I think, hopefully, the lunch was great, and we've got Reckitt here today, Kris and Shannon. Thank you for attending and supporting the conference every year. We appreciate that, so the format today, as has been the case already, is going to be a fireside chat. We are going to do a breakout, by the way, next door afterwards for 15 minutes for those who want to join, so I've got a lot of questions for you guys.
So we're going to try and get through as many as possible, but maybe kick off, Kris. Can you talk a little bit about the new organization? You're talking about a more accountable organization. Why and how is that an unlock? And how would it help you deliver and execute more consistently? Because obviously, consistency is the name of the game.
It is. So, thank you for having us.
Cool.
It's a pleasure to be here. So, I felt strongly that we needed to simplify our organization. And I would say the main driver of the changes that we've made was really about simplicity, effectiveness, accountability, and hopefully speed. There's a byproduct, which is it's less costly. We have fewer senior executives. But I think the overwhelming focus is for us to create a simple and fast organization.
And we heard that from the rank and file in the company for a while, that they felt that was an opportunity to get to faster decision-making. And I felt clarity around accountabilities was important. So, what we did is we took out a couple of layers of management. It's quite a significant change. And then we simplified the geographic reporting. So, we now have three presidents that are accountable for all execution.
And that makes it much easier for me to work with them and drive good execution, but also, of course, to make sure we have clarity of accountability. And by the way, that is also the case below. We simplified our regional structures quite a bit, too. So, we made this change six months ago.
So, we've been living in this new organization for, well, the year is going fast. It's eight months now. But I think it's going well. We're capturing benefits from it. But I would also say any big organizational change like this, it takes a year or two before you get all the benefits. So, there's more to come.
Maybe moving to innovation. Innovation is a lifeblood of consumer staples. Can you explain the One Reckitt way of brand building and building categories? You've done it with Lysol Air. You've done it with Lysol Laundry Sanitizer, which have made new markets. And it's allowed you to get a price premium given the level of differentiation.
So the question is, can you replicate that market-making model to other power brands? And is your R&D set up enough so that you can do it more quickly and more agile? Or are these big breakthroughs quite infrequent events? And which technologies are you most excited about in terms of innovation that can really move the top line needle? So it's a big question around innovation.
That feels like five questions. But.
One big question.
Let's take the one big one. Let's take the elements of the big question in turn. So, innovation is our lifeblood. And we have been investing in our pipeline and in our R&D capabilities quite a bit. And it takes years. So, we did have a period historically where we didn't invest enough. And then it's a catch-up process. The good news is we're done with the catch-up.
So we're now in a position where we have really meaningful innovation. To your point, you don't want actually too many of them. You want sort of a cadence of big platforms, one or two that land in the market every year. Because the job isn't just to launch them and land them. The job is actually to use three or four years to scale them. Because we want them to be permanent new additions to the portfolio.
Category creation is the most valuable kind of innovation that we can do. And the way that you do that is, obviously, your fundamentals have to be good. You have to be consumer-obsessed. You have to see a need in the market. You have to have the technology solution that is really going to deliver on the promise. But I think what is helpful for us is you really have to have a number one equity.
Your brands have to have the right to create categories. And one of the things that we're spending a lot of time on is understanding which of our brands have that right and where can we do it, to your question. But you look at a brand like Dettol, where we've dramatically expanded the number of categories that Dettol operates in. In a market like China, that's a big part of our growth.
And so much of it comes back to do we have the right brands? And the good news is in our core Reckitt portfolio, we only have very strong power brands. It's really the whole idea behind the plan.
Bringing you in, Shannon. I'll try and make it a bit shorter, this one. On the fixed cost reduction, it looks like you're tracking well ahead of your targets. I think you were already at 20% the first half against your 19% target. You've talked about two big areas of scaling shared services as an opportunity and also working with Generative AI to reduce overhead.
So, just interested if you can maybe elaborate a bit more on those two points. And I guess, given where you're tracking, is there any reason why you don't hit that target a little bit earlier than you've said, given you're already well ahead?
Yeah, we're super pleased with the progress we've made to date. As you said, savings are coming in quite quickly from overhead. I think that as far as resetting any targets, not really looking to do that. I think 19% is the right target for us. We're committed to getting there as we exit 2027. I would say, of course, there's no finish line. So, once we get there, we can talk about going further.
To your point, I think what's important to remember is while we've had strong delivery early on in the program, if you think about 2026 and 2027, first of all, in 2026, we'll be needing to mitigate stranded costs from Essential Home. So, if you think of that trajectory of savings delivery, I think that could moderate a bit in 2026.
And then if you think of those two buckets you called out, so shared service and GenAI, we absolutely think they're large opportunities. We think they're very structural, sustainable opportunities. So once we have that capability up and running, we think it's something that for the long haul will continue to drive savings.
But it's also two opportunities that take a lot of work to really get them going. And so those are the two pockets of savings that I would see coming into play as we get into 2026 and then in a really significant way in 2027.
Okay, thank you. A nd maybe just touching on advertising spend, because that was up significantly in the first half, I think 130 basis points from 13.3% of sales to 14.6%. That's a big jump.
Can you maybe outline where that money is going, what the top priorities for that spend, maybe how much of that spend is digital today, if you have that number? And should we assume it kind of levels off? Or just in terms of calibrating modeling, what's the thought process about what the right level of spend should be in the business?
Sure. So in addition to innovation, I'd say one of the second most important things, I think, for FMCG is to be really investing in our brand equity and making sure we're fully supporting our brands. And so our intention is that over time, brand investment as a % of net revenue should absolutely be growing.
And so in 2023, we had a significant step up, more than 100 basis points. In 2024, we increased it another 30 basis points. Year in and year out, you should be looking for that to be increasing as we take some of this fixed cost optimization and put it back in to invest behind our brands.
As far as where that goes, I mean, obviously, one of our top priorities is that when we do have great innovations, we want those to be fully funded.
That would be the first place that we're putting incremental BEI. We're constantly looking at country-brand combinations to understand where do we think we either have clear opportunity to drive high ROI investment, where do we think we're behind some of our key competitors, and we're very targeted in where we put that incremental spend over time.
And then another one on EPS growth. Shannon, I know you've had it a few times, but for some of us, it's quite hard to model. And there's a lot of moving pieces. You've said that EPS will be up in 2026 after the Essential Home exit. And so you've got a few things going on there. You've got the 30% associate that we need to model. You've got the stranded overheads.
So, can you maybe help us a little bit, sort of bridge that to give us confidence that actually, indeed, the 2026 EPS will be up? What would you outline? What would you point to?
Sure. So absolutely, our ambition is that year in and year out, we're growing EPS. I think both Kris and I recognize that if you look back historically, it's been a bit of a missing piece if you think about consistency of EPS growth from the Reckitt story for the past few years. We had great results last year. We're confident this year that we'll be growing EPS.
When you look into 2026, the building blocks I would think through are, obviously, the sale of Essential Home is diluted. It's about $2 billion of net revenue. What bridges us to growing EPS and the ambition to grow EPS is, first of all, core Reckitt top line growth. And so we expect strong top line growth. We've guided 4%-5% as our midterm outlook for core Reckitt.
Going back to the Fuel for Growth programme, we expect to deliver cost savings in 2026 from Fuel for Growth, which will help drive operating profit expansion. That'll all be compounded by we've had an ongoing share buyback program that we launched in October 2023, which will continue to be a tailwind on EPS.
As we have the special dividend with the Essential Home transaction, there will be a share consolidation with that. That will be a tailwind for growing EPS.
And then to your point, we would expect to have some benefit coming into EPS from both the interest on the vendor loan note associated with Essential Home transaction as well as the 30% stake. Obviously, FX, I can't predict that. So we'll see what the impact is. But those are the building blocks.
Okay, thank you, Shannon. That's super useful. Maybe back to you, Kris. Got to ask you about the U.S. market. You've called it as hard to call. Lots of moving pieces, a lot of channel shift going on, a lot of consumer shift. How exposed are you to the declining drugstore channels versus the growing channels of Amazon, Walmart, and Costco? And how are you trying to improve execution with the winning retailers like Walmart?
What investments are you making in supply chain technology people maybe to win in the US, almost regardless of what the macro does?
Great question. So yeah, I think the U.S. is quite dynamic. It's tough, although it's stabilizing. So actually, if anything, from what was quite a concerning outlook in the middle of the spring, I would say, it feels more stable now. Our categories are pretty stable. It's a low-growth environment, but it's an environment that we can work with and we can drive reasonable performance.
Our brands are quite strong in the U.S. We are leaders in most of our categories. And that means that our brands find their way to consumers' pantries irregardless of channel shifts. We're available broadly. We win with lots of different retailers. And so I'm not so concerned that the consumer won't find our brand.
In fact, we have good traction and execution is improving. And that's really good to see. So we're watching channel shifts. The drug channel is obviously having a tougher time.
But we've been winning with winning retailers for a long time. So, Walmart is not a new focus. Walmart's been a winning retailer for a long time and a focus of ours for a long time. We have a great partnership with Costco. We have great partnerships with many retailers. And we do well online.
So I'm not so worried about these shifts. They tend to happen quite a bit. And we have to be able to navigate that and deliver performance regardless. I don't think the shifts that we're seeing in the U.S. are dramatic. There's other markets around the world where we're seeing far more dramatic channel shifts, like China. And so, I think we can navigate it.
Okay. And maybe like a specific one on the U.S. I think it was down 2.7%, I think it was. And you said that a lot of that was due to the reformulation of Mucinex.
Yes. So, we were reformulating the Sinus range and the Mucinex. And that product has been going back. The reformulated product went back into the market at the beginning of Q3. So it's a bad guy in Q2, a good guy in Q3.
Was it most of that minus 2.7? Just trying to understand. And does it mechanically completely come back in Q3?
Yes. I mean, we obviously have to execute that well, and we've been micromanaging that execution, but yeah, I would expect it to come back fully.
In terms of sell-in, sell-out dynamics, are you seeing where are inventory levels today? Is that also improving or normalizing? Maybe are you able to say how much stock is in the system? Give us an idea of where it goes.
There was a bit of destocking in the spring. I think a lot of that had to do with the confluence of what inventory levels were after a relatively weak start to the season and then a very sharp decline in March after a robust season in January and February.
That gave retailers, I think, the opportunity to just work through the inventory they already had, and so I think my interpretation is a bit more of a short-term situation that was very reflective of how the season was moving and also what was happening in the macro at that time.
We're not seeing destocking as a significant impact for our business now. We don't anticipate it being a significant impact. In fact, we're quite happy with the sell-in and the shipments for the season that's upcoming.
So net- net, would we expect the U.S. to therefore be up in the second half, given Mucinex is coming back?
Yeah, we expect the U.S. to grow. Yeah.
And maybe turning to emerging markets, that was obviously the star performer in the second quarter. It was up from 10% to 15%. I think you've got a mini CMD on EM coming up in December, which will be super interesting. But when you think about the sustainability of that growth in emerging markets, Reckitt's been a bit up and down, I would say, in EM in the past.
How can we get comfortable that this time it will be more sustainable, that you can actually grow EM, I don't know, high single digit? And are you confident you can comp the comp? Because Q3 is fine. But in Q4, Q1, Q2, you start to get into much tougher comps. When that happens, would we still expect to see maybe not 15%, but still high single digit growth?
Yeah. What we've said about this, and I believe that to still be true, is we shouldn't get used to growing at double digit just because it's unlikely to sustain itself quarter in, quarter out, year in, year out, but high single digit I feel very comfortable we can do consistently. A nd as we can see, the business can definitely do more than that, too, as it has been doing now for three or four quarters.
We have been successful in China and India for a long time, and that's really the markets that are driving most of that growth. N ot all of it, because it's broad-based, but most of it, and we have the ingredients to be successful in those markets for a long time. We have very strong brands. Much of our growth is volume-driven growth because we're competing very effectively in the online channels in China.
And we're expanding our offline footprint in India. Much of the growth is in health and in intimate wellness, where we are leaders and have a big runway for continued household penetration. So, I'm very happy with the teams we have in place. They really know what they're doing. I think we have some advantaged capabilities. So, for China and India, I feel quite confident that we're going to see continued strong growth.
Then the most exciting part about this footprint to me is the remainder of emerging markets, where we have a cluster of six or seven markets that taken together will be and is of the size of India or China and has the same growth potential. And so actually accelerating those markets is a big priority of ours for the coming years, which will also support the.
Which countries would you call out? Is it Colombia? Is it Malaysia? Is it Indonesia? What would be the most exciting?
Yeah. So, there's good names in there. So, we have, for us, Malaysia, Vietnam, Sub-Saharan Africa, Colombia, and Mexico and Brazil, where we have nice businesses today. Now, there's more markets than that, but those are the ones that are on my radar in terms of really big growth potential.
And how do you seed those markets? How are you actually going about trying to grow them? How do you prioritize? Is it Sub-Saharan Africa versus Indonesia? What's the kind of?
Well, we have a lot of conversation about this. I mean, I don't want to prioritize too much because there's so much growth. So, I would like most of it if we can find a way. But obviously, that's already a subset of markets that we've picked.
The good news is we're not starting from scratch. So, we have pretty good businesses in these markets. They just haven't been, let's say, the biggest priority for the organization. And so that's what we're changing.
And what that looks like is investments in the brands and supply chain. In some places, we can have more capable R&D that's a little closer to the market to get the innovation really firing. So, every market is a bit different. But what's exciting about it is our people know how to do this.
And so our new structure, where we have emerging markets under one roof with some very capable, experienced leaders, they can start to really spread these capabilities and playbooks in a more effective way. That's probably the thing that I'm most excited about, about our new organization.
Okay. Maybe back to you, Shannon. As we're staying on the geographical tour, maybe we can turn back to Europe. I think you said that the Q1 stage, Europe would be kind of up low single digits. It ended up being flat. So, that was one of the few areas that was a little bit behind what you had thought.
Can you maybe outline why that was? And where do you see kind of category growth in Europe share? Do you expect Europe to be back into positive territory in the back half, as Kris does, from North America in Europe?
Sure. So Europe, I mean, I'll start with your last point. We do expect Europe to be back into growth in the back half. I think the dynamic we saw in Europe in the front half, there were a couple aspects to it. One is we certainly saw category growth rates declining. If you go back to January and sort of map that out through the front half, we do feel like that's now stabilized.
And so when we look at category growth rates today in Europe, we're seeing them pretty flat. But we see that as stabilizing. We talked about the fact in our half one results, from a share standpoint, we feel good about what we're delivering in Europe. We talked about it's the first time that we've been market leader for Finish and all large European markets.
So, we feel like we're getting to a place where we're showing up very competitively for the consumer. We have some good innovation. We've been talking about intimate wellness in Europe and innovation there. And so I think as we look to the back half, we see sell-in and sell-out should be converging in Europe. And even with very low to flat category growth rates, we're confident that we'll be delivering growth in the back half.
And you touched on Finish, Shannon. So, I want to ask you one about that. It's one of your biggest brands. And what we're seeing are some different dynamics in the U.S. versus Europe. In the U.S., it's obviously you're up against a big competitor.
We are.
Can you maybe sort of just outline where market share trends are for Finish in the U.S. and Europe, what you're trying to do to improve it where it's not currently there? And then sort of a second one on Finish as well. The other thing that really struck me at the CMD, I think you said that you sell Finish to 27 million Australians, more than the 4.8 billion Asian consumers.
So, that kind of shows you the potential that a brand has in some of those other EMs. But how do you actually think about playing? How do you actually crack those markets? Is it just about dishwasher penetration? Or how do you drive the category? So one about the Europe-U.S., one about EM on Finish specifically.
Yep. So Europe-U.S., I mean, you have to remember the competitive dynamic is totally different. So in Europe, we're the market share leader, as I just said, market share leader in all large European markets. In the U.S., we're obviously in the challenger position. And so the activities across Finish, though, are quite similar. I mean, it's a brand where it's really important to make sure from a media standpoint, we're supporting the brand in the right way.
But almost even more importantly, that every day when consumers go into retailers, that we're showing up in a competitive way. And so starting in the back half of 2024, we were talking about the need, particularly in Europe, to really make sure we had the right level of promo, right frequency, right depth.
As we got that right, market by market by market in Europe, that's when we really started to see the share results turn around. So it's a very different dynamic. A good part of being a challenger in North America is that even when we're not gaining share, we can be growing revenue quite nicely.
Of course, our intention is we want to be gaining share. It's the same levers that we saw in Europe that we're playing with in the U.S. to try and get to that place.
From a long-term potential of the business, I mean, this is one we talk about as having decades of runway. When you go country by country and look at dishwasher penetration, I mean, it's very surprising to even see in developed markets, you have markets where the penetration is well below 20%.
That will be one of the key enablers for long-term growth for Finish as we see that dishwasher penetration move forward. We're very focused on making sure we're there. We're partnering with the manufacturers of the machines so that we're really the first brand that new consumers to the category are learning from and growing with.
Okay. Thank you. Kris, talk about intimate wellness. It's your star category. We've seen a step-changing growth. What's driving that? How sustainable is it? It sounds like it's adjacencies. And particularly your China business, your market share was, I'm not going to say nowhere, but five years ago was much lower than it is today. You're a clear market leader. And the brand Durex is a billion in revenues.
What is the real potential for this brand? If you look out, crystal ball, how big could this brand be?
It could be very big, but obviously, we have to do the hard work to get it there. S o, I think Durex is maybe one of those brands that exemplify what we talked about before, which is the power of strong R&D and breakthrough innovation.
We have really made big strides in our IP, our capabilities as it pertains to materials innovation, and in condoms, it's really all about materials and what benefits they bring, and so we are now clearly global leaders again, and that's where I want us to stay.
We have a big runway for growth. It's actually not just China. I mean, Durex is growing double-digit in many emerging markets, and it's got a big runway for growth in emerging markets, kind of similar to Finish. I mean, really, the category needs to be built and we're the right people to build it.
Then we also have adjacencies. So, female intimate wellness is a growing space. And we have a really great brand called Intima, which is indeed now growing very fast in China from European roots.
You've hit double digit, isn't it?
Yeah. So it's fast. So, now we can't sustain necessarily that kind of growth rate. But it's just an indication back to your question. I mean, how big can this be? I think it's just a function of how good of a job we do to create categories. I don't think there's really a clear ceiling.
It's a question of category adoption, education, capturing people at the right age to teach them about how to be healthy and safe with this category. So, we have a lot of work to do there.
Thank you. I also want to touch on brand stretch because one of the big things that came out for me at the CMD was your Dettol brand and the performance in India is incredible, and it's also in 13 subcategories.
Yeah, so we've expanded it significantly.
But I mean, most of your others are in two or three subcategories. So, why is Dettol an outlier? And can you replicate that playbook with some of your other power brands? Or is there something about Dettol that's different? And if you can replicate it, which of the power brands would you like to stretch more into adjacencies?
So, most power brands have the ability to stretch because they are trusted. They are the number one equity. They're well known. And they deliver. So, I would never say that any of our power brands cannot stretch. They can all stretch. The question is how far, how many categories can we sort of straddle? And when is the right time? What's the right product proposition? Because again, efficacy is everything. So it has to deliver.
So, Dettol is the brand that we've successfully stretched across the most categories. It is a phenomenal equity. And in that part of the world, it's really a beloved brand. But look at Lysol. We've stretched Lysol into multiple categories. Durex, we've stretched into multiple categories. Finish is both auto dish tablets, but it's also cleaners and other things. So, I would hesitate to say that we have any brand that can't stretch.
And if I showed you our strategic plan for growth for the next three or four years, unsurprisingly, brand stretch and category expansion is a huge part of our growth. So, we have big plans, I would say, for every one of our brands to stretch into new categories.
Probably Dettol is always going to be the shiniest example that we have. But that's okay. We don't need 13 categories for each brand. We just need to successfully stretch into.
What's the brand doing in India now in Dettol? Where's the growth? How big was it like 10 years ago? Where is it now? Where's it going? Is it still growing? Because it's been around for a long time.
It's growing.
Where is it growing?
Yeah, so we develop new formats and do line extensions. Dettol in India is a very mature business. It's been around for 100 years. It's bar soap. It's ASL, antiseptic liquid. That's the core of the brand, but then we're extending it into new formats and new benefits.
In bar soap, we've been selling Dettol bar soap forever, but now we have our Cool platform that's driven some great growth, and we do other things that's more dermatological that will also bring good growth. But actually, Dettol, the best case example for what Dettol can do is China. B ecause in China, we've really stretched the brand far beyond even what we managed to do in India, and that's where the 13 subcategories happens.
Why is that? What is it about, Shannon?
Yeah. I think we cracked the code on some really good propositions. In China, we have found a way to engage with consumers that's highly impactful. So, we can explain to them a new proposition, and Chinese consumers are really engaged in our categories. It's probably one of the, if not the most curious and well-informed consumers we meet anywhere in the world.
A nd we've cracked the code on how to connect with them online to explain the benefits of new categories, new products, and that's really helping.
Shannon, I want to turn back to you and ask you a question on free cash flow conversion, free cash flow yield. I think free cash flow conversion was only 54% in the first half. I know there were some one-offs in there. But we normally would expect Reckitt to be 90%, 100%. Even if I X out the one-offs, it was still a little bit lower than that level.
Were you disappointed by that performance on the free cash flow conversion? And maybe what should we expect for the full year? And maybe can you maybe pass out for us the phasing of the restructuring costs and where you see the biggest opportunities to improve free cash flow? Because I imagine exiting Essential Home may be a bit of a drag on the cash.
So, when you sort of take a step back and look through the ups and the downs, and I know there's lots of moving pieces, how are you feeling about the underlying free cash flow generation of the company?
Sure. So, I'll start at the end. So we feel good about the underlying cash flow generation of the company, for sure. I mean, it's one of the hallmarks of the investment case of Reckitt, is our free cash flow. From a free cash flow conversion standpoint, the biggest driver far and away of that decline is, in fact, the restructuring costs and those one-off costs.
Expectation is that those will continue in 2026 and be a substantive headwind in 2026. I would expect that to really be tailing off in 2027. I fully expect that when you get through that restructuring program, Reckitt, core Reckitt free cash flow should be back up into the 90% plus, which is much more in line with historical levels.
Okay. And the final one for you, Kris. And it's about the kind of guidance and the 11 power brands. You've got these 11 power brands. You've got the target of four to five. You raised the guide to about four already.
For the year, yeah.
For the year. So you're on track. You're kind of on the journey. When you look at that four to five, how would you compare that to market growth? What would you expect? I know it differs year by year, but the split between volume, price, and mix to be.
And when you've got these 11 brands, which of them do you think has the biggest potential? And then which of the non-power brands? Because you've got lots of non-power brands, like things like Biofreeze.
Yeah.
Which could be the next power brands for the future? So, a little bit about getting comfortable with the four to five, and then a little bit also around some of these other jewels that maybe we don't hear as much about.
Yeah. So, I think for the power brands, it's a terrific portfolio. It is a portfolio that's designed to grow and grow for a long time. We said the four to five. We feel good about that. As you said, different years, different dynamics.
Obviously, this year is quite unusual. But our medium-term framework is four to five. I feel good about that. I think if everything goes right, we can beat that. And that's probably a good place to be so that we can deliver consistently.
And then sometimes we might be able to beat. So that's how we thought about that. I think in terms of the algorithm, it's a balanced algorithm that we want. Two points of growth, two points of pricing, a little bit of mix. This would imply slight outperformance in our categories.
But we don't have to do anything extraordinary to deliver in that algorithm vis-à-vis category growth. So I feel like it's good. It's solid. And we can work with that. In terms of the smaller brands that we have, we do have some smaller brands. And we don't have a lot. So we're 80% power brands now. So we're quite concentrated.
The things that we didn't divest were things that we wanted to keep for a reason. So a lot of the things there are health businesses that are not as big but can be big one day. Biofreeze is one. Obviously, topical analgesics has slowed down as a category. But Biofreeze is a great brand.
I think once we get out of this economic cycle that we're in right now and the consumer is sort of freed up a bit to spend again, I think topical analgesics will grow fast, and I think Biofreeze will do well.
We have some other health businesses that are small but growing so fast that soon they can become power brands. Some of our VMS brands are in that camp. Who knows? Intima, if it keeps growing like this one day, Intima might be a power brand.
Okay. And maybe just in self-care, I mean, we don't hear that much about brands like Gaviscon and Strepsils. What are the plans for those kind of brands?
Gaviscon and Strepsils are sort of slightly unsung heroes of our portfolio. They have grown steadily, and they have grown fast, much faster than OTC averages. Part of that is because they're growing in emerging markets.
Gaviscon, for a while, we grew faster than we could actually supply. That's moderated a bit, but still, these are growth businesses. For each of them, we have a plan for brand stretch, category expansion, geographic expansion. Emerging markets remains a really big part of that growth.
Within that, with all the hopefully the growth that's coming through, do you think the manufacturing configuration is such that you can supply the demand? Because historically, I know you've had issues with bottlenecking. Sometimes it's been more the supply than the demand issue. Can you maybe explain what you're doing to actually ensure that the manufacturing footprint is optimized for that higher growth?
This is my favorite question of the day. This is a topic I'm very passionate about. S o, I say to our team all the time, you're only as good as your supply chain. At the end of the day, we're selling consumer packaged goods. We're selling products in boxes and cans, and they need to be available.
And we have historically not invested enough in our manufacturing footprint as a company, and we have been on a journey to change that. S o, we're building a big anchor facility for a health business in North America. We built a mega factory in China.
There's more CapEx coming, more investments in that manufacturing backbone, and it's critical for growth, and it does drive growth. I'm really happy that we've seen over the past year a sharp recovery in our service levels.
So, I feel that our supply chain team is very much on this. And they're doing a nice job. But we have years of improvements to make. And every time we can deploy CapEx in a good way, that strengthens manufacturing and the footprint, we can grow off of that. And we can get some good productivity.
I'm glad I asked your favorite question last. We are actually on the buzzer, so thank you, Shannon, and thank you, Kris. Thank you, everybody, for listening, and we've got a breakout next door for 15 minutes. If you want to join us, thank you.
Thank you.