Okay. Thank you, Neil. Thank you, Nate. Welcome, everybody, on the webcast, which I hope everyone's now on, if the technology's working. I am sure it is. Let me just walk you through the agenda before we start. We have two days. We are starting this morning with Alan and Nitin giving us an overview. After a break, we have Marc talking about the supply chain. We move into divisional pieces, starting with Beauty & Personal Care and Sunny. In the afternoon, we will have Foods & Refreshment and Home Care. In the middle between that, we have Jostein Solheim, who looks after Foods & Refreshment here in North America, and he is just going to give a little quick teach-in on the new marketing capability before we go into what looks like a two-hour lunch break.
You could make it a two-hour lunch break, it's not intended as that. There will be optional opportunities to go and visit our digital hubs, the Foods & Refreshment hub, and the BPC hub. Also, there'll be some demonstrations in the big marketplace here. Make use of that two hours. There will, however, be food, which will be served by Unilever Food Solutions, who Hanneke will talk about this afternoon. Then we will end the day after the divisions and after the break with Graeme, before we have transfers to Manhattan Manor, for dinner in the evening. Tomorrow, we'll start with two geographic presentations. Amanda will talk about North America and then do a little spotlight on e-commerce. Rohit and team have come over from China, will do the same for China.
Most of the rest of the day will be on rotations. We have three rotations, one with Leena Nair talking about people with purpose. Richard Slater, Chief R&D Officer, talking about plastic and plastic packaging and what we are doing in that space. Fernando Fernandes, who is our EVP for Latin America, will be talking about how you work in a tough market. We like a crisis in Unilever, and Brazil has been like that for a few years. He is just going to talk through how we manage that kind of thing and how we come out stronger. Then we will be ending tomorrow with Alan and the exec taking Q&A, before Alan does some closing remarks. That is through the full agenda, and the normal agenda. However, I imagine that everybody has noticed that we made a very important announcement this morning. Before we get into that main agenda, could I ask Marijn to come up and take the stand?
Good morning. Thanks, Richard. Good morning, everybody. Welcome to Englewood Cliffs on a beautiful, sunny fall day in New York. I would just like to comment on the press release this morning that you have seen, that Nils Andersen is the new Chairman at Unilever starting today. I will be stepping down and give you a little bit of background, just a minute on that. I have been, with a lot of pleasure, three and a half years Chairman of Unilever, coming off my Bayer CEO assignment in April of 2016. I started a boutique investment and advisory firm two and a half years ago called Novalis LifeSciences. It has turned out to be something I'm very passionate about and something that has been growing. I have external investors now in a fund and raising a new fund next year.
Lo and behold, it's become more than a full-time job. I've been thinking about this over the last months in terms of my responsibility as chairman of Unilever, which is not a small responsibility and also quite a time commitment. I've decided that it's better for me to step down. I'm going to continue as a regular board member at NED, but no longer as chairman so I can focus on what Novalis LifeSciences is doing and grow that firm. There's a website if you're interested. It's essentially a firm that invests and advises life sciences, biotech mostly, companies that are in the phase of beginning to get revenue.
After seven, eight years when an invention has been developed to the point that it's a sellable product or service, there is a commercialization strategy or a monetization of the company strategy, and that's the point in time growth investing of Novalis. I feel that the company is in a very good place. A very important moment, of course, was the transition from Paul Polman to Alan Jope last year. Alan has had a terrific first year. Behind him, the management team and Alan are working beautifully together. You'll hear this over the next few days. In that sense, it's a good moment to make a decision like this.
Also, Nils has been on the board since 2015, and I've gotten to know Nils as an extremely intelligent and constructive Board member who supported the Chairman very much so and very, very keen on doing the reverse for you, Nils. With that, thank you, all of you. Unilever is a great company. You will see that again the next two days. I would like to ask Nils to come up and say a few things and introduce himself. Thank you. Please.
My name is, as you guessed probably, Nils Andersen. I would like to start my first speech at Unilever by thanking Marijn, not just for the introduction, but Marijn has been chairman of the company in three and a half years, and those of you who followed the company in that time knows that it's been quite an intense period. Marijn, very early in his chairman period, had to fend off an attack from Kraft Heinz, which we thought was sort of abusive. He did that very well, leading the board during that period, and was also part of the resetting of the strategy, going for the increasing of margin strategy that we continue to pursue.
On top of that, Marijn led the change of CEO, which is no small task in a company of the dimensions of Unilever, and he did also this in a very, very good way, and we ended in a good place. Thank you to Marijn. You've done a great job, and we look forward to continuing working with you, and thanks for your support and friendship. A little bit shortly to my background. I've been 25 years in Carlsberg, or other sort of nearby fast-moving consumer goods industries. After 25 years in that business, I was brought to Maersk, where I was nine years. When I stepped down at Maersk in 2016, I decided to go plural. I've been advising and doing chairman roles for private equity and a number of listed companies.
I've been on the board of BP, I'm still on the board of BP, by the way, and chairing the board of AkzoNobel, which has also gone through a major margin resetting exercise over the last years. My plan is now to focus obviously the time needed on Unilever. I will step down from BP. It was announced this morning. I will step down also from the role as chairman of the Salling Group, which is one of the largest retailers in the Nordic region, all with effect early next year. I'm really super excited about the role. I think there are times in your career where you can afford, even as a businessman, to be a little bit emotional. Unilever is a tremendous company with great brands, but first and foremost, global coverage, fantastic people, and some fantastic values as well.
Leading the discussions on business responsibility in a really remarkable way, which was also what attracted me to the board back in time. I'm very enthusiastic with the opportunity to work with the team and continue to develop Unilever. I also look forward to interacting with our shareholders and investors, and we will get in contact with you over the next months so that we can start having a dialogue. I'm a strong believer in that dialogue because you spend a lot of time analyzing our company. You sometimes know more about it, or at least from different angles than we do ourselves, and it would really be a waste of all your effort if it wasn't put to use also by listening to it. Thank you for turning up here today. I look forward. I'll be the one learning the most probably during the day or two days, but I look forward to that, and I look forward to chatting with you during the conference. Thank you very much, and off you go.
Okay. Thank you very much, Marijn. Thank you, Nils. With that, let's get started with the normal agenda. Alan, over to you.
Richard. Are we live? Yes. Good. Well, thanks guys for the safety moment. It's always a bit of a thing to sit through such a intense safety moment. One thing you should know is that there's a strong correlation in our business between high performance on safety and high operating excellence and good business outcomes. This is something that matters intrinsically, it's a very good predictor of performance in a well-run business. Welcome again to our investor event for 2019. We've got an action-packed couple of days. Our goal is for you to get a look under the hood of some of the high priority things that we're working on. There's a strong digital theme throughout.
Although we'll use the fact that we're here in the U.S. to give you exposure to our U.S. business, we've also brought all of our global divisions, China and Brazil, to come visit. Of course, we start this morning with a very significant announcement, and I do want to just use a few seconds to say a few words about our chairman. First, my sincere thanks, Marijn. For the last couple of years, Marijn has been a source of significant mentorship and advice for me, you can imagine that. Of course, since January, we've been working very closely together. I can share with you that Marijn has brought a very skillful blend of counsel, but also challenge to his role as chairman. Marijn, I'll miss our close working together, but glad we still have you on the board.
I wish you all the best with Novalis LifeSciences. We discussed it many times, including a couple of the investment firms just last night. I'd encourage you to ask Marijn about these businesses. They're extraordinary. I'm sure it's going to be an exciting future with Novalis LifeSciences, as well as being on the Unilever board. Nils, congratulations. Not sure anyone's actually said congratulations. It's quite a thing, becoming Chairman of Unilever. I've already enjoyed our work together on the board, I'm looking forward to tapping your experiences and perspectives as we work more closely in the future. Getting back to our kind of normal order of business, please note our usual safe harbor statement. As many of you will remember Next. There we go. It was almost one year ago that I was invited to become Unilever's Chief Exec Elect.
That was eight hours before it was announced to the market, two working days before our last capital markets day, and 16 working days before I took the reins on January 1st. The first order of business for me was to listen carefully to the multiple stakeholders in our multiple stakeholder model, including extensive shareholder engagement, and more on that later. We've made some important changes in the last 10 months, some visible to you, others less so. We began, though, with some changes to the top team. We brought some talent in from the outside. With it, a combination of fresh thinking and some stronger capabilities in key areas. Sunny and Richard, who are both here today, are already making a great contribution. We also promoted two of our most consistent performers, Sanjiv and Peter.
It's fair to say South Asia and Home Care have remained high-performing businesses under their leadership. Of course, we made some important changes within the team. In total, seven out of 12 of the Unilever exec are either new in their roles. We know that you appreciate spending time with our senior team. Most of the exec are here for the next couple of days. You'll be hearing from them, you'll have a chance to chat to them, but also some of our other senior team from around the world, so enjoy that. This pattern of refreshing and promoting is being repeated at a more accelerated rate through the other ranks of the company. In other words, we're bringing in fresh talent and stronger capabilities in areas which we've prioritized and where our need is greatest, and we've promoted some of our most promising and growth-oriented internal talent.
Along the way, I've been struck by the desire and appetite amongst top people in the industry to come and ply their trade at Unilever with all the growth opportunities that we have and with the strong purpose-driven ethos that pervades our company. Our employer brand is a major asset, and not just with undergraduates. We think we've strengthened the top team and the layers just below. We've also made changes to the organization itself. We've established the role of Chief Operating Officer, and we've de-layered the regional clusters. That will give us a tighter operational grip and the ability to clearly align our markets with the strategic agendas of the divisions. I'm more convinced than ever that this is the right model, putting back in a Chief Operating Officer.
Nitin's organization has only been fully in place since May, we're only at the early stages of reaping the organizational dividend for Unilever that this markets organization can deliver. I've absolutely no doubt that we've got the right person for the job. Nitin will talk to you shortly about what we're up to in our markets organization, after that, you too will have absolutely no doubt that we've got the right person in the job. Alongside people and organization, we have refreshed the vision for the company. We've always had, as you know, a passion for growing our business sustainably with a long-term multi-stakeholder model. Our vision is simply that we will be the leader in sustainable business globally. We mean sustainable in the broad sense of the word, economically, environmentally, and socially.
Of course, we aim to demonstrate once and for all that our purpose-led, future fit model drives superior outcomes, superior business performance. I think in the last eight years, we have demonstrated that it's possible to decouple growth from environmental impact. I think we've demonstrated that our purpose-led brands do grow faster and are more trusted by consumers. We've demonstrated that Unilever's purpose-led approach to business is a magnet for the absolute best talent. Since April, inside the company, and this is a bit you've not been exposed to yet, our sustainability strategy and our business strategy no longer sit separately, but they're now one integrated business and sustainability strategy. I don't think any issue exemplifies this better than the current debate on plastic packaging.
As you know, the tide may have turned on single-use plastic, but unfortunately, each passing tide still washes in a mountain of plastic debris, too much of it with Unilever's name on it. There is a place for plastic. It's safe, it's highly cost-effective, it's efficient, and it has a much lower emissions footprint than many of the alternatives like glass and aluminum. The place for plastic is in the economy, not in the environment. There's no bigger environmental issue for consumers right now, we know that. Frankly, if it's a consumer issue, then it's also a business issue for Unilever. That's why we announced last month some of the most stretching goals on plastic that any company in the industry has announced. Our whole business is hugely motivated by this, and we're aligning against it to give consumers what they want.
You'll get a flavor over the next day of what this plastic commitment really means. We've also this year completed our move to using 100% renewable electricity in our operations worldwide. We announced the move on five continents a few months ago. We now only have two states left to go in Australia to be 100% renewable electricity in our operations. Again, that puts us way ahead of the rest of the industry. Marc will explain more about this and some of the economic benefits later. In this refreshed vision, we've set out to be the global leader in sustainable business. I think there's two dimensions I want to draw your attention to.
The first is that the big corporate commitments that we make are going to be quite tightly drawn, ensuring they're more directly within our sphere of business and our ability to influence system change. Plastic is a great example. We're not out to single-handedly address all the world's sustainability issues. We are out to ensure that Unilever remains relevant for tomorrow's world by addressing the systems that most directly affect our business. Secondly, our brands are being put front and center. I made it very clear in the business that every brand has to be able to demonstrate how it contributes to this vision for Unilever, leveraging purpose as a source of competitive advantage as so many of our better performing brands are already doing.
Our portfolio of brands will be given time to do this, but there will come a moment when we'll become impatient with brands that have been unable to demonstrate how they contribute to Unilever's purpose. I've really enjoyed the chance to get into the business, rediscover parts of Unilever I haven't been exposed to for a long time over the last year, to engage meaningfully with our teams, many of our partners and our stakeholders. Already this year, I've had the privilege of visiting our U.S. business, India, China, Russia, five of our Southeast Asian markets, Latin America, multiple countries in Europe. Just two weeks ago in Egypt, and next week I'm off to Africa. I've seen tons of examples of Unilever at its absolute best.
It's also helped me clarify in my own mind where we have the opportunities to go further and to raise the bar a bit. I've thoroughly enjoyed the many meetings that I've had with investors and indeed the knowledgeable analysts who have got such a scarily deep understanding of Unilever. That was a priority for me. In fact, I've seen over 100 investors in Unilever, many multiple times. I wanted to do that. I've listened carefully. I've learned a great deal from the interactions. I hope you found the conversations to be open, frank, very much a two-way dialogue. That's a practice and it's a rhythm that I want to maintain. I want this to be a very open, two-way, straightforward discussion. As I reflect more directly now on Unilever's performance over the year, I think it's been okay, good in some places.
As we have made clear time and time again, growth is our priority, and I'm not happy about where we are right now. It is not my goal to remain in the bottom half of our multi-year range. I am clear on some of the things that we need to do. What I'm going to do in the remaining part of this talk is to set the approach that we're following and the steps that we're going to take. Let me say right up front that I'm convinced Unilever has the potential to grow faster. There's simply more that we can do with the business that we have today. We have set out that we believe there are four levers to accelerating growth.
Shifting our portfolio, moving into higher growth segments, leveraging our growth geographies more fully, designing for and winning in high growth channels, all underpinned by putting purpose at the center of what we do. Our view remains that these are the right four levers for the long-term sustainable growth of Unilever. I have heard criticism in some parts that, well, these are just the fundamentals of a well-run consumer products company. I'll take that criticism. That's exactly what we intend to be, a well-run consumer products company. There are opportunities to improve in other areas, and I'll come onto those later. Let me just very quickly talk about these four. The first, of course, is portfolio. We've been moving our portfolio into higher growth segments, and we do that through this framework of innovate, develop, acquire and dispose.
Here you see, for example, the clinicals range on Rexona is simply breakthrough technology, delivering higher performance, accelerating growth, and reinforcing our leadership in this key global category. Developing new brands such as Love Beauty and Planet, now Love Home and Planet in home care too, and well on track to be over EUR 100 million of turnover this year. We've acquired some high growth brands such as the wonderful The Vegetarian Butcher. I hope you saw that in the news yesterday about what Burger King have decided to do with The Vegetarian Butcher. It's a beautiful example of putting our foods portfolio on the latest hot trends. Of course, we will continue to dispose of lower growth brands and segments, and the biggest of these, naturally, has been spreads. We enjoy a lot of discussion and debate on our M&A strategy.
We have done and will continue to use M&A to drive active portfolio management, acquiring businesses in high growth segments and adjacencies, and disposing structurally lower growth businesses. In the last five years, those who watch us carefully will have noted that we've acquired 34 businesses that have an expected turnover this year of about EUR 2.5 billion, and we've disposed of 14 businesses with a combined turnover of nearly EUR 4 billion. We've had some outstanding successes. Our prestige portfolio, with things like Dermalogica, Hourglass, Tatcha, is strong, it's performing bang on business case, it's delivering the strategy. Our Korean beauty skincare brand, Carver, it's on trend. We're confident about the strength of that brand, and the strategic direction, although we've had some short-term challenges with this Chinese Daigou legislation change.
If you want to get into a discussion about the Chinese Daigou legislation, very happy to do that. Seventh Generation has been successfully rolled out across the world and expanded in terms of the products that it offers here in the U.S., and we've now got Pukka Tea in 23 countries around the world. We've made acquisitions with new and disruptive business models such as Dollar Shave Club, which has delivered beyond our expectations in terms of capability and learning. We've learned how to run direct consumer businesses. We've also learned about the unique economics of these types of businesses. Dollar Shave Club is growing, but importantly, it's also making good progress towards profitability. There is a but, as you would expect, not all of our acquisitions have been as successful as we would have hoped.
I think here I would call out Blueair, the air purification business. Blueair is now growing again, and boy, we sure have some learnings. In this case, I think we moved too far beyond our core FMCG experience. Plus, we exposed ourselves to a category that's too dependent on one particular condition, i.e., bad air quality in the large Chinese cities. It's a condition that the Chinese authorities have begun to address. Very good for the people of China, less good for our sales of air purifiers. This M&A strategy has served us well, and we are still open to M&A, large and small. We'll continue to set demanding criteria, run a rigorous process, be highly disciplined in valuations. You may well notice a slowdown in the number of acquisitions going forward.
At this time of particularly high valuations, we're going to focus on the 34 acquisitions that we've already completed in the last five years, and how we can realize full value from those, including rolling out to more markets. That's one side of the ledger, but portfolio shift is also about disposals. I would like to acknowledge that perhaps we've not been as active in this space as we have in the past. We do want to be more strategic here. We know that we have structurally lower growth segments in the business, and we're in the process of carrying out an uncompromising evaluation with an open mind. There are no sacred cows, but please don't probe us for specifics in the next two days.
We won't be giving any more detail until we've completed our disciplined work, looking at what brands or businesses might fall into that category. So much for portfolio. The second lever is geography. Look, our emerging markets footprint is a pillar of Unilever that I regard as absolutely outstanding. It is second to none, and there is no doubt that as populations grow, as the middle class rises, and that trading up happens everywhere around the world, we are well positioned for growth. 16 of our emerging markets countries deliver more than half a billion EUR of turnover, and 38, which by the way, includes the 16, deliver more than €100 million of turnover per year. We have multiple powerhouses, and we have strength in depth and in breadth.
In the 60% of our market that, in our business that's in the emerging markets, we now directly cover 8 million stores through our distributor trade model, and growing, with more than 10,000 distributors. Putting 50,000 ft on the streets every day is the result of our long-term approach and commitment to emerging markets, we'll continue to invest in coverage in these types of countries. Now, as an example of continuing to invest, let me just say a brief word about one of my favorite markets, Myanmar where I was in July. We've been present in Myanmar for decades. Our joint venture with a local company called EAC was announced in 2017. It's allowed us to rapidly scale up our business, in particular, it's boosted our home care presence. We now have a EUR 140 million business in Myanmar.
We have an aggregate HPC market share of 42% in this fast-growing market of over 50 million people. I'll take a bet that Myanmar is a powerhouse business for the future of Unilever, on track to be over half a billion in due course. By the way, expanding our geographical reach isn't just about new countries. In places like India. We have a clear strategy for winning in many Indias, and most of you saw that last year when we were in Mumbai. In China, there's a huge opportunity in tier C and D cities. We're focusing on expanding our direct reach through distributors into 600 cities that make up now half of China's urban population. These new distributors that we're setting up are growing 10% on a like-for-like basis, or 25% when you include the geographical expansion. They're leading our offline growth in China.
Rohit will talk more about this tomorrow. We know we have to continue to innovate and invest to stay ahead in our emerging markets route to market, and digital is our method of securing the moat of competitive advantage that we already have in this space in places like India, Indonesia, and Brazil. E route to market, a digital route to market, is allowing us to reach more retailers and more consumers more effectively and more efficiently. Our strong physical reach has always been a competitive advantage, and this new digital route to market is how we're going to preserve and strengthen that advantage. In fact, our Compra Unilever business in Brazil has transformed our route to market there. We've now got 184,000 retailers that generate EUR 600 million of annual turnover on the Compra platform.
Of course, we get the new gold, which is lots of customer data for our and other products. Fernando, who's with us here, is going to talk about that tomorrow. The third growth lever after portfolio and geography is channel. I've been talking a little bit about channel just now, but sticking with the theme, it's clear that in a hyper-fragmented world, it's important that we preserve the strength we have in the big channels of today, but also be clear about our view of the winning channels of the future: e-commerce, out of home eating, health and beauty, and professional cleaning. Each of these channels has got quite unique characteristics, and that impacts the offerings that we make, the capability and service infrastructure that's needed for success, and it's also a space where we need to increasingly differentiate our go-to-market approach by division.
What do I mean by that? Well, BPC needs access to beauty stores and pharmacies. Foods needs access to out-of-home channels. Our Home Care business needs access to where small businesses and large businesses buy professional cleaning products. All our divisions need access to e-commerce, where we continue to grow over 30% this year. It's a very important channel for all our divisions. In fact, we expect somewhere between a third and a half of our total growth in the coming years to come from e-commerce in its various forms, B2B and B2C. That's why tomorrow, Rohit and Amanda will bring this to life for you as we review our e-commerce development in both China and the U.S. While we have a lot of initiatives and opportunities to leverage channel as a source of accelerated growth, there's more to do, especially in product design.
We know what consumers and customers want in these channels, and we now need to ensure that our portfolio, our products, our packs, our variants, and our price points are carefully designed to service the needs of the channel. That's why I've called out design for channel as a major priority for Unilever in 2020. The fourth area, purpose. Let me contextualize this just by sharing a little bit of new data. It's a piece of research done by GlobeScan, and it shows, once again, that Gen Z and millennials are likely to be loyal to brands that are making a positive impact in the world. You'll see that older consumers are also interested, less so than millennials and particularly Gen Z, but still interested. We see in the recent Extinction Rebellion events that activists come from all age cohorts.
This is simply another string in the body of evidence that we have that purpose is a driver of performance. Our brands can play a very powerful role in catalyzing positive change on issues that really matter to people. It's simply our way of ensuring Unilever's brands remain relevant for generations of consumers for many years to come. We've now got tons of examples, not just Dove and Lifebuoy, and you'll be hearing later from Jostein, who used to be the head of Ben & Jerry's, our most activist brand, who's now bringing the purpose-led approach to our brands in food and refreshment here in North America. Yes, getting it right on portfolio, on geography, on channel, and on purpose may be the basics of consumer products, but they're basics that still have a lot to give Unilever in our drive for stepped-up levels of growth.
I mentioned earlier that there are areas where we've concluded that we need to improve, areas of the business that we can raise our game. Let me just spend a few moments on these. There are areas where we need to raise the bar, marketing excellence and innovation, and areas where we need to go further than we are today, fuel for growth and in our organization and culture. A short word on each. Marketing is and should remain what Unilever is most famous for. A powerful vision for the company has to be supported by marketing excellence and brilliant execution if we're to unlock the growth potential of this business. Keith Weed, our outgoing Chief Marketing Officer, has left a very good legacy, both in the performance of our brand communication today and in the capabilities that we're building for tomorrow. Our marketing is good, often excellent.
We won 17 awards at Cannes to place third overall. We're top-rated in both the Effies and the WARC Report, and it confirms the effectiveness of our advertising. Marketing is changing quickly. The marketing abilities of yesterday are no longer fit for today, far less tomorrow. We must ensure that the propositions of our brands are rooted in new, deep consumer insights and have purpose embedded in them. We're shifting, frankly, from producing advertising to producing content, often using our in-house studios, U-Studio, and we're working with huge sets of data in our digital hubs to target consumers more precisely, working with new media partners, using technology at scale, and it's all happening much faster with way shorter response cycles.
Jostein is going to describe some of the tools we put in place, and you will have a chance to visit our North American digital hub, over lunch. I really would encourage you to study that, ask questions. It's a far cry from the old world of the brand manager. It doesn't even resemble the marketing departments that were around even 10 years ago. We have a fantastic data-driven marketing capability. We've got 1.9 billion digital data connections. We've now run more than 1,000 campaigns through the digital hubs. By the end of the year, we'll have 38 of the digital hubs live across 30 markets, and that will cover 90% of our digital spend. Excuse me. Our people data centers are now in 30 countries and have handled 7,000 internal market research briefs. These are operating at massive scale.
Gaining insight from our own in-house expertise is saving us a huge amount of money, but much more importantly, are dramatically speeding up how quickly we can access consumer insight in our brands. U-Studios, our in-house creative agency, is specializing in digital and social advertising. They've now created over half a million assets and are able to deliver really top-class digital creative work faster and at lower cost. Despite all of these proud achievements, I've seen that in many places, we have to raise the marketing bar. For example, while our penetration overall is growing, it's not the case everywhere. We're renewing our focus on marketing fundamentals, on communication effectiveness, on driving distribution, on making sure we've got the right assortment at shelf.
I'm a marketeer at heart, I'm a marketeer by training, and this is an area I intend to stay close to and drive hard in the company. Innovation. This is the second area where I really want to raise the bar. Brilliant marketing also requires brilliant products. We've got many examples of fantastic market-leading innovation at global and local level. For example, I've already mentioned Rexona Clinical is an example of deploying absolutely breakthrough technology, or on Dove, where we're the first mass brand to launch an innovation that cares for your microbiome, a very hot area. In the U.S., our Talenti innovation shown here, has been one of our top-performing ice creams in the U.S. Actually, anything with salted caramel in it seems to be performing quite well at the moment. There is no substitute for product performance and superiority.
It may sound a bit obvious, but we've got data that shows that we have a 60% higher chance of growing market share when we have a superior product and a significant higher probability of strong loyalty. We've committed to having a higher proportion of Unilever's products testing as being functionally superior with more leading technology. I've asked Richard Slater, our new Chief R&D Officer, to carry out a full review of our innovation process to see how we can get faster and more decisive in our choices, being clearer on our overall company priorities, and taking a good hard look at the cost and complexity that's locked up in a tail of smaller projects that we also have in the funnel. Beyond marketing excellence and innovation, there are two areas where we've delivered strongly, but again, I want us to go further.
We've delivered a stepped-up level of around EUR 2 billion of savings every year for each of the last three years. That has to become our new minimum. I expect us to generate at least EUR 2 billion of savings in the future, year in, year out. Most of these savings are invested for growth, only when our brands are properly funded do we allow these efficiency programs to drop through to margin. To date, most of the savings have come through the four initiatives outlined here, the restructuring change program, net revenue management, 5S, and zero-based budgeting. These will continue, we need new programs that will help deliver, we can never be done with generating savings. There are always areas to target as the world changes and as our business changes.
Nitin's going to share with you in a minute our thinking about a new model for running the business with higher levels of effectiveness and efficiency. We're using the terms Grow, Power, and Run. The Grow layer is basically sales and marketing, supported by expert teams in Power, such as the people data centers, the digital hubs, real centers of excellence and expertise. Both are underpinned by Run teams that keep the business operating at absolute highest efficiency in areas like demand planning, order to cash, the basic transactional processes in the company that we want to do at lowest cost. Marc's going to talk, Marc Engel, our Chief Supply Chain Officer, is going to talk about automation, and he'll show you an example of our factory digital twins model.
There's also going to be a renewed focus on portfolio complexity, where we are determinedly going to reduce complexity that does not add value and which leads to higher cost, waste, write-offs, et cetera. As I mentioned, the savings here will go into supporting growth, though some may drop through to margin. Before you ask, we've decided that it would be inappropriate today to give any guidance on margins beyond 2020, as we still have 15 months of hard work to get through to the end of next year. I do, however, want to make clear that we will not trade off between growth and margin. In fact, growth and margin usually come together. This is the myth that needs to be bust. India has grown strongly whilst improving EBITDA by 500 basis points in the last three years.
Dove has grown at an average of 7% over the last 10 years and improved profitability by 580 basis points. As we know, our Home Care growth continues to be very impressive with a three-year CAGR of 4.5%, whilst at the same time improving profitability by 240 basis points. Rohit is going to show you exactly the same picture for China tomorrow. Of course we can and should both create value for the business, but it has to be high quality, sustainable growth that comes first. Now, on organization and culture. First, let me say a word about organization. The three divisions of Unilever, Beauty & Personal Care, Foods & Refreshment, and Home Care, they set our divisional strategies. They allocate resource, they own, craft, and nurture our brands, and they drive our innovation programs.
It's the divisions that make the choices about where we will grow and set the targets in consultation with our Chief Operating Officer for our geographies. They are different and they have different strategies. To repeat what you already know, Beauty & Personal Care's key priority is growth through delivering on-trend innovation, superior performing products, as I mentioned earlier. Foods & Refreshment is also growth focused, with a task to move into higher growth segments, higher growth channels, and higher growth geographies while still delivering margin improvement. Home Care has been our fastest growing division with its attractive geographic footprint almost entirely in emerging markets, but has also delivered strongly on its role of steadily improving margins. Even within the divisions, we need to organize according to strategy and the different needs of the different businesses.
That's why, for example, we run Prestige as a completely different division from the way we run our mass skincare business, or our out-of-home food solutions business is run differently from retail foods. We're very mindful of these differences between our divisions, and we're going to continue to ensure that the differentiated strategies land in the geographies and where necessary, we'll adapt our ways of working to make sure that each division gets the focus that it needs. Nitin is going to say more about our cell-based approach, which is one click down, and which is how we take this to market every day. We will continue down the path of making our organization reflect the inherent differences between our divisions with, for example, more of our markets having dedicated sales teams for Beauty and Personal Care, Foods and Refreshments, and Home Care.
This is something that's already happening in several geographies, and we're going to take a look at doing this more widely across Unilever. Culture. The Unilever culture is a strong one. We're a company that, as you know, treasures common decency and treating each other and our stakeholders with respect. We are hugely diverse inherently with 70 nationalities in our top 100 leaders and an increasingly gender balanced organization. In that regard, we're a uniquely human company, and purpose pervades our history, our brands, and our people. These elements of Unilever's purpose culture, being human, being purposeful, are evergreen. They continue to evolve, and they will keep up with the changing world of work, which Leen will cover tomorrow. I also want to run a business that is hungry for results, fast, agile, competitive.
We want our people to feel accountable for performance, and this is an aspect of our culture where we're leading for a step up. Leena will say more about this tomorrow, how work is changing, how we're at the forefront of many of these changes, and how we're going to increase the sense of a culture of accountability in our business. Coming back to where we started, my ambition as chief exec here is to demonstrate that sustainable business delivers superior long-term financial performance. Let me recap very quickly the key points. We've made some already important changes this year to the people, to the organization, and to the sharpness of some of our choices. The benefits of these are starting to flow through, although the real unlock will come in the quarters and years ahead.
Our refreshed vision finds expression in much more integration of our business strategy and our sustainability strategy. It's founded on a smaller number of bigger, more business-aligned corporate sustainability goals, combined with a clearer role for our brands in driving social and environmental change. Purpose is going to sit at the heart of all of our brand strategies. We know it drives growth. We're 100% sure of that. We have the evidence. These changes to people, organization, and vision are, in many instances, largely internal, but the effect is to give us a much more externally driven organization. I hope you get a sense of our greater external orientation from your own engagements in the next couple of days and throughout the year. The clear messages coming back from all the stakeholders is very matched with my own instincts.
We have an enviable reputation as Unilever, but we also have a challenge to step up growth, and that, therefore, remains our first and overriding priority. We will achieve a step-up in growth by more effectively leveraging four proven growth leaders, working on our portfolio, working on our geographical footprint, working on our channel footprint, and driving purpose in the business. On portfolio, our bolt-on acquisition strategy has served us well. We remain open to M&A, big and small, but you may see a deliberate slowdown in the rate of small deals, combined with greater willingness to look at disposals where that makes strategic sense. When it comes to the how we're going to support these growth levers, focusing on where we need to go from good to great, Marketing excellence, building capabilities to market in a transformed digital world.
Innovation, where we've spread our efforts too thinly of late, we're deliberately focusing on more product superiority and being a little bit more top-down in our overarching priorities. Fuel for growth, continuing to generate savings at our stepped-up post-2017 rate of over EUR 2 billion a year. On organization and culture, keeping all that's good about a divisionalized Unilever, letting the divisions operate autonomously. Where it will drive better results, ensuring that we have an organization and culture that is faster, more agile, more performance-driven, and more accountable. With that, let me say thank you. Thanks for listening. I think we've got a few moments for one or two questions. Richard, where's Richard? How are we doing on time?
Yeah, we have time for questions.
Okay. At this point, you can ask questions throughout the two days. There will be a formal Q&A session at the end of tomorrow. If there's anything that you've heard that provokes an immediate inquiry, objection, or grievance, bring it on. Yeah. Can you just wait for the mic because of the.
Yeah, sorry.
broadcast.
John Ennis from Goldman. I had a question on your portfolio strategy comments. When you break down the four components, you talked about innovate, develop, acquire, dispose, and you effectively suggested that the acquire component might take a bit of a backseat going forward. Of the other three, which one would you highlight as being the biggest driver of the growth improvement going over the next maybe three years? On the disposal component, can you maybe break down some of the criteria you're looking at or what you're analyzing, and how that differs maybe by each of the regions?
Yeah.
Are you screening for growth mainly in BPC? Are you screening for low margin?
Yeah
businesses in Home Care?
It's a very well-articulated question. I'm glad you asked it the way you did. We've become preoccupied with M&A as the biggest driver of portfolio. I guess what I would describe is we're into a period of where we want to digest the work that we've already done on M&A and focus on getting into more markets and leveraging the full potential of the businesses that we've bought. It won't take a full backseat, so I wouldn't use that example. We're definitely going to continue to make acquisitions when they meet our rigorous criteria. Our M&A team will continue to be busy boys and girls. They will have a stepped up proportion of their time working on disposals, and the headline answer is structurally low growth. Anything that's structurally low growth, that will be the number one criteria that we would look against.
Margin is something we can manage within a business, sometimes the headwinds are just too much. If you look at spreads, for example, the acquirers of our spreads business have done an absolutely fantastic job. The focus that they've brought has brought a tremendous step-up in the performance of that business. Even with that, it would be dramatically dilutive to Unilever. Growth will be the main lens that we look at disposals through. Your real question, the best question is which of those are going to drive the biggest step-up in growth? It's going to be innovation, because that's what's going to flood across our core business. A great innovation on Dove and a great innovation on Knorr.
The news that you saw yesterday, we've acquired The Vegetarian Butcher, and then we've pulled off a magic piece of innovation, to show we can deliver a better product for Burger King in Europe, and that's going to be a big number associated with that. Innovation on our core business is always going to drive a tremendous impact. Thanks. Yeah. You shouldn't really be running. I told you off yesterday for not holding a handrail. That's two strikes.
Thank you very much, Alan. I have a question, I'll open with the main first, regarding the 34 brands. Obviously, they will have an incremental growth rate this year of 70 basis points. How much will be the incremental EBIT improvement? Could you give any guidance for next year, how much these 34 brands could deliver incrementally on top line and on margins?
As I said, we've got a normal distribution curve on the acquisitions versus their business case. Because growth has been and remains our top priority, the mean expected growth on our acquisition portfolio is significantly higher than that of Unilever. In fact, in the first half of this year, our acquisitions in aggregate were growing at, I think, 10%. Have I got that right? I think it's around 10%. I'm not going to box myself in with an exact, what's the next year's basis point improvement going to be. Remember that next year, spreads is in the base, not having spreads is in the base for growth.
If we say that we want a similar level of growth accretion next year, as we have enjoyed this year, that would imply a step up in growth even from what we are seeing this year in our acquired businesses. As far as EBIT is concerned, similarly, I don't want to box myself in with a full breakdown there. Suffice to say, we expect our acquisitions to improve the bottom line slightly faster than Unilever improves its overall bottom line, from an average of a slightly lower start point. Yeah. We have probably got time, Richard, for two more? Okay.
All right. Thank you. Hi, Alan. When Paul Polman came in, his big message was doubling sales to EUR 80 billion. We always saw that as setting the aspiration for the organization to look at growth. From what you said, if you take the net movement of disposals versus acquisitions, it feels like you're happy to take this business down to, let's say, I'm making a number up, but EUR 40 billion. Just to ask the question, is EUR 50 billion plus and going up a key headline metric for you? Would you say EUR 40 billion but doing better is something you'd be happy with? Thank you.
It's amazing the creativity of the questions to try and poke at what big portfolio things we might try and do. I think Unilever operates at scale. We're a big company, and we enjoy tremendous scale advantages from that. I would anticipate that we remain a substantial scale business. To answer your question, if that meant we were a little bit smaller than we are today, for a higher intrinsic growth rate and an attractive margin evolution, I'd have no problem with that whatsoever. It's not size at any cost. I actually meant to go to you. Let's honor that commitment.
Robert Ottenstein, Evercore ISI. A little bit more of a maybe a touchy-feely type question, but I think one of growing importance, particularly given your mission of being very purposeful, human-driven company, and that is, how do you think about data and the use of data in marketing with privacy issues, with concerns of creepiness, whatever creepy means?
Yeah.
That's obviously going to be different by different culture and demography and age groups. I'm just wondering how you're thinking about that issue.
Yeah. The way we think about that is data offense and data defense. Data offense is ensuring that we build capability to use a much more targeted way of delivering messages in our marketing. That you're going to see an amazing piece of work tomorrow, this digital twins in our supply chain, it's all about data. We've made a commitment to Microsoft. We're working with them on our Azure Data Lake. Just recently we did our annual employee survey. Actually, damn, I should have built some of that into the speech because unbelievably positive results. Leena, are you talking about that tomorrow? About UniVoice? It'd be nice if you mentioned our UniVoice results tomorrow. Thank you. Here's the interesting thing. It's a very quick survey. It's about three minutes to fill out your annual employee survey. We got 92,000 responses, an all-time high.
I think it was an 82% response rate. Here's the interesting thing. Although it's all anonymized, our data analytics team were able to cross-tabulate the information from our employee surveys with their Outlook information and understand that people whose bosses. We took employee satisfaction data, Outlook data on how many emails, how much time in meetings, and organization structural data, and looked at it across the patch and discovered, not surprisingly, employees whose bosses have got wide spans of control have a higher sense of empowerment in their business. Frontline employees who spend less than 30% of their time in meetings score Unilever extremely high on Unilever responds faster than competition at responding to issues in the market. We're starting to get these amazing data pictures. That's data offense, using it for our marketing and our operations and in an integrated way across the company.
We put as much effort on data defense, and that's areas like making sure that we're as cyber secure as we can be, moving from detection, sorry. Prevention to now detection and remediation. We're all being hacked. That's part of data defense. Another part of data defense is the kind of bit you're talking about, the legalistic bit on data compliance. We're putting a lot of effort to make sure that we stay on the right side of the law and of our own standards on what we do with data. It is the responsibility of the general manager in every country to ensure data compliance in their territory. The third point is the more subtle bit on how do we use data in marketing. What we know is that the creepiness thing is funny to talk about, but it's not a real issue.
The real issue is if you can serve content that is the right content to individuals, that matches what we know about them, they absolutely love it and appreciate it. Serve me content on adventure motorcycling, I'm going to absolutely lap it up. The next time Emirates tell me that I've got a great deal on business class travel, and what a great business class product they have, I'm getting sick and tired of it. I'm getting over-served that message. It's really more about relevance than creepiness, and that's what you're going to really see that in action in the digital hubs at lunchtime. Okay? Data offense, data defense. All right, one more? Last question.
Hi, Rich Taylor from Morgan Stanley.
Hi, Richard.
Hi. Just going to your refreshed vision statement. I'd just be really interested how you landed on deciding you're aiming for the top third, and what that means. I mean, at first glance, it seems a bit unambitious. I'm just kind of interested in what your thinking is behind that.
To be the global leader in sustainable business, I think is exceptionally ambitious. There we're not talking about within our sector, we're talking about versus Patagonia or IKEA or whoever would be the other candidates. If we could be top third TSR for the next 10 or 15 years in our industry, the returns to you and the other investors in Unilever would be spectacular. Graeme's going to talk about that. We hemmed and hawed about I admit I've given you a rather qualitative presentation this morning. Graeme's, by contrast, is absolutely packed with numbers on value creation. In fact, he's going to give you the most CFO-like presentation Graeme's ever given you. I think you'll see in that that when we can deliver top third TSR for a sustained period, the value creation that comes from it will be absolutely spectacular. We don't find it unambitious, and we're not humble or apologetic about that as the quantitative ambition. Right. With that, let me wrap up and hand the reins over to my friend and partner in crime, Nitin, who's going to talk about how we take all the strategy and really land it in the markets. Thank you very much.
Thank you. Thank you, Alan. Welcome everyone. Good morning. Over the years, I've had a chance to meet many, if not all of you, and therefore, it would be good to start off with a little bit of a introduction. I'm Nitin Paranjpe. I am now the Chief Operating Officer, doing this role for the last five months. Prior to that, over the last 8- 10 years, I've played roles in first running the South Asian business, then moving on as President of Home Care, and then for a relatively short period of time, 15 months or so, I was President of Food and Refreshment. That's the background. Alan has given you a full picture in terms of what we are trying to do.
Now I'm trying to give you a little bit of a flavor in terms of what it means to be the COO, run the markets organization, and translate this vision that we have for Unilever into reality. Before I begin, a quick look at the safe harbor statement. With that, let me start. Right. Alan described the creation of this role, the COO. It took place in May of this year, and there was one specific objective. The mandate for this business was to see how we could step up growth. To step up growth in a manner which was consistent with our divisional strategies, which means we had to land our divisional strategies in every market that we went to. That's really what we were required to do.
Between May and now, we've already taken some actions, and some of those actions are about delayering this organization, flattening it. Specifically, we've delayered and flattened this organization in Europe and in Southeast Asia, where the regional clusters no longer exist. What that means is that there are more markets and clusters which report directly into me. That creates a flatter organization. It allows us to have the right conversations quickly and creates for a more agile organization, something that is absolutely important in the times that we are living in. What you see out there, the picture that you see out there is the picture of my top leadership team. This is a top leadership team that we've called the 4G Squad.
Even as you hear this, you would see that this is a rather unusual name for a top leadership team, a name that we've chosen quite deliberately. Deliberately because in many ways, this name reflects what our role is. Our role is to drive growth, which meets four criteria. That's the 4G growth which is consistent, growth which is competitive, growth which is profitable, and growth which will be purposeful. That's what we are trying to do out here. Our markets, in many ways, are the microcosm of Unilever. It's in our markets that all our functions and all our divisions come together. It's in our markets that we either win or we lose. Win in terms of trying to serve our consumers, shoppers, and people in that market better than anyone else. That's what we do in our markets.
That's where the strategy comes to life. That's why in that picture you would see general managers who run the markets are absolutely in the center. Everyone else, every function, whether it's finance, HR, IT, supply chain, me included, everyone else is in service of the markets, helping them to lend growth, serve their people to the best of their ability. That's really how we've organized ourselves. That's the market. Our goal and the single mandate that we've got is to step up growth consistent with divisional strategies. Alan highlighted the four areas that we want to move the needle on, four areas which will drive growth. That's shifting and increasing our presence in geographies which are growing faster, shifting our portfolio and driving the transformation of channels are indeed making our business through our brands more purposeful.
All of these levers are absolutely important for us. You can imagine the channel piece is particularly important for my organization, and we are spending a lot of time thinking about how we can organize ourselves to effectively deliver what's required. Design and designing for channel and executing for channel becomes absolutely important. We have called out four channels, which Alan spoke of, four channels which are absolutely important for us, and each one of them has slightly different characteristics and requires a different focus. I'm not going to spend too much time on that because Alan's referred to all of them. He's referred to e-commerce, he's referred to the beauty channels, the out-of-home, and the professional channels which we've got. That's one aspect.
What I want to do today is to give you a little more understanding of how, in addition to the focus and channels, we will go about identifying those pockets of growth, those tailwind areas that we need to play in because that's how we are going to step up our growth rate. Over the last few months, we've put in place a model, a model which will enable us to start looking at a category or a country through three lenses. The lens of a channel, the lens of a demand space, and the lens of a price tier. Imagine what could happen when we are able to do that consistently, market after market, category after category, subject things and look at opportunities through these three lenses.
For example, an output of that would be something like, in skin cleansing in the United States, there's a significant growth opportunity maybe in the natural space, but in the e-commerce channel and in a super premium price point. Visualize what this would mean when you run it across the business and how you start getting a very granular de-average set of opportunities consistently across the business. That will enable us to be more focused, assign resources, and develop plans to go after these growth opportunities, and thus get more tailwind in our business and avoid some of the headwinds that we are facing. I've given you one sense of how we can start getting a fix and a handle on the tailwind and the growth opportunities that we've got.
There is another way by which we can start looking at de-averaging, that is through the lens of cells. What is a cell? Some of you would have heard us describe this before, just so that everyone understands what we mean by it, let me describe it. A cell is essentially a category-country combination. We are here in the U.S., dressings in the U.S. is one cell. Hair in Philippines is a cell. Fabric solutions in India becomes a cell. That's what a cell is. We've called out four distinct roles that a cell could have. You could see them here. We've got 165 cells, which account for about 70% of the Unilever business. Those 165 cells have been assigned one of these four roles. Accelerate growth, sustain growth, turn around growth, or unlock margins.
You would see three of the four roles are related to growth. 165 cells have these specifically assigned roles. From my personal perspective, my focus would be on 70 of these cells. 70 of these cells account for 50% of the company's turnover. That's something that I would have an opportunity to focus on. What does that focus really mean? It really means the ability to look at brand performance, brand financials, through the lens of the role that has been assigned for it. Just last week, I was in France. Along with everything else that I did in the market, I had the opportunity to assess the performance of different cells, the plans that we've got for different cells as we are entering 2020, and whether they were consistent with the roles that had been assigned for them.
That's really the advantage that we have. It also does something else. Having this sort of clarity also drives alignment. Alignment in terms of exactly what's required and enables better and smarter resource allocation choices that we would make. That's really the cell-based approach that we've got. I want to touch upon one other aspect. We can do all of this. We can identify the pockets of growth. We can do this whole analysis by cells, but we also need to organize ourselves to provide focus on growth. I want to give you a little bit of flavor in terms of what that means, and Alan's referred to our model of Grow, Power, and Run. I want to start off by describing what it would take to get that focus, starting with growth.
What this really requires us to do is to make sure that our people, be it in the markets or in the categories, are freed up, are liberated to focus externally, to focus externally on the consumer and the customers, to identify the opportunities and chase the growth and make that happen. That's what we want our people to do. Reduce the amount of time that they would be spending internally in the organization. That's going to happen through what we call the grow part of our business. In addition, there is a second thing that needs to happen. We need to find a way to aggregate, to consolidate, to bring together many areas of capability, of expertise, which will power our growth. You heard Alan talk about the 30, the people data centers and the digital hubs. These are incredible capabilities that we've built.
These capabilities provide insights. They provide the expertise which helps our front-end people drive the growth that is required. It's important that we don't spread ourselves too thin, and that's why aggregating and consolidating these capabilities in hubs becomes so crucial because that's what will help us power our growth going forward. The last but not the least is what we call run. If power is about expertise and capability, run is about the transactional aspects which happen in a business, which absolutely must done. In many ways, these are the things that can be done at scale. In fact, many of them need to be done at scale to be done effectively and efficiently. One example is technology. It's not just technology. There are certain processes that we need to run, processes that can be run in a consistent manner across Unilever.
They are common across all divisions, processes which can be digitized, they can be standardized. Frankly, many of these, it doesn't matter where they are carried out. They are not location specific, but they have to be carried out with precision and expertise. That's what will give us scale. This model of thinking about the organization as grow, power, and run, what it really does is enables us to be as focused as we need to be, as focused as we need to be to land our divisional strategies, to be focused on the channels that we want, to be absolutely obsessed about consumers, customers, and the external opportunities, and yet benefit from the scale of this organization that we've got. That's really what is going here.
As you hear this, I think it would be obvious to you that this is not a new initiative that we are starting. This has been something that we've been doing through the hubs, the digital hubs, the people data centers, the U-Studios, tools like LiveWire, et cetera, that we've been putting in. What I've provided to you is an organizing thought which will help you understand how all of this fits in the organization and gives you a sense of the direction of travel that we are on. Lastly, before I finish, one last thought, and that is around this whole aspect of execution. Every company has a strategy. Most have a good strategy. Several have an excellent strategy. The difference and the differentiating factor is often not strategy.
It is your capacity to translate that strategy to deliver what is expected to be done. That requires execution. In our business, execution has to be an everyday affair. It is not, you can do something great once in a while. Every single day is a moment of truth and requires us to be excellent at execution. Great execution requires clarity, and it requires discipline. The organization that we've got provides that clarity. The organizational framework that we have provides clarity of roles and of decision rights. It's the divisions which determine strategy. It's the divisions which make the long-term choices, focus on the innovation which is required. It's the markets which then focus on making sure that they land the year, make the shorter-term choices which are required and translate outstanding functional and divisional strategies into a great P&L in the market.
This clarity helps. The clarity is also provided by the cell-based roles that we've got. It helps us make smart choices, and there is an aligned position that we've got. These two things helps clarity. In addition to clarity, we need discipline. That's important for everyone, maybe even more important for us because of the sheer breadth of our business. The breadth of our categories and the breadth of our geography means that we have to have a very disciplined approach to land this consistently across the world. That's what we need. We've called out, based on the work which we've done, called out a few areas that matter.
Before someone asks, I just want to know, I'm not going to share what those areas are, but suffice to say, these are the areas which have the strongest correlation to growth, and we've called them out and we have codified that into a program which we call Everyday Great Execution. Every single market everywhere will be driving this program consistent. That's not a choice. A rigorous tracking of the sharp metrics that we've got and timely interventions that we make is what will drive progress. That's the sort of discipline that is needed as we move forward. Last but not the least, I just want to recognize that execution is as much a mindset as anything else, and we need to deepen this aspect in our culture to make discipline and Everyday Great Execution something which we feel good about, pride about, and take pride in.
That's really it for me. As I look back 30 years into this business, I've never felt better. I absolutely am convinced that we have the right strategy. I am super excited about the vision that we've got, which we are working towards, and absolutely confident that we've got the organization, we've got the strategy and the plans to systematically move us up the growth that we're all seeking to do. That's it from me. Not sure whether we have any time. Maybe a question? Maybe a question or two. Yeah.
Hi, Nitin. It's Warren Ackerman here at Barclays. I think you said that 50% of the portfolio was made up of 70 sales. Would you be able to give us some kind of quantification, what percentage of the sales are red, amber, green, or maybe put another way, what are the top three best performing sales that you're looking at? What are the bottom three sales? Just give us an idea of where you are on the journey, what the baseline is. Thank you.
As I'm not going to spell out any more than what we have spelled out. You have heard us talk at the end of our last meeting that there are a few areas that we want to turn around. Two of those happen to be where you're sitting in, whether it's the U.S. dressings business or the ice cream business, or indeed pockets of developed market tea business. We've spoken of that. I'm not going to speak any further in terms of other areas. Suffice to say that we've got a relatively good balance of sales across the four buckets that we've got. Broadly similar percentages across the four buckets. As you know, three out of the four happen to be focused on growth. Yeah.
John Feeney, Consumer Edge. Thanks for another great presentation. A bit of a follow-up on Warren's question. You gave us of the 160 sales, I believe you said were 70% of your business, have you bucketed those sales as far as percent contribution to growth? How many are driving, say, more than all the growth or all the growth? Do you have any numbers like that to give us a sense of what's growing, what's declining globally?
We do have numbers, but today is not the stage where I'm going to go into those numbers.
Not from me.
I just want to give you a sense of the fact that the sales that we have are broadly well-distributed across the four roles that we've defined them. You can do your math to figure out the percentage of business that would be sitting in each of those areas.
Thank you.
Yeah. Okay. Thank you. Thank you very much, and look forward to interacting with many of you over the next two days. Yeah?
Okay. Thank you, Nitin. Thank you, Alan. We'll now take a short break. Back in here at 11 o'clock. Thank you.
Hello. Good morning, ladies and gentlemen. My name is Marc Engel. I'm the Chief Supply Chain Officer of Unilever. For the next 45 minutes, I have the pleasure to talk to you about some of the supply chain transformation that we are managing as part of our new journey. Quickly point you again to the safe harbor statement, as we'll be looking forward a little bit. First, a recap on what is supply chain in Unilever. We basically sell 150 billion consumer units a year that have to be bought, made, distributed, and land with two and a half billion consumers daily. We sell our products in 30 million outlets around the world where consumers can buy these products in 190 countries. In the supply chain, we make 5.3 million shipments to 300,000 unique outlets. You're saying, yeah, 30 million, 300,000.
That is because where we ship to is a mix of final customers and distributors and wholesalers who then distribute the product on. We have 3,327 production lines at this stage around the world in 300 plants, 67 countries. We work with 580 contract manufacturers that produce around about 15% of our turnover and 85% of our turnover we produce ourselves. We work with 48,000 suppliers around the world that supply goods and services, everything that we buy into Unilever, raw material, packaging materials, and all the services that we use. When we look at the footprint of the Unilever supply chain, we employ 89,500 employees. When you take the bigger ecosystem and you say, "Well, how many people are actually deriving their daily livelihoods dedicated to Unilever?" It's around about 2.5 to 3 million people.
When you count every single farmer, every single employee on plantations or whatever, we think that it's closer to 10 to 15 million people that are somehow involved in making Unilever's value chain coming to life. We have the land footprint of about 2 million hectares, which is half the size of the Netherlands, which maybe doesn't sound big, but it is significant. We have a CO2 footprint in our own operations of 1.4 million tons of CO2. I'm going to be talking a little bit more about it. We have a plastics footprint of 700,000 tons. Richard Slater, my colleague, the Chief R&D Officer, is going to talk you through tomorrow about what we are doing on our plastic footprint, very exciting part. This is roughly what we talk about when we introduce the Unilever supply or the value chain.
We've been always focused on the fundamentals, any supply chain, cost, cash, and service. You don't have service, you don't sell to your customers. When you look back, we've made great progress on delivering a cost savings program north of EUR 2 billion every year. Our working capital in the last 10 years has made great progress from being slightly positive to becoming negative, our service in terms of dispatch rates to our customers has jumped up in the last seven years by 210 basis points. When Alan talks about fuel for growth, we have a 5S program, I've talked to you about that before, which is our five smarts program, which is covering about EUR 20 billion of raw and packing material costs. This is a perpetual program. Let's say we do this every year.
We even see reason how we can step some of this up in some of the categories. The main thing is this is going to be a perpetual program going forward that will continue to deliver the savings as it has done in the past. Production cost, which is roughly a cost perimeter of EUR 5 billion in terms of manufacturing cost and the waste that we produce. We've really started to step this up through ManEx and world-class manufacturing, and I'm going to be talking a little bit more about that, what we're doing there. When you look at our Zero-Based Budgeting Program that touches north of EUR 10 billion of cost, when you add up all the media and the marketing and the logistics cost and the services, et cetera, is also continue to deliver cost savings.
When we talk about fuel for growth and Alan talks about the need to be north of EUR 2 billion in the future, we are relatively confident that we will continue to deliver that because we have an enormous amount of pipeline in the bank that we will continue to deliver through these programs. On top of that, the run grow power that both Alan and Nitin talked about are also going to be going through in the future. It's also important though, to realize that our fundamentals of any fast-moving consumer goods business are changing very fast. The traditional pillars of mass communication through TV advertising, mass distribution as a big barrier to entry, and mass production, are basically being disrupted on every side.
Alan talked about the need for changing in marketing, and when I look at the supply chain, this is how supply chains need to be changing, too. We're moving from a portfolio that is going from mass and popular heavy to a much more hyper-segmented portfolio. We run our business basically in pallets and sometimes cases, and we need to be going from cases to units, very often customized, as we are moving into new channels. Our minimum order quantity, there's a lot of pressure on these to go down. Today, we are shipping to 300,000 unique shipping points, a mix of wholesalers, distributors, and end customers. At the end of the day, we will be transacting with billions of consumers, and we need to build a supply chain for that as well.
Our typical lead time for orders in our business is about two to 10 days. Where the world is going is anything upwards from 30 minutes to a day max. That means that our responsiveness and the way we set up our fulfillment in the supply chain will be very different than what we see today. Last but not least, the impact on people and planet, always been a good to have, is an absolute must-have in the future. The program that we've developed, which we call the Connected supply chain, is essentially the same slide I presented to you two years ago. It's about delivering today, but transforming for tomorrow. The transforming for tomorrow is a simple three-box slide on the what, which is creating an agile supply chain for a very fast-changing market.
It's the good old chestnut of reshaping our cost and asset base that you will hear come back every year. It's about care for people and the planet. You can't have a brand with purpose if you don't have a purposeful supply chain that actually takes care of the people and the planet. Both underpinned by partnerships and future fit people. If we look at the agility for a changing market first, the way we plan our business is changing very fast. We live in a world where essentially we try to forecast the demand. We work in weekly buckets, and then once we figured out what we think the demand is, then we figure out the supply, then we do our line scheduling, we call off the materials, et cetera.
What we are just finding is that this program of planning is absolutely dead, because it's an impossible task in a hyper-fragmented world with all these channels and all these different opportunities, to get the future right. We are looking at a very different way of planning. We've had POS, point of sales data for a long time, but we've been mostly using that for marketing purposes to measure our share in-store, et cetera. Finally, at big scale now, we're starting to collecting the POS data, that is the real-time sales of our big customers, directly into our planning systems to get synchronization. We're moving increasingly from weekly planning into daily planning, that brings with it the needs to do concurrent planning. We've been sequentially planning from demand, supply, line scheduling, materials, distribution.
When you plan daily, it is just physically impossible to do that that way because you just don't have the time nor the human brainpower. Which is why we're moving to no-touch planning, which is why we need to use the machines, the artificial intelligence, the machine learning, to basically deliver our plans. Today, as we speak, all of our demand plans are centrally generated in Bangalore and sent to the 190 countries where we operate. There is essentially very little human interface because it becomes physically impossible. We're also at a pivot point where actually the quality plan, the quality of these plans generated by the machines, are better than the plans that are generated by hand.
Last but not least, this is a very big philosophical point, is that in a world where the future is difficult to predict, you need to go to a mindset where agility trumps forecasting, where it's not about getting the forecast accuracy right, but it's actually about how do you essentially react to it? How do you respond? Moving into a world where we produce tomorrow what we sold yesterday is where we need to get to. Sounds very simple. It's not so easy to do because that's not our reality today. We do need to go to a much more agile world where we can respond to changes rather than trying to predict what's going to happen. The second one is about mastering complexity.
There is no doubt that the hyper-fragmentation of channels, combined with our Connected for Growth strategy, the need to experiment on new innovations, et cetera, has put pressure on the complexity of our business. Which makes it even more important to be disciplined about how you take the tail out. One of the things that we have realized in the last two years as we've gone live with that, is the need to be much firmer and much more rigorous to take out the tail. We are being helped by digital technologies. The tail is no longer, let say, the last 1% or whatever, let say the old way of defining. We can now interrogate which SKUs have to be pushed. How often are they sold in a month? Do you have to apply a lot of discounts? Are they only in certain customers?
The intelligence to basically take out your tail due to the digital unlock has increased a lot, and there's a lot of discipline required to get this right, because we will get more complexity on the left. That's why we need to take out more of the tail on the right. Alan talked about new channels. You'll hear a lot about e-route to market tomorrow, from Rohit, from Fernando, et cetera. Of course, there is a big supply chain element to this. The basis, and they're all different stories, but I'm a simple supply chain guy, and in my simple language is like the current reality of a typical Unilever customer is that the salesman comes on Tuesday, you make your order, and it gets delivered on a Friday. That is the reality for how the business works.
When we now start to offer customers digital interfaces, that customer will also expect a different supply chain, a back-end supply chain that will fulfill those orders. If you give people a digital app to order stuff on, then that whole model of coming on a Tuesday and ordering and delivering on a Friday is no longer valid. The supply chain supporting an e-route to market when it comes to fulfillment looks very different than what we have today. Secondly, design for channel. If we've called out these channels, if you look at a product portfolio to win in e-commerce is a very different product portfolio than to win in discount channels or in out of home. There's going to be complexity again in portfolio and how do we manage that.
Value density and price point, driven by last mile logistics in the e-retailers is a very important part. In discounters, people want to have the feeling that they get more value for their buck. The product inside is very often the same, but the packaging needs to be different, and we need to create the supply chains for that. There's a very big transformational element in getting ready the supply chain for the new channels that we have identified where we want to win. We go to more familiar territory on the cost and asset base. The first box is about the manufacturing network design. This is essentially how are we executing the EUR 3.5 billion restructuring execution, of which about two-thirds is related with the supply chain. Essentially, the program is we consolidate a number of factories.
We outsource part of the volume, very often that is linked with the sale of the facility, particularly on the sunset formats that we do this. There's an element of streamlining, which is a combination of robotics, automation, et cetera. The second box is a new activity that we started about a year ago, when we made a partnership with Microsoft and The Marsden Group, and it's something that we call digital manufacturing. It's about driving out cost and waste, it's about automation and digital twinning. I'll be giving a demonstration in a minute about what that means. Last, digital voice of the consumer, which is another digital example on how we have redefined quality in the business. What is that about?
Well, quality in the old days is basically, a consumer is unhappy about the product, they call a care line, and then one of our employees takes the complaint. We see what we can do about it. We add up the stats, and we say, "We have so many consumer complaints per million unit." That's then basically quality. Of course, who calls a care line anymore when you have Twitter or Facebook, or Instagram, or anything? Basically, we had to redefine how we manage quality, which is what we call digital voice of the consumer, which is essentially the combination of a social listening device combined with natural language processing that is basically giving different parts of the organization different information about what people are saying about your product.
The advantage of it is that it's real-time, you get real-time data all the time. You get much faster response. It's not just complaints, but it's also, let's say, you can check your product attributes. Is it soft on skin, and are people talking about that? It also gives us early warning for serious issues because you can scan for certain what we call smoke words, that trigger alerts in the organization when, let's say, trends are there from serious complaints. Let me just quickly go into the demonstration. As I said, we partnered up with Microsoft and The Marsden Group. What you're looking at here is essentially the technology of a PlayStation gaming console. Obviously, you see the world, and you see some dots, and those dots are Unilever factories.
What we basically did is, because of the cheap technology now to get internet-connected sensors, we've been basically digitally twinning a number of factories by just hooking them up, let's say the key control points to a system. If I take our Valinhos factory, which is the Dove bar factory in Brazil, I then basically get a plot of what the factory looks like. If I then go to a plodder, and the plodder is a machine that turns oil and water and fragrances into soap, simply spoken. Basically what we said is, look, in making soap, one of the key, let's say, properties of the product is the moisture content. The moisture content controls the quality, controls the quality of the wash, the softness on the skin, but it also controls the cost.
It's a very complex process, and we always have managed that by operators trying to tweak the line and trying to basically get the product specs in the middle. Because we could hook up about 27 sensors that we thought would control the moisture, we then build an algorithm. We then basically started tracking this. We specified what we wanted and not, and then we developed an algorithm that is basically controlling all of that. That's what you see here. By the way, the algorithm says you put 27 sensors in. I only need five to control the moisture content, and that's what you're looking at here. Then what we did is we said to the team in Valinhos, "Okay, we'd like to pilot this." That was in January.
Let's run it for 24 hours automatic. It's never been switched off since because the operators have said, "No, you better leave it on because this works much better than what we ever did." All of a sudden, this has delivered EUR 2.5 million of cost savings, and in terms of waste and in terms of operational efficiency. We have four of these Dove bar factories around the world. It's obvious that by zoning in to a certain issue and by using digital twins, you can basically get a lot of benefit. If I then go a little bit further in the south of Brazil, Indaiatuba is our largest laundry powder plant. If I go here, this is the tower where we make powder. Now, energy usage is a very big thing. This is our largest laundry plant.
It's in fact, 1% of our carbon footprint in Unilever is the running of this plant. Energy usage is very important. By developing the algorithm of balancing the input and output controls, we've been able to cut the energy use by 15% in a couple of months' time. This is massive in terms of energy cost. When you basically say, "Look, what other laundry factories?" Well, I have also a very big laundry tower in Konya where I see the same tower, of course, you can immediately roll that out. We had an issue where all the operators were controlling the inlet pressures of the nozzles. When we started to control it, because they do it by hand a couple of times a day, when we start to continuously control that, all of a sudden you have 20% more throughput.
All these digital, let's say, continuous monitoring and continuous control systems that you can change is really changing the way of how we run our factories. If I go to Independence, which is our savory factory here in the U.S., and this is not finished, so I can only show you work in progress. I just want to show you the complex. There's 1 million combinations of set points to run a line. It's almost impossible for the human brain to really logically decide on how you run it. We're having lots of issues with those lines in terms of startup waste, in terms of efficiency, et cetera.
It's our belief that, we think we will know this in three months when we hook this up, that the algorithms will actually control how we run these lines, and will take out another couple of million EUR of cost. When I look at Kilbourn, which is our mayonnaise factory here, we've basically started tracking the mayonnaise making. You have three streams that come together, then you make mayonnaise, every time we start up, the operator has to see what is the viscosity and how does the mayonnaise look. We have a lot of startup waste. Again, by developing the algorithm, it basically predicts how the mayonnaise comes out, it saves about 80% of the startup waste that we have in this factory.
The last example that I'll show, if I go to our factory in Port Sunlight, and I go to the motor control hub, we have about 150,000 motors in Unilever. We replace about 10,000 every year in terms of our maintenance program. Costs a lot of downtime because usually, we wait until they're broken. If I just click on this one, we now have basically fitted every motor in Unilever with a little small sensor, costs less than EUR 1. It's a Bluetooth sensor, and it measures vibration, temperature, and power usage. It allows you to remotely, from any screen in the world, to basically manage your motor health. It says here, policy violation. Do not despair. This basically means that it's not in specification, but we're not violating any kind of policy. It's technical language.
Essentially, what you're seeing is, in some industries, this is very normal, if you're in the nuclear industry or the airline engines. In our industry, this is actually quite novel, and we're quite well ahead of this. What is this? What of this? Well, we think that by the end of the year, this will be live in 65 factories. Out of a cost perimeter of EUR 4 billion-EUR 5 billion, we think we will be able to take out half a billion to EUR 1 billion of cost over time. Don't get excited. It's just part of the EUR 2 billion plus savings program. It is just to say that we are quite confident that this is a new leg that we are exploring that will basically deliver the health of our savings programs going forward.
Quickly going to the DVOC, which is the digital voice of the consumer. What you see here on the bottom, and this is live information, is basically everything that people write about your brand. It comes into ratings and reviews, it comes into care lines, and it comes in through social media. If you have nothing to do, it is just very enjoyable to just read what people write about your products. It gives you the stats, it gives you everything. Where does it come from? Which are the lot codes? How many mentions over time do you get? These are weekly buckets. This is refreshment, so this is the tea and ice cream categories in the United States that we put on here. You can make any selection around the world.
The clever bit about this is that we have natural language processors in 35 languages now, and this is live in 55 countries, where it basically packages the information that you need and sends it to different parts of the organization. The global brand manager of Magnum will basically get the information that is relevant to the brand in terms of desired product properties or product superiority and get the live feedback there. The factory gets live information and, for the first time, gets connected in real time to consumers. The other nice thing is that it actually packages up actions for our care lines employees.
Rather than for them sitting and waiting by the phone for somebody to call, the system will actually direct our employees to which consumers do they need to approach, and what is the desired approach that they need to take with certain consumers. As you can see, this is just basically a simple function like product quality. That has been completely redefined by our digital, starting with social listening and then the data analytics and making sure that the right organization gets the right information. That's just a demonstration of where we are. I have no time clock, so I have no idea where I am on time, Tony. The last bit is caring for the planet and the people. Now, brands with purpose require a supply chain with purpose. There are five big areas that we're very mindful of. First one is the fair value distribution.
There is gender and equality in our total value chain. Plastics, decarbonization, and nature. Those are five big topics that for any supply chain in the world or any company in the world are big areas. I want to talk a little bit about decarbonization today and a little bit about deforestation. When we look at the Paris Agreement, that sort of says that we need to stay within a one and a half degree world. What it actually means is that everybody in the world, including you at home, but including all the companies, by 2050 needs to be net carbon zero. If and when everybody achieves that, the science says that we will stay within one and a half degrees. Why is this important?
Above one and a half degrees, you get a lot of changes to the world that make it unsustainable. The big but in this target is that not everybody will no doubt achieve that. That means that some need to do more than others. A very big risk that we have here is in the word net. If everybody just continues what they do today, and their net means that I'm just going to buy some offset projects or buy some carbon credits, there are actually not enough of these projects in the world. We really need to look at our carbon footprint. At Unilever, we said, "Look, we need to be much more aggressive than that." We had said 10 years ago, we will halve our carbon footprint by 2020. We said we want to be net zero by 2030.
We said we need to look further than that, and we need to work with our distribution partners and our suppliers to make sure that they also get their decarbonization journey right. We said that we would move to green energy or renewable energy by 2020. We have halved our carbon footprint. We have achieved our renewable energy. It's just important to talk a little bit about the economics of that. Essentially it's been delivered at no incremental cost. How have we done that? Couple of years ago, we have basically started to levy an internal carbon tax in Unilever. Any side that was emitting had an amount of money that we called internal carbon tax. I think we started at EUR 40 a ton. We put that money into an investment fund called the Clean Energy Investment Fund.
That fund could basically be used by people to get their footprint down, to save energy, essentially. If I look where we are today in 2019, we have cut 28% of the energy or the electricity that we use in our sites versus 10 years ago. Of course, not only is the greenest and cleanest energies, of course, the energy that you don't use, but more importantly, you don't pay for it either. We've then have to basically said, "Okay, now all the money that we have left, we have then start putting into PPAs on solar, PPAs on wind, PPAs on hydro, and buying renewable energy certificates." That have basically led to us being able, two months ago or a month ago, to call out that we are now 100% renewable in all of our locations except in Australia.
We're working hard to fix that. I think in the next couple of months we will be there. The other thing also to say is that actually cost is no longer a barrier for this stuff because solar is already, in many cases, cheaper than grid electricity because the technology has basically cost one-tenth today what it cost 10 years ago. It's very often regulations that sit in the way, regulations of markets, regulations of what they call horizon pollution. Governments don't want you to put it up because it pollutes the horizon. Basically, it is our view that is absolutely doable. Renewable is doable. We've done it now for electricity. The next step that we are going to take is we're now going to net zero carbon in all of our operations by 2030. We call this carbon positive.
We're converting to biogas, to biomass, to electrification to do that because we need to move out of oil and petrol-based fuels. We're working very hard at that. Just to give you a sense that this is also not impossible, today we already have 26 sites that are carbon neutral today. Out of our 300 plants, 26 are already, and they're listed over there. They're already carbon neutral. Six months ago, this was 16, so we're working very hard to get there. It is absolutely, we believe that this is something that we need to drive very hard. We're looking at all kinds of opportunities to move out of gas into biogas, into biomass, into electrification. I want to quickly, because I'm running out of time, I want to quickly say something about sustainability, because we've been managing sustainability for a long time.
The real unlock in sustainability is, again, where digital meets sustainability. In the past, if you talk about palm oil, these are palm oil pictures of Sumatra. You rely on a certificate, and that means that an auditor did something and went to a plantation, and they all checked it, and it was fine. That's basically how we started 10, 15 years ago. In today's world, and you see that on the picture on the right, we essentially use the anonymized data of mobile phones, just like Google Maps is using your mobile phone data to determine where the traffic jams are and they color the streets red where the traffic jams are. We got the same technology through them.
We're just tracking the palm oil truck from the farmer into the mill into our facility. All of a sudden, you have 100% traceability in real time. In that kind of world, what does certification mean? We then map that data with where are the forest fires, where are the national parks? Where is deforestation taking place? This whole thing around sustainability, moving from a compliance, audit, certification point of view, is going completely digital into real time traceability and transparency as to where your stuff is coming from. This is a very important development, and I do believe that this will radically change, let's say, how we manage our chains in terms of no deforestation, no exploitation, no peat exploitation. For us in Sumatra, it has completely changed the way how we do business with our key suppliers.
This is very new. It's only a couple of months old, and we're still beta testing it. It's going to drastically change how we do that. Last but not least, partnerships. Now, we've always been good at partnerships with, let's say, raw material suppliers or chemical suppliers. Our Partner to Win program has been live from 2010 onwards. It's very clear that in this digital space, we need different kind of partnerships. We're putting a lot of focus around building these digital partnerships around operation, around the digital reset, around sustainability, et cetera. The last bit is future fit people. I'm just going to mention one thing because Leena will talk about some of this stuff tomorrow as well.
When you want to do all this stuff, the first reaction is, oh, we need to employ a lot of data scientists. That's true. You need to employ some data scientists, but it's only a handful of people. The learning that we have had in Unilever is that actually the biggest unlock is to make sure that your organization is actually understanding what this handful of data scientists are doing. You need to not understand developing an algorithm, but you need to understand how it works. You need to be comfortable with the statistics. You need to be comfortable with the data analytics and how it works. We've basically set up a program at Unilever called Citizen Data Scientist, and citizen really means amateur.
We've got three levels, and it is really amateur because even I can get the certificate, so that vouchers for something. I got it this year in July. It's essentially making sure that your leadership still stays relevant in a digital age that gets more and more controlled by algorithms and things that run themselves. If you don't really understand how that works, then it's very difficult to lead in that world. We've been running 5,000 people through this data scientist program, Citizen Data Scientist, to make sure that our leadership is actually capable for the next phase, because you cannot have a future fit company or a future fit supply chain if you don't have future fit people and future fit leaders. I think I will leave it at that. Let's open it up for a couple of questions. Five minutes, Richard, yeah? Thank you.
Hello?
Yeah.
Marc, hello.
Hi.
Martin Deboo at Jefferies. Marc, when we were with you at Port Sunlight a couple of years ago, I remember in a wood paneled room.
Yeah.
I think you said then that you were going to commit to 25% outsourced manufacturer.
Yeah.
Is that goal still there?
Yeah.
Has it changed? Where have you got to? How are you feeling about that?
Yeah.
So.
When we met in Port Sunlight, we were at 90/10. We are at 85/15 today. I think the general trend line will be towards more outsourcing, but we don't have a target, so I don't want to sit here and say we're going to go for a 75/25 because each decision that you take needs to be sound in itself. The general direction of travel is definitely more towards outsourced than insourced. I don't think we will ever be a company that will have no manufacturing at our scale because there are many geographies and many technologies where we believe that having manufacturing is a competitive advantage. In many parts of the developing world, the infrastructure to outsource doesn't exist. It is a competitive advantage.
What we also see is that when you have a lot of sunset and sunrise formats, so if you look in laundry, people move from a laundry bar into powder, into liquid, into capsules. God knows what Peter's going to present to you tomorrow. The next thing is, of course, our assets are very linked to these formats. If you have a factory in powders, other than the real estate, it is not easily convertible into a factory into liquids. Again, if you go to capsules, it is another thing. We are looking a lot at sunset formats or the formats that are being overtaken by innovations. We are also looking at a lot of the sunrise formats, which are technologies that maybe we do not have so much, and therefore you do not want to invest capital.
It's better and faster, very often, to go to dedicated contract manufacturers, who by the way, also have great product development capabilities. What you see is you see on the fringes of the portfolio, you see a lot of movement. I do think we will go towards the, I think we said 75/25, I think if I remember right, we also said that is not a target in itself. It's a direction of travel, I think the direction of travel is still valid.
Hi, this is Heidi Rauber from Fidelity.
Hi.
You mentioned that the supply chain needs to be able to reach billions of consumers. That suggests to me that you're moving much more to direct-to-consumer business models, and I just wanted to see whether you can elaborate a bit more on what you meant.
Yeah. Well, look what you see is that a lot of the consumers are now transacting directly with a number of companies. Whether we should do that all ourselves, I guess we will not do that. If you look, for instance, we have 300,000 unique customers. When we bought the Dollar Shave Club, they had 3.8 million direct customers. Obviously, when you go into directions of D2C subscription services, et cetera, you will basically transact with many more people. Whether we do that ourselves, that is not the message here. What you do see is that the 300,000 that we have today, for sure, will not be the 300,000 that we will see in 10 years' time. There will be more proliferation. If you look at the presentations that Fernando and Rohit are talking about tomorrow, you will see very clearly how the 300,000 of our existing customer base is changing fast, and the number is not going down. Whether we end up with 2.5 billion, probably not. Again, the direction of travel is up. Yeah.
Hey, Marc. You talked about a lot of great things that you're doing within your supply chain, but I also heard a lot about complexity really stepping up for you.
Yeah.
If you were to try and kind of quantify how much more complex is your supply chain, say, versus five years ago? Are you having to do all of this stuff just to stand still because it is becoming much more complex? Sort of related to that, how long will it take you to fully digitize your supply chain?
Yeah.
Once you've done that, how big a advantage is that?
Yeah
your peer group? Thank you.
Well, look, if I start with the last question, I think that the digital rewire journey will take us probably about three years to complete that fully. We're about a year in, some of the run power grow, things also need to be disseminated, et cetera. I think three years is a good stake in the ground. When you look at, complexity has many definitions. It's difficult for me to say it's become 10% more complex or 20% more complex. What we are seeing is that, when you very clearly want to dedicate SKUs to channels, you see more SKUs. In some markets we haven't seen it. In other markets, we have seen it. It's a direct consequence of the channels that you manage. That doesn't mean that basically the complexity cannot be managed.
I think one of the things that we've come to, Richard and I have come to really understand is that complexity comes with giving up certain things. We come from a model five years ago where we wanted to develop everything ourselves, the bottle, the recipe, all the ingredients, et cetera. Now, what we've realized is that if we want to step change our innovation, and if we want to make more launches, et cetera, you need to give up certain things. You need to give up and maybe say, "Okay, fine. I'm not going to own the total recipe development. I have professional partners who can do that as well as I have." Essentially, we've basically have been thinking about what we need to give up, and how do we need to manage the complexity that's going up. Because it has definitely gone up.
I find it difficult to attach a number to it, because then you all run away and say, "Well, Unilever had X% growth and Y% complexity increase." It is not a big issue, but it does need to be managed on particularly the tail. What does not need to be managed is that we need to stop, let's say, getting the good complexity and like good and bad cholesterol, you have good and bad complexity as well. If you want to win in all these different channels, you need to allow for the product portfolio for that channels to be a winning portfolio. That brings with it different SKUs. You need to basically then say, how do you cleverly cut some of the tail that you have to make sure that the total is still balanced.
I think I'm very confident that we will continue to do that, and we have been doing that, and we continue to do that.
Okay.
Thank you.
While we stop to questioning Marc there, he won't thank me for saying this, but he has to run off straight after the extended lunch break. If any of you want to grab him for any more questions, then get him over the lunch break.
Okay, a bit of a change now. We're now moving into the divisional pieces, and we're starting with Beauty & Personal Care with Sunny Jain. Sunny, yours.
Thanks, Richard. It's always a tough act to follow Marc, talking about digital twins, algorithms, high tech. I'll do my best here. Hello, everybody. I'm Sunny Jain. I just joined four months ago, and I'm the new President of Beauty and Personal Care. It's a real honor to take on this position at such a great company. Today, I'll be presenting the Unilever Beauty and Personal Care Division strategic choices and give some examples across our business demonstrating how we're going to bring these strategic choices to life. Before getting started, just at the break, I was already getting asked some questions around what are my first impressions about Unilever, about the beauty and personal care, about the recent division performance.
I thought I would just start off with a couple of soundbites, so that you don't have to ask me the same question at the lunch break here. First of all, my impression of Unilever's BPC division is that it's a powerhouse of strong global brands with leading market positions all over the world. It's backed with strong science and technology. It's got a great geographic footprint. It's got high-quality talent and leadership running these businesses. Digital transformation, as you've seen in Marc's presentation, as you'll hear throughout the next couple of days here, is high on the agenda, and we've got great pockets of brilliant executions all over the place. Looking at the recent division performance, our average growth rate in the past few years has been about 3%.
This is nice, steady growth, but it's not where we want to be, as Alan had mentioned earlier on in his presentation. The main reasons for the 3% growth, again, nice and steady, but not where we want it to be, is we've got some slowdown in some global market growth. We've got a couple of hot spots in some of our big sells. We've got relatively low price growth in an environment of relatively lower commodity inflation. Our portfolio transformation needs to have a bigger play in higher growth channels and geographies. Going forward, we made clear strategic choices for BPC that are building on our strengths as well as addressing our challenges to step up the growth. Let me now begin. I should have said this before, safe harbor statements, please take a note of that one.
Firstly, as context, I just want to ground everybody on the division. We're a EUR 21 billion business and have almost doubled in size since 2008, the last 10 years. Two-thirds of that growth has been coming from just organic growth, and one-third has come from our strategic acquisitions. No doubt our acquisition activity draws attention and discussion, but the majority of our growth will continue in the future to come from steady expansion of our core brand and geographical footprint. In the same period, BPC has become a significantly bigger part of Unilever, growing from 28% to 42% turnover, and is now generating half the company's operating profit. Thanks for fixing the clock there. We operate with a strong portfolio of leading category positions. These are the five categories that we predominantly play in.
We have a EUR 5 billion skin cleansing business, which is three times as big as the next biggest player. Hair care is a EUR 6 billion business, now number one globally in daily hair care. We have a EUR 4 billion deodorants business where we're four times as big as the number two, and we have the number one, number two, and number three deodorant brands across the world. In skincare, we have a EUR 3 billion business, and we're globally number three. We have made it a priority to build scale as skincare is the largest BPC category in the world, and I'm happy to report that this year, this is one of our fastest-growing businesses. We also have a selective play in oral care. We're a EUR 1.5 billion business there, and we generally are either the market leader or the number two player in the geographies in which we play.
Going to this slide here, it shows our top 10 brands and our top 10 geographical footprints. If we had more time, I'd play the flag game with you, but we won't do that today. Here on the left, we have the first five brands that have more than EUR 1 billion of turnover, Dove, Rexona, Axe, LUX, Sunsilk. The next five are closely closing in on becoming billion-EUR brands for us. On the right, we have our top 10 markets, and the first five, again, these are greater than EUR 1 billion, with the U.S. here being our largest market. It's important to point out that the developing and emerging markets account for 64% of our BPC turnover, and it's accounting for a majority of our growth. India's our second largest market, and Brazil, Indonesia, and China are all over EUR 1 billion in size.
With that backdrop, what I wanted to now get into are the big drivers of future change in beauty and personal care. The speed of change is just continuing to accelerate, as we all know. We've outlined here four big drivers or macro forces that are impacting our business and reframing the way we do business and engage with our consumers. Let me just touch very quickly on all four of them. The first one is consumer fragmentation. As the world gets younger and older, and migration continues, societies are becoming more diverse, leading to greater consumer fragmentation. This is creating opportunities for a much more sophisticated portfolio driven by the consumer trends. In channel fragmentation, we can see just in ourselves, as consumers are changing their habits in shopping, the channel importance is also shifting.
Consumers are becoming more around, I want what I want when I want it. It's fast becoming the new normal, and we need to shift along with it. The digital and technology revolution, again, something that's pretty obvious to anyone here, but as it's becoming more implicit versus explicit, how people engage with brands will continue to evolve very quickly. In the future, we have to really think about who will the consumer be? Is it the consumer that we know of today, or will it be something like Marc was talking about, a digital twin or a digital avatar that we have to deal with? We need to think about these things as we're moving forward. Fragile planet. Consumers are seeking brands with a clear sense of purpose.
In this new era of capitalism, brands that positively contribute to society with a lighter environmental footprint, and actively support people and communities, are more likely to flourish and grow. These are the big four macro forces that we see. We see three specific Beauty & Personal Care trends that are really shaping the portfolio and the innovation and the category plans that we have moving forward. Let me just talk very briefly about each of them. Naturals and sustainability. The naturals trend is here to stay, and it's growing significantly well ahead of the average BPC growth rates. Consumers are increasingly becoming conscious of what they put not just in their body, but what they put on their body as well.
With the ever-increasing pressure on the world's limited resources, naturals and sustainability will have to converge as society realizes that the planet and its people need to coexist in harmony. With time, the sustainability paradigm in BPC will shift from, it's not just about doing less harm, it's about doing more good. Traceability, transparency, a no-waste approach to product will be paramount for us. We have a very strong program behind naturals and sustainability, but we're going to make it even stronger. Our naturals portfolio in BPC reached about EUR 3 billion in size this year, and will continue to be a bigger part of our portfolio moving forward. Let me move to beauty and holistic wellness. Wellness is increasingly a lifestyle choice, and obviously a very important one.
Today, the wellness economy is three times larger than the global pharma industry. It's growing two times faster than other industries. Therapeutics will continue to grow as a segment as consumers increasingly seek out products that tackle the underlying root causes of unhappy skin, unhappy hair. They just want to feel good about themselves, but attack the root cause of the problem, not just cover it up. Within BPC, we'll also see the evolution from physical beauty to proactive wellness, and some predict that the microbiome will become one of the biggest health and beauty trends by 2025. Microbiomes won't just be about what's inside our body, will also be what's on our skin, outside our body. The science and technology will enable brands to move beyond products into services and experiences powered by data that will allow people to optimize their wellness day in and day out.
You'll hear more from me later on how we're transforming our core portfolio to build on this trend. Let me move to the personalization. As we move towards an omnitech world, technology, as I mentioned earlier, will move from more being about explicit to implicit. As we all know, the number of devices that are connected to the internet are just growing every single day, and they're expected to reach 75 billion by 2025, which is three times more than what they are today. The key is that our artificial intelligence and biometrics will combine, transforming our health and wellbeing and targeting the granular needs of the individual. In this era, we'll see a shift from mass marketing and basic customization to personalization, where products and services are based on the very specific needs of the individual.
We see that in this world, the technology has the potential to know us better than we know ourselves, leveraging the individual genetics and epigenetics that we all have. Importantly, though, personalization will unlock the democratization of beauty. Underserved consumers like Gen Z, Gen S, Muslims, babies, kids, will no longer be excluded from the beauty industry and the innovation that occurs. All consumers will have a voice and an equal one, and the communities that I just mentioned will flourish. We're tailoring our core innovation programs and launching new brands to better serve the needs of these underserved audiences in all key markets around the world. Now that I've set the stage here, let me get into our strategy. Let me start with our purpose. Our purpose at Unilever Beauty & Personal Care is beauty that cares for people, society, and our planet.
We care for the whole person, both inside and out. We care for the whole of society, promoting greater equality and inclusion. We care for the whole planet, improving the health of the world we all share. If we think about our three strategic choices for Unilever BPC, they're the three that are listed on the slide here. Purposeful brands, building a future fit portfolio, and focusing on the high-growth channels. These strategic choices will all be underpinned by two big things, digital transformation, which you're going to see in here about the next couple of days, and agile teams. As Alan said in his opening presentation, building Purposeful brands for us is a top priority. It's also a top priority for BPC as well. Purpose is no longer a thing, it's now a trend.
A new generation of informed, skeptical, and action-focused consumers are choosing brands based on their values and purposes. To attract these generations, our big brands need to also be purposeful. Alan shared statistics that were quite mind-boggling. For example, 75% of millennials would be more loyal to a company that helps them contribute to social and environmental issues. With this growing loyalty towards purposeful brands, the key that we need to see is that the link between purpose driving performance, and there's studies out there, including our own studies, that show that this link does exist. Let me just share some statistics. If we go to Kantar Consulting, they've surveyed more than 20,000 consumers and carried out over 100 deep dive interviews with leading brands all over the world.
Their studies found that brands with a high sense of purpose have seen their brand valuation increase by 175% over the past 12 years, versus a median growth rate of 86%. It's almost double. A growth rate of 70% for brands with a low sense of purpose. Brands with strong sustainable living purpose have 1.5x higher brand power. They're growing two times faster than the average brand in their Kantar BrandZ database, and are growing two times faster than brands that are low on the sustainable living purpose metric in their BrandZ database. Let me flip to a study that we've done here at Unilever, right here in the U.S. We studied the impact of our own communications over a four-year period.
This analysis showed that when we had purpose communication directed to the consumer, it delivered an ROI that was three times bigger than just new news communication. It's important to note that the ROI is not a long-term ROI. ROIs are measured here on a short-term basis. This is results that we're seeing right now. It's truly not a slow burn process. Therefore, building truly purposeful brands is a large priority for Beauty & Personal Care, and we're proud of our truly purposeful brands and know that purpose drives superior performance. Let me give a few examples, out of our portfolio, how we're bringing purpose to life. I'm going to cut here to some videos that will show the purpose coming to life on three brands that are a big part of our portfolio, part of the EUR 5 billion brands that we have. I'm going to show Dove, I'm going to show one on Lifebuoy, and then I'm going to show one on Sunsilk. Enjoy the next couple of minutes here. If I can get it to. There we go.
[Presentation] Girl, you're so young, but you see everything. What if we could show you a vision of beauty where no woman or girl were excluded? Where fitness comes in all sizes. Where all hair is professional. Where all skin is beautiful. Where we're shown exactly the same as everyone else. Where femininity can be strong. Where beauty isn't primary. Where my gray hair is fantastic with red. Because if we show you a world where every woman is seen, then girl, you'll show us all./ I think it's really important that there's at least one kid who can see themselves in me. People have this idea that you have to be brave to be who you are. It would mean so much not to be seen as different. I'm glad that some little girl is going to see me and think I could run that boardroom.
I think there was supposed to be two. No, that's not. There's two more films here that I was going to show, but I guess they've been cut off. Maybe I'm getting over time here. I think one thing I see with this film is every time I've shared it with my team and other people, the number of tissues that come out are quite incredible. I'm sure there's a correlation between this film and the number of tissues being sold out there. If we get the two other films to play, I'll bring that back out. I talked about building purposeful brands, and I think it's very important for me to highlight that purpose is not a substitute for product superiority and portfolio transformation. Therefore, we're equally committed to building a future-fit portfolio. Our core remains our top strategic priority.
We'll continue to invest in our core brands and product superiority and our ongoing product performance benchmarking. 98% of our products are either superior or parity versus competition. I think this gives us a tremendous competitive advantage in our core business. One example of superior products is one that Alan mentioned earlier in his presentation, which is Rexona Clinical Protection, which you see up here on the screen. Rexona is the world's number one deodorant brand and the pioneer of deodorant technology. As you probably know, in the 1980s, we introduced the first antiperspirant active, and now we're changing the category all over again by developing a new game-changing technology in Rexona Clinical Protection. This technology delivers consumer perceivable superior odor and wetness protection, resetting the consumer's expectations all over the world. This year, we started expanding Rexona's clinical efficacy to our consumers' favorite formats, aerosols, and roll-ons.
The launch is having a very strong consumer response in the markets that we're in so far, and we're seeing strong five-star reviews online. We're winning share, we're winning brand equity, and bringing new people into the segment. We have now doubled the size of the segment in just six months after the launch of this product. Now I'm going to take you to this next film that show how Rexona Clinical Protection and the product superiority that it has comes to life. See if I can get that thing to go. There we go.
[Presentation] Also available in spray, three times more protection. Let's put it to the test. In extreme heat situations, free from sweat and bad odor. In extreme effort situations, free from sweat and bad odor. New Rexona Clinical in spray. Rexona won't, will never ever, under no circumstances, let you down.
It's a wow, right? Okay, now let me flip to core on trend. It's absolutely crucial to stay relevant and contemporary with our core portfolio. We do this by shifting our core portfolio towards fast-growing and on-trend consumer spaces. Here, I'd like to show you an example from one of our oldest brands, POND'S, which is, believe it or not, a 172-year-old brand.
[Presentation] Yeah, wow.
A couple years back, the brand embarked on a very exciting journey with the vision of making millennial and Gen Z girls fall in love with POND'S by tapping into the hottest beauty care trends and innovating with incredible speed. Today, we see that the brand has completely reinvented itself and is now growing in all the key markets that it plays in. On the screen, you'll see here some recent trend innovations from POND'S. For example, inspired by the new trends of cosmetocare, which is the hybrid of cosmetics and skincare, glowing creams have been launched under the POND'S brand. As face cleansers become more fun with new, enjoyable, transformative sensories, as you can see, POND'S clay cleansers were introduced in both face wash and face mask. With girls experimenting with their looks and expressions and a rising trend of high-performance makeup removers, POND'S Cleansing Balm was launched, delivering the same quality of a prestige product for just a quarter of the price. Let me just share a quick film here that brings that to life. Again, remember, 172-year-old brand.
[Presentation] It's playtime. Na, na, na. Time to play. Na, na, na. Clay to foam. Na, na, na. It's playtime. Na, na, na. Bounce and glow. Na, na, na. Bounce and glow. Na, na, na. Ooh. New POND'S Cleansing Balm. Melting from balm to oil at first touch. Removing all makeup and moisturizing skin deliciously.
Great. Well, I'm really proud of the POND'S team. This does not look like 172-year-old brand. It looks like something that would have just been launched in the market. Last but not the least, I wanted to get into sustainable core. As you know, we recently announced two ambitious new commitments to help us keep plastic in the economy and out of the environment. First, for total Unilever, we'll have our use of virgin plastic in our packaging, and as part of that, we'll reduce our use of absolute plastic by more than 100,000 tons. Secondly, we'll collect and process more plastic packaging than we sell. All of this by 2025. No doubt, our beauty and personal care brands are going to play a critical role to bring our corporate commitment to life.
I'm very pleased to share with you our first bold move in the space is going to come from the Dove brand. Dove is taking positive action on plastic waste by launching one of the biggest plastic reduction programs in the global beauty industry. In a move that will reduce more than 20,500 tons of virgin plastic from its portfolio each year and support the creation of a circular plastics economy, our Dove brand is making some significant changes to packaging and products within the better, less, no plastics framework. Let me just give you a little bit of detail on how we're doing that. First, starting with no plastics initiatives. From next year, single packs of Dove's iconic beauty bar will be plastic-free globally. Better plastic initiatives.
In line with Unilever's global commitment to halve its use of virgin plastic by 2025, Dove will switch to new 100% recycled plastic bottles in North America and Europe by the end of this year. This will apply to all packs across all of the three brands ranges, including Dove Men+Care, and even Baby Dove. Dove will be the biggest brand in the world that has moved to 100% recycled packaging. This should send a clear signal to the global recycling industry that there is a huge consumer demand for recycled packaging. We're going to continue to innovate across all of our brands to change the way we use plastic for good. Now, let me move to future-fit portfolio, new brands. While growing our core brands, we've also stepped up the creation of new brands.
In the last two years, we've launched more than 10 brands in different geographies to succeed in the hyperfragmentation that I was mentioning earlier. Love Beauty and Planet is Unilever's homegrown brand that was launched in 2018, with here in the U.S. being its first market. It's a brand created with purpose at its heart and plays a strategic role in our naturals portfolio across beauty and personal care. Through its endeavors and actions in making the planet cleaner, greener, and more beautiful, in a very short amount of time, this beautiful brand has driven strong engagement and following amongst Millennials and Gen Z cohorts. LBP, as we call it, is in more than 30 markets already today, and it's on track to exceed over EUR 100 million in turnover by the end of the year. The next one is Unilever Prestige.
As a part of our portfolio transformation, we've acquired as a portfolio, beyond just Prestige, 17 companies since 2015. Undoubtedly, we've made the majority of our investments to build a Unilever Prestige unit. We have a portfolio of purposeful, on-trend Prestige brands offering innovative products and outstanding beauty experiences. I'm pleased to say that Unilever Prestige is now a EUR 600 million turnover business. It's grown double digits in the past 12 months, and I can say that our ambitions to build a minimum EUR 1 billion turnover Prestige business remains. Now, flipping into the third strategic choice that I mentioned earlier is high-growth channels. In a space that's obviously close to my heart, we're continuing to step up our e-commerce growth across omni-channel and pure players. We're growing well ahead of the market at over 30%, and it's now contributing to over 7% of our BPC sales.
We're also running pilots to develop our presence in new e-commerce channels like social selling. We now have a model of design for commerce that looks at portfolio, content, and demand creation in a differentiated manner to win in e-commerce. Our focus continues to build the right assortment, which addresses pack sizes, value density dynamics, and sustainability. We are building integrated experiences across digital touchpoints and have stepped up our investments behind data-driven performance marketing, including partnerships with the e-commerce players that we all know. E-commerce is key to our BPC channel transformation and divisional strategy. We're already seeing some of the work coming through by focusing on a few key things. Number one is investing in our core brands. We're focusing on our core brands and best seller SKUs in offline to drive our growth in e-commerce, addressing the right price, pack, and value density dynamics, as mentioned earlier.
We're launching new brands as well in this high-growth demand space, such as Dr. Sweat, you'll see on the screen here. Dr. Sweat is our new clinical deos brand that taps into excessive sweaters and is currently live in the U.S. and in Germany. This innovation was designed with e-commerce in mind right from the beginning, from being value dense to having packaging that withstands the route to market. Using business models such as social selling, we have a brand called K-Bright. It's a new skincare brand that was first launched through social commerce in China. Our hero SKU sold out in just two and a half hours. It's incredible. Another high-growth channel is beauty specialty. We're building our channel presence in beauty specialty, obviously, via our Prestige portfolio. Our Prestige brands are currently sold in more than 20 countries right now.
Leading retailers like Sephora globally, Ulta in the U.S., Space NK in the U.K., and Mecca in Australia. Our brand serves this channel with additional education and dedicated training for beauty advisors to enable a holistic beauty experience for our consumers that are shopping it. One of our newly acquired brands, Tatcha, can be found in already over 400 doors in the U.S. Sephora market and is already ranked number three in the skincare category there. I've spent a lot of time on our strategic choices. Let me just speak a little bit about some of the key enablers that will bring these strategic choices to life. Number one is digital transformation. As part of our digital transformation program, we're stepping up our performance and capabilities in data-driven marketing.
Data-driven marketing leverages the power of data to move our consumer communications from mass marketing to mass customization to hyper-personalization at scale. We now have digital hubs up and running in all of our key markets, driving data-driven marketing at scale, and you'll get to see that over the next two days. Today, as beauty and personal care, we have over 500 million addressable and actual digital IDs and over 75 million PII data. We're focusing on quality over quantity and in actioning programs which enable us to build meaningful relationships with our consumers. By 2022, we will have high-quality digital IDs of what we are expecting over 1 billion and over 200 million addressable PIIs. Far, the results are encouraging. Our efficiency and effectiveness has increased by over 25% in BPC and our overall precision marketing efforts.
While in performance marketing, the return on ad spend is over 2x, and in some cases, as high as 3x. Later today, Jostein Solheim, he's our EVP of Foods & Refreshment here in the U.S., will briefly talk about digital hubs in his session. You'll get the opportunity to experience how our digital hubs operate. I invite you to join one or more of these sessions to just get a first-hand experience and feel for how these digital hubs look and feel like. Another enabler for us is going to be what's called agile ways of working. For those that have been a part of the tech industry like myself previous to this role, we used to call them two-pizza teams. We've transformed the way we do marketing and engage with our consumers, we're also transforming the way we work as an organization.
In the last 12 months, we have run several agile organizational pilots and have seen tremendous benefits in a few key areas like bringing clarity on priorities, speed, and execution, as well as just building critical digital capabilities for us. In the next year, we're going to be rolling out agile ways of working across all key markets and categories to transform and just really modernize the way we work as an organization. We're going to use agile ways of working to focus on our priorities, execute with precision, and really learn at speed. You're going to hear more about agile ways of working when Leena comes up tomorrow. In summary, I would just say that we're a leading global player in beauty and personal care with a strong portfolio, market position, attractive geographic footprint.
We believe that we're well-positioned for sustained, profitable growth in the fast-changing and fragmented world of tomorrow. Our goal, again, is to accelerate top-line growth. We're going to do this with the three strategic choices that I spent a lot of time on earlier: purposeful brands, building a future-fit portfolio, focusing on high-growth channels, and all these strategic choices will be enabled by digital transformation and agile teams. We believe that this is a model that can continue to deliver consistent, competitive, profitable, and responsible growth in tomorrow's complex and fast-moving world. Thank you. You got the film?
Yeah.
Okay, great. Let's roll. Do you want me to click? No.
[Presentation] Every year, 1.2 million children under the age of five lose their lives to diarrhea and pneumonia. Many of these deaths can be prevented by the simple act of washing hands with soap. Tragically, this received very less attention. Lifebuoy made a bold commitment to change this scenario and created the world's largest handwashing program, Help a Child Reach 5. We weaved powerful stories that got attention. We adopted the village of Migori in Kenya, Thesgora in India, and Bitobe in Indonesia and induced behavior change. We leveraged India's telecom revolution to reach mothers without access to doctors through a unique program called Mobile Doctarni. A whopping 458 million people were taught hand washing. Lifebuoy contributed to lowering the under five mortality rate, and most importantly, washing hands with soap became part of the UN SDGs for 2030.
It is so decided.
[Presentarion] Year-over-year, Lifebuoy continues to ensure that children don't lose their lives to something that can be prevented with the simple act of hand washing.
Great. Thanks. Do we have time for one more?
[Presentation] Oh, yeah, yeah, I see what's going on. Oh, yeah, yeah, feel it coming strong. Oh, yeah, yeah. Oh, yeah. Are you ready for it? Mm-mm-mm. Get ready now. Mm-mm-mm. Are you ready for it? Mm-mm-mm. Let's go now. Are you ready for it? Better get ready now, because we're about to go down. Better get ready. Go down, go down.
Great. I'm glad you got to see those two videos. Do we have time for questions? Yeah. One or two questions.
Thanks, Sunny. John Ennis from Goldman. I had a question on the digital transformation. From your experience at Amazon, within which BPC subcategories do you believe you saw either the lowest level of consumer loyalty rates or the highest churn? How that experience has maybe influenced the way you think now at Unilever around launching within new subcategories.
I think, the first question I wouldn't be able to answer without revealing some information Amazon wouldn't be happy about. I think in terms of the second question, as I was talking about how digital is becoming more implicit versus explicit, one of the areas that we need to spend a lot of time on is how can we predict consumer behavior, and how can we be there, with those algorithm, our predictive algorithms. Programs that allow replenishment systems on automatic basis, I think is going to be a key area for us to focus a lot of attention and energy on. As consumers are trying to spend time on the areas that they want to spend time on family, career, health, et cetera. If we can take some burden out of their daily life, that's where we're going to focus on. It's going to require partnerships with the various players in the industry.
Hi, Jeremy Fialko, HSBC. When you look at the different.
Jeremy
big buckets of your portfolio, so skin cleansing, haircare, deo, skincare, and then you look at the, let's say, the purposeful nature of the brands or how future fit they are, where do you feel most comfortable with the brand portfolio that you've got, and where do you think that there is perhaps the most work that you need to do? Thanks.
Well, our top 10 brands are generally healthy and the brands that I was showing you there, they're the ones that are ready. I've shown you a couple of films here that bring purpose to life. We always have to continually get better as consumers are shifting their behavior and their preferences. I think one of the key things that we need to continually do is just stay close to the consumer and make sure that we're meeting their needs. One last question, then I'm getting the hook.
Hi there. Chris Pitcher from Redburn. Sunny, you've moved to an organization where it has to balance e-commerce growth and traditional retail. Looking at the growth we're seeing in e-commerce in the division, it's almost as if e-commerce is delivering on the group targets, actually, the acceleration in growth is almost managing the rate at which sales are lost in traditional. Can you say, coming from the other side of the business, what you're going to do on traditional rather than just e-commerce to deliver?
Yeah, I think, when I talked a lot about the portfolio and channel transformation, that's the key. The growth on e-commerce is not coming really at the expense predominantly of offline. I think the consumers are just shifting their behavior. Yes, they're shifting their behavior to online, they're also shifting their behavior to different channels within the offline environment. What we need to do is continually transform our portfolio to fit in those channels like beauty specialty I was talking about. The Prestige portfolio that we're getting into and accelerating is coming from a shift into the beauty specialty channel. That's where we're going to focus our energy. Okay. I think that's it for now. Look forward to speaking with you at the break and over dinner. Thank you.
I hope you enjoyed lunch and the groovy tunes that we had here. That was fun. My name is Hanneke Faber. I'm going to talk to you about F&R. Actually, let's make sure that's on there. Foods & Refreshment. Quick introduction since many of us don't know each other. Hanneke Faber joined Unilever last year in 2018. Before that, spent 20 years with Procter & Gamble. In my last job there out of Cincinnati, ran the big global shampoo brands, Pantene, Head & Shoulders, Herbal Essences. Then spent four years in retail, on the board of Ahold Delhaize, running their e-commerce business. For those of you based here in New York, I was running Peapod and also a bunch of other European grocery dot-coms and bol.com in the Netherlands. Super fun. We took that business from EUR 1 billion to EUR 3 billion in four years.
Wild ride, but I couldn't say no to Unilever, and I'm delighted to be here. I ran Europe last year and now have taken over from Nitin in Foods and Refreshments. First we have this slide. Please note the safe harbor. What I'd like to do today really is just two things. A little bit of time on how we look at the market and what the big trends are in F&R, but very much then focused on how we're going to grow this business a little faster with our force for good growth strategy. The market, obviously very, very big. Two and a half trillion EUR in global foods and growing at a 4% CAGR for the last five years. We expect that to continue, because the global population is growing and everyone's got to eat, and because the global middle class is growing, so people will eat better.
Just in India and China, we'll add 2 billion people into the middle class in the next 10 years. I think the funnest thing in foods these days, it really is sexier than ever. When I was a shampoo girl at P&G, beauty was the sexy thing. Today, every teenager posts their food pictures on Instagram. As my 15-year-old says, "Instagram eats first." We cannot eat until we photograph our food. It is super sexy. There are something like 350 million food posts on Insta. Food is sexier than ever, and it's a really fun place to be. What are the mega trends that we see in foods? The biggest one, of course, is better for me and the planet. This is fresh, natural, vegetarian, vegan, local. People really care what they put in their body and what that does for the environment.
Another big trend is what we call 'anytime, anywhere', which is food delivery. Again, if you live here in New York, I'm sure you're ordering all your food in. We all know those delivery.coms and the grocery.coms. I think what's new in emerging markets especially, is what I would call fresh.com. I was in Shanghai just two weeks ago, and there's a picture of the customer that we visited. They're called Dingdong Fresh. I don't know if any of you have heard about them. They're about a two-year-old company. They're in Shanghai only. They have 500 dark stores already in two years. They deliver in 30 minutes, fresh foods for you to cook at home. They do 390,000 orders a day, which is a magnitude bigger than a Peapod or a Tesco.com.
The thing that blew me away visiting them was, first of all, he says it'll be five times bigger next year, which is interesting. Also, I walked in there thinking, "Okay, fresh.com. This is going to be fruits, vegetables, meat, chicken." All those things were there. What's his top seller? Live fish. It's like walking into an aquarium. You have 22 fish tanks with fishes, different fishes, different water temperatures. In 30 minutes, you have your live fish at home, and if it's dead on arrival, of course, you get to send it back. Now, why is all this relevant? Because it's a great opportunity for us to sell ice cream and condiments, because all these people that are ordering this fresh food, many of them don't know how to cook, don't know what to do with the fresh food.
Big trend and big opportunity for us, the Dingdong Fresh, but also the Getir, the Yemeksepeti in Turkey. This is a big trend in emerging markets. The two other big trends, delicious experiences. This is a flip side of all that health and all that convenience. People do want to sit down. This slow food movement, the food vacation, the indulgence of actually having a really nice ice cream, or a really nice glass of wine. Indulgence is a countertrend. Finally, personalized wellness, that's probably the trend that's still most in its infancy. This is targeted diets, fortification, DNA-based eating. The science is in its infancy, but it will come. This is what we see as the big trends, and we'll come back to that and what it means for our strategy.
Of course, the foods industry also has massive challenges, which we'd like to turn into opportunities. Obesity. 1 billion people obese in the world, but also 800 million people who don't have enough to eat. That's a crime, and as a food industry, we have a massive role to play here. You may have heard there's a climate crisis. What you may not know is that 25% of global greenhouse gases actually come from the foods industry, and that's deforestation and cows. Cows are a big part of that. If we were all to eat a little less meat, this would make a huge difference for the planet. Finally, waste. Not just plastic waste, which we've talked about and which we'll keep talking about, but also food waste. There's a lot of concern. Will we be able to feed the world in 2050 when the population peaks?
We certainly can if we weren't throwing away one third of all food that's produced. Massive challenges, but again, we take those as opportunities. I think this is the most exciting business to work in, where we can really do well by doing good. Unilever's F&R business, what does that look like? We're about EUR 19 billion, about 40% of Unilever. That is compelling scale. We have very competitive margins, close to 18% last year. Unlike our other two divisions, less than half of our sales are in emerging markets, which again, is an opportunity for us to increase that footprint further there with the fabulous capabilities we have as a company in emerging markets. We're headquartered in Food Valley in the Netherlands.
We've just opened a fabulous new innovation center on the campus of Wageningen University, which in every ranking is the world's number one food and agri-tech university. Super cool to be there within their ecosystem of professors, students, startup, scale-up, and that should give a real boost to our innovation capability. We have a strong category and brand portfolio, which you should be familiar with. We're globally number one in ice cream, in mayonnaise, in scratch cooking aids, so that's bouillons, condiments, herbs and spices, seasonings, and in cheese. We have seven big, more than 1 billion, some are close to 1 billion, but I've called them our seven big brands, Knorr, Wall's, Lipton, Hellmann's, Magnum, Ben & Jerry's, and Brooke Bond Tea. We also have a fabulous set of acquired brands. They grow on average about three times faster, and there's some real stars in there.
Pukka Tea, consistently growing more than 20%. The Vegetarian Butcher, which we'll talk about in a second, and also here in the U.S., Talenti, which you've heard about in the digital hub, and Sir Kensington's, also growing quite nicely. Finally, on our business, we have a strong presence in fast-growing channels. Out-of-home, out-of-home channels are about 40% of our business. Clearly with that anytime, anywhere trend, people are eating out and outside of their house more often. Part of that is digital, part of that is old-fashioned out-of-home channels, and we have a strong track record in those out-of-home channels. Our CAGR for the last five years is more than 5% growth per year in that channel, and there's a lot of sub-channels, by the way, in out-of-home channels.
The way we define it is through our Unilever Food Solutions business, we're a leader in restaurants, hotels, institutions, and workplaces. With our ice cream out-of-home business, we're a leader in convenience, gas, leisure, and also in delivery.com. This is not just a center store business. I just want you to realize that. A large part of our business actually sits in out-of-home. Another little known fact is that Knorr is a real chef's favorite. Knorr does more than EUR 1 billion in sales just with chefs. More than 3 million chefs around the world use Knorr, which is exciting. A little video on that out-of-home business.
[Presentation] In this crazy world we call food service, we know it's not always easy. There's tired feet, long hours, and hard graft. Whether you're serving a customer or at the pass, no two days are the same. There's opportunity behind every oven door, from pot washers to front of house, from owning your own café to seeing a customer smile. Whatever drives you, drives us. Just think of us as part of your brigade. We're here to support you through the busy times and inspire you to keep trying something new. Most of all, we're here to help you progress. Bring on the empty plates, happy customers, and hearty smiles. Whatever it is you want to achieve, we've got your back.
Again, I hope you enjoyed the lunch. Those were just 10 of the more than 300 chefs we employ around the world to work in this business to help us inspire other chefs, which is a great capability. Looking forward. Our ambition is to be a business where we help people to taste good, feel good, and also to be a force for good. When I say force for good, I mean more force and more good. We need more force in this business, more growth, more speed. We do that by doing good, and again, there's no other business than this business where we can really do good for the help of people and the help of the planet. We have four clear growth choices.
Accelerate the out-of-home channel growth, a shift in our portfolio, every brand a movement, which is what we call purpose, and winning innovation. I'd like to touch on all four of those. If it lets me move forward. Would you help me? There we go. Despite our strong presence in the out-of-home channel, we still have opportunity because we're underweighted when you compare us to the market. Our business is just under 40% in out-of-home channels. Of all food consumed, about 60% globally is consumed in out-of-home channels. There's certainly upside there, and we see this as a major opportunity for accelerating our business, mainly through increasing points of sale. Even though we cover an enormous amount of restaurants globally, that's less than 20% of all restaurants globally. Still an enormous coverage opportunity. There's also opportunity in portfolio cross-selling.
There's many restaurants or cruise ships or swimming pools or movie theaters where we sell part of our portfolio but not our whole portfolio. There's an opportunity for branded presence. Any brand is the company it keeps, and to be what we call front of house, like Hellmann's here with the burger, is a great opportunity to build your brands as well. Digital is helping us do this because clearly you can imagine, going to five times as many restaurants around the world, if you have to do that all with physical people, feet on the street, it's going to be prohibitively expensive. We're building a digital route to market, and already we have a million chefs digitally connected to our Unilever Food Solutions ordering site and to our inspiration website where we gather fabulous first-party data.
The example I'd like to use to illustrate this, again, is also a digital example. You saw it downstairs. Hopefully, most of you saw it. It's called Ice Cream Now, based on a wonderful consumer insight. It is always summer at 9:00 P.M. on the couch, so why not order in some ice cream? We started this effort less than two years ago, and we are now partnering with pretty much every big delivery dot-com that you can imagine. Whether it's the pizza chains, or the courier services like Uber Eats, or the platforms like Cash or Just Eat, we are there. We've built this business from zero to just under EUR 100 million it should be this year. We're in 150 cities and counting, and clearly, there's a lot of upside here going forward. That's an exciting example of how we're building out-of-home today.
Second, and I know this has a lot of your interest, our portfolio shift. In food, there's clear tailwinds and there's also some clear headwinds. We've got to focus on the tailwinds. Tailwinds when it comes to channels, we already talked about that. Out-of-home, grocery.com, delivery.com. All of them have growth rates 5% and a lot more. That's where we'll be focusing our efforts for growth. Categories, we are playing in a number of categories that are actually very healthy. We need to get more out of those. Impulse and premium ice cream, all these are categories, by the way, of the last five years, growing 5%. Scratch cooking, those are the bouillons, the seasonings, the herbs and spices, 5% globally. Herbal and green tea, 6%. Snacking, huge category, where we're actually quite small, but we have some interesting efforts. We'll talk about those. Growth spaces.
Vegan and vegetarian, so plant-based and meat replacement, a big space. Personalized wellness, also growing fast, although yet quite small. Of course, geography, where we have an opportunity to increase our footprint in emerging markets using the fabulous Unilever capabilities. That will be our focus in terms of where to grow. A lovely example, obviously, is The Vegetarian Butcher, an acquisition of this year. We bought it earlier this year. The Vegetarian Butcher is a market leader in the Netherlands, which is a pretty progressive, competitive market when it comes to meat replacements, founded by Jaap Korteweg, who is a ninth-generation farmer. Very interesting story. In the late '90s, Holland had what they call a swine flu epidemic.
Jaap, he was not a pig farmer, but he was asked whether they could use his cold storage for dead pigs, and he had 10,000 dead pigs on his farm. Overnight, he became a vegetarian. He really loved meat, and he missed meat. That's how he started the company. He started experimenting, and he built a great little business, not just with burgers, but with What the Cluck chicken, Magic Mince, the Unbelievaballs. Very tongue in cheek, but with a huge range of meat, chicken, and even fish replacements. We bought the business just earlier this year. Jaap's dream was to be the biggest butcher in the world. That's what he told us when we acquired. We said, "Oh, dang, that's Tyson.
They're actually bigger than Unilever. We have some room to go, and we said, "Okay, we got to go after some big customers." Very excited that yesterday, we started shipping in 26 countries the Vegetarian Butcher burger with Burger King, their new Rebel Whopper. Looks great. I just went on social media to check, everyone seems to really love the burger, which is great. Yeah, we love this. Got a couple of videos for you, one that introduces Jaap and our new Unilever CEO, Hugo, and the ad from Burger King.
Jaap!
Hi, Hugo.
Rebel Whopper, here we go. Lovely weather, by the way. Jaap, great to see you again on a historic place, your farm, where it all began.
Yeah.
Tell us a bit about it.
Well, I'm a ninth-generation farmer, grew up between the cows and fattening bulls. I'm a big meat lover, and now The Vegetarian Butcher with a mission to become the biggest butcher in the world as soon as possible.
For those that don't know The Vegetarian Butcher yet, what is The Vegetarian Butcher?
What we try is to develop the new meat, plant-based meat, for real meat lovers. Not for vegetarians who don't like meat, but people who like meat very much.
Quite a journey, and a shared journey by now.
Yeah
between ourselves. I remember the day, and I said, "You want to become the biggest butcher in the world. What better to team up with Burger King?
Yeah.
Here we are making a partnership announcement and going all across Europe.
Yeah, that's because of the cooperation with Unilever. You did it.
Yeah.
That's your power as a worldwide company.
Jaap, enough talking now. The real proof is in the tasting. Let's give it a go.
For real meat lovers, I think. Absolutely.
That's Jaap. Let me just show you Burger King's advertising for their new Rebel Whopper.
[Presentation] This Burger King Whopper has no beef. Introducing the Rebel Whopper with a patty made from plants. Kind beef. Take a look. Try it yourself. It's totally not beef, I swear. No way. That has to be beef. Go tell your friends you ate plants on a Whopper, and Burger King made you do it. No way. The Rebel Whopper, 100% Whopper, 0% beef. Only at Burger King.
Great. That's channeled in portfolio. The third area of growth, of course, we are Unilever, is every brand a movement. In our Foods & Refreshment portfolio of brands, we have some of the most purposeful brands in our stable. Of course, we all know about Ben & Jerry's, but I just put two pictures just from the last two months to illustrate how purposeful not just our brands, but the people who work on those brands every day are. That's the Ben & Jerry's store in London. On the day of the climate strike, without telling anyone, the employees just decided to close up shop because they were going to go out and strike. They put this sign in the window. This was not planned. I saw it around 2:00 P.M. in the afternoon.
It's so the right thing to do for that brand. It just shows how ingrained that is for Ben & Jerry's. On the right is one of our newer brands. That's Tim Westwell, he's the founder of Pukka. On World Peace Day, we launched Peace Tea for Pukka. To celebrate, Tim decided to have a peace strike in Covent Garden. Again, there he is, really going for what he believes in. Again, so the right thing for that beautiful brand. Now, it's not only our small brands. What's critical is that we start bringing back purpose for our big brands. It was there on brands like Knorr back in 1849 when Carl Heinrich Knorr founded Knorr. It's always been there in Hellmann's. On tea, it's certainly always been there. I want to show you three films that show how we're bringing back purpose in our brands to attract millennials. These are all fairly new, but look really promising in market.
[Presentation] When you choose Knorr, the goodness starts in your pan. It doesn't stop there. We use natural ingredients. 95% of all our herbs and vegetables are grown sustainably, respecting the land and farmers. You're choosing to do better for the planet and better for you. Knorr, a little big difference.
[Presentation] [Non-English content] Hellmann's.
[Presentation] [Non-English content] Alzheimer's.
[Presentation] [Non-English content] Amit.
[Presentation] Brooke Bond 3 Roses. [Non-English content]
Very different purposes, very different brands, very different countries. You saw here, Germany, that was translated, Brazil and India. Our belief is that purposeful brands will grow faster, and the early results on this would say that is indeed the case. Finally, winning innovation, also quite critical in foods. What we've done is we've redirected our innovation efforts into those big four mega trends that are showed up front. Better for me and the planet. Very focused on plant-based, and I'll come back to that in a moment, and sustainable packaging, critical in foods as well. Anytime, anywhere, snacking is a big opportunity. We're actually quite small in snacking in the absolute, but if you look at our Knorr snack pots, which are just a much healthier and much tastier way than those noodles you guys all know.
Those are growing 15% the last couple of years, and we think there is a big opportunity for other forms of snacking as well. Delicious experiences, also a really important innovation thrust for us. You just tasted the new Knorr seasonings for chefs. Those are phenomenal. They can make you look really great at home, too, if you like to cook. Of course, ice cream is full of indulgent options like the Talenti layers that you've heard about. Finally, again, for us, personalized wellness is the thing that will come. Fortification, supplements, targeted nutrition. We have a business in there. Knorr has a big fortified business in emerging markets. Pukka does a nice job in selling supplements. Our big thrust will come with Horlicks, and that acquisition, we're hoping to close that in the next couple of months.
Plant-based is funny because really, Peter and I were talking earlier. Plant-based was at the founding of Unilever in 1929. We were a margarine company, that's like the original plant-based product. We've always been quite good at plant-based, really for the last six years, we've had a cross-category plant-based R&D team in place, which has now been beefed up. That's a terrible way to say that. Sorry. In our new Wageningen center. We were actually rated number one in FAIRR's, which is the investor network for ESG issues, in FAIRR's protein diversification ranking versus all our competitors. More ready for protein diversification than others. We're proud of that because actually replacing dairy and meat is hard. It's hard to get the texture right, the juiciness of meat, the creaminess of dairy products, it's hard to get the taste right.
There's many a plant-based product out there that you don't want to touch. I think we've done a pretty damn good job, and the consumer and influencers would say the same thing. Ben & Jerry's non-dairy is a success in market, got several awards. Magnum Vegan has great momentum and, again, has won several awards. Hellmann's Vegan is also off to a really great start, winning product of the year of the New Grocery in the U.K. We're excited. Plant-based is not just The Vegetarian Butcher. That's been a really nice addition, but plant-based really goes across much more of our portfolio. Finally, of course, we are a big polluter, so sustainable packaging is also a critical part of our innovation program. Loads of great examples.
Hellmann's is going to be the first global foods brand in 100% recycled packaging, coming here in the U.S. very soon, Q1 2020. We're moving many of our products, which are today in multi-layer plastic, which is evil because you cannot recycle it, into paper or recyclable plastic. Things like ice cream tubs. Very difficult, we've just launched a compostable paper-based tub in Italy. Also, these pouches on Knorr go into paper. Which is again, hard to do because it doesn't last as long, blahdy, blah, we're doing it because it's the right thing to do. Finally, one that I really love, it's on the chart there as well. Solero is our first ice cream bar without wrappers. That takes away a lot of plastic, in a multi-pack, you can do it.
Took us a little while to design it and to make sure that it will actually last and that they don't all go together and become a mess. We've done it. Again, that takes away a lot of plastic. With that, just in summary, taste good, feel good, force for good. More force, more good is what we need in this business. I think we have some pretty clear choices in terms of the out-of-home channel, portfolio shift to tailwinds, every brand a movement, and winning innovation. With that, I thank you. I think we have time for a few questions. The mic is coming.
Hi. James Targett from Berenberg. You mentioned Horlicks and.
Yeah
moving into that fourth vertical.
Yeah
you were talking about. It's obviously a year since it was announced at this event last year. I wonder if you could give us an update on where you see the opportunities for you in the next 12 months coming from Horlicks.
We haven't closed. I can't give you a whole lot of detail about we're going to do X, Y, and Z. We're hoping to close early next year. Clearly, priorities on any big acquisition like this, certainly for Horlicks, are fielding the best team. We are ready to field that best team once they close with a nice combination of people from Horlicks and from our outstanding Hindustan Lever business. Keeping up the growth in year one. Again, we've been working plans to continue the nice growth that Horlicks has had. Of course, delivering on the synergies, which are quite critical. The one thing, if you say, "What does keep me up at night on Horlicks?" They have some fabulous capabilities in terms of doctor detailing.
That is not something that we've done a whole lot of, so we're being very intentional about keeping that capability and in fact, strengthening it further. Yeah.
James Edwardes Jones from RBC. Do you gain any benefit as a food business from being part of a combined food and HPC business?
I think absolutely. Of course, there's always a benefit between focus and scale. I've worked in foods retail, I've worked in beauty for many, many years. They are different, so you do need focus. There's also definitely a benefit to scale. Especially when I look at emerging markets. The feet on the street, the enormous distribution power we have there in many stores that sell both food and HPC. That's a scale advantage that I would hate to miss. Yes.
Just on your tea business, is there any way you can get black tea to grow? Is it just a matter of moving into green tea and herbal teas and just kind of making it a smaller piece? Is there any way to kind of premiumize Lipton black tea?
Yeah.
It seems to be kind of ongoing drag every year.
Yeah. Clearly, a shift to the tailwinds in tea, which there certainly are. Green tea, herbal tea, also RTD, so ready to drink tea in our Pepsi Lipton joint venture. Sexy new teas. Again, was in China last week, and in China we sell Lipton milk bubble tea front of house at Burger King. Oh, there's Burger King again. That's black tea actually. There are ways to make that more sexy and more millennial. It is not hard to change that entire black tea supertanker, especially in the developed world. We're going to stay at it. Thank you.
Could you maybe talk a bit more about the in-home channel? You talked a lot about out of home.
Yeah
How that's growing above 5%. If that part's growing more than 5%, that means in-home's not growing. I guess if you could just talk about your outlook there, where the biggest challenges are. Obviously, black tea is one of them that Warren just talked about. What is your growth outlook for that channel?
Yeah. With about 55% of our business in Foods & Refreshment in the U.S. and Europe, I'm sure you guys all know how the big grocery retailers in Europe and the U.S. are doing. They are struggling. They are struggling like crazy. If there's any part of their business that is growing, it's actually the fresh perimeter. Their center store is struggling even more than the store as a whole. That has been a more difficult part for us to grow. What we do see is, even with them, we got to grow where their growth is. Placing Knorr into the fresh section, growing with their grocery dot coms, which are also a bright spot for all the big global grocers, from Tesco to Ahold, to the Stop & Shop here around the corner. It's a hugely important part of our business. It's not easy to grow, but even with them, we try and grow where the growth is. Yeah. Oh, yeah. It is slightly positive. It's not going to grow 10%. Yeah. No more questions? Thank you very much. I will then hand over to Peter ter Kulve.
Great job.
Thanks.
Hello. My name is Peter ter Kulve, and I am here with two colleagues, and that is Joey, who you have seen, who runs the North American Home Care business. He is part of my team. Next to him is Edu, who runs the Brazilian Home Care business, but also is leading the business in South America. What I did, safe harbor statement, I am now basically five months in my role. I visited 23 countries. What did I do in these 23 countries? Obviously connected with my teams, but also cleaned houses and visited stores. What the three things I learned, what are the three friction points that are important in this category? First, it all starts with performance. Cleaning is really important for people. It is the hygiene, it is the germs, but it is also the state of mind.
Many people, rich and poor, when the place is clean, you feel more relaxed, you feel more zen. I'm a little bit OCD. I actually like cleaning. I've always done my whole life because it gives me sort of peace of mind. Most people are not like me. They actually hate it. It's a race to convenience. Cleaning aids that make it go faster and faster and faster, and when you can afford it, have somebody else doing it for you. There is a third friction point, and it's a little bit a new friction point. I was in Vietnam, and we were cleaning a small apartment with a floor cleaner, which smells really nice. We had put expensive fragrances in it, and the lady opens the window. I said, "Why do you open the window?" She said, "Yeah, these are toxic fumes. It's unhealthy.
Chemicals." There is no science, but many people believe that all these chemicals are unhealthy. This is a new friction point, just like you had organics in food, naturals in BPC. No real science that it is better, but deep belief system. For us, this is an opportunity because we can help solve the friction point. This is the sort of consumer side, but there is another side, and I thought, shall I put up a chart or shall I not do that? I decided not to do it because it is the only thing you will remember. That is the fact that cleaning is a dirty business. What do we basically sell is petrochemicals, with lots of polymers in plastic bottles. The footprint of Unilever Home Care, we have the carbon footprint of the country of Slovenia.
We have the water usage of the domestic water usage of the U.K. We leave a lot of plastic, 22 Eiffel Towers, in nature. This is just Unilever Home Care. Clearly, next to the friction points, we need to deal with some of these externalities. Because when we don't, at a certain moment, they will start hitting us. They're also an opportunity. What are now really the jobs to be done? You know, it's one step back when you talk about cleaning clothes care. You do the sorting, you do a little bit of pre-wash on the stains, on the collars. You put it in the main wash. When you still have problems because it's still not smelling nicely or it's too harsh, you basically take it through a post-wash. You do drying, you do ironing, you put it in a cupboard.
Guys, ladies, gentlemen, do you recognize this? Yes, because everybody in the whole world does this. You say, "So wow, that's a nice global industry." What is the reality? That the drivers for this are highly local. The water quality you have in your country, hard, soft, dirty, clean. Do you use washing machines or do you work with the hand? Do you have wools or do you have synthetics? You know, what type of detergent quality are you used to? What's your income level? Do you have money? Do you not have money? What's the competition? This is the perfect global and local business. Many of you have asked me, "Why is Unilever so good in this category? Why is this performance so good?" It really plays to Unilever's strengths. I will show you now a small video that we made on a mobile phone.
It's quite funny, but you see what I do when I travel. The glorious world of home care. It's a good one. She uses a lot of product. Good. This is my world. How do we help these people be more efficient cleaning their clothes? I'll give you a small example. This is Pakistan. We had a problem in Pakistan because my Pakistan market share was going badly, and I was talking to the guy who's running the business and said, "What is now happening?" He said, "Yeah, currency crisis, people don't have a lot of money. People are downtrading. Problems, problems, problems. Portfolio is not good." I said, "Okay, go and talk. What is now make some fills, do some research." What did we discover? We actually, because the cost went up through a devaluation, we had underfilled our pack up.
What we learned is that actually they wash a little bit atypical in Pakistan. In one load, they have a big load. They first do their whites, then they take the whites out. In the same water they do their darks, wash it again, and then rinse their darks. By underfilling, actually, we did not put enough product in the package. Our competitor, local competitor, had just raised the price and didn't do the underfill, and it worked much better for the consumer. You really need to drive basics in all these spaces very, very hard. One step back. It's a EUR 10 billion business. We're in fabric solutions. That is the washing of clothes. We're in conditioners. We're in home and hygiene, that is cleaning the house, and we have the life essential business, which is basically water and air.
Very strong brands. We are very strong, especially in emerging markets. We have a strong performance. We consistently, for a number of years, have growing ahead of market. In many markets, we have number one or number two positions. These are not small markets, these are huge markets. We come from relatively low profitability. Under the leadership of Nitin and Kees, we have year-over-year worked up the profitability. Still not where it wants to be, but we have shown that we can drive a delta every year. By both growing and by improving profitability, what we can do, and I'll explain a little bit why, we have actually created a really good business. What is a strategy?
Many of you ask, "Why is this now really working?" We have a relatively simple strategy, and we are very consistent to that strategy. First, there's always a lot of work you can do on geographic footprint, on channel footprint, a lot of work on cost. We, in Home Care, under Nitin, developed the 5S, the design to value programs, network optimization, lots of space in e-commerce. Joey business. What's your share of e-commerce now in your total sales? It's approaching 30%. 30% of Seventh Generation is e-commerce. Can you believe it? A lot of opportunities there. Speed is really important because when you have a screw-up, like we have in Pakistan, when you repair it a year later, that's very costly. It's always how quickly can you react, not only of opportunity, but also when you make mistakes.
Good global local. There's a lot of new science developing in the area of cleaning, and I will talk about that a little bit later. I'm going to talk about three things in particular. Product superiority. Superior products are the best chance to actually grow penetration and share. Therefore, an enormous amount of focus goes permanently to optimize our products, because you're never done, because as soon as you improve your product, the competitor improves their product, so it is a continuous thing. Driving convenience, and last but not least, cleaner choices. How are we now fundamentally dealing with this horrible footprint of this category? A lot of work happens in market development, and we have a very structured program for that. We started this base with bars. Bars turned into powders into liquids into unit dose.
Next phase will be auto-dose, machines that fill the dose themselves and order themselves. It's a lot about driving new benefits, whether it's naturals or whether it's sensitive, there are endless opportunities, and moving into new channels. Biggest channel opportunity, obviously, is e-commerce, we also develop services and professional channels. That is basically at the core of the growth model. A lot of innovation, simple innovation, line extensions. We also have been quite successful with the creation of new brands. Love Home and Planet was mentioned. It's the most successful home care launch in China for the last five years. These are big, new things. We launched a new brand in India. We're experimenting with dry wash. We haven't cracked that yet. We've made acquisitions for portfolio fill.
Obviously, Seventh Generation, a very chemical safe and natural home care brand, which we have brought to 30 countries. It's a pretty nightmare because it's a lot of work, but we are in 30 countries, and we're building from that. We have bought a New York business, The Laundress, that has landed in the meantime in China. A lot of work on innovation and portfolio development. This is the Chinese home care portfolio three years ago, and this is the portfolio that we have in the market at this moment in time. This is the sort of stuff that drives growth, new benefits, new price points, lots of innovation. Love Home and Planet is there, Seventh Generation is there, Laundress is in there, lots of new Omo products. Lots of portfolio development. We talked a lot about purpose in Alan's presentation. You saw it in Sunny.
You saw it with Hanneke. This is also super important for home care. We have a beautiful brand called Domestos. It's bloody bleach. What can you now say about bleach? Bleach is super important, and we believe that with Domestos, we can fight a global war on poor sanitation. I will show you two examples of how we play this in the U.K., where we basically fight for clean school toilets, which are a disaster, even in the U.K. In India, Mr. Modi has built 200 million toilets, but many people don't want to clean their toilet because cleaning toilet is a lower caste thing. When you ask your wife to clean the toilet or your daughter, she gets associated with lower caste activity systems. Watch the two videos. I hope. One click, huh?
[Presentation] [Non-English content] Norovirus, Salmonella, E. coli, you make me sick. Hiding, breeding, infecting the weak. Germs, here's your bad news. I'm Domestos, and I'm coming for you. I've helped build 200,000 toilets for people who had none, and I have an unstoppable determination to kill all known germs dead. I am Domestos, and I am unstoppable.
Good. Very different context, very strong purpose, but also same identity for the brand. The Domestos as a sort of Superman, cleaning toilets and killing germs. The science of cleaning used to be very stable. It's basically surfactant science, it's chemistry, it's basically petrochemicals. Very rapidly, the science around cleaning is changing. That is really important, because that is also our way to deal with the footprint. We do a lot of work in creating very efficient new formulations, and make them much more weight efficient. We are now moving away from petrochemicals, and move through bioscience in very new surfactant systems. For example, we have launched a product in South America, it's a hand dish product. It is made through a bioscience process.
We created a new surfactant from sugar, the molecule is so big that it doesn't penetrate your skin. It cleans as good as the traditional surfactants, but it is much softer on hands. It's pH neutral, so actually you can add all kinds of enzymes and they work much better. A lot of change in the science of our products. It's also really important, we use a lot of water, not to have persistent ingredients in there. At this moment in time, most of the fragrance systems are still in encapsulated plastics, so you leave, basically with a lot of these fragrances, you leave microplastics in nature. We need to take that out. It will require new science, and we're working that with our suppliers.
A wash in India basically takes between 50 L and 60 L of water in the different phases. Can we redesign, especially the rinsing phase, and move that from 50 L to 20L, 30 L? Obviously, how do we design products that always work on room temperature and don't need to be heated? Last but not least, how do we get to better plastic, but especially to less plastic? We're making a big bet on refills, and you will see that a little bit later on. When I need to summarize our cleaner choices vision, is that over the years we want to work towards the following. Basically move away from petrochemicals and become 100% renewable, and preferably not palm.
Secondly, massively reduce single use plastics, with a lot of focus on refills and reuse, and make all the ingredients 100% biodegradable and very rinse efficient, and a little water, and able to use in cold water. This is the Home Care strategy. It's relatively simple. We have built it over a number of years, and we consistently execute it, and that drives the consistent results. Now to give a little bit more flavor to this, I've asked Edu to describe what he has been doing in Brazil, where we run a very successful business in difficult macroeconomic environment. Edu.
Thank you, Peter. Good afternoon, everybody. Before I start showing what we are doing, I just want to give you a feeling of what our business is like in Brazil. We have a very strong fabric solution business. We have a very good fabric sensations conditioner business. We are in the home and hygiene territory as well, and we are building a new business platform that I'll get you guys through in a minute. I'm very proud to say, as Peter rightly mentioned, we've been very successful in the past years on driving our growth. In six years, we nearly doubled the size of our business, and that's in hard currency. At the same time as this, we've been adding 100 basis points year-on-year on profitability. Looking at this, one may ask, is there more fuel for growth moving forward?
I'll give you a little bit of the feeling of where we are in the year to date. We are actually growing quite fast in the business, and we are growing across all the categories, and we are growing in our new business as well. How we're doing this, and I think that's the reason why I came here a little bit to share. We took what's our Home Care strategy globally, and we fast-tracked it in Brazil. In a gap window of six months, from March to September this year, we relaunched 92% of our portfolio. Okay. Imagine how hard the supply chain has to work to get all this done in the market.
We not only relaunch it for the sake of relaunching it, we're relaunching it driving superior product, bringing cleaner choices into the market in a way that actually raised the bar in our marketing excellence, moving from advertising to content. How we get to do this is actually building one-to-one connections. As you guys got to see a little bit earlier in our digital hubs here, that's a capability that we have across the globe, and that's what making us deliver our message and our innovation in a much more relevant way to each of our consumers. This is what our gondola, our shelves used to look, and this is what it's looking now. It's a radical transformation in the market. To give a little bit of a bigger flavor on this, I explain a little bit what we did in our biggest brand. Okay?
Some of you may not know. Its top single selling SKU of Unilever, it's Omo 1 kg in Brazil. Okay. This is our biggest single individual SKU. We fully relaunched this brand. I have to say that it's such a big relaunch that when we started, even in Unilever, some of us were a little bit in doubt if this was the right thing to do at the right moment. When you have such a big brand like this that charges a premium, if we don't innovate, and if we don't lead the agenda, we might lag behind. We are not doing this only driven by relaunching the core. We did this actually engaging consumers throughout this journey. I have to say that actually two weeks ago, we were awarded the top-of-mind brand in Brazil.
When I mean top-of-mind brand in Brazil, I'm not saying top of mind in home care, I'm saying top of the top. We were awarded the most well-known brand in Brazil, ahead of Google, ahead of Facebook, ahead of Apple, ahead of Nestlé, that's even more impressive considering this is a home care brand. How we got to do this was not only communication led, it was very much innovation led. We completely relaunched our core, every single SKU, with a much better product, with a much cleaner choice. It is a compacted portfolio. What it means by compacted, we taken the known goods out of the formulation and replaced it by cleaner choices in it that's single driving 33% less trucks because you need less trucks and you are increasing your density per palletting. Also we are entering wide spaces.
We launched the delicate range that's performing really well. The market's shifting. We also were the first brand to enter in the front load. Our market in Latin America, it's pretty much top load when I talk about washing machines. New consumers are actually going into front load, we enter there. This is very much successful when we are very much rooted into consumer real insights. Of course, when you talk about superior products, when you think about laundry, you can imagine how much water there is in a product. If you concentrate, this is very easy to make the product more profitable, maybe not very easy to be adapted by the consumer habits because maybe consumers don't want to change the way they dose. They just want to keep life in the same way they've been doing for many years.
The insight that we brought to life was the fact in saying how we sell a concentrated product, but actually consumers can dilute at home, so you get all the benefits of concentration without the challenge of changing consumer habits. That we can see, later on, not now, because I know you are very much inspired by my presentation, but if you want to follow the hashtag new Omo to dilute, okay. This is real consumer feedback. Okay. You will be able to see what consumers that actually buy our products have to say about our innovation. Okay. You have to speak Portuguese. Yes, you have to speak Portuguese. You can see more likes than dislikes, and I think that's going to be universal language and going to help you get a bit of the feeling.
This is a breakthrough innovation because this innovation comes with a unique technology from Unilever, not easy to be copied by competitors, but more important, this is innovation that show a little bit what the future will look like when we drive this agenda all across. It was not only in the Fabric Solutions business that we did the change, and I know that every time we talk about purpose, one may think this purpose really linking to sales. The relaunch of Comfort, our softness brand, it's 100% enrooted in purpose. What's the purpose of the brand? The purpose of the brand is actually making clothes last for longer. Before I actually joined this category a few years ago, I had no idea that the fashion industry is the second biggest polluter in the world.
If you make clothes last for longer, you have a real benefit for consumers because they can have their clothes lasting for longer, but also you have a huge impact in the environment. We relaunched this brand, we said softness have always been a product pretty much well-known for making clothes a little bit softer, but also for driving a great fragrance to your clothes, and for great fragrance in many countries, actually giving the feeling that you actually care for the family, you care for the clothes. Once we step changed this brand and we reignited and we brought purpose into it, we actually made consumers understand that the product has an additional benefit to it, and that is our top growing brand in the country year to date.
This is 100% driven by the fact that consumers can understand the added benefit we are driving into it. One cannot lead from your current portfolio, and that's how we are building the portfolio of the future. A year ago, we had no professional business, and what I mean about professional business is actually having products that we can sell in a professional channel in the country. From zero to EUR 35 million only in Brazil. That is empowered by our brand, our route to market, our capability in our factory, our R&D technology. This is really driving the scale, but even more having the right channel. We are going through a new route, so products that couldn't get to facility before, now through our e-commerce, we make it even better the way we can drive the distribution and accelerate this business.
Last, we understand there are more opportunities. We understand that through technology and the knowledge of our brand and the power of our brands, we can connect consumer needs to all the consumers that are willing to help them solve their needs. What I mean by this is by a simple app, I can get consumers that don't want to wash and iron their clothes with consumers that are willing to wash and iron their clothes. Just like Uber did with mobility, we are doing with washing your clothes. One connects with the other, we empower all this through technology and our expertise. We are doing even further. 65% of households built in Latin America, actually most of the developing world, are smaller than 40 sq m . That's a pretty small house.
When that house it doesn't have a laundry area anymore, it doesn't have a laundry facility, and becoming a shared laundry become very important. That's how also we are building a shared laundry business that we actually connect consumer demands to our capability and knowledge in how we wash and clean their clothes. That's how transforming our portfolio, we are accelerating growth in Brazil and driving the agenda of the future. Peter, I invite you back to sum up all this.
Thank you. What is the Home Care strategy? First place is cleaner choices. That is how do we clean up cleaning? Because it cannot be that we carry this heavy footprint for many years to come, because there either governments will intervene or consumers will intervene. It is also good because we solve consumer friction points around the stress around chemicals, synthetic chemicals, the stress around plastics. Secondly, premium innovations. This is market development. How do you grow the business? Obviously, by serving people who do not buy laundry products, but that are not that many, but selling them more premium formats with better efficacy and more convenience. Thirdly, driving new channels.
Last but not least, I actually like it that the science of cleaning is changing because all the new biochemistry and all the new enzyme science is actually complex. That is really good, because when you can make products in your garage, there are no entry barriers. The science and the focus we put on science is building new entry barriers to the category. This is Home Care and looking forward to your questions, and Joey and Edu will help me when it gets really complex. Any questions? Thank you.
Yeah, Peter, thank you. It's Martin Deboo at Jefferies. First of all, I just want to say what a tremendous job you've done in Home Care over the last few years. It's been the growth and margin engine of the business.
Yeah.
A slightly less charitable interpretation of what's happened is that it was a woefully under-earning business in 2010 that was re-margined and regrown in a time when Procter & Gamble.
Yeah
lost their way strategically. Now they're back. They're going to come after you in Brazil and India just like they have before. Where does that leave you, and what's the plan to deal with that?
Yeah. Clearly they're good at that trade. They've always been pretty decent in Home Care, but we're also very good. Even in the U.S. where we have a tiny business, we have a business that grows 20%, 30% per year. We can even compete, be it the flanker strategy in the U.S. In big places like China, yeah, there are local competition, there's P&G and there is us, and you need to be on the forefront with your innovation, with your execution. Enough place for two of us. Actually, I like it, because markets with a strong P&G, it helps to upgrade consumers to higher benefit areas, which basically grows the category. Yeah, they're there. They're good. We're also there, and we're also good. That's I don't want to be cocky, but we know how to compete with them. I either have been super boring or super clear. Okay.
Hello. Hi.
Hi.
It's Anubhav Malhotra from Liberum. I just wanted to ask about the decision to move a bit more into professional channel. The channel has always-
Yeah
been there.
Sure.
Why have you ignored it in the past, or have you ignored it in the past?
We were in there with Lever Diversey. Then basically we handed it over to Diversey to do this. At a certain moment, that contract came to an end, and we said, "Okay, let's rework our relationship with Diversey because this is clearly a big opportunity." I think especially green and clean chemical technology is really important when this will go wrong. We have products that are truly safe when you use them. I believe with our science and with our brands, that we can build a nice EUR 1 billion, EUR 1.`5 billion business in this space. Let's see. First indication's really good. You had a question there in the back, I believe. Yeah.
Hello. Yeah, Chris Pitcher from Redburn. You were mentioning that the science and the bioscience in particular is creating a barrier to entry. How much of that is actually proprietary to Unilever, and how much is it using third parties to come up with the science for you?
It is very interesting. Our main research facility is Port Sunlight, where the good old man started the business. We have moved to the University of Liverpool, where we're now co-located with the material science department of the University of Liverpool. Innovation is now very much with startups, small companies. It is with academics. How it works is that you develop a specific application for a part of science together. You co-fund it. They have it outside cleaning, we keep it inside cleaning. We believe that, of course, there's also stuff that is generic. When we go to Novozymes and say, "Give me this or that," they will probably, you can fence it off a little bit, but they of course, will sell it to everybody else. Going deeper into the technology. Building more hardcore IP.
I think that will be the name of the game over the coming years. I think that is really good because I've been in this consumer business now for a long time. Over the last couple of years, a lot of the growth came from emerging markets and new markets. We have not always been very good at driving science-based innovation. Now with being everywhere in the emerging market, we really need to dial up innovation in a world of refuse and basically open social communication on product performance. Actually having products that are superior, backed up by science, I think that's the sort of space where we need to try to push it again. In this respect, Marijn will stay our consultant for a very long time because this is his world.
Hey, Peter, can you maybe elaborate your strategy in Home Care in the U.S. because obviously a decade ago you exited the U.S.?
Yeah.
You're now back in with Seventh Generation and The Laundress. I still think it's a small single-digit % in the U.S.
Yeah
Do you want to get back more into the mainstream in home care in the U.S., or are you just happy building out Seventh Generation and The Laundress? Separately for Joey as well, could you maybe talk a little bit about the growth rates of Seventh Gen since you've been owned by Unilever, and how you've scaled your business outside of the U.S.? Thank you.
Okay. It is super important for us to be in the U.S. Why? The most interesting and competitive market in the world, by the way, is the Chinese market. When you really want to see what is happening on the innovation strategies, et cetera, you need to be in China because you learn most in China. The second most interesting market from a learning perspective is the U.S. For us, not having a toe in the U.S. would be problematic because you're just not connected to what everybody is doing, whether that's Johnson or P&G or Target with their Everspring ranges. It's important to be there. With that, we have a flanker strategy. Going head on against a 500-lbs gorilla is probably complex, but we can build in this huge market, very profitable and interesting niches.
For example, we talk about Seventh Generation, we also have Schmidt's. With Schmidt's, we basically sell grandma's cleaning agents, to Gen Z, which is an interesting proposition. The Laundress doesn't sell detergents, they sell shampoo for cashmere. The most expensive product is $60 for 750 ml. There are people coming from China to pick it up. It is clearly, it's a niche. That's our overall strategy. Joey, do you want to say something? You have a thing.
Sure. Yeah, they gave me a mic. Does that work? Yeah. What I'd say about the business in the U.S. is post-acquisition, it's going really well. The business is growing really strong. We've seen an acceleration. The home care business in particular is growing strong double digits north of 15% a year. We're really excited about the growth that we've experienced. I was talking to some people earlier today, and Seventh Generation's never been this kind of zero to EUR 1 billion overnight kind of business, but has been a real consistent growth engine over the past 30 years. We're seeing that, as I said, accelerate really nicely.
As we think about the scale of this business and the potential for it in the future, A, we're really confident that we can compete in the marketplace because we've seen, even as big conventional brands have come into the space, that just having the chemistry alone isn't enough. The brand plays a really important role in enabling us to accelerate despite an onslaught of competition. Secondly, I look at how our brand performs at places like Target. The shocking fact for us at Target is that we are the number two Unilever brand at Target, so after Dove. There's Dove, there's Seventh Generation. Now there's a big gap between us and Dove, but it's a very big brand inside the Target business. I guess for me, that creates real confidence that there's a brand of scale that's out there, and we're seeing great growth as we continue to build distribution, and velocity continues to grow in the places that we're already existing.
We're, by the way, we're now in 30 countries, which was really, really scary. We said, "How the hell can we go immediately to 30 countries?" I think we will survive in more than half of them. We have learned so much and so many new insights to just pivot and drive harder. Yeah.
Can I just ask what your research shows the consumer does differently in developing markets when they have more disposable income in their pockets in relation to your business? I suppose as a second question on that theme, do you have all the right brands and the right tiering to serve any changes in behavior?
Yeah. Unilever always believes in home care to have a total category spanning all price points. For example, Argentina is not the happiest of places at this moment in time. We have Skip, the most expensive brand, and we have Omo Ala in the middle, and we have an economy brand. When people are temporarily distressed, we don't want to lose them. That is one. One thing is really important in home care, and this is the beginning insights. Cleaning matters, so people are willing to pay for it, but convenience matters as well. When people get richer, you can just up-trade them to more convenient, more effective products. That is what we see.
You see that very rapidly in countries like China, where when you look at from a format perspective, China has gone from absolutely basic in 25 years to actually a more premium structure of the market than the U.S. It goes very rapidly when people have money, and we know how to play it. We know when to come with liquids. We know when to come with capsules. We know when people are ready to move to a sprays product because we have all modeled it, and we can then say, "Okay, at this moment the market is ripe, maybe only in these cities, to start building certain premium benefits." We have the flexibility that when the shit hits the fan, that you can also take people back to cheaper formats and then hopefully take them up again at a certain moment. I think that's really our bread and butter in this category.
Right, I'm going to start anyway, if you're in your seat or not, I'm going to get cracked on. Welcome to what is the last session of today. I suspect that probably half the people in the room like me are on European time. It's close to bedtime now. It's almost 10:00 o'clock. Stay with us, especially you, John. I can see you flagging away in the front row there. POND'S is 172 years old, and still going strong, so presumably we can crack on for the balance of the day here. So far, you've seen Alan in his new role, you've seen Nitin in his new role. You have seen three divisional presidents in their new role. You're getting me very much in my normal role. This, for me, is a session where the content is pretty pure play finance, to be honest.
I'm going to talk about three things. I'll talk about our value creation, I'll talk about our capital allocation framework and how we think about how we shift our capital around the business and how we return our capital, and I'll talk a little bit at the end about the savings plans that we have that fuel the growth of the business and keep that flywheel turning. Three pretty good subjects to finish the day with. As usual, I'm required for the ninth time today to remind you of the safe harbor statements. What a world we live in. I'm sure we all feel really comforted and protected by this. Back in June, in Paris, Alan spoke about the three beliefs that underpin our Compass Strategy.
These are three beliefs which really anchor together our business priorities and our strategic imperatives, they are quite simply, that brands with purpose grow, that people with purpose thrive, and that companies with purpose last. If you take the first of those beliefs, I hope today has already given you plenty of examples about just how focused we are in the company on driving growth through brands with purpose. Now, on the second belief, you will hear Leena, who is our Chief HR Officer, talk about how people with purpose thrive tomorrow. The third belief, which is that companies with purpose last, is really for this session. I would like to focus on how we have delivered and are committed to continuing to deliver superior long-term value.
For us, this means consistent multi-year performance on growth, on margin, and in cash delivery, even as our markets are, generally speaking, a bit more volatile, so that we can deliver attractive returns to our shareholders. These are the areas, as I said, that I'm going to focus on today. Let me start with shareholder returns. When we look at our performance, we've increased the market cap of Unilever from about EUR 88 billion in 2014 to around about EUR 144 billion today. That's an increase of 80% over five years. It's strong performance. It's twice the rate of the AEX index, which increased by 40% over the same period, and it's much more than the FTSE's done over that same time period. We didn't choose the best and easiest comparator.
I really think that comparisons like this have a lot more relevance when you look at our performance relative to our peer group. This chart shows where we've ranked in terms of three-year total shareholder return over the last 10 years compared to our peer group. What you see is that we've sometimes been in the top third. We've very rarely been in the bottom third. Really, since 2014, our performance has been strong relative to our peers. Now, Richard, where's Richard? Richard Taylor, you asked this morning in one of your questions, where are plans unambitious? I just emphasize that what we're doing here, it is a really hard thing to do, to be in the top third consistently of your peer group. I think we all recognize that.
You see our performance here, and you see what's happened over the course of the last 10 years, with a strong performance since 2014. Looking more closely at recent years, this is from 2016 now, we've delivered consistent multi-year performance across all the key metrics. Our growth has not been in the upper half of our 3%- 5% multi-year growth range over the last four years, but we have managed that in five of the last 10 years. I hope, again, from the earlier discussions today, you can tell just how committed this team is to getting back into the upper half of that growth range.
If I summarize all of the discussions we've had in the breaks, or at least that I've had in the breaks with many of you so far today, it is a question of that growth, that little bit of growth, to move ourselves into the upper half of that range. Our growth has stepped up, as it shows here in the chart. We have done this in an environment where our markets have slowed, especially across, for example, the big footprint presence that we have in Latin America. At the same time, as you can see in the chart, we've grown our operating margin as we said that we would. Our delivery shows, and Alan touched on it this morning, that growth and margin improvement can very much go hand-in-hand when they are managed properly and carefully.
This in turn, as you see in the chart, has resulted in strong EPS growth. Our margin's gone from 16.4 to 19.3. We've added 300 basis points or so of margin, that gives us a fantastic platform now for value creation. As we now grow from that higher margin base, we create much more absolute value per unit of growth and even better returns over time. I'd like to take a look now at our financial growth model. We use this a lot and have done very consistently in the business for a long period of time. When we think about our financial growth model in Unilever, we think about three levers. It's not rocket science, but it's worth setting out.
We think first of all about growth leverage, and that's essentially our underlying sales growth and the accretion that we gain from working the portfolio through acquisitions and disposals. The second lever in our growth model is operating leverage. That is driven principally by efficiencies and by margin improvement. The final lever is financial leverage, which includes pensions, tax, finance costs, and minorities, et cetera. As you can see here, over the last 10 years, we've used different levers to drive our financial growth model at different times, always seeking to deliver consistent value for our stakeholders.
I'd give us a pass mark for this, because as you break the last 10 years down into two five-year buckets, what you see here is that between 2010 and 2014, when commodities were booming a bit and emerging markets were really flying, our top line growth was the main driver of our earnings growth, cash flow growth, and value creation. These were also the years of higher catch-up investment in the business, which we spoke about at the time, which kept margins over that period relatively low. Since 2014, we've seen our markets, and consequently our growth, slow down a little bit. Over the five years from 2015 to 2019, we were able to significantly step up our margin delivery, and that allowed our operating leverage to be the bigger driver of our financial growth model since 2015.
At the same time, we worked to get a benefit from financial leverage by managing our pension, our tax, and our financing costs quite efficiently. I should say for those who came looking for margin guidance beyond 2020, I just want to repeat what Alan said this morning. We're not giving guidance on margin today, and of course, if that changes, we'll let you know. We do understand how we create value in this business of Unilever, and we do understand what levers we need to pull in different circumstances. Now we are very disciplined on cash, and that will not change. Our free cash flow has increased by EUR 1.5 billion over the last five years and now stands at well over EUR 5 billion a year. We've doubled down our focus on cash conversion, and we're pleased with the progress that we've made on that.
We said we wanted to run the business at around 100% cash conversion. That's what we delivered last year in 2018. That really is quite a significant improvement from where we were just five years ago. Now one of the drivers of this has been an improvement in working capital. That alone has freed up about EUR 4 billion of cash over the last 10 years. Marc mentioned this in his presentation. Having negative working capital consistently for a period of eight years is good. To have negative working capital of over negative 5%, I think is better than good, although it has been a little bit tougher to maintain such a strong position as that recently.
We have seen a little bit of a deterioration since our lowest working capital level, which was in 2016, but we are very clear what the reasons, what the drivers of that are. Some of them are structural and quite understandable, but some aren't structural. Where they're not structural, of course, we've taken steps to correct that. For example, we did build up stock for a potential no-deal Brexit. We also carry higher stock levels in areas of our business where we're restructuring our factory network. We're doing that restructuring of course to get more flexibility and a lower future cost base, but in our big supply chain networks in Europe and in Latin America, we do build up stock levels before restructuring our factory network. Also as Marc touched on, we have increased our portfolio complexity a little bit with Connected for Growth.
We've introduced more SKUs through locally relevant innovation and channel specificity, which Marc mentioned this morning. All of that puts a little bit of pressure on working capital. More recently, we've had a couple of specific liquidity issues in some parts of the world, such as Africa and the Middle East, and of course, we're managing those situations thoughtfully and carefully. Let me move to CapEx, which is another critical part of our cash generation. Around 10 years ago, we took the very deliberate decision to step up our CapEx levels to over 4% of turnover, and we did that because we had identified a prolonged period of relative underinvestment in the business. A short period of that higher spend allowed us to modernize our fixed asset base, and since then, we've been able to steadily reduce the levels of CapEx.
This has been helped by the strategic shift to more use of third-party manufacturing across the business as a way of handling that complexity and lowering risk, particularly with regard to local innovations or the new to the world brands that we've been developing. Our CapEx levels now sit at around 2.5% of turnover, which we see as a more normalized and sustainable level. Following the strategic review back in 2017, we increased our leverage to approximately two times EBITDA, and even with that, we've been able to maintain a healthy single A credit rating. Having that good credit rating is pretty important from the perspective not only of low absolute cost of financing the business, but of course, it also affords us a lot of strategic flexibility with our balance sheet, should that ever be useful to us.
Our average interest rate on net debt has decreased from around 3.5% in 2016 to 2.2% in 2018. That's helped to deliver the financial leverage component of the financial growth model that I showed a couple of charts ago. For simplicity, that's all shown there before the impact of IFRS 16 from 2019, which brought leases into liabilities and net interest cost, of course. Now I'd like to spend a few moments reviewing how we think about capital allocation in Unilever, and essentially, we have three broad choices available to us on where we put our capital. The first is what we call operational investment.
We will always invest first back into our business, creating the platform and momentum for future growth, creating the flywheel or virtuous circle of growth, as we call it, that works so well for businesses like ours that are focused on brands and on consumers. Operational investment includes CapEx and restructuring, where we spend now in order to create the right foundations for the future in our assets and our capabilities and in our organization. We also include within operational investment choices around investing in our products and brands, for example, through R&D, and we also include sustainability investment and minority buybacks in this bucket, which I'll come onto in a minute.
You could debate whether minority buybacks would sit in portfolio reshape or in operational investment, and indeed we do from time to time, but it's certainly very clear to me that there is no better example of investing back in your business than to buy some of the minorities that you don't own, so you own a little bit more of the business that you already control. The second set of choices for capital allocation is about reshaping the portfolio through acquisitions and disposals, and that can either be a source or a use of capital, of course. The third group is about returning value to shareholders. Let me talk about each of these. I've already talked about capital expenditure under operational investment, but let me turn to investing to stay future-fit. We have to continue to invest to be a future-fit organization.
For several years now, digitization and the creation of assets and capability around data in Unilever has been an absolute priority for the entire organization. You saw this at lunchtime today in the digital hubs. You saw it from Marc with the digital twinning in the supply chain presentation this morning. This includes technology, includes automation, and most importantly, the capabilities of the people that work in Unilever. Not only have we introduced extensive and mandatory digital upskilling and training across the entirety of the business, but in the last two years, we've recruited over 1,500 digital roles across all of the functions in the business. Actually, the candidates for this are a mix of internal talent and external talent, such as data scientists or audience insight specialists.
We now have 500 people in the business who are dedicated to our 38 digital hubs and our people data centers, which, as I'm sure you know now, are now in over 30 countries. You had a chance to meet a few of them during lunch when we popped downstairs to the digital hubs. We also make an active and frankly unapologetic choice to invest in sustainability. You all have seen the challenging targets that we've announced for ourselves on plastic packaging, and this can sometimes bring costs, but as Alan explained this morning, it is very much what consumers want, particularly future consumers, the consumers that are coming into our products. Therefore, it's a very important area of investment behind the future relevance of our brands and our products, your brands and your products. We have to start thinking about that sustainability investment in that way.
It's also fully in line with our strategic commitment and our strategic priority to purpose-led brands, and of course, those two things go hand in hand. All of this, of course, builds on a sustainable living plan, which we should remember was in place well before the UN Sustainable Development Goals were created. You also know that we're investing about EUR 3.5 billion in restructuring spend between 2017 and 2020 to make sure that we have the right organization and infrastructure in place for the future of the business. The key enabler here is our change program, which I'll come back to in just a few minutes. At this point, I'd like to digress slightly for a minute. Investment in the long term isn't just about buying businesses. It's not just about restructuring or building new capability.
In our business, we sometimes have to make investments now in a brand or in a country for which the return is only going to come some years later. We do this again so that that virtuous circle, that flywheel that is so important to us, keeps spinning down the line. There are just three examples on this chart where we benefit today from investments that we made a decade ago. The first one is Dove Men+Care, which was the very first extension of the Dove brand into the male segment. It started very small. It crossed the EUR 100 million mark in 2010. It doubled in size by 2012, and it's now over EUR 600 million, which is similar in size, just to anchor it with a reference point for you, that's the same size as our entire business in Russia.
It continues to grow very strongly and will continue to grow strongly from that ever bigger base. The other two examples just illustrate where we backed ourselves to grow positions in our emerging markets. You know, we talk a lot about our emerging markets. We love talking about our emerging markets. They're such an important part of Unilever, but they didn't show up by accident. We didn't have the unbelievable footprint that we have and the advantage we have where populations are growing just because by happenstance. This happened through these longer-term investments and having the foresight to develop assets in places that will be a future store of value going forward. There's two examples here. It's Mexico and the Philippines, both businesses that have grown to over EUR 1 billion each over the last 10 years. You see the average rates of growth they deliver.
We often talk about the early investment and commitment that we have when investing in our emerging markets, and that we're all about growing them into the long term, even in some volatile and difficult environments, such as we're experiencing right now in Argentina and Brazil, for example. You're going to get the chance tomorrow to talk to Fernando and really get it from the front line of managing through those markets. What I hope you take away from that is that this is opportunity. This is our bread and butter to operate in these volatile markets. Sure, yeah, it's going to take a bit of growth, a bit of shine off the momentum of the top line of the company for a period of time.
The opportunity and the scale that you create by being in those markets through those moments of volatile change, it's what creates the platform from which you then grow even faster when it comes out. People ask, how did you develop these businesses in emerging markets? Most of it was by managing through crisis. Most of it was by being there when nobody else was there, and therefore creating very strong brands with consumers in those marketplaces and building loyalty that lasts to this day. They are just two examples there. Myanmar and Ethiopia are good examples that sit in the next wave. We are investing on your behalf in Myanmar and Ethiopia because we see the potential for future growth there, and we want to build a strong position that will pay off further on down the line.
Another way, as I mentioned, that we've been investing capital back into our business is by increasing our ownership interest in subsidiaries in strategic geographies of the company. Over the last 10 years, we've invested over EUR 4 billion in minority buybacks. As you can see on the chart, we now own 100% of our businesses in Vietnam, in Algeria, in Egypt, and in South Africa. Also in 2013, many of you will remember, we increased our shareholding of our biggest subsidiary, which is Hindustan Unilever. Since we repurchased those shares, the share price of Hindustan Unilever has increased from INR 600 to over INR 2,000. A really strong value creation example, especially since we were able to use some of that additional shareholding to fund the acquisition of the Horlicks brand from GSK, which was announced right about this time last year.
It is, in fact, the largest acquisition we've made since Bestfoods back in the year 2000, and very significant. All of the 34 acquisitions that I'm going to talk about in a minute and that you're constantly asking questions about, they are not all equal. There are four or five of those that are very big and very significant, and the others tend to be rather small and single country or much more manageable. Increasing the holdings that we have in subsidiaries means that you, as Unilever shareholders, will benefit more from the future growth in these markets. We believe that that is a very good use of our capital from time to time when the conditions are right. Moving to the second group in our capital framework, portfolio reshaping through acquisitions and disposals.
Alan and Sunny and Hanneke and Peter have all described the importance of portfolio change, either first of all, organically through innovation on our existing big brands, or secondly, through the development of new brands, or thirdly, this is very much a sequence, through acquisitions and disposals. It has been a particularly important feature of our capital allocation over the course of the last five years. Since 2015, as I said, we've made 34 acquisitions and we've made 14 disposals. Over that time period, if you count the cost, that's EUR 11 billion invested and proceeds realized of EUR 8 billion. Together, that's almost EUR 20 billion of portfolio churn, for want of a better word, through acquisitions and disposals.
That we think is a reasonable level of activity for a company that has a market capitalization of around EUR 150 billion. The sole objective of our M&A strategy is to reshape our portfolio towards higher growth segments. First of all, at a macro level, this means more of our portfolio in high growth segments such as Prestige and exiting lower growth segments such as spreads, for a basic example. While most of the increased scale of Beauty & Personal Care has in fact come from organic growth in the business, acquisitions have also played an important role, and that will be more evident over time as the acquired businesses grow. That was the macro level. At a micro level, we're also reshaping our portfolio within each of our three divisions.
In Foods & Refreshment, for example, we've made relatively small investments to acquire The Vegetarian Butcher, which Hanneke showed you, to tap into the fast-growing plant-based trend. We also acquired Graze, tapping into healthy snacking in the U.K. In Beauty & Personal Care, we've acquired smaller brands in the naturals space, such as Schmidt's Naturals, and created new brands in naturals as well, such as Love Beauty and Planet. In Home Care, as Peter and Joey, who manages the business, just showed us, we've acquired Seventh Generation, part of the clean and green home care movement. We've also continued to prune the portfolio. We have done a number of smaller disposals within the divisions. For example, Alsa, which is a European desserts business, and AdeS, which is a Latin American soy drinks business.
As Alan said earlier, we're still open to M&A, large and small, but we will continue to set demanding criteria and run a very rigorous process. As we do that, you may notice a slowdown in the number of acquisitions going forward. At this time of particularly high multiples, we're going to focus on the 34 acquisitions that we've completed in the last five years and how we can realize full value, including by rolling those businesses out across our footprint to more markets. On the subject of talking about M&A, I want to stress that every single transaction, if it's an acquisition or a disposal, goes through the same very consistent and robust process, whereby after looking at the fundamental strategic fit of that business, we make a very rigorous assessment of the financial returns and the risks of every opportunity.
We don't get this perfectly right in every case, and I don't think you'd expect that we would get it right in every case. In aggregate and over the midterm, you can expect that we make good acquisition and divestment decisions. Sitting above this rigorous process is the discipline that we have around return on invested capital. Just to remind you that ROIC is one of the targeted metrics in our long-term compensation plan for 90% of the top 100 leaders in the business. They are all signed up to that. We've been very clear that we want to keep ROIC in the vicinity of the high teens, and over the last five years, we've delivered on that. We've closed a significant number of acquisitions over that time period without significant dilution to our high ROIC.
Although we are prepared to see ROIC go down somewhat in the short term, provided that acquisitions meet our financial and strategic criteria, maintaining ROIC as we have done has really only been possible because of the strong margin progression we've delivered over the same period. The margin progression has been the thing that has allowed us to churn our portfolio, moving to faster growth spaces, without major dilution of ROIC. I think Alan has made it abundantly clear already today that growth is our number one priority, and we've managed to balance the capital cost of shifting our portfolio into higher growth segments, but also being able to do that whilst having the discipline to maintain that high ROIC. The last area of capital allocation to examine with you is returns to shareholders. We've always paid, as you know, a regular and growing dividend.
We have a payout ratio usually somewhere between 60%-70% of our earnings. Paying a regular, sustainable, and growing dividend is important. To be quite candid with you, it's the first thing I think about on the 1st of January every year when I wake up with the year ahead is, in simple terms, we've got to generate the cash to fund our dividend. We've grown our dividend year-on-year, irrespective of any single year foreign exchange impact on our earnings. That can be quite significant sometimes because of our emerging markets footprint, which over time it tends to round out and revert to a mean. We've also made several event-driven share buybacks in the last couple of years.
We see that as a very good way to return excess cash to our shareholders, cash which is beyond that which we need in our capital allocation framework. It also helps us to grow our earnings per share. For example, we returned EUR 6 billion with the proceeds that we got from the sale of our spreads business. Now, historically, our share buybacks have been episodic and event driven. They've usually been associated with a cash buildup following a transaction. Going forward, we see the opportunity to use buybacks as part of the suite of tools that we have within our capital allocation framework, whilst broadly keeping at our goal of around 2x leverage. Let me turn now to a subject that Alan introduced earlier.
With growth our clear priority, I want to review with you the programs that provide us with the fuel that is essential to driving that growth. These, by the way, are the same well-established and slick programs that have helped to deliver our margin progress in recent years. The three main programs are ZBB, 5S and the change program. Together, they've consistently delivered EUR 2 billion of savings every year since 2017. Let me just take each of them in turn. Most of you, I think, will have heard of our 5S Program. It's a holistic program covering pricing, product sourcing, and product design at the SKU level in every country. It is and will continue to be a really key driver of our savings. It's delivered over EUR 1 billion of savings in both 2017 and 2018.
Let me just share with you some examples on the chart of what the teams have delivered as part of the 5S Program. In skin cleansing, we've harmonized the 3D shapes of our liquid hand wash bottles across brands. You can see it's the same bottle shape between Lux and Lifebuoy there. Instead of having different shapes for every brand, we now generally have the same bottle, but we can still very effectively differentiate our brands through, for example, the cap and as, of course, the branding on the bottle, what we call the 2D design. This drives a number of efficiencies for us. In our factories, we don't have to do pack changeovers on lines when moving production from one brand to another. That improves the efficiency and effectiveness of our operational equipment in the factories.
We also negotiate better costs with suppliers through having higher volumes of the same bottle. The change also means minimum change part requirements, and therefore lower CapEx on the lines in our factories. Last but definitely not least, this change also means a plastic reduction of 20%, which is another cost saving, but just as importantly, of course, a reduction in our plastic usage. It's a great example of the less plastic lever that we talk about when we discuss delivering the plastic goals that we've announced recently. What this shows is that when we get 5S right, we drive efficiencies, but also reduce plastic usage. We've got another example of this, which is Dove soap bars. We're now removing the polyethylene layer from our Dove bar cartons and making the cartons recyclable. That, of course, saves cost, but it also saves plastic as well.
Turning now to the second lever of fuel for growth, which is our ZBB program. We first introduced ZBB back in 2015. It really has been a resounding success across the company. Now, I want to caution that not all ZBB programs are the same across companies. Unilever's ZBB program is very broad and it's very deep. We benchmark very actively quartiles of cost across a very wide scope and at a very granular level. As you can see on the chart, we had different starting points, but also more importantly, very conscious and different levels of ambition within the different cost types themselves. We've seen the benefits of ZBB for our organization. We continue to extend the model and its philosophy into new areas, and we'll keep on doing that.
We've now extended ZBB into digital media, into spending on our trade terms with customers, and into the area of logistics spend. ZBB doesn't always necessarily mean spending less money, but it also means spending the same money or even more money, more effectively. We've created, for example, Digital Mandatories. These are best practices for creating our digital assets, and they're proven to deliver greater end market impact and growth for our brands. Currently, not all of the assets that we produce digitally follow our best practice. By ensuring that our digital assets follow that best practice, we know we can improve our ROI by over 30% on Facebook and about 20% on YouTube. There's a lot of potential here. In 2019, compliance levels with our Digital Mandatories have already doubled by focusing on that.
Another example is bought-in services, where we drive savings through building new global tools and capabilities for our local marketing teams. We've introduced tools that allow us to reduce the risk of duplication and maximize the reuse of assets across our business. As you know, we've consolidated and we've simplified our agency partnerships to be more efficient and to improve both creativity and consistency. Regional advertising producers, U-Studios, and UniAdapt, all of these tools help our business to improve the quality and efficiency in advertising production, in adaptation of advertising, and in the amplification of the content of that advertising. The third initiative that fuels our growth through driving organizational efficiencies and investing to ensure we're future fit is our change program. We have significantly stepped up the level of restructuring spend in the company. We're now spending around EUR 1 billion a year.
The average payback for projects in the change program is 2.5 years, we have about 35 projects that deliver over EUR 10 million of savings each. For us, restructuring is and will be always important to continue to make sure that our organization is future fit. We know we have to do restructuring in a responsible way. In regions such as Europe, where a significant part of our cost base sits, this means executing our plans can take a little longer than we would like. Leena is going to talk about what we call the future of work tomorrow and cover how we're becoming more agile and simple as an organization. The future of work also includes principles such as lifelong learning, reskilling, and upskilling of existing employees for a different future, and pioneering a growth culture across all of our business.
We continue to identify new change projects all the time to sit within this and be future fit. Nitin this morning introduced our thinking on grow, power, and run. As he said, we're still piloting ideas, but we think that within the run space, there is a great potential for efficiency and liberating our resources away from internal processes in order that those resources can get out there and focus on growth. Our plan is to take our global business services platform to the next level. It's a Unilever-wide program, and it aims to free the business to grow by transforming the way that we work across all of our functions. It's about redesigning the way that we do the very basics of our business, essentially making it easier to get things done by taking full advantage of future technology pathways.
It lets our people focus on consumers, on customers, and on growing the business while delivering efficiencies at the same time. Last, under fuel for growth, I want to share with you a great capability that we're developing within our enterprise technology solutions organization. That's our global business services organization. It's called the Automation Factory. This team delivers automation at scale for Unilever. They work with expert partners such as IBM, Deloitte, EY, and Accenture, and they deliver RPA, robotic process automation, for repetitive basic tasks in the company, as well as delivering cognitive automation, which incorporates a little bit of Artificial Intelligence. It includes things like chat box, text mining, and anomaly detection. You've heard those things mentioned in presentations over the course of the day. This is the team that produces the technology that allows that to happen.
It has freed up about 1 million hours of work per year. We've deployed over 250 bots in the business. We've automated over 1,000 processes. That 1 million hours of work can now be deployed on higher value add activities. It's really another example of how we're investing to be future fit, while at the same time driving efficiencies. Just to wrap up, as the day draws to a close, hopefully, I've been able to give you a few examples of what we've done and what we're doing to drive superior long-term value. We have delivered strong multi-year performance across many metrics. We have a very disciplined and effective capital allocation framework. We have a healthy pipeline of savings programs that provides the fuel for growth in Unilever today and out into the future. With that, thanks for listening. Can I take a couple of questions, Richard? I'll take a couple of questions, and then Richard's going to come up and give us the details for this evening and dinner. Hi.
Thank you, Nadim. Nadim Rizk at Fiera Capital. I have two questions on acquisitions. The first one is, obviously you're mostly like everybody else, selling slower growing businesses and buying faster growing businesses. The issue with that is you're selling them at a much lower multiple, buying the faster growing companies at much higher multiple, and hence your return on capital is actually declining. The question is the first one, or it's a comment. Unless you can take that business or believe you can take it and make something significantly bigger with it, there's no value for the ultimate shareholder by doing that sort of mathematical exercise. The other question I had on acquisition is, you said you're open to both small and large acquisitions. Yet, you're mostly compensated on ROIC, which I actually like.
That also can prevent you from making a good acquisition that hurts short-term ROIC just because you're compensated on ROIC. For example, there's a, let's say a large oral care company that's struggling these days that could potentially be a good fit. I don't know. I hear. That would effectively mathematically hurt the ROIC significantly, at least, you know, on an accounting basis. That would make such a large acquisition complicated from that perspective as well.
Nadim, you've just given half the room a heart attack by mentioning that.
I didn't mention a name. I just, Nobody knows what the name is.
Okay. All really big points. We could talk for ages about it. Let me start at the end of your second question on remuneration and doing the right thing. You've got to have a ren plan that drives the right behaviors within the business. The second chart I put up showing the sort of sine curve that happens on TSR ranking, there's no doubt that TSR is the way to align most closely the interests of the people within a company with the people who own the company. There's no doubt about that. The problem with it is you're a little bit of a hostage to fortune on the timings that happen in a TSR ranking, et cetera. That's why, a few years back, we thought very hard about introducing EPS growth into our long-term target metrics.
We have four long-term target metrics. It's not that ROIC is the only one. The reason we put ROIC in is because we believe we're a high ROIC business. We know we create value from our high ROIC. We know it's very important to our shareholders. When we introduced EPS growth, and you know there's a lot of funny stuff can happen, particularly in this neck of the woods, when it comes to EPS growth as a metric. We believe that ROIC was a very good counter to that, so you would not use cheap debt to buy assets that give you EPS accretion, which is just mathematical and congratulate yourself for that. ROIC is the counterbalance to that. There's 25% on each of those two metrics.
There's also 25% on our compounded long-term sales growth, because we know that growth is what drives value in a consumer company. The other 25% is on progress with our Sustainable Living Index. We'll talk a bit more about that at a future juncture. I recommend that all of you, at some point, if you're serious about ESG investing, start to put some form of ESG-related measure into your own performance metrics. Because if they're not in your performance metrics, I just don't think you can be that serious about it. That's the long term. Now, your specific question about that is done on the basis of our strategy of bolt-on M&A, which broadly speaking has been between EUR 1 billion and EUR 3 billion of M&A activity in any year.
If we step beyond that for a transformational or mid-size transformational in that hypothetical example that you mentioned, at that point, I think, you would have to accept that the strategy justifies it. You would be extremely rigorous on the strategic rationale for any move such as that. Of course, the board and the remuneration committee, and we would talk to everybody, of course, you would not stop yourself from doing something that was manifestly in the strategic interest of the company and its shareholders because there was a ROIC number. I think you can be confident that when it comes to transformational transactions like that, hypothetically, then you wouldn't allow the short-term impact on ROIC to get in the way of that. You're highlighting what we all know, of course, which is that there is no silver bullet for any form of remuneration structures.
I think our performance measures are well thought through. I think they're fair, they're balanced, they align the leadership team with the interests of our shareholders. We think long and hard about that, even to the extent that the changes we made to our remuneration arrangements about 18 months ago were bold. They were leading-edge things. In order to make the same amount of remuneration as a manager now in Unilever, you have to take your short-term reward, and you have to reinvest it. You have to reinvest it in the long term into the MSIP program. That MSIP program lasts for four years. In order just to make the same money that you did before, you basically have to do what we ask you to do, which is to invest in our company.
We wanted to do that because we wanted to have more of the people working in Unilever owning more of Unilever. We've thought a lot about that. Your first point on the mathematics of accretion and dilution for transactions. M&A starts with strategy. It's one of the most strategic things you can do. In our case, it's about shifting our portfolio to higher growth. You're right. When you're acquiring higher growth, particularly with valuations and multiples now very closely correlated with growth, they weren't, by the way, five years ago, but now they very much are. That can be expensive, and that's why we are saying that we think we'll see a slowdown in our deal flow. In fact, our conversion between everything we look at and transactions that we execute is about 10: 1.
The activity system over the last five years around M&A has been upwards of 350 transactions that we've looked at in great detail. We'll always do the right thing when it comes to M&A. As I said, we might not always get it right every single time, but you can be reassured that the processes, the rigor, the strategic thinking, the way we think about our cost of capital, the way we think about deploying that capital is the same every single time. Hi, John.
Thanks, Graeme. On a similar topic, actually, in relation to portfolio change, you said that EUR 20 billion of inflows and outflows for Unilever's market cap is about right over a four-year period. Is it fair to interpret that statement as indicating a 10%-15% change in your market cap over the next four years? I appreciate it's not linear, is that a sensible starting point? Again, related to the previous question on CapEx, you showed that CapEx from 2012 to 2018 fell from 4% to 2.8% of sales, and that decline in organic investments obviously correlated with a pickup in inorganic investments. How much is the lack of further CapEx savings a big driver behind you reducing the number of small acquisitions you're making?
That's quite a chain. Yeah. What I hope you've picked up from the presentation is that we are always in a very fortunate situation in a company like Unilever, because very rarely are you truly capital constrained. Therefore, when opportunities come at you sequentially, you don't have the luxury of being able to say, "Well, let's just pause on that. We have a better alternative here." Things tend to be coming at you in a sequential basis. Therefore, you have to sit back and think quite strategically about where you want to invest. That's why when we think about our M&A strategy, and we were early, I think, within the industry to say our philosophy for portfolio change is bolt-on, not necessarily big transactions. We will keep an open mind, obviously, but bolt-on.
Was because we saw that as a way of shifting the portfolio in the places that we wanted to get to. It may be that that strategy has become a little bit less attractive than it was because multiples are much, much higher now, and therefore, the opportunity to not create value but destroy value has gone up in those situations. That's how we tend to think about it. To pick up your point on CapEx. Really, the way to view it is that the increase to 4% and above 4% in a couple of years was a pickup for under-investment in the preceding years. It was a catch-up level of investment within the business, and brought us up to those levels. Really, 2.5%, round about where we are today at 2.8%, that's a normalized level of CapEx.
As Marc said today, there's an awful lot of the activity that now happens around new brands. Many of the businesses we buy, for example, do not have much in the way of their own supply chain. They're already using third parties. They certainly wouldn't have significant R&D resources, et cetera. There is a different shape to the businesses that we're buying. As Marc said today, there are still benefits, particularly in the geographies that we are in owning production. It allows you to get scale benefits and allows you to get quality benefits that might not be available in those local marketplaces. Sorry for not really sharply answering your question, but it is a continuum of choice and investing back within the business. I don't think there's any correlation, really, between CapEx spend level philosophy and level of M&A.
Do you know the thing about the EUR 20 billion? I was wrestling myself, and this was when everybody said, "Wow, you've done 30 acquisitions, Unilever. You must be spending all your time working on the 30 acquisitions and not thinking about Dove." That is not true. It's absolutely not true. We're completely focused on our core business, and the level of acquisition we've done is in no way a distraction to our business. It was me that, I was asking myself, what is the right level of CapEx? Is there a right level of M&A activity? I knew the right approach was not to say, we spent EUR 11 billion and we've realized EUR 8 billion, so we've only done EUR 3 billion. That's not true.
All I could think was, well, why don't you just add the two numbers together as a gross in and out, and what is that as a proportion of the market cap? Is it good or bad? I don't know. You know what? If we'd only done portfolio change of 1% of our market cap, I'd say that we were not using that strategic tool and that capital allocation opportunity to change our business to higher growth opportunities effectively enough. On the other hand, if we'd done 50% of our market cap, I'd say that we had a big strategic problem with the portfolio that we had. I get comfortable. I offer it up. You might disagree, but when I did that and thought it through that lens, I thought, yeah, it's okay. We haven't gone crazy on M&A opportunities. Yeah. Thanks. One more? Anyone? The last question today. Jeremy.
Thank you.
Make it a good one. Come on. No pressure.
The pressure's on. A question on savings and restructuring. You've indicated that this EUR 2 billion number is the ongoing run rate, presumably beyond 2020. Is the implication of that that the restructuring cost will also have to stay at the sort of level that we are at the moment, or do you think you can achieve those savings with a lower level of restructuring costs than you are at the moment?
Great question. A couple of points on restructuring. We said, and this was quite a broad estimate back in 2017, that in order to deliver EUR 6 billion of savings and to change our business, we would need to spend about EUR 3.5 billion of restructuring. That's still a pretty accurate number. I'm actually surprised with how accurate that number has been. We may spend some of it beyond the 2020 phasing. The reason there, principally, as I sort of alluded to in the presentation, is that the ability to restructure in a responsible way, particularly in parts of our footprint like Europe, it just takes longer than we'd anticipated. I think there'll be a tail going out beyond that. Will it drop down again to the EUR 400 million, EUR 500 million a year?
Too early to say. We will tell you and be clear on what to expect in terms of the cost of restructuring the business. The one thing to be really clear on is that the payback on restructuring in Unilever comes with really, really nice economics. To be blunt about it, you're typically talking about the reassignment of labor within the company. That typically comes with quite short paybacks, two to three years. For every single restructuring project we have, we have an NPV, we have a payback period, and we have an internal rate of return on the project of itself. All of that is managed. All of that is in a program office. We know that when we spend that money, we get a good return on it. The question, and the thing that's difficult, Jeremy, is to really be clear on annual buckets of where that phasing will come through. Okay. Thank you for the questions. Richard, what are we doing this evening?
Thank you, Graeme.
Thank you.
Thank you for everybody that's presented today. I know people have been up on this stage, there's also been a lot of people who put a lot of work into the demonstration of the digital hub. Thank-- I know not many here, thank you to them as well. End of day one. We now go for dinner. This room, if we could clear it, please. Don't clear it of products, please. If you could clear it of your things. Don't leave anything here. The coaches are waiting outside probably now to transfer us to the venue in Manhattan. Lanyards. Please hang on to your lanyards for two reasons. One is because the color will be relevant to the rotational group you go in tomorrow, the other is because you can't get in without it. Please hang on to it, if you want to be here tomorrow. Apart from that, I think it's just a case of clearing out, getting the coaches, and we start here tomorrow, I think, at the same time at 9:00 o'clock. If I've got that wrong, I'll let you know at dinner time. I think it's 9:00 o'clock. Thank you, everyone.