Are about to hand over to you, Neliva, to begin the conference call. We will now hand over to Graeme Pizzakethly. Please go ahead.
Good morning, everybody, and a warm welcome to this Q3 trading update. I'd like to start with some of the highlights of the quarter and what we're going to deliver growth in what remains for now at least a stubbornly low growth environment. Andrew will then cover the category and regional performances, and I'll wrap up with the outlook for the year as a whole and a brief update of our progress on the actions taken to accelerate shareholder value creation, which we set out for you back in April. But first, let me, as usual, draw your attention to the disclaimer relating to forward looking statements and non GAAP measures. Let's kick off with the market context.
Overall market volume growth remains around flat, as it has been in fact for the past 2 years. But the overall number masks some divergent trends within, so we need to unpack this a little bit. Let me begin with the emerging markets where we continue to expect to return to robust growth in the medium term, and of course, where we remain very optimistic about the prospects for the longer term. There are already signs of improvement in some of these countries. India has been managing its way through the disruptions from demonetization and the new goods and services tax.
While it's not yet back to historic levels of growth, we are cautiously optimistic for the near term and very positive for the medium and longer terms. In China, market growth has picked up. And in Brazil, consumer demand is still well down than last year, but it is flattening out. While these are all encouraging signs, it remains a mixed picture with weaker market conditions in South Africa, for example, and in Indonesia, where wages are not keeping pace with inflation. Turning to developed markets.
Overall demand in Europe remains flat, as it has been for the past few years. And in North America, market growth slowed at the start of this year and has not yet improved. It is important to point out that this does not mean that there is no growth in these markets. Across all of our markets, there are opportunities to grow with brands that appeal through a clearly articulated purpose that resonates with consumers' values, with innovations that bring relevant new benefits and by growing in new channels. But it is clear that many of the more traditional segments and channels are slowing.
This is why continuing to evolve our portfolio and our channels under Connected for Growth is so vitally important and why we will keep returning to this during our discussions. Overall, underlying sales growth was 2.6% in the 3rd quarter, with volumes up by only 0.2%. As we'd expected, price growth is moderating. Unpacking this, there was a markedly different picture across our different markets and a strong contrast between the regions. In the emerging markets, growth accelerated to 6.3% in the quarter, and we've seen a notable pickup in momentum in volume growth, which was 1.8%.
This is very encouraging, and we expect the trend to continue. In developed markets, however, underlying sales declined by 2.3% in the 3rd quarter, having been around flat in the first half of the year. Now there were some specific factors that impacted the Q3 in the developed markets of North America and Europe in particular. Now this isn't an ifs and buts presentation, but you will not see us excluding any of these items in our reporting, but I do want to give you some relevant context and deeper background for the quarterly performance by both region and category. The first of these factors was the series of natural disasters in the Americas, namely the hurricanes that hit the Caribbean, Texas and Florida, and to a smaller extent, the earthquakes in Mexico.
These disrupted both retailer demand and transportation, leading to canceled orders and unfulfilled shipments left on the dock. Secondly, our sales of ice cream in Europe were down as a result of poorer weather in the latter part of the quarter after 2 consecutive very good summers. Both of these factors were unforeseen and compared with our ambitions at the start of the quarter, led to a growth shortfall of around 80 basis points at a global level for Q3. A third and partly offsetting factor was expected by us. We called out last quarter that the timing of Ramadan in Indonesia and destocking ahead of the implementation of GST in India held back sales in Q2.
These effects partly reversed in the Q3. The net effect of all three of these factors was to reduce underlying sales growth and specifically underlying volume growth by around 40 basis points in the Q3. We are encouraged by the improving volume momentum in emerging markets, but this does not mean that we are satisfied with our overall performance this quarter. The first two factors I just described to help explain the markedly weaker performance in developed markets in the Q3. Together, they reduced sales by about €100,000,000 split roughly equally between North America and Europe.
But we also lost share in ice cream in North America to Halo Top, a new competitor. Overall in the Q3, we came up about €150,000,000 or around one day sales, short of where Paul and I would have wanted us to be, and we're not happy with that in aggregate. In fact, we feel we left some runs on the field of play this quarter, and while our overall growth is in line with our markets, we know that we can and will grow faster. The changes we've been making to our organization, including the setting up of the Country Academy business teams, which are now fully established, put us in a much stronger position to win in this fast changing and more competitive marketplace. We will progressively reap the full benefits of these changes, but it's reassuring that we're already seeing some good examples of a more focused global innovation funnel, together with greater local agility and speed to market.
We are reducing the number of global innovation projects while increasing their average size. And we're speeding up the rollout time from the first to last market by up to 30%. For example, innovations like Magnum Pints launched less than a year ago are now in 19 markets, and we expect them to deliver more than €30,000,000 of turnover in 2017. Or Baby Dove, which we've taken to more than 20 markets in the last 12 months alone, most recently South Africa and the Middle American countries. And Simple, which plays in the fast growing natural space in the U.
S. And the U. K. And is now rolling out globally through the second half. At the same time, we are landing more local innovations than ever before.
In fact, so far this year, we've increased the number of local launches in Unilever by more than 50%. We showed you plenty of examples with the first half results like Hijab Fresh, which is a new brand launched in Indonesia for Muslim consumers or Luxe Botanafique, a premium silicone free shampoo in Japan. And here are a few more recent ones, a premium OMO Naturals range in China, starting with an online launch in Tmall in September. Browner Bear in Germany, like many of us on this call, I suspect, this is an old classic brought back to market in a matter of weeks. And Knorr Fresh Meal Kits, an experimental launch in the Netherlands with online retailer picnic.
As it's a test, it's been developed under licensing at a co packer. If it fails, it won't have cost as much. But if it succeeds, it opened up a new opportunity for Knorr in chilled foods. As we've said before, we're seeing a rapid change in our channel footprint. It goes without saying that we need to be where our consumers are, and so we're becoming increasingly channel centric, bringing our marketing and customer development teams closer together and innovating specifically for our channels.
Let me share a few examples, including 3 completely new brands that we've launched. KJU by Luxe, specifically for e commerce, co created with a Korean designer to meet the K Beauty trend with urban millennials in China. In the health and beauty channel in Asia, we have extended Dove into face care with a proposition that puts back moisture and nutrients with every wash. In the U. K, we have launched 4 Amazon laundry bundles, a brilliant example of understanding the algorithm to win in search and tailoring our offerings.
Leveraging the learnings from Dollar Shave Club, we've launched 2 completely new direct to consumer brands, SkinCe in the U. S, which provides a personalized skincare regime based on skin type and local environment, and VERVE in the U. K, a monthly subscription of products that protects clothes from damage, wash after wash. And finally, taking learnings from our retail operations group in the 1300 stores that we now operate worldwide, we recently opened a St. Ives mixing bar in New York, where consumers can mix a product that is uniquely their own.
It's safe to say you see a lot more channel innovation from us in the years to come. Alongside innovation, we've been developing our portfolio through M and A with a faster pace of change and a clear strategy to position our portfolio for future trends and higher growth. Each of our acquisitions has a rationale that has a strong fit to our strategy. Acquisitions like Carver Korea and Quala build on our strength in personal care. Dermalogica, Living Proof and the other prestige brands we have acquired extend our personal care presence into much higher growth points with an attractive growth profile.
SIR Kensington's and Grom are examples of premium brands that can work well through mass channels. Blueair and Dollar Shave Club take us into entirely new channels. And 7th generation and Puka are examples of meeting the growing demand for more natural products. Since the start of 2015, we've been much more active. Taking all of the 18 acquisitions that we've completed or announced since 2015, we see that the total consideration is €8,200,000,000 The acquired turnover is €2,100,000,000 and they collectively grew by 16% in the 1st 9 months.
There was a reminder, most of this is not yet in our underlying sales growth, but will increasingly contribute to USG over the coming quarters. As well as moving into higher growth segments, we also continue to actively manage the portfolio, moving to dispose of lower growth brands or brands that no longer fit with our long term strategy. We expect that the combined impact of the acquisitions we've made since 2015 once they've anniversaried and the disposals including spreads will add 1 percentage point to our ongoing underlying sales growth. I'd now like to hand over to Andrew to take us through the development of turnover and the category and regional performances. Andrew?
Thank you, Graham. Underlying sales grew 2.6% in the 3rd quarter. Acquisitions added 1.5% to turnover, which was partly offset by the disposal of Addis to give a net M and A impact of 1.1%. The acquisitions impact includes part of Dollar Shave Club, which was completed halfway through the Q3 of last year, as well as the 8 other acquisitions we've completed during the last 12 months across all four categories. Currency translation reduced turnover by 5%, a marked change from the first half year when it was a tailwind.
This is a result of the sharp appreciation of the euro between April August this year. It's worth noting that most emerging market currencies have been stable or stronger against the U. S. Dollar this year. This remains encouraging for day to day affordability in these markets.
If exchange rates would remain as they are today for the balance of the year, we would expect currency headwinds of about 2% on turnover for the full year and less than 1% on EPS. Turning to the performance by category, in 3 of our 4 categories that is personal care, home care and foods, we have seen a clear pickup in volume performance compared with the first half year. Personal Care grew 1.8% in the 3rd quarter with 1.0% coming from volume. Price growth has moderated with the easing commodity pressures and the effect of GST in India which I will come back to in a moment. The strongest growing brands have been Dove including extension into Baby and Sunsilk with more natural variants.
However, Rexona and Axe have been weaker. These are brands which are strongly exposed to some of the markets where consumers have been down trading like Brazil and South Africa. Our personal care portfolio is still heavily weighted to the mid tier of price points is where this down trading has had the biggest effect. Our deodorants brands were also weaker in Europe where competitor promotional intensity increased. Homecare growth improved to 4.6% with 1.3% from volume.
This has been led by new product launches such as Persil Power Gems in the UK and the continued strength of comfort fan brake conditioners. In Latin America, Brilliancee which is our whiteness brand in a value propositioning has benefited from down trading at the expense of OMO. Foods excluding spreads grew by 2.7% in the quarter with volume turning positive driven by a pickup in emerging markets. Knorr grew by 5% with a good balance of volume and price. The trajectory for spreads continued to improve with a decline of just 2% in the 3rd quarter and improving volume.
Refreshment is the only category where volumes weakened in the 3rd quarter. Underlying sales grew 3.1%, but this was all from commodity driven pricing. Volumes were down by 2.4%. In ice cream, we've grown strongly over the past 2 years helped by our innovations behind brands like Magnum and Ben and Jerry's and 2 Good Summers in Europe. This year we had poor weather in August September leading to lower sales.
Despite this Magnum continued to show double digit growth globally with almost half in volume. Tea continued to grow in mid single digits and we have taken share leadership in India, the largest tea market in the world. Turning to the performance by region, starting with our largest region, Asia AMET rub. Underlying sales were up 6% with a healthy pickup in volume growth to 2.7%. China delivered double digit volume growth led by e commerce.
In India, we saw an improvement in volume following the implementation of the new goods and service tax. Our business was able to start invoicing immediately without any problems. However, while some of our customers coped well with the change, others have had more difficulty and only recently returned to a more normal buying pattern. As a result, we have only recovered part of the shortfall from the 2nd quarter. Price growth in India was lower as we passed on the benefits of the tax change to consumers as expected.
Latin America grew by 6.6% all through pricing. Volumes are still marginally down but by less so than in recent quarters. The volume decline in Brazil has slowed through the year and was only -one percent in the 3rd quarter. Volume growth in Mexico, which had been strong in the first half stalled in the third quarter. This is the combined effect of prolonged rains from Hurricane Harvey on ice cream sales in August and the disruption from the earthquakes in September.
We expect volume growth in Latin America to turn positive next quarter and beyond. In North America, underlying sales were down 2.9% in the quarter. The hurricanes in Florida and Texas, our 2nd and third largest markets, disrupted transport and we lost on average about 1 week of sales in these states. We expect part of this to be recovered in the 4th quarter. Our personal care and foods businesses in the U.
S. Continued to gain share. But in ice cream, as Graham said, we have lost sales to Halo Top's low calorie high protein proposition, which has taken off rapidly. We've responded with our entry into this segment in June, launching Briar's Delights and have followed up with further variance added in September. We expect to be back in growth in U.
S. Ice cream next year. In Europe, underlying sales declined by 1.6%. We have continued to grow well in Central and Eastern Europe and return to growth in the UK. However, lower ice cream sales led to declines in Germany, France and Spain.
With that, I'll hand back to Graeme.
Thanks, Andrew. Let me just try to summarize that regional picture. We are encouraged by the improving volume growth in the emerging markets, and we expect to see this trend continuing now in both AAR and in Latin America. In North America and in Europe, however, we've had a particularly difficult Q3, and we're not happy with our performance in the aggregate. While we don't expect that to repeat, market additions are likely to remain challenging for the time being.
We're fully focused on getting back to growing ahead of our markets. Our share of voice to share of market is competitive, and we will be bringing more firepower to bear here. Changing trends and channels put a premium on agility and connected for growth, our organizational change truly delivers that. We continue to expect to deliver against our full year objectives. These are underlying sales growth within the range of 3% to 5%, a step up in underlying operating margin of at least 100 basis points and another year of strong cash flow.
Let me finish up with a quick progress update on the actions we set out in April to step up value creation in Unilever with the Accelerated Connected for Growth program. The first of these was a simpler and faster organization. All of the country category business teams are fully in place and the integration of Foods and Refreshment is on track. The second was accelerated margin improvement driven by an amplified savings program. As we explained at the half year, we are making good progress here with our savings programs delivering a little faster than we had planned.
We are progressively stepping up the level of reinvestment of savings the course of the second half year and expect to see the benefits of this over the coming quarters. The third was an accelerated evolution of our portfolio. I showed earlier the increased pace of change through acquisition. In the last 12 months, we've announced 9 acquisitions compared with 5 in the preceding 12 months. The exit from spreads through sale or demerger is on track, and the Board's review of our legal structure to enable future strategic flexibility is progressing well.
The acquisition of the preference shares is an important step to simplify our capital structure and improve our corporate governance. And finally, we targeted increased leverage and return to shareholders. We've completed €4,000,000,000 of our €5,000,000,000 share buyback program. And you'll remember that in April, we raised our dividend by 12%. And with that, let's move on to take your questions.
Thank you, Graham.
Our first question comes from Warren Ackerman of Societe Generale. Warren, please
go ahead. Good morning, Graham.
Good morning, Andrew. It's Warren Ackerman here at SocGen. Two questions, please. The first one, Graham. I mean, you said that you and Paul were disappointed and you left some runs on the field, a nice day and you got the share price down 3% to 4% today.
Can I just go back to your expectations on the shortfall? You said 80 bps, but 40 bps net of Ramadan GST. So if I add 40 bps back to the 2.6%, you still would have only been at 3 percent USG for the quarter compared to consensus, which was much closer to 4%. I'm just trying to understand the gap and maybe you can outline the moving parts for Q4 and what USG you expect for Q4 given the difference between what you delivered and what consensus thought you would deliver? And then secondly, can I just go back to Personal Care, specifically in the quarter?
And maybe you can talk a bit more about deodorants. I mean, I think one of your better businesses, I think we saw some pressure in deodorants this quarter. I think you talked about some markets like South Africa. But is that a concern? And what's the outlook for that specific subsector within your PC division?
Thank you.
Hi, Warren. Thanks for the questions. Well, if I take the first and our feeling of a bit of dissatisfaction with the Q3 performance. You've sort of done which I don't think we should do here, which is sort of pro form a add back 40 basis points and come back to a number. I don't want to do that because in aggregate, we just want to describe the factors that made us come up a little bit short and not sort of pro form a But I'll give you an example 2 examples of where we're not disappointed with hurricanes and there's not much we can do to control the weather.
But where we are, we feel we left some runs on the table. Our competitiveness has dropped off a little. We're now growing share in about 50% of our business as opposed to the last couple of years when we've been up around the 60% mark. So we're growing at market. Our markets are growing in aggregate between 2% and 3%.
We're growing about 2.6% in the 3rd quarter. That's not good enough for us. We need that 1% outperformance versus market growth, and we'll get that back. The second thing, and I said in the talk there that relative to our own internal expectations, we were about a day's sales short on a 90 day quarter. So that's roughly where it came up.
Other than the factors I called out, for example, and Andrew mentioned that the battle with Halo Top in North America, I mean, that proposition has built a 5% share position very, very quickly. It's taken 1.5 share points from us. We've responded very quickly with Briars. We've gone in 6 months. It's taken us to get Briars delights into the marketplace.
That's very quick compared to where we were. That's the benefit of the new organization. But it's not quick enough because that proposition has been built. So hence, us not being totally satisfied in aggregate with the performance, Warren, that's where we'd see. Turning to deals.
We've had a slowdown in our deals performance. Some of our biggest brands, Rexona, for example, is growing a little bit quite a bit more slowly than it was last year. Obviously, there were 1 or 2 marketplaces which are more impacted by that that than others. Brazil is a large deal market for us. The Latin American performance gets taken there.
Similarly, in Europe, we're seeing an awful lot of price competitiveness in deals, a lot of price promotion, which we're having to respond to, but that makes it a very competitive environment there as well. Taken in totality though, across the whole of our deals business, our market shares are still up. That's driven by North America, where I think looking at Andrew here, I think we've established about 1,000 basis point differential in leadership of the deal market in North America. I might use the example because I know the North American results will be a focus for everybody. But across the totality of our North American portfolio, we are very competitive in every category apart from ice cream.
And in ice cream, the loss was due to the new entrant of Halo Top. So although our North American results have been subdued, it is a competitive performance. Okay. Thank you. Thanks, Warren.
And our next question comes from Alain Oberhuber of MainFirst. So if Alan is not there, then we have Celine Panuti and we'll take Alain after Celine. Celine, if you're there, please go ahead.
Hello, everybody. Hi, Alan. Thank you, Marc. Good morning, Graham. Good morning, Andrew.
Question regarding coming back to the ice cream business. Could you give us a little bit more insight when you expect it to recuperate the market share losses in U. S? And when we could expect it again a stronger growth rate in that business? And the second question is regarding home great performance there.
Congratulations. But do think this will be sustainable in the next 1 or 2 quarters?
Alain, thanks for the questions. So ice cream in the North American market, we do think we will recover quickly to a winning position and growth again in North America, in particular. Overall, ice cream is growing year to date at 6%, volumes are slightly down. The relatively poor Q3 in ice cream, which is a combination of the hurricanes, there's of course Texas and Florida, our big ice cream markets for us in North America, the competitive share losses to Halo Top, but also the very poor European weather in September. That poor Q3 mask was actually a pretty good performance, I think, in many markets.
Our fastest growing brand in the whole portfolio at the moment is Magnum, which is close to 15% growth. We've had some great innovation performance. I talked about Magnum Pints going into 20 markets really, really quickly. Magnum Double, Ben and Jerry's, all of our big innovations, the big assets that we brought to the marketplace in ice cream this year have gone on very, very successfully. So we're feeling confident in ice cream.
We did have, as a consequence of the weather in September, a overall, we're feeling good about ice cream performance this year. Thanks for mentioning Wound Care because I really think it's the steady, steady pro form a from BOSA, overall balance of performance perspective, but also importantly, also achieving its strategic objective of improving its margins, balancing growth and margin effectively. If you remember, the operating margin was up 110 basis points in the first half. And we really do think that we're on track to deliver its contribution to the 2020 targets, which would be about a 16% margin, we think, for Home Care. So what's been driving it?
It's been high quality growth. It's driven by market development. Remember, our Home Care business really is an emerging markets business. So market development is as important as winning share, etcetera, and particularly strong innovations. The thing I'd call out is fabric conditioners.
Our Fabric Conditioners business is growing very, very healthy. We've seen a little bit of a slowdown actually in the momentum that was in Fabric Cleaning, but then that's a balance between delivering quality growth and delivering the right shape of margin. Andrew mentioned it on the call that Brianca in Brazil is winning big. It's also winning at dispense of our other big brands, which is almost. So that's another example where the portfolio and introducing Tier 2 and Tier 3 brands for a hard pressed consumer works.
It costs us a little in aggregate in the short term, but we're fairly confident that by managing that in the way that we are, we will pull things through and be better positioned in the longer term. There are some really exciting innovations sitting in ice cream and some white space expansion with Pootsurf into Central and Eastern Europe. We've had a lot of success rolling out domestic toilet blocks in the European space, and you're now starting to see 7th generation, the Naturals brand we acquired coming into the U. K. So I think a lot of excitement in home care.
So we'll take the next question from Celine Panuti of JPMorgan.
Yes, thank you. Good morning. My first question on the market outlook into 2018, you mentioned the market is growing at 2 to 3. Do you see that continuing into 'eighteen? And what do you make of the price at your casinos today, one of your competitors was talking about negative pricing.
Yours remains quite positive. So if you could comment on that. And I presume as well, should we therefore expect, given what you said of your ability to grow faster than the category that maybe you will be at the low end of the 3% to 5% into 2018? The second question is really repeating the question that Warren asked on Personal Care. If you can give us a bit more background on the moving parts.
I see that the volume accelerated 1%. At the same time, the comparative base was 300 basis points easier. So it has been a rather weak performer. If you can comment on category and different subcategories, please.
Okay. Thanks, Celine. Let me take the first one the second one first about Personal Care, and then I'll comment a bit on markets and give Andrew a bit of time to come back on pricing outlook, which is a little bit more complicated with exchange rates, etcetera. So on Personal Care, yes, we Personal Care performance was a relatively low rate of growth as you've seen in the quarter, 1.8%. But thank you for calling out that the sequential acceleration in volumes in Personal Care, which we're encouraged by in this quarterly performance.
In fact, we isn't is refreshment. And we've spoken a lot on this call already about the specific factors that cause volumes to be negative in ice cream in particular. So yes, it's a low rate of growth in Personal Care, and but we are encouraged by that step up in volume for sure. The performance has been a little bit mixed. Dove and Sunsilk are growing strongly.
As I said earlier, we've had very, very good share gains in North America in deodorants and in hair and in skin cleansing, but the overall market remains quite soft. In Latin America and South Africa, where we've got quite significant down trading, our portfolio is largely mid tier. And so as the consumer moves down to Tier 2 and Tier 3 brands, we suffer a little bit of a loss of volume in those situations. Our performance has been a little bit weaker in Southeast Asia. That's where we find the impact of new local competitors who are agile, who are faster to react to local trends and spot local consumer opportunities.
That is, I think, the sort of Premier League of where that's happening in Southeast Asia. And it's no surprise that you see a lot of the local innovations that our new organization is bringing in are focused on Southeast Asia where those trends are there. So our Personal Care performance in Southeast Asia been a little bit uncompetitive, but it's that shift to the locals. It's that dynamism and pace that's needed through the new organizational design where we expect to see the benefits land hardest, if you like. And I mentioned it earlier, but the deal business in Europe is pretty price competitive with a particular competitor.
We are doing a lot of the new innovation and the reshape of the portfolio through M and A, of course, is focused on Personal Care. I mentioned the 3 new organic brands that we've launched this year in Personal Care. Long time since we last brand we brought to the market was REGENERATE, I think, and perhaps before that Dove Men and Care. So lots of new activity with truly new organic brands focused on Personal Care. You know what we're doing in naturals behind Simple, St.
Ives, the launch of Ayush in India, which is our biggest number of SKUs we've ever launched in the Indian marketplace. You know what we're doing through M and A, repositioning the portfolio in prestige, new channels with Dollar Shave Club and getting into very strategically significant new spaces like skincare in North Asia. So lots of action in Personal Care, all the right things happening for the future, but a relatively low growth month, but one where we do see the volume sticking up nicely. Overall market growth, as I said, is 2% to 3%. Just to give you the context of that in the 3% to 5% long term outlook that we have given you.
I'm really looking to 2018. If market growth doesn't pick up from where it is today, we pretty much expect to be in the 3% to 4% range. So the bottom half of that 3% to 5 That's going back to that expectation we have of always being competitive and growing 1% ahead of the market growth. If the market does pick up, however, to say 3% to 4%, then that would get us into the top half of that range, and we would expect to grow between 4% and 5%. On pricing, let me hand over to Andrew.
Yes. You remember that in the first half year price growth was 3%. And we said then at the mid year that we expected that to moderate, come down a bit in the second half. And the first most important thing is put it in the context of commodity costs. So commodity cost increases were up mid to high single digits in the first half and we said we expected them to be up by low to mid single digits in the second half.
So some easing of the commodity cost pressures which is what we are seeing. In terms of few countries we are seeing price now positive Germany and Central and Eastern Europe and flat in Italy, Spain and the Netherlands. So that's better than where we were. But in Brazil we've got pricing now virtually flat which is clearly by historic reasons historic context unusual. And finally India.
So India we talked about a bit about on the half year call. So in India we get a benefit from GST through both lower taxes on the goods and services we buy in and getting full tax credits on the goods on those goods and services as well as changes in tax rates on output. The net net of all that is a benefit from a tax point of view which we pass on to our consumers. Hence, we said at the half year that that would be expected that to be around 20 to 30 basis points lower pricing on Unilever in total. I would just for clarification in case anyone was wondering, there is no impact on our Unilever reported results from the treatment of the accounting treatment for excise duty because in Unilever's group accounts, group reporting, we were already netting those off from turnover.
So in terms of next year, I think, Celine, you were looking for some kind of outlook and guidance. I think we'll wait till the full year to look and see what commodity costs are doing in particular before we guide on pricing for next year.
But you don't have a specific issue on pricing pressure in DMs? There are
always price pressure points, Celine. I mean, we've commented on, for example, personal care, particularly deodorants in Europe. But there equally there are other places where we are coming out of some price pressures, which are easing everywhere around the world. We always see some pressure points, but nothing I would say at a macro level different to what we have.
I think, Celine, you can always expect that the developed markets are going to be highly promotionally intense. A lot of volume goes out on deal in a number of our European markets. Levels of couponing remain very, very high in North America. Looking through that to net pricing at the end of the day, it's all about managing your pack price architecture, making sure that you're available in the right channels, making sure you're there at the right price for the consumer. And that's really the focus of what we talked about in calls past as net revenue management.
We're building our capability up there. I think it's an essential market essential muscle rather for all consumer companies. Some are better at it than others. And I think we need to continue to build our capability there because you touched on a key point, which is the pricing environment in the developed markets is not going to get any easier. I'm sure there's going to be a little bit of inflation perhaps coming back in intense markets like the U.
K. But overall, it's a highly priced intense marketplace.
Can we have our next question, please, from Martin Deboo of Jefferies?
Martin Deboo of Jefferies. Two questions. One is a question that Warren asked right at the start, I'm not sure if she's answered, which is how should we think about Q4 in the light of the Q3 and the 9M? I mean to make full year consensus, you need to grow about 6% in Q4, which looks like a big ask. But how should we think about Q4 structurally relative to Q3?
And the second question, Graham, I guess, is a more structural one, which is one could characterize Q3 as a quarter of little local difficulties. So one could characterize it as a quarter where there's some tectonic plate shifting. You'll comment about only gaining share in 50% of sales and that has an echo with the conference call I was on with a large company in Slough yesterday commenting that they feel the ability of big brands to take share is being questioned. So I'm sure the answer to the second question is it's complicated, but are you seeing any systematic pattern for local competitors to take share from you? Or is it little local difficulties?
Those are the 2 questions. Martin, a couple of couple of good questions there. The so how do we think about Q4? We obviously think about Q4 a lot less than you guys do, to be honest. We you heard it you heard us say it before, but we really do not manage the business by reference to a series of quarters.
Obviously, there's a Q4 consensus that will adjust following the results that we announced this morning, and then we'll see where we are. Our Q4 and all we're prepared to say is in the long run, we think we will get into that 3% to 5% range for this year. And we think that 3% to 5% range is the right level of expectation to set for the years to come. And as I said, to Recovering will be the big determinant of where we sit within that range. Recovering will be the big determinant where we sit within that range.
To go take that and sort of extend it into your second point about is it little difficulty or more structural. The and the hurricanes and the weather are just what they are. That's more there just to give you a little bit of color on what isn't underlying, if you like, in what we've seen. But back to that point around where we are unhappy with the aggregate performance in Q3, It is exactly that drop down in competitiveness. That 1% outperformance, that 60% winning share in aggregate has dropped to 50.
Now I could speculate about why and what that might be, but I do think to build on your conversations from yesterday that there are some challenges, and there are challenges in our industry. There are fast moving changes. There are new competitors, and there are consumers moving to new channels. And in order to do that, we have to change our businesses. Now we believe that what we're doing with our organizational change to make us more local and more faster, but also do the global innovations faster and bigger with higher impact is exactly the right move.
You have to shift your organization in order to do that. We're augmenting that with the strategic use of M and A, while we talked about it specifically in the presentation. But I think in combination with how you change your capability, you innovate in a more channel centric way, you empower your businesses in the front line more. Frankly, you make sure that your global whatever you're doing globally has to add value globally, otherwise there's no point in doing it. It cannot get in the way of the frontline of the operations and the ability of people in our marketplace to be close to the consumer and to react to that in a very, very competitive way.
And that's what we're trying to do is to get out of the way of the front line of our business and empower them with the organizational changes. The M and A point is around giving them longer term the assets that they need in order to connect with the consumer where the consumer is shifting to. And in every one of our M and A transactions over the course of the last couple of years, I think you're starting to see a pattern where there's a strategic objective to it in the form of an ability to reach the consumer in a different way or address a new trend. So I think it is dealing more to come back to the specifics of your question, I think it is dealing more with Tektonix. But I think that it's quite possible to have the benefit of scale whilst making sure that you're able to compete highly competitively in against those tectonic shifts.
And it's sometimes, it'll you won't be able to line the pace of those two things up perfectly. And that's, I think, what we've seen in the Q3, where we're a little bit less competitive than we'd expected to be.
Next question is from Alex Smith at Barclays. Alex, go ahead please.
Hi, good morning. I guess just coming back to those comments about leading runs in the pitch or your competitiveness having dropped off a little. I guess you've clearly made very good progress with your margin in H1 and are on track to make good progress again in H2. But I'm just wondering how much of that revenue shortfall is perhaps being overly very difficult to achieve across the consumer staple space. And then the second question is on market shares.
Again, the 50 able to share with us the similar sort of statistic on a volume perspective? And I guess maybe if you could give us a bit more color as to where you are doing very well gaining share, where you're not gaining share and where you are underperforming. Is that, to a certain extent, an element of by choice, where, again, you're prioritizing cash and margin?
Thanks, Alex. So on the question of fundamental question of investment levels, let me step back a little bit and just reconfirm that we I mean, this is a it's a balance point to be worked at all times in consumer companies. We're very clear that we're a growth model and it's not about growth or margin, it's about both growth and margin, as you've said, I say, many, many times. But if we weren't able and we find ourselves over a long period of time structurally not getting the growth we think we should because of a margin target, then we would prioritize the growth every single time. First thing is we continue to invest BMI at a very high level.
And you heard me say before, we've increased it by $12,000,000,000 over the last 8 years. We're now doing about $7,500,000,000 a year. We think that, that is enough. And we basically said in the strategic review over the next 4 years, we thought we'd have about €30,000,000,000 of firepower in investment levels. So that basically means we don't we anticipate that we've got around about the current levels.
It's just fine to fuel the growth in our business. And we're very clear in the Q3 and year to date, in fact, that our spend is very competitive. Now the whole market is recalibrated and is spending a little less. Against that, and this is never a very good market measure, but it works in aggregate, if you like, our share of spend to share of market is over 100, well over 100, and it's stable versus last year. And our brand health measures, which are the most important trailing measure of where that investment goes because a lot of it doesn't result in share gain or growth, but in fact, it is the it invests in the long term equity of the brand.
Our brand health measures remain very strong. But there is a changing approach here because when we're spending as competitively in terms of the share of spend, share of market level as we were last year, I'm absolutely certain that we're doing so in a much more effective way because ZBB allows us to put more of our reinvestment back and cut waste out and invest in a more effective way. So we've got much more consumer facing media and promotional point of sale investment as part of that mix and less on non working media. So less money spent creating advertising, more money spent showing that advertising in a more effective way to our consumers. Now of course, the way in which you show that advertising is shifting.
So we've got a 3rd vector here, which causes some of the correlations of the last 10 years maybe not to be quite as relevant for the next 10 years. And that's something we're all going to have to work through. But we could talk for ages about what we're doing in terms of digital and social and video and search capability and those sorts of things. But clearly, the mix of advertising has changed a lot. So no, we don't think that there is a correlation between our investment, our margin delivery, which was which we expect to be over 100 for the year and overall growth and that step down in growth.
We think that step down in growth competitiveness, which was in the 3rd quarter, was quite focused in a few areas. As I've said, when you deconstruct it and take most of our markets, North America, for example, very competitive across all categories apart from ice cream. Europe, a little less so. Southeast Asia, a little less so. But we'll be focused on bringing that back.
I guess, sorry, quickly. My question was in part how much of the margin priority has been a distraction for the organization in terms of trying to balance that growth in margin, not so much the A and P spend.
Yes, I don't think I mean, the level of we've always delivered margin. We've delivered a steady increase in margin consistently for the last 7 or 8 years. It's not like the organization isn't used to balancing a P and L and managing the shape of a P and L. We are dealing the big disruption is that levels of market growth are lower than they've been in many years. And the specific challenges around some markets where we have big businesses are particularly intense.
What I think is terrific is that in aggregate, when we balance out the diversity of our portfolio or exposure to the emerging markets, it means that we're able still to deliver a competitive growth number through those challenges. And as those markets recover, as we're convinced, we'll seek to benefit. And when we do that with a higher rate of margin accretion, then the value creation is substantial. I
should take the point on the market shares and the so yes, exactly. So the 50% applies to both value and volume. And just to give some color around by category. So in personal care, we're gaining in skin cleansing, Dove baby and deodorants in the U. S.
As well. But deodorants in Brazil, South Africa, we mentioned affected by down trading and in Europe due down in deodorants due to the competitor promotional activity. In home care good gains overall, particularly emerging markets up in laundry, household cleaning is flat, particularly given competition in Europe, but holding share in household cleaning. Within foods we're up in savory. We have actually gained share in U.
S. Mayonnaise as well. Although the whole market is down in value terms in U. S. Mayonnaise because of competitive pricing.
And margarine we're almost back to flat, almost back to maintaining share. In refreshment we're down in ice cream basically for well entirely for the reason that Graham mentioned through halo talk what we mentioned. But also actually one other factor which is that in Europe we have been prepared to feed some share in low margin bulk in home ice cream business as we evolve our portfolio. So hopefully that gave you some extra color around the wins and losses.
It does. Thank you. Just one overall point maybe Alex that we're around about 50% in volume share business winning at the moment. Our volume share performance is a winning performance. We're about 5% higher than that in terms of volume share winning.
So kind of leads back into the thrust of your question before about our willingness to invest in price and win at a volume level is still there and robust. And these are the things which our businesses are managing on the front line day to day. And you can see there that there's no sort of desire to chase after a profit number at the expense of competitiveness, a fundamental volume level. Got it. Thanks.
Thanks. So we have 2 more questions. We'll take those 2 and then close the call. So the firstly from James Targett of Berenberg.
James?
Okay. In that case, we'll take we have James Edwards Jones of RBC.
Good morning, guys. Two questions, if I may. The winning share, the 50% winning share used to, I think, define winning or gaining sorry, winning or holding share, and the figure used to be around 60%. Can I just confirm that, that's 50% absolutely winning share and not just winning and holding? And the second one, I'm not really sure how to ask this, but you're saying spend is competitive and brand health measures strong.
But by your own admission, sales and market share performance is disappointing. I'm thinking of P and G's comments that, to some extent, digital marketing isn't working. How well are you coping with developed in marketing? And is that spend as effective as it used to be?
Let me take the first one, James. So no, I'm afraid you're wrong on that. When you're getting us mixed up with someone else, we've always done a binary. It's either winning or it's losing. So when we said 60% it was 60% winning, 40% losing.
We don't have a maintain category in that. So we've been very consistent when we say that at the moment it's around 50% winning and 50% losing, nothing in the maintain. Plus 1 bps is a win, minus 1 bps is a lose.
James, I'll take your second question there. So yes, our spend is competitive. We're clear on that. We have more spend coming in, in Q4, and we always said that we would be a little bit backward weighted in terms of innovation and spending. So we have a very high spend quarter coming up from an investment perspective.
And when we said we're a little bit disappointed with the Q3 performance, really that's from the perspective of 1 quarter and expectations in 1 quarter. So I think overall, what we're very ratio bias, we're making the right changes within our business, the organizational changes and reshaping the portfolio. All of that we think are the right things because that in many ways is the important strategic response to the changes that are taking place within the consumer communication landscape. Now I don't need to tell you there's an awful lot of change in Fluxy, a very exciting, in fact. And if you get it right, you get it very right.
And if you get it wrong, you get it very wrong. The ROIs on traditional media, TV advertising are what they are. There's quite a narrow band. It's quite predictable. The ROIs on today's landscape of search investment, social investment, video, etcetera, are it's much, much more wide.
Display advertising, for example, has a very or social, in fact, has a very, very strong range of ROIs for individual types of investment. All we can do there is continue to invest very heavily in building capability in that new marketing space. So about a third of our investment is and this is probably the wrong distinction here, but digital. Unilever Studios, which we are our in house studio digital content capability is now in over 20 countries. So we're doing our own digital advertising and content creation in house for that.
People data centers, which we think are pretty market leading ability to secure consumer insights from social listening and scraping of data from around this sort of digital landscape, that's now in 20 markets and cover 40 languages. We think we've got a world class programmatic capability in our Ultra platform. And as you've seen, Keith Weed, our Chief Marketing Officer, alongside other Chief Marketing Officers, I think are doing a lot to shape the industry in terms of proper stewardship and leadership role in terms of basics like viewability, verification, combating ad fraud and making sure that advertising shows up in appropriate and safe places in this new world. So you'd never say you're entirely satisfied, but for sure, we recognize the significance of the changes, and we want to lead in those changes, invest behind them and make sure that we are as capable as anybody for in this new landscape.
And the final question comes from Tobey McCallach of Macquarie. Hi, there. Thanks for
letting me squeeze at the end. Just a couple. First, on acquisitions, you say that aggregate of the acquisitions that you've made over the last couple of years were at 100 basis points or so to run rate underlying sales growth once they all annualized. Can you say how much they added to 3Q given that some of those have already annualized? And then the second one is a point about A and P.
And you said that you're spending less money creating more money showing. I just wondered, can you remind me what the rough split between creating and showing is?
Hi, Tobey. How are you doing? So on that breakdown, the acquisition 1%, by the way, from acquisition and disposals, there's an impact there from the divestment of spreads, which we're assuming we're successful with. All indications are that it's going well so far, but it's biggest complex and it's very, very high profile. So we would assume that in that number of 1%.
Yes, in the Q3, it was a very small number. Basically, to get that 1%, you'd have to look through until the anniversary of closing transactions and then it feeding into our underlying metric or on anniversary days. So that is a momentum rate enhancement that you would see in sort of mid-twenty 19 relative to the end of 2015 before we started doing any of those acquisitions, if that makes sense. And obviously, there'll be lots of other portfolio change in the meantime, I would assume. But right now, we think we've got a 1% tailwind from that.
In terms of Q3, it was only around 10 basis points. So that's all out there in the future for us as we go forward.
Yes. So on the spend on advertising, first point is to make about 30% of our spend on advertising is digital. And really that question of how much is it production, how much is showing really isn't relevant in that space. But in the other 70% that is traditional, it's roughly 75%, 25% between showing and producing. Toby.
So thanks very much. And we'll bring the call to a close there. If there are any further questions, then of course Hans Garebecki and I will be happy to take them as soon as we get back to our desks. And enjoy the rest of
the day. Thanks, everybody. Have a good day.
This conference has been recorded. Details of the replay can be found on Unilever's website and will be available shortly. Thank you.