatologically approved. We're excited to make most of this in-house, and we expect to get another incremental GBP 5 million-GBP 6 million of revenue over the next five years. Again, margin accretive to the current Family Care P&L. That's the second one, and I come to the third and final growth pillar for our future expansion. It's the last, but certainly not the least. This is our expansion across Africa geographies, Pan-Africa growth expansion.
Our focus here is to do two things. One, disproportionate revenue growth. We plan to double our Pan-Africa business on exports over the next five years. The second focus is as an FX hedge, a source of dollars. This sits well within the guardrails that are jointly owned locally and globally, which I know Jonathan is going to spend some time talking about a little later. Let's take a step back on this because it's important for me to reinforce exports is a repeatable, scalable model, one that we already know and we've had success in. Recall, 11% of our Africa business comes from exports. We have 18 countries where we have presence in, separate from our big three on-ground operations markets, which are export markets. We know how to win here, and we now need to scale that up.
The approach we've chosen is market-driven, market-back designed. Through understanding various levers, whether that is the GDP, per capita income, population density, customer capabilities on the ground, regulations, languages, supply chain corridors, as well as latent and current brand relevance, we've been able to design an approach that's broken into three buckets: enterprise, trading, and explore markets. Enterprise will be our brand-led markets, where we'll focus on activating and driving demand and accelerating. We are currently already getting some success on that with Uganda and Tanzania served out of Kenya. Trading will be mainly markets served out of Nigeria. We're talking the likes of Niger, Chad, Togo, Cameroon, where we will lean on highly capable customers, leveraging tools like joint business plans and true scorecards to ensure we get execution excellence in those markets. Finally, enterprise is how we consistently and rigorously assess the next growth market opportunity.
When we can qualify where we have a right to win, we recycle that and bring that straight into enterprise and activate fully. That's how we're going to win with the Pan-Africa growth third lever. To bring this all together, if you recall the three messages I asked you to keep, the points I want you to keep at the beginning. One, Africa. Strong potential, strong opportunity and possibilities with great structural trends that set it up to sustainably and rightfully deliver long-term growth. Two, PZ Cussons. Our cultural heritage, our leading locally loved brands, and the capabilities, hard-fought, that we built on distribution and manufacturing give us a right to win in this market. Finally, we will win because of the compelling growth strategy we've articulated around core category and Pan-Africa expansion.
All of this underpinned by joint local and global ownership of guardrails that allow us to unlock these growth opportunities but help us risk-proof it as we go after that growth. I believe I've been able to share my excitement about why we have to win and the fact that we have a right for success in these markets. If you may, hold hands with me. Together, let's go after this great, amazing opportunity that is Africa, and let's seize that tremendous future. Thank you.
I did say we'd be bringing Lagos to London, and I think we have delivered on that promise. I would also say we've heard a lot about the significant opportunity in Nigeria. We absolutely share Oghale's excitement. Seriously, we're not doing any massages though, right? Just to be really clear, right? Genuinely, there's an opportunity, right? As we seek to unlock that opportunity, we are also really clear that we need to be disciplined in how we go about doing so because we are evolving the framework of applying guardrails to mitigate against the risk that does exist operating in such markets. Let me come on to explain more.
As a board and a management team, we've learned lessons through and since the 2023 devaluation and are using what we have learned to guard against future shocks and in particular to limit the impact of any future devaluation. These guardrails fall into three areas. First of all, repatriating surplus cash. Many of you will remember that due to the challenges in accessing U.S. dollars prior to the June 2023 devaluation, it was not possible for multinationals to repatriate cash, and therefore we had significant sums trapped in Nigeria. Although our ability to repatriate cash today is much improved, we will nevertheless target to hold no more than GBP 20 million cash in Nigeria in the future, thereby limiting the impact of any potential future devaluation. Secondly, minimizing our FX exposure.
Historically, many of our input costs have been denominated in U.S. dollars, leading to a currency imbalance between our revenue and our costs. We now source more raw materials in local currency in order to reduce, if not completely remove, this imbalance. We can also help address this by driving more of our revenues in hard currency. Exactly as Oghale mentioned, increasing our export business will contribute towards this. Finally, on this point, we've been able to expand access to dollars since the devaluation, and we will continue to use all legitimate channels to reduce our exposure. Thirdly, we have the opportunity to strengthen capabilities and culture. This is broad-ranging but critical.
Our intent here is to ensure that we have the right teams locally in Lagos and centrally here in the U.K. That are equipped with the institutional knowledge needed to operate in a dynamic market such as Nigeria and enabled by the right tools to assess the market conditions and when we might need to course-correct to protect the business. Ultimately, we want to enable the team to unlock the significant opportunity that exists in Nigeria and more broadly in Africa, but with the right guardrails to mitigate against downside along the way. Now, let me pull all this together, get us to Q&A, and then the chance to touch, smell, and maybe even try some of our products. I'll summarize how we expect the choices and actions we've talked through this afternoon will translate into sustainable shareholder value in the coming years. This chart, checking it's the wrong one.
This chart sets out the financial model that underpins the plan. As stated earlier, we intend to deliver mid-single digit like-for-like revenue growth, fueled by low to mid-single digit revenue growth in our developed markets and higher nominal growth rates in our emerging markets, which when adjusted for inflation, will still represent revenue and share growth in real terms. As we grow revenue, we will also look to nudge up gross profit margins in each of our businesses as we improve asset utilization through volume growth or insourcing opportunities, as we continue to use revenue growth management to maximize value, and as we expand into margin-accretive categories or price tiers.
This gross margin leverage will be a source of increased marketing investment so that we reach competitive levels by category and market, continuing the trends of recent years and ensuring the brand-building flywheel continues to spin, generating marketing activity that will represent a good return on investment. We will maintain an ongoing focus on improving productivity, benefiting from investments already made in capabilities over recent years, and we will constrain overhead growth to be less than revenue growth. It's worth noting here that this morning we announced cost savings in line with the previous guidance on track to deliver the GBP 5 million-GBP 10 million of cost reductions this financial year. This overhead and gross margin leverage will deliver modest but steady operating margin expansion over time and high single-digit operating profit growth on a constant currency basis.
Given the nature of our portfolio, there will be ebbs and flows, but we are confident that we will deliver this over the cycle. Let me move on now to our capital allocation policy. Based on the financial framework presented, we expect to deliver more consistent cash generation, partly enabled by some of the significant investment in capability and other transformation costs now being behind us. Based on this expectation, the board has established a capital allocation policy which sees us commit to leverage being within a range of 1x-1.5x net debt to EBITDA. In order to err on the side of prudence, we are removing cash held in Nigeria from the calculation, which as mentioned, we're targeting to be GBP 20 million or less in the future.
On this adjusted basis, excluding cash in Nigeria, will be around 1 x at the end of this financial year. In terms of future dividend policy, we will adopt a progressive dividend increasing over time. Finally, we will consider bolt-on M&A with a focus on the U.K. and ANZ and in our core categories of personal, home, or baby care. This will be where there is a clear strategic fit and where we are confident with the financial returns. Any potential acquisition will be considered alongside cash returns to shareholders. Connecting our financial algorithm with the capital allocation policy, let me come back to our value creation framework, setting out how Mid-single digit like-for-like revenue growth will drive high-single digit earnings per share on a reported F.X. basis, which when combined with a progressive dividend, will translate into double-digit total shareholder return.
Again, this won't necessarily be year in, year out, but we have confidence in our ability to deliver double-digit shareholder return over the course of a cycle. In summary, a reiteration of the investment case for PZ Cussons that I set out earlier this afternoon. It's a business that is now well-placed to win, or actually as we're referring to it internally at least, a business ready to be unleashed with brands as the foundation of the business and the essence of our competitive edge. Combine these with our go-to-market capabilities and our manufacturing scale and agility in our four lead markets, we see a right to win versus larger multinationals as well as smaller local players.
There's a natural balance in our portfolio now with developed and emerging markets playing their own clear role. The focus on four lead markets and three core categories gives us the ability to prioritize resources and allocate our capital effectively, balancing investment in the business with a progressive dividend and possibly targeted M&A. Wrap it all up. PZ Cussons is a more focused and more resilient business targeting delivery of double-digit total shareholder return. The opportunity is for you to ask us questions and let us know what's on your minds. I'm gonna ask, I think the three presenters, co-presenters, and Sarah to come and grab a chair, I could call them hot seats, to bring those chairs to the front while you guys think of any questions that you have.
If you are brave enough to ask a question, can you please let us know who you are and where you're from? Right. That will then give me time to decide which one of my unsuspecting but esteemed colleagues I will palm off the question to, unless I just have to take it. Okay. I can see Matthew, and Sahil, and Damian already. You don't have to tell me your names then. Okay. Sahil, do you wanna go first? Then you can pass to Matthew in front. Where's my pen?
Thank you. It's Sahil here from Singer. Thank you for your presentation. Really helpful today. I've got three questions.
Oh.
Can I go back to the innovation piece-
Yeah
Just frame that for us in terms of what that means in the context of the mid-digit like- for like growth, and what has it been historically? Second question is around M&A. Importantly, what's the criteria that we should be looking at or you're looking at in terms of the kind of deals you're looking at, the kind of multiples, the return on investment, and all that kind of good stuff. That would be really helpful. Finally from me, just from a capital allocation point of view as well, I think I saw in the slide something about possible cash returns.
In the context of that leverage you've set out around 1x-1.5x, if leverage was to fall somewhere closer to 0.5x or less than that, is that the trigger point for cash returns in the absence of an M&A opportunity? Thank you.
All right. Look, why don't I'm gonna ask Sarah to answer the question on capital allocation. I'm very happy to answer the M&A question. Let me give a response on the innovation 'cause it will give you a flavor, but it won't give you the empirical numbers that you are looking for, right? That is that we absolutely intend for innovation to become a bigger part of our future revenue growth. Some of that will be replacing existing business that we're doing. In a sense we will intentionally cannibalize ourselves to ensure that we're competitive in the market, and some of the innovation will go beyond it. We'll very happily come back with what we think that might be directionally.
We literally will be discussing in our board this week avoiding falling in the trap of giving a number. Let's say, oh, 15% of our net sales will be innovation. Literally the next thing that happens, everyone that walks into the office says, "This is innovation." Everybody starts claiming innovation as a percentage. We will give you, we'll find the best way to give you that, particularly as you're initiating coverage to make sure that you have a good feel for how you can frame that.
Great.
All right. Okay. Anyway, it's very nice that you asked the question. With that, why don't I ask Sarah maybe to pick up on the capital allocation.
Yeah
I'll come back on M&A.
Let me do that. I think when Jonathan does pick up on M&A, you're going to hear a theme of discipline come through. You know, how I would think about the excess surplus capital.
Yeah
in terms of cash returns versus M&A is we'll consider both on a real time basis. You should assume we would have a pipeline of attractive M&A targets, Jonathan will come onto some of the criteria that we would consider particularly attractive to us. I don't think you should think of us having set any particular trigger. There would be no particular net leverage number that would have us default to any cash returns 'cause we'll be both considering trailing and future leverage, organic opportunities, and inorganic opportunities. We will be assessing it and the relative economics on a real time basis. Sahil.
If I talk about, you know, a little bit conceptually how we might think about targets, we'd be very clear. Three core categories, developed markets out of our four lead markets, so that would be ANZ and the U.K., right? The way to think about it is more likely to be a bolt-on a la Childs Farm, which was in one of our core categories in one of our lead markets, where there wasn't just an opportunity for revenue growth, but also cost synergies, both organizationally, but also by insourcing some of the manufacturing. That will be very much the kind of target we will be looking at. All right. Matthew, power of the microphone.
Yeah. Thank you. Matthew Webb from Investec. First question on the Africa growth opportunity, and specifically, the opportunity to push into new categories, and I can see that's obviously underway already. It seems such a compelling thing to be doing that I think the obvious question is why hasn't it been done already, and why now? Has something changed? Is it that, I don't know, that you've been firefighting and that's distracted you? Is it others pulling out and leaving space in categories? Is it that you've been wary of putting the investment in? What could you tell us about that? That's the first question.
Oghale, do you wanna give that one an answer?
Yeah. Great question. Obviously, the last couple of years with the challenges around devaluation, we've been trying to really focus on navigating and ensuring we have a resilient business that comes through that, right? Now, like, just like we said, one part is that we've had some success in Pan- Africa. It is the 11% of total Africa business. We're in 18 countries where we have presence. It's a, it's a model that is repeatable and that we're proud of, and we believe we can scale.
As we look forward into the future over the next five years. Having come through that devaluation COVID bit, now is the time where we set our growth strategy very firmly. The third very important growth pillar is Pan- Africa expansion. We're in the right position to go after that today. The organization is frankly excited to get after that opportunity.
I would simply add to that, you know, the reality is we have been busy on the ground dealing with a few challenges that have come our way. We might have got to some of them sooner, but we're now getting around to them, having stabilized the business and giving us a solid foundation to launch from, Matthew.
Great.
Matthew, maybe if I can just add some, you know, financial aspects to that. As it stands today, we source around about 20% of our U.S. dollar needs through our export business. The plan that Oghale and the team have set out would take that number to north of 50%.
Yeah.
Clearly, an export strategy is more volume than price-led, and given the risk through the currency devaluation, we didn't consider a volume-led strategy to be one that was particularly wise. Now forex markets work well, and we can access enough dollars to repatriate cash. It's a level of risk that we feel the business can take and deliver some return on.
Well said.
The second question is related to that. You mentioned that you're now sourcing more in local currency in Nigeria. I just wonder whether you could quantify that in terms of, you know, where you are now in terms of local sourcing versus hard currency and where that's come from over the last, I don't know, three years, five years, whatever.
Sarah, do you wanna-
Sure.
Either Sarah or Oghale between one or two.
Why don't I give a couple of numbers, and then you can talk about the types of commodities and the capabilities with Steve Noble's help that we've built over the years. It differs between family care and electricals.
Yep.
Very, very definitely. In Oghale's part of the business, we source now a good level. Electricals, again, is a little more reliant on imports given the nature of those materials. That one, you know, we've had less success in translating locally. Oghale, do you want to talk about family care and how we've done that a little bit?
Yeah. In family care, we've taken local sourcing from over the last few years from what was 30% of the business in terms of how we did that to now north of 50%, right? We're incredibly proud of increasing. We keep trying... We do supply chain scrubs to identify suppliers who have reliability, quality consistency, and can deliver on the cadence of our demand forecast. That is how we intend to build the future where we wanna take local sourcing to north of 60%, 70% of the business. It's a worthy challenge, the team is excited to go after it.
Thank you very much. Sorry, final question. Just thinking about how the group targets are going to work. I think you mentioned earlier in the presentations that gross margin expansion should hopefully be part of that. I think if I'm correct, that today the fact that Nigeria grew so strongly.
Yep
And has got a lower-
Yep
You know, gross margin was a bit of a headwind. Is that something I should be worried about in terms of how that's all gonna work?
I think it's something that we should all be healthily interested and concerned with, right? Our goal will be, as we've said, is to nudge up in each of the business units. What we then have to deal with is the geographic mix if we're seeing accelerated growth in one of the business units that has relatively low gross margins. The case in point would be, are we going to suffer if Africa really goes gangbusters and everyone else stays flat? Which is why one of the reasons that we were so pleased being able to demonstrate the breadth of our performance this morning is as evidence that we are beginning to get sustainable momentum in all of our businesses. It's interesting, if you were to look at Indonesia, that is a highly accretive gross margin to our group average.
It is not as easy for us, unlike other players maybe in consumer goods, just to say, "Oh, emerging markets, low gross margin, developed markets, good." Our goal is to improve in all of them, and ideally, we will strive to make sure we can offset gross margin if there is geographic mix dragging it back. It is easy for us to start off saying four business units, we'll improve in each one. As we navigate forwards, we will strive to make sure that we're nudging up for the total group. That's obviously a little bit harder if the rapid growth is in the lowest margin region.
Got it. Very clear. Thank you all very much.
Damian
Thank you. Yeah. Damian McNeela from Deutsche Numis. First question I think on the guidance. Given you're a staples business, what is the cycle that we should be thinking about, and what is its duration, please?
Okay. Let me give you an answer. Yeah, I was predicting we cannot get through that presentation without saying, "So you've mentioned the cycle a lot, so can you give us a little bit more detail?" Right? We can all have a view as to how long a cycle is, right? I would say the first thing, right? Obviously what we are trying to convey is a sense that there is an inherent volatility in some of the markets which we're operating, right?
It is not necessarily empirically easy to say, "On that date is when that cycle is complete for a given market," but what we're trying to indicate is over time, while there may be ebbs, we're saying ebbs and flows, ups and downs, over time, we believe that over the duration of a cycle, that we will be able to deliver the sort of targets that we have laid out. If I bring, give you a more accurate answer or an empirical answer, honestly, our internal planning, we have been looking at a three to five-year time horizon, That is very much how we have been thinking about this. However, this is not a promise of, "Oh, it's jam tomorrow at the end." Just, you know, hope is a strategy.
We're very much trying to make sure that we can demonstrate the progress year in, year out. We're just also trying to be very sanguine. There are some big macro things out there that are not entirely in our control. We can mitigate against the risk, but we can't prevent it.
Okay.
All right?
Very clear. I think the next one's maybe for you, Oghale, on competition in Nigeria. Now, you identified some sort of characteristics of Nigeria which are very exciting, urbanization, youth, digitization, et cetera, but all of those sort of factors seem to sort of, I guess, benefit small startup-type brands. I was just wondering what level of competition you're seeing from that sort of competition in Nigeria. Second part, just on the two categories that you identified as sort of, delivering sort of, I guess, about 5% share over the next couple of years, what's the current competitive set there? Who are you taking on? I guess, yeah, give us some sense of what needs to happen there is next question.
Okay. You mentioned the local, and that is true. Right? We're seeing very nimble low-cost players come up in the Nigerian market that we have to compete against. It's a function of... This has been built into our growth strategy. We are very clear that when we think about core growth, we want to get closer to the shopper than those players will be. We're also clear that as we think about our manufacturing scale, we're trying to drive lowest conversion costs that will allow us to get competitive price, priced products in the market versus those players. Yes, we see them gaining prominence, but our growth strategy is set up to go after that and deliver superiority in those points where they have advantage.
Then we layer on top the parts where we uniquely have advantage, where we build on global capabilities, like the brand flywheel that Paul and Sharon talked about. Those unique capabilities then give us an extra set of a competitive advantage. So yes, strong competition, but we feel very confident about our right to win in that market. Our unique cultural heritage, and the capabilities we have across distribution, manufacturing, give us a right to win. Could you repeat your second question?
Yes. Just specific-
Who are the competitors in beauty and grooming?
Uh.
Yes.
Right?
Basically.
Thank you, Jonathan.
That's all right. I'll answer if you want, if you like. No, you go.
You could build on that. You see a lot of the typical competitors, and in this case, you do see global players like Beiersdorf with Nivea, Unilever with Vaseline. These are the players that we're gonna come after, and they're formidable ones. But again, in this sense, why we feel really positive about our ability to succeed here is that we have the strengths and the competitive advantage of distribution. Shared the chart earlier, and you had Beiersdorf in that chart. You had them in that chart, and we outpaced them in terms of what we've done on distribution, what we're able to do with our low-cost manufacturing.
That gives us the scale that is a competitive advantage in that category, and that's why we feel very excited about being able to get in there.
One last one maybe. Just capacity utilization.
Yes
... In your African factories looks comparatively low...
Yep
... At sort of mid-40s. You talked about insourcing. Can you maybe quantify that, and maybe have you thought about doing third-party manufacturing to improve that capacity utilization?
Okay. Very good questions. We put those capacity utilization numbers there for a reason, because one of the drivers of the future opportunity is, you know, leverage down the P&L, and if we can drive down some of our conversion costs by driving up our capacity utilization, that's gonna help with our gross margin progress, going back to the question that was being asked, right? First and foremost, we wanna drive volume on our business, okay? In some markets, actually it's not in Nigeria, but in some markets we do outsource things that potentially we could insource. Childs Farm would be a good example, and in fact, you saw the video, on the video of Agecroft, from Rob, you also saw some St.Tropez being made in Agecroft, which in the past might have been outsourced.
Where we can do it at a lower conversion cost, we should be insourcing it, and so we are conducting and will conduct a review of exactly that. We shouldn't insource everything, 'cause some things we don't want to invest in the production capacity, and sometimes we won't be as fast or make a smaller batch. Where you're also poking, though, is a slightly more, you know, challenging area for us, like would we make for other people, which I think is what you're saying, right? We start off making our brands and building our brands. I would never say never, but we are not gonna become a private label manufacturer or a contract manufacturer for other people, right? However, the first job is to see what of our brands we can put into our factories to drive up our own utilization.
All right? It's also optimization, 'cause there could also be some opportunities to reduce our capacity if necessary and drive up a higher level of utilization.
Very clear. Thanks.
All right. Any other questions in the room? Okay, look, we have given you a lot of information this afternoon. Hopefully, I said to a few of you earlier, I don't know whether you'll like what you see, you are going to see a lot, you're going to learn a lot. You can now tell us whether you like what you see. Before you rush off, upstairs there are three things for you to engage with, right? 1 is a table of the latest and greatest on St.Tropez. We haven't talked a lot this afternoon. I did this morning. We're very happy to talk about that.
There's a second table which is all the upcoming innovation, so lots of goodies there, and an attempt to bring you a golden outlet of what do we mean of going shopping in Lagos, and you can touch this funny thing called a pomade. I mean, that is the proper English description, by the way. It is in the dictionary, even though none of you will have a clue what it is. Right? You can go fill your boots, as it were, with Stella, with Robb, with Premier, right? There's also a bag of products for you to go home, try, and tell your family and friends to go buy. Thank you very much.