to the stage. Thank you, Hein, for supporting the conference. It's great to see you. [audio distortion]
Nice to see you again.
It's, I think it was December last year when we did our last fireside chat, and a lot's happened since then with the Growth Action Plan or the GAP. The shares have responded a lot, you know, so first question, can you maybe summarize where we're at on the GAP? Kind of what's next?
Yeah, so the Growth Action Plan that we launched last year in October, it's really about, you know, making choices, doing fewer things, as we say. Bigger bets with greater impact. So that means, amongst other, a strong focus of our funds behind 30 Power Brands. It means growing those 30 Power Brands through a comprehensive framework on Unmissable Brand Superiority, which is all about execution. Bigger bets behind innovation, not too many, but a few big ones. It was about strong focus on Gross Margin. That was absolutely critical for us for this year, and over time, an improved competitiveness.
So if you now look at it, sort of, not a year, but close to a year down the road, I think we've seen good progress in the first half. You know, with volume-led growth in the business, strong gross margin expansion, and in competitiveness, I think we've made steps, so you know, sequentially, I see some improvement, but we're not yet where I would like to see it.
Okay. Can we talk a little bit about your six P strategy? 'Cause for me, it's the key to the whole turnaround.
Sure.
I mean, we saw the top 30 brands, Power Brands growing 6% USG. What I want to understand is the methodology, because it seems to be real substance. I think you've said that you've tested it in 120 business cells, and it shows great correlations. Could you elaborate on what were the three most relevant insights you've gleaned as you've gone through that process?
S o Unmissable Brand Superiority is. It's really about a very holistic view on brand performance. And we have now, or by September, we will have it implemented in roughly 70%, 2/3 to 70% of our business, and it's very important. It's always at the intersection of a brand and a geography. So you know, think of it as Dove in the U.S . or Hellmann's in a certain country. And then what we do, is we measure superiority through the lens of the consumer along six pillars or the six Ps, and in total, that's about 21 metrics. So it's, it's a lot of data.
But that enriched data, they, you know, inform us very well on what decisions we need to make to make the brand just a little better. So that could, for example, mean that we, you know, we find there's opportunity to increase placements, increase distribution, in a certain type of store. It could mean that we need to adjust our pricing, our strategic pricing for a certain SKU, and I can go on, and I can go on. So it's, it's a lot, it's a very comprehensive way of looking at brand health, much more than the functional superiority.
And the correlation that we see, if a brand is improving on its superiority, holistic superiority, and market share growth is very high. So the chances that if the brand is superior versus the competition in all these dimensions, the chances are ten times as high that the brand will then also grow share.
Yes.
So it's something that will take time to take full effect, you know, because while we have implemented it now and we know the baseline and we know what to do to improve, but it will take. It's really a methodology that will take effect in years to become truly superior in everything I believe that we do. If you ask early insights, I would say we had some work to do on our packaging side.
And that meant that in some of our business, we have really improved on the design of our packaging quite strongly. Recruited new people for that, more with beauty background and so forth, and we're seeing the first effects on that. You know, we just did a relaunch, for example, on our body wash here in the U.S. for Dove. The same on face care in Latin America. So, you know, there are some early learnings, and we're moving fast to implement them.
You mentioned Dove a couple of times i t's your biggest brand in the portfolio. What is the growth of Dove at the moment, and how do you make that brand unmissably-
Superior
Superior. And I'm quite interested, just as an aside, you're entering the dermacosmetics market in Brazil, which I think is a first for Dove. It looks like quite a big bet. Brazil is normally a testing ground for, and so that's happening. Can you maybe just talk about that as well?
A little bit about Dove. S o, Dove, more than 10% of our total turnover at this point, is Unilever's largest brand, and you know, the first half, first six months growth number on Dove was 10% . So, you know, we're quite optimistic about Dove. You know, so there's a lot happening. I mean, first of all, I think the brand is stretchable to multiple categories and probably a little bit more so than what we had assumed for a while. You know, if you think about it, this has a leading position in haircare in India. Of course, here it's more body wash, but we see opportunity to leverage Dove across different verticals. So that's one.
But if we do it, clearly, we must come with a brand proposition that is a bit more united and a bit more aligned than what we had before. Of course, the whole real beauty purpose is still the background on Dove, but we're changing tone there a little bit, and we are premiumizing behind Dove. So in some markets, we see more room to premiumize than in others, and particularly Latin America, what you say, dermacosmetics and so forth, face care. Through the design on packaging to enhancement of recipes, I mean, we're seeing a real premiumization opportunity and the brand is responding extraordinarily well to that.
Okay.
But at the same time, last, we also need to be a bit realistic, Warren, because, you know, in a country like the U.S. you know, Dove can go to some price points and probably not above, but that's fine.
Okay. On innovation size, you're talking about trying to double the average innovation size, more 100 million EUR platforms, 10- 12 big projects rather than 50 or 60 projects. Question is, how do you get better at scaling your brands, and how do you mitigate the risks of making such concentrated bets? You know, I'm trying to understand where are we i n terms of building a multi-year innovation funnel, and what does that mean for the R&D department?
Yeah. So, obviously, you know, innovation is the lifeblood for CPGs, much more so probably than what we had thought for a while. And I think it's our role, if you're in 80% of where we play, if you have a number one or a number two position, you need to build markets build categories and make markets. So I'm a big, very big believer in innovation, but it needs to have a serious program. So first of all, you need to think about innovation through multi-year programs, and it needs for us, because of our scale, you have to have scalable innovation. And I think that's where we had to step it up.
You're right. So versus 2020, roughly, we felt that we had to double the average size of innovation, and we had to put a number of big, big bets down. That was. That was very much in the growth action plan. And in 2024, I believe that average size of innovation, we are indeed doubling. So that means we're doing less, but when we do it, we're more serious about it. And we have, you know, we have clearly made a number of 12, actually big bets that should become 100 million EUR platforms in two, three years' time.
We're well on the way to do that, but of course, it's only one year down the road, and we need to see how it develops, but I feel very good about it, and all of these big bets, by the way, they're all behind these thirty Power Brands as well, so it goes hand in hand.
In terms of margins, obviously, gross margin was up 430 basis points in H1.
Yeah.
You raised your EBIT margin guidance to above 18 . The question we're trying to get at, how much of that gross margin was deflation year on year from the NMI change? I'm thinking the number EUR 500 million. Is that too high, too low? And can you sort of walk us through, you know, the savings and the kind of medium-term gross margin? 'Cause obviously, you were so strong in the first half some of that's one-off, and it's gonna kind of roll over. So how should we think about the kind of gross margin cadence from here?
There's a lot of questions in one question.
Yeah.
But let me take a step back on the gross margins, but i'll quickly get to your point. So, you know, when I started in the role last year, gross margins, by the end of 2022, I believe, were 40%, and pre-pandemic were 44%. So we had to close a gap of 400 basis points, and we're absolutely keen to do so. The good news is, first of all, you know, we thought we were gonna get there in 2025. We pulled it forward, and we're sort of there, and we believe that's quite structural. So that's number one.
Now, then, let me go to the composition of that. You know, the first one is just the part that you can always control. That's the controllable cost part. It's around 10% of your cost base, and there, we're implementing a program on net productivity, i.e., you know, cost per ton, lower cost per ton every year, and I think that's something that consumer goods companies in moderate inflation environments simply need to do. And this year, we had a target of minus 2% on controllable cost and that's something we will exceed. So that's one part, and that will help us going forward. So that's one. Secondly, our mix, given the focus on Power Brands, and Power Brands are accretive to the group, that will help, of course, a bit.
Yeah.
And then thirdly, as you say, I think in the first half, we did have tailwind of, you know, some deflation and rollover pricing, and a combination of that gave us expansion. And we were simply... You know, we simply were buying better than the market. I wouldn't confirm or deny your EUR 500 million, but yes, we had tailwind, and therefore, I expect that expansion of 400 basis points, we will not continue in the same rhythm in the second half. But probably the way to think about it is, year to date, we were on a Gross Margin of 45.7%. On an MAT basis, first of July, it was 44.5, and, you know, that probably gives you a good indication the second number of where we want to where we want to land.
'Cause I guess the other drivers, the cost savings, the EUR 800 million that you've talked about, can you maybe spell out where that's coming from? Obviously, Fernando's doing a lot of work on different verticals. You've mentioned surfactants as one, but I'm sure there's other, many others that you're doing-
Yeah, but that-
and how that plays.
Yeah. Just to clarify, you know, there's two programs on productivity.
Yeah.
The first one is something that you need to do every year. That's the one that I talked about, net productivity in the supply chain. And therefore, we're also quite adamant that we will spend at least half of our capital expenditure this year or next year behind net productivity improvement in the supply chain. That will benefit gross margin. The EUR 800 million program that you're referring to, and impacting quite a number of jobs, is much more on the overhead side.
Yeah.
That is meant to, A, offset stranded costs from the ice cream separation, that is, that we aim to get to by the end of 2025 , free up funds for investment in brand and marketing investment, and capitalize on technology, you know, that is there in the company . You know, but we didn't always take the consequence to then say, "Hey, we have increased productivity and good technology, but now we need to take the people consequence." It is what it is.
On the people consequence, you're taking out, I think, so I think the number is 7,500. I think it's one in three office jobs in Europe. It's obviously quite a big change. How is that going? Are you able to do that with the minimum of disruption? 'Cause obviously, big bang, not saying it's a big bang, but it can, we've seen it in other companies, it can be quite disruptive.
No, I mean, an exercise like this is not something that you like to do. Definitely not. But we felt that for the reasons that I talked about, it was the right thing to do it right now. And of course, it's unsettling, you know? So we announced it in March. We went through consultation in Europe, with unions and works councils, before the summer holiday, and we're now in execution. Outside of Europe, we have done the design, and now we're also going to execute. So quarter three, we're in the thick of it now. Again, there is anxiety in the company. It is a bit uncomfortable, but, you know, I think providing clarity is also respectful here, and, you know, we aim to get through it swiftly, and to the other side by the end of the year.
Okay. In terms of market share, you talked about green shoots. Are you able to maybe elaborate a little bit where you're seeing those green shoots? I mean, you still talk about the 70% of the portfolio that's measured-
Yep
and 30% is not measured. Are you able to kind of give us a view on the whole portfolio as you see it today?
Yeah. So, you know, on competitiveness, as I said, we're not there yet. That said, sequentially, we are improving.
Yeah.
If you look at the last 12 weeks, and you do that on a monthly basis, you know, we are seeing improvements. But I don't expect immediate, you know, a swing from, you know, losing share to real winning share for the full year. But I do expect improvement in the second half, which is also what we, by the way, indicated when we announced the Growth Action Plan. But then if you look at where we're winning and losing, so the way to think about it is I always think about it 40/40/20 and, you know, that is still the reality today. So, Europe under pressure, mostly on local brands in nutrition. I would say the rest in Europe, actually, on personal care, we turned the corner.
That's going very well. The same on nutrition on our main brands is going in the right direction. Then the second 40% was the United States, and that was predominantly due to premiumization in deodorants and body cleansing and in hair care. And here, you know, we, we've seen that prestige segment, so the much higher price point, not the super premium, but just below, has been growing very, very fast. We gained share in the premium segment that I talked about with Dove. But simply, the category grew faster in a more premium part. That will continue, although we're seeing some bit of slowdown.
And look, we are not super present there so we will accept that, and at the same time, we will continue to evolve our portfolio. The third area is Indonesia, the 20% remaining, essentially, and Indonesia has been a tough story for the company for, you know, ten years. If there is one area in my first year that I'm not happy with the progress, then it's probably that one. I would've loved to see that turn around quicker, but it's a very sticky situation.
I think, given you mentioned Indonesia can you actually sort of unpack it a bit? 'Cause obviously on the surface, there's consumer boycotts.
Yep.
You were talking about recovery in the second half. That's been pushed back to next year. You're now talking about, I think, quote, unquote, "significant portfolio initiatives and a full reset of route to market strategy." So it sounds like you're really going deep dive and sort of blank piece of paper. Any sort of color on that? Cause it seems to be a bit of a change, well, big change.
Yeah. So as I said, so Indonesia has been under pressure for a long time. Last year, we made a significant change. We changed the leadership of the company in Indonesia. We changed our go-to-market, but I felt already at last year that somehow we did not keep up with the developments in Indonesia itself. So we were very focused on the general trade sector-
Yeah
... but actually, the consumer moved on. You know, if you think about it, Indonesia today is the second-biggest TikTok country in the world. But if I then sort of looked at how savvy are we in reaching our consumers through social? How savvy are we reaching the consumers through, you know, the convergence of marketing, commerce, and entertainment channels? How good were we in driving a modern trade presence? And we were simply behind, and that meant we had to step it up. We started doing that, but of course, consumer boycotts came in, and they spike. They continued to spike, and then they moderate. And of course, that's not helping, so it pushed us back. But I certainly don't want to say that the consumer boycotts were the sole reason for underperformance.
Once again, I would've loved to be, you know, more ahead by now, but it's sticky. It's a, it's a full transformation that we're doing. I believe we're doing the right things. We're very committed to Indonesia, so we're definitely not giving up. I think this is a super important country for us, but it will take longer to turn around.
While we're doing the world tour, can we touch on a few other countries?
Sure.
China being one of them. We were talking before . You've just come back. Clearly, the consumer's weak, the macro is weak. Can you maybe give us your latest thoughts on, on-
On China
... on China?
Yeah, so China, I was there actually, last week, spent the full week there. All the categories in which we play, and I think that's for, you know, for all our competitors, obviously, as well, I mean, they're under pressure, so it's minus at this point or at best, zero. I feel good about what we do in China, so I'm here, you know, our presence in China is actually good. We've grown the business organically, so this is not an acquisition business. We've grown it organically with very strong market positions in a few of our core categories. Hair care, number two. Food solutions, by far the number one. Home care, still a top three player, and a growing business in prestige beauty.
You know, we're gaining share in China. We have a good team, and I feel with the price positioning that we have, I think we're actually well positioned in China. But clearly, I don't expect for the next two years that double-digit China growth that we've obviously seen in the past. It will be very subdued for the near future.
The other, the big one, of course, is India . It's your biggest emerging market by far. There's a lot of stuff happening around channel shift.
Yep
... in India. I mean, your dominance in the mom-and-pops is well known, but clearly there's more digital apps, much more quick commerce. Does your historic distribution advantage get eroded over time-
No
because of that?
No. Well, let me first take a step back on India. So India, of course, is very important to us, and I think India as a country, we really see that, you know, they are just over that tipping point in terms of work, you know, where the middle class is ready to spend more. I mean, the premiumization that's happening in India is astounding. Channel shift is clearly happening and modern trade is now really booming. But also, of course, social is super important as well. You know, we are leading in 85% of our categories as a number one. Will our shares always hold because we had tend to have very high market shares? Probably not, but we're really interested in growing the pie and, you know, building premiumization, building categories.
So I'm very positive about it. I mean, if you, if you think about it, the second quarter, 3.8% volume growth, and yes, negative pricing, that deflationary impact will turn a bit in the last quarter of the last half of the second half of the year, I think, with inflation coming back somewhat. That's usually positive for us. I mean, the short term this year 2024. But we remain very bullish about the medium term for India.
The other big opportunity that everybody's talking about is the beauty opportunity in India.
Yeah.
You know, it's the next big growth avenue for the ten years. You've got interesting brands already-
Yeah
-in India.
Yeah.
Like Lakmé.
Lakmé, yeah, very [audio distortion].
You've also got a portfolio now-
Yeah
to potentially take advantage in India in a way that perhaps you didn't in China a decade ago, because the portfolio was very different. So the question is: How are you going to. And I know we've spoken about this before, but I'm interested in six months on, have your thoughts evolved in terms of how you actually bridge that and how you go about trying to get your fair share of that growth?
Of that growth? Yeah. I mean, as I said, I'm obviously quite bullish in China, in India, but don't forget that those more buoyant, you know, premium brands, actually we invested in China with these as well also organically and through cross-border e-commerce . We do it selectively, but that's an important growth avenue for us. Because as you say, we were not there so it's incremental. In India, you know, I want to make sure that we're not getting, gonna get behind on this one for sure.
So we've, we're actually introducing, and I need to, you know, obviously not give all information here, but we are introducing, quite a few of our prestige beauty brands. Lakmé is an important, vehicle, but also in haircare. You know, with Dove, TRESemmé, you know, these brands are four times the next competitor. So there's a lot of opportunity to continue to develop those brands that are already on the premium side. So I think we're well positioned, but we are moving in India with more bullish than what we've done in other countries.
Okay. And turning to the U.S. consumer obviously, here we are in Boston, and, you know, your U.S. business is in, it looks like it's in pretty decent shape. Are you, however, seeing any areas of trading or any hotspots where promo spend is spiking or channel shifts you'd call out? And do you think that pricing in your business in the U.S. could actually turn negative? Because obviously, it did roll a fair bit in the second quarter.
Yeah. No, I mean, we're not projecting negative pricing. So let me be straight on that. If you look at the US, there's three, I would say three businesses. You know, the first one is the prestige beauty part. There we absolutely do see slowdown, so where we were growing that for many quarters, double digit, it became single digit in the first half, and it will be at best that in the second half from what I'm seeing today, so there, we're really seeing slowdown. At the same time, our health and well-being business, you know, led by brands like Liquid I.V., Nutrafol, Olly, is still growing very strong, so I feel that there we still have runway, and probably they are a bit more, bit closer to where the consumer sentiment is today.
Yeah.
If you look at the core business in the U.S., and I talked about Dove already. Look, we're seeing the consumer, as I talked, you know. They continue to trade up actually on that for a long time, because these higher-end deodorants spend has gone up for a long time. The same on body wash. We see it slow down, and I think we're well positioned, but I you know, from what I see, the U.S. consumer, but probably not on the top end but they are still spending.
Okay. Maybe can we move to the foods business, and nutrition? I think nutrition returned to volume growth in Q2. How do you see sort of Hellmann's and Knorr performing f rom here? Because clearly pricing has been very high, pricing is rolling, volume is clearly key. You've got a new head of the division. There's cleaning up to do. So maybe just your assessment of how you're feeling about the nutrition business.
Yeah. So our foods business, I like to call it foods because I've, you know, I find it more a foods business than a real nutrition business. But, the nomenclature will change at some point.
Okay.
But if you look at the foods business, you know, I'm actually very happy with that business as part of the company, because if we're capable to streamline it further to its strategic core, and the strategic core, for me, there are four blocks. One, which is led by Knorr, and that's cooking aids, and Knorr is about 70% of that vertical.
Second, condiments, led by Hellmann's, about two-thirds of turnover. Third, Food Solutions, which is the business-to-business angle, mostly in China and Asia, and they only do Knorr and Hellmann's. You know, so there's a lot of leverage there and a lot of innovation as a result.
Yeah.
And then number four block is our nutrition business in India. And yes, then we have local brands, et cetera, et cetera. So I expect some, you know, over time, some further pruning and focus on those four key blocks. They are accretive, they are disproportionate in cash generation for the, for the group. And, you know, we can, you know, we can clearly leverage innovation by rolling it out across many geographies. So I feel good about that business but it needs strong focus and strong execution in the months to come, and I know Heiko is behind this agenda.
Okay. Ice cream . Why doesn't a JV or a sale create more value than a demerger or an IPO? I would've thought it brings proceeds in the door immediately. You know, the margins are clearly still quite low. Top line is still not being fixed in Q2. But I'm just, you know, where are you in terms of sort of carving out the ERP system?
Yep.
'Cause I imagine that's quite a big chunk of work within the organization, and my understanding is you're running it as like a parallel process. But when I look at the numbers, it would seem to me that a JV or a sale would actually make more-
More sense
... sense. I know it gives you certainty to say that you wanna do a demerger, but in terms of if you had a preference?
Yeah. Well, you know, I mean, we made a strategic call on the ice cream business that we felt it's a distinct business model. It's different, as i, as we mentioned before, and I know it's repetitive, but it's frozen, the rest is not. So, you know, from a go-to-market, different. It's seasonal, the rest is not. It needs a higher capital expenditure than the rest of the group. But it has a very focused brand portfolio. On a relative basis, we have the most premium brands in the category in ice cream, and the most global brands. So I feel this is actually a very good business. It's a, it's a very strong business, and it can stand on its own.
Yeah.
And it needs to stand on its own to flourish and to grow faster. That's, that's very much what I believe. And the route that we have, you know, the route that we're taking, I think is good for shareholders because they can benefit from that standalone nature of that, of that group, by holding shares in, in that company, and I think it would be It's a higher value creation route. That's number one. Secondly, it's a, it's a route that we can control as you say.
And the other route, it takes more to tango . As we said, we're open for other options, and I remain open for other options, but we are absolutely determined now, you know, to push to push this one through towards the end of 2025, and we're well on the way with the disentanglement of systems. And, you know, I would say at this point, we're really on track in doing that. I would've liked operating performance just to be a little better. It's probably a bit of delay, but I feel we are making those improvements.
And I'm still very much there, and I think I said it to you, that I expect 2024 to improve versus 2023, on all metrics: top line, Gross Margin, Operating Margin, and Cash Delivery, and I, I'm still convinced that we're gonna get there for the full year.
'Cause you're still saying that the trading performance, it sounds like you've done a lot of work, but the trading performance still wasn't great in the quarter. I know the weather was poor. China, you called out ice cream as well.
Yep.
I think it was a factor. So what is Peter ter Kulve sort of near-term priorities in terms of you just need the sun to shine, or...?
I mean, I was smiling because I hate to say that the weather was not good. You know, but it actually, the weather was awful in June in London.
Yeah.
In Europe, well, so it wasn't great, so that didn't help in the second quarter, but I also felt that the operating performance in ice cream came, you know. We made a lot of improvement, but probably a little slower and one quarter slower than I had hoped. But y ou know, we are seeing fundamentally strong improvements. And when I talked about share, you know, our market shares in our main geographies, particularly the U.S., are positive. We're also improving market shares in Europe. So again, I feel that by the end of 2024, you will, you know, I'm still convinced that we are improving ice cream essentially in every metric and, in most operating metrics as well.
China has been a tough situation. You know, the local competition very strong, but pipelines were extremely full. You know, distribution channels record number of inventory days. We looked at it and said, "Hey, we're not gonna participate in that with all its negative consequences," took a step back, cleaned the business, and now we're moving forward, and I think it's on a firmer footing now.
So, I'm moving around here, but prestige and health and wellbeing. I mean, the thing for me that was interesting is you've delivered the 14 consecutive growth, 14 consecutive double-digit growth in that division-
Yep
... despite the fact that prestige slowed down significantly-
Yep
... in the quarter, so therefore, the health and wellbeing part must be flying. So you've got Liquid I.V. that is being rolled out, but you've also got K18 is coming into the portfolio.
That's prestige beauty.
Yes.
Yes.
But you've also got Nutrafol-
Yep
... as well. So can you maybe just talk a little bit about Liquid I.V.? I see it in the, over there. It's flying off the shelf.
Yeah.
I'm not sure if a hangover cure is
Well, I mean...
But it's doing really well. I've seen in the UK, you've got a sugar-free version.
Yep.
So can you maybe talk a little bit about how you are gonna get the most out of those two particular brands of Nutrafol and Liquid I.V.?
Yeah. So for, I mean, you know, we manage two verticals globally, right? So first is prestige beauty, and I think the play there, if you take a step back, if you look at prestige beauty, we're focusing more on the bigger brands.
Okay.
You know, Dermalogica, Paula's Choice, and scaling these brands across the globe. Essentially, I mean, those two, K18 is a great example, where, you know, it's ahead of the business case, so that's good, but it's scaling already internationally quite fast. So that's what we want to do there, bigger bets, behind a few brands. By the way, in the Power Brands, there's four brands already of that part in there. Then health and wellbeing. You know, health and wellbeing has been indeed the success behind Liquid IV. Nutrafol, which we called out in terms of growth, in the first six months it grew 40%. That's really strong behind the subscription model. And we're expanding from hair now also in skincare, so a beauty from within concept for skincare.
We're very bullish about that, and Olly remains strong, but the growth of Olly is mostly in China, so also here, it's scaling those brands, and we're not gonna choose many . So we choose Liquid I.V., and we choose Olly, to scale them in big markets. So, Olly in China, Liquid I.V. we're rolling out in Canada and then the bigger European markets. So, you know, that is what we can offer, of course, to those, to those brands.
And at some point, we need to bring them to the world, So because otherwise why would they become part of, become part of Unilever? So, you know, I think prestige will be under pressure a bit for, for a while here, particularly in the U.S. I believe for the next two, three quarters, you will see good performance on health and, you know, health and wellbeing overall.
Yeah.
I'm not promising another consecutive quarter of double-digit growth. I mean, that's a bit a t some point, that will be hard to do.
Lower big numbers.
But you know, selective internationalization, bigger choices behind which brand to really grow-
Yeah
... and continue to refresh the portfolio.
But the other thing that's interesting is that in parts of the U.S., you have high price points. So you mentioned U.S. deodorants and U.S. skin cleansing which historically, Unilever's wheelhouse would be like a price index of 80 to 120, 130. But some of these are growing at price indices of three- 400 . And we've talked about it a little bit previously, but how do you go about trying to access that kind of growth? Can you take prestige brands down? Can you bring, you know, other brands up or do you need to buy new brands? 'Cause that could happen in other markets, 'cause we're seeing a polarized consumer, super premium value.
Yep.
Normally, people think of Unilever outside of prestige as more like a mass market consumer in terms of the DNA of the company.
Yeah, so first of all, you know, premiumization as a concept is something that is very important in the growth action plan. So when we talk about, you know, market making, and when we talk about multi-year innovation, it is, in a way, it is premiumizing, but it comes in different forms. So if you think of Unilever going forward, and the bigger bets, and the strong focus that we will make, the strong focus that we will exercise is you premiumize in large markets like Brazil, like you talked about with Dove, you know, in dermacosmetics. And there, we are capable to premiumize those brands into, you know, categories that I. You know, skincare, face care, and so forth.
We're premiumizing in India in laundry by going into a liquid, from powder into liquid, and doing that decisively. In developed markets such as Europe and the US, yes, we want to... You know, we can premiumize brands like Dove, which we are doing. TRESemmé to styling and treatment, solutions that we borrow from the prestige beauty segment . But I think we also need to accept that in some price tiers, our brands were not playing.
Sure.
You know, people were quite hung up about it, and shouldn't we do this? Hey, we have a good prestige beauty business. It's still small, but it's or on a group scale, but hey, growing. It has been growing. That's good. We have brands that we can continue to premiumize up to a certain price point, but are very strong. I talked about 10% growth of Dove in the first six months. Hey, maybe you miss a certain price segment, but I'm okay with that, as long as you grow, as you do the right things for the for your existing brand portfolio.
I've got to ask you about ESG and particularly around plastics, because it's one of your four pillars.
Yep.
Do you think there's gonna be a legally binding plastics treaty this year? And if there is, do you think it will have teeth? It sounds like you're quite active in this area. What do you wanna see from that agreement? Any kind of update that you can share? 'Cause it sounds to me like Unilever's one of the companies leading the charge in this important area.
I'm co-chair of the Global Business Coalition. It's a coalition that includes more than 200 companies pushing governments to get to a global plastics treaty. You know, I think it's tremendously important for our sector because our sector is a big user of plastics, and we simply have to make progress, you know, to, for our own credibility, and of course, you know, to manage externalities that are simply not right.
You know, it's just, you know, better for the planet to take them out. I am cautiously optimistic that there will be a treaty. I went to the previous negotiation round in Canada. The next one is in Korea, and now we're managing in between to see how far we're gonna get. A treaty has to be binding because otherwise, it doesn't make sense. You know, you have to have a binding agreement. In the binding agreement, you have to have rules around the design of packaging.
You have to have rules on things like hazardous chemicals that you should not be part of packaging material. And you should have clear design, you know, clear rules around recycling and what we call EPR, so extended producer responsibility, but it means, what is the role that companies need to play in markets in the whole recycling system?
You know, I think we are ahead of the game as a company. You know, we are reducing our virgin plastic now by 18% versus 2019. That sounds not much, but actually we're quite ahead of the rest. The problem is, with voluntary action, we cannot make more progress. We can't. We need the system to cooperate: rules, regulations, recycling systems, et cetera, et cetera. So I'm cautiously optimistic, but we have quite a bit of, quite some way to go before we're getting to a real plastics treaty. By the way, the plastics treaty will be. I just want to say, for all governments, it will be good for business. It's good for investment.
Yeah.
-and it's good for the planet. So, hey, this is a win, win, win. But, yeah, we need everyone to play.
That's very interesting, and watch with interest to see how that develops. The one thing I forgot to ask you earlier, I was going through my geographic tour, and, of course, the European question. And, you know, having followed Unilever a long time, it's-
Yeah
... it's been a, you know, one of the Achilles heels. We were seeing progress in Europe i t seems like you're premiumizing Europe and you're, you know, pushing, you're executing better in Europe. Is it just the categories are getting a bit better? It seems like you're being promotional in some areas. Can you just give us a sense of Europe? Do we still see sequential improvement in Europe from Q2 into the back half into next year?
Yeah. You know, first of all, on Europe, I mean, when I joined the company, you know, we had three geographic priorities, which was US, China and India. And there, we did make a change. So we said, "Hey, we run the company through five global business groups, and if a group, personal care or nutrition," I mean, both of them, "if they have a significant presence in Europe," and that means both are exposed to more than 20% of their turnover to Europe, "hey, Europe is important." You can't make your algorithms if you have 20% underperforming. It just doesn't work.
Yeah.
So first of all, we have increased our attention to Europe by. And by the way, the same on home care. By developing, again, scalable innovation that builds categories and therefore works with retailers to do so. The best example, I think, is the introduction of Wonder Wash in home care, that we're now rolling out across Europe. And we're doing the same. We're introducing whole body deodorants in Europe as a first mover under personal care. We've been working on plant-based mayonnaise and different variety, more, you know, spicy mayonnaise in nutrition. So we are developing European specific, but still very large and scalable innovations, and I feel that we have a good pipeline for the next year. So for me, Europe, it's not a lost continent, you know? In CPG, you can win.
Yeah.
Yes, it's a share game, but you can build categories if you do it in the right way, and we will continue to play in Europe and in those areas where it's a significant part of our business.
I think we're on the buzzer, Hein, so I think we're gonna leave it there. We're gonna do a quick breakout with Hein next door. So if you'd like to ask Hein questions, please do join us. Thank you.
Thank you.