Are about
to hand over to Unilever to begin the conference call. Please ensure you are calling from a landline telephone and not a mobile phone. Please avoid using a speakerphone to ask your question. Use the telephone handset to minimize background noise. We will now hand over to Graeme Piccethly.
Good morning, and a warm welcome to our Q3 results presentation, and thank you for listening to that terrible music. This title chart reminds me that Dove Men in Care is a proud rugby supporter here in the U. K. And Ireland. With all the excitement and drama of the Rugby World Cup now in full swing, I'm greatly reassured that in my old job running the U.
K. And Ireland business, we hedged our bets and agreed deals with all 4 of the home nations and so can continue to support the 3 of them still in the competition going into this weekend's quarterfinals. Now ahead of starting as CFO at the beginning of this month, I had the pleasure of meeting many of you at various meetings and conferences during September. This has been a very valuable opportunity to get up to speed and find out what is on your minds. So thank you for the interaction and the welcome you've extended to me.
A few of you have commented on the big boots that Jean Marc leaves behind, and I'd like to say a personal thank you to him as both a colleague and a friend for what he achieved at Unilever. As those of you I have met will know, I worked in finance for a large part of my time in Unilever and so fairly closely with Jean Marc on the changes that he introduced in the finance function during his tenure. We can talk a little more about my own thinking and agenda at our investor event in a few weeks' time, but for now, let's get on and focus on the review of the Q3. I'll begin with the market context and a brief review of our underlying sales growth overall and by category. Andrew will take us through the regional performance and our turnover development, and I'll then wrap up with some concluding remarks on our outlook for the remainder of the year in what continues to be a very volatile and so challenging environment.
Before we go further, though, let me draw your attention to the usual disclaimer relating to forward looking statements and non GAAP measures. So let's get going with the market context. I'm always wary of averages and too much aggregation in looking at performance, but I think it's fair to say that in aggregate, we have not yet seen any improvement in our markets. In fact, in a number of countries, the economic environment is getting worse with the situation on the ground dominated by the effects of currency depreciation. In Europe, with the exception of ice cream, our markets have stayed flat.
There is some volume growth as a modest and slow economic improvement translates through to increased demand in our categories, but this is offset by price deflation, which is for now the norm. In North America, market growth remains hovering at around the 1% to 2% mark. In the emerging markets, we are seeing the greatest volatility, of course. And while it continues to be a very mixed picture country by country, the GDP growth trend is slowing in most of them. In India, there is a pickup in urban markets, but rural economies are under pressure.
In China, you will remember that we saw a slowdown in consumer demand during 2014. Since then, market growth has stabilized, but at rates step down from those we were used to. As yet, we haven't seen any further deterioration as a result of the recent stock market volatility, but we remain cautious. China is, however, a major consumer of commodities and a driver of sentiment, so the relatively small devaluation there triggered much larger movements in a number of other emerging markets. These came on top of the earlier devaluations of the past couple of years in major countries like Brazil, South Africa, Indonesia and Russia.
This in turn has pushed up the cost of living faster than incomes have risen in those countries, and so consumers are having to economize, making a little go a long way and in some cases, down trading to cheaper alternatives. Against this challenging background then, we are encouraged by the improvement in our overall growth in the Q3. Underlying sales grew 5.7%, taking the year to date growth to 3.8%. This improvement was driven by volume, which was up 4.1% in the quarter. So a step up in our growth.
However, it's important to recognize that there were some specific factors in Q3 which helped that growth, each with a similar sized impact. Firstly, a strong ice cream season with better weather in the southern half of Europe and a competitor quality related recall in North America. Secondly, the phasing of Latin American sales between the 3rd 4th quarters. Now there are a number of reasons behind this, including advanced sales before an announced price increase in Brazil and a system upgrade in Mexico. We expect these to reverse with a consequent decline of Latin American volumes in the 4th quarter.
Thirdly and finally, the soft comparator from the trade destocking in China that we talked about last year. We will see a similar, though slightly smaller, positive effect in the Q4. These factors helped the personal care, home care and refreshment categories, but there was no impact on foods. By region, Latin America, Europe and AAR were particularly affected with a smaller impact on North America. But as the chart shows, even allowing for those three specific factors, we would still have seen a steady improvement in growth momentum as we expected.
Importantly, our competitiveness has improved. And after 3 quarters in which our growth was no more than in line with our markets, we are now gaining share once again. All four categories are growing, and the portfolio as a whole is demonstrating its resilience with the overall delivery becoming increasingly robust. Our innovation is getting stronger, incorporates more differentiated technologies and is more and more aligned behind the category strategies. We're investing consistently behind the core of our business and behind our innovations.
Let's take a look at each of the 4 categories in turn. In Personal Care, our priority is to continue growing the core while building premium. Underlying sales grew 6.2% in the quarter, mostly from volume, and by 4.1% in the 1st 9 months. The new dry spray aerosol deodorants launched in the U. S.
At the end of last year are already approaching €100,000,000 of turnover on an annualized basis. They use the same innovative nozzle technology that we developed for the compressed deodorants in Europe to crack the problem of perceived wetness on application, which has been the major barrier to this format in the U. S. Up until now. As well as helping to drive strong share gain, this innovation is accretive to margin and are growing the total category.
In skin cleansing, Luxe is rolling out the world's 1st body wash with fragrance touch technology from Southeast Asia to the U. S. And Japan. The new Dove Advanced Hair series, now in 11 countries, is up trading a portion of the existing Dove user base to higher price points and at the same time attracting new consumers and growing overall category value for our customers. And in oral care, we've introduced the Zendium brand into 5 new countries this quarter, taking the total number to 9.
Zendium has a strong proposition, boosting the mouse natural defenses by harnessing the same protein and enzymes that our mouse use. In foods, our priority is to improve volume growth while maintaining the strong margins and cash flow that this category generates. In the Q3, underlying sales grew by 1.6% and are up 1.5% in the 1st 9 months. This is an improvement on the flat sales we have delivered over the last 2 years, but with still more to be done. Savory continues to grow in mid single digits.
Knorr has just announced sorry, introduced the 1st meal makers made from 100 percent natural ingredients. And in a number of markets, we've launched new cooking ranges of Knorr ready to heat soups with home cooking recipes made entirely from sustainable ingredients. In parts of Africa, where iron deficiency is a real issue, we have introduced Knorr fortified stock cubes to supplement local diets. Dressings also had a good quarter. The new Hellmann squeeze bottle already working well in Europe and Latin America is now building nicely in the U.
S. The bottle fits neatly in the fridge door and the innovative new nozzle leaves it completely clean after each serving, a very appealing consumer benefit. The new baking, cooking and spreads unit up and running since the start of July is now 100% focused on executing its strategy. This includes driving down costs, better allocation of resources and investing to reposition our portfolio more towards the faster growing segments of a market that remains very challenged. The new blends of vegetable oils and butter, like Bertolli with butter, are on track to achieve sales of approaching €80,000,000 this year.
We are gaining share within margarine in the developed markets, but the market decline has continued, made worse by low dairy prices. We've made a big change to how we operate in spreads, and 2015 will inevitably be a year of transition. The results from the new approach will need to be judged through 2016. Turning to refreshment. Our priorities are to improve margins and cash flows in ice cream and to grow faster in tea by repositioning the business to the segments which are most on trend.
Underlying sales grew 8.5% in the 3rd quarter and are up 4.7% for the 1st 9 months. A strong ice cream performance in the 3rd quarter was boosted by the factors I mentioned earlier, but we are also seeing good results from our innovations. What is most encouraging is that the fastest growth in ice cream is coming from our premium brands like Magnum and Ben and Jerry's. We continue to add to the portfolio at the super premium end with the acquisition of Grom just announced and through Talenti acquired at the end of last year, so not yet in our underlying sales growth, but up by more than 40% as we expand its distribution. Magnum Pink and Black has been our most successful variant of Magnum yet, so much so that we are keeping it in the range for next year.
And the new Ben and Jerry's Kors range with a central cookie core has helped sustain the double digit growth rates that this premium brand has consistently been achieving. Tea continues to grow solidly, but not yet to the potential of this attractive category. Our portfolio remains heavily weighted to traditional mainstream black tea, while the growth lies elsewhere in the tea category. We are focused on addressing this and now have a much stronger innovation program as we build our presence in the more on trend segments. We are launching new ranges of specialty teas under the Lipton brand in many countries.
In the U. K, we have kicked off a complete relaunch of PG Tips with a new fresh look, extending the core with specialty black teas as well as herbal and green teas. We have opened more T2 stores, including 6 in the U. K. And 1 in the U.
S. These stores bring strong visibility to the brand with consumers making repeat purchases online. We are introducing machine compatible single serve capsules in several European countries. And in France, we have just launched our first tea brewing machine, T. O.
By Lipton. I think it's also worth remembering that the growth rates you see here don't include our successful joint venture with Pepsi for Lipton ready to drink tea. This continues to go from strength to strength with 13% growth in the 1st 9 months, underpinned by further investment in the brand. Turning to Home Care. Our priority is to improve profitability in laundry and scale up household care.
We will report back on the margin development with the full year results, but you will recall that in the first half, we were and 5.2% in the 1st 9 months, mostly from volume. Innovation is helping to drive both continued growth and margin improvement through mix. The new global range of OMO with wash boosters have an improved formulation for both better whiteness and removal of oily stains. With a renewed focus on speed and simplification, we were able to half the time to launch the new product compared to previous global innovations. Comfort Intense takes fabric conditioners to an even more premium level with a super concentrated formulation and double encapsulation technology.
And in Brazil, where we launched the new OMO specialist pretreaters and strain removers, we have achieved a 20% share in the 1st year. Meanwhile, in our household care brands, we have extended the SIF Power and Shine sprays for kitchens and bathrooms across Europe. We've also introduced Sunlight Dishwash into new countries in Africa and into the Philippines and launched Brilliance small surface cleaners in Brazil. So if I can summarize the category performances in Q3, there is good progress on executing the Sharpen strategies and strong innovations driving growth across the portfolio. But of course, there's still more to be done, particularly to improve growth in Foods and in Tea.
I'll now hand over to Andrew to talk us through the regional performances. Andrew?
Thank you, Graham. Let's start with our largest region, Asia AMETRUB. Here, growth of 5.3% was largely volume driven and included some mixed performances. India showed continued solid volume growth of just over 6%, but pricing has turned slightly negative as a result of benign commodity costs, a change in excise duty benefits and competitive price pressures in hair care. In China, the channel shift continues with demand through the modern trade in the Tier 1 cities flat or declining.
We are extending and deepening our reach through distributors to the Tier 2 and 3 cities where there is growth, and we are building in e commerce, where we've grown more than 80%, that's 8 0% in the year to date. We expect 6% of our retail sales in China this year to be online. Southeast Asia remains subdued with macroeconomic conditions holding back consumption in most countries in the subregion. Thailand has been particularly weak. Turkey grew strongly, with standout performances in ice cream, tea and hair care.
Growth in Russia accelerated, driven by price increases as we managed through the currency volatility. While in Africa, market conditions are difficult and growth remains low. Moving across to Latin America, our businesses here continue to demonstrate their resilience with broad based volume growth as well as strong pricing across the region. We've been managing effectively through currency volatility and weakening economies, including a recession in Brazil. Pricing decisions are taken locally, always with a view to consumer affordability, and we benefit from strong, well supported brands and bringing technology led innovations to the market.
Volume growth in the Q3 was particularly high for the reasons which Graeme explained. Growth in North America picked up to 3% and is now slightly positive for the year to date. We're gaining share in the U. S, with particularly strong performance in ice cream, especially Ben and Jerry's, Magnum and the premium Briar's Gelato range. Deodorants are also growing well, helped by the dry sprays launch.
And Dove goes from strength to strength. As well as the Dove Advanced Hair series, which Graeme mentioned, we've introduced a new body wash. The new formulation and design delivers superior care and a better experience with consumers enjoying softer and smoother skin after just one shower. And the Dalf MEN care range is also building well. In Europe, growth improved to 2.0 percent with 4.7% volume.
Here also, the year to date is now slightly positive. The strong Q3 came from both good traction for our innovations and the boost to ice cream sales. All our key countries in Europe grew in the quarter. There was a strong contribution from the UK with successful laundry innovations and continued rapid growth in e commerce. Germany and Central and Eastern Europe also grew well.
So having reviewed underlying sales growth by category and by region, let's have a look at the impact of the other drivers of turnover for the 3rd quarter. Turnover was up 9.4%. M and A has now turned positive with an impact of 0.7%. This includes Talenti, the Zest and Kamay Skin Cleansing Brands and the more recent acquisitions in Prestige Skincare. Currency translation added 2.9% to turnover due to the weaker euro compared with the Q3 of last year.
Over the past few months, the euro has strengthened and a number of emerging market currencies have weakened. If exchange rates were to remain as they are today for the balance of the year, we would expect a tailwind on turnover of around 5% for the year as a whole. The tailwind on core EPS would be less than on turnover at around 2%. As a reminder, there are two reasons for this. Firstly, the effect of the stronger sterling and Swiss francs on our central costs.
We now expect this to have a negative impact of around 20 basis points on core operating margin for the year. And secondly, the impact of the stronger U. S. Dollar on our finance costs and average tax rate. And with that, I'll hand back to Graham to conclude.
Thanks, Andrew. The Q3 marks further steady progress in restoring growth momentum in the business. We're not expecting improvement in market conditions in the remainder of the year, and indeed, markets are likely to remain volatile and hence challenging for a while yet. However, we remain very confident in the longer term prospects for emerging markets and in our ability to navigate through volatility to deliver consistent, competitive, profitable and responsible growth. In the Q4, we will see another soft comparator from last year's destocking in China, but we expect this to be offset by relatively weaker volumes in Latin America after an exceptionally strong Q3.
You will remember that at the start of the year, we said we expected underlying sales growth for 2015 to be in the 2% to 4% range, and we now expect it to be towards the upper end of that range for the year. We will drive a continuous improvement approach to simplification and cost savings across the business, with restructuring costs staying at around 100 basis points. And most importantly, we will consistently invest in our brands, our innovations and in strengthening our distribution and go to market capabilities. All of this keeps us on track to deliver against our key priorities, which remain unchanged: volume growth ahead of our markets, steady and sustainable margin improvement and strong cash flow. With that, let's open the line to your questions.
Thank So I see our first question is from Harold Thompson. Harold, go ahead please.
Yes. Good morning, gentlemen. A couple of questions, please. The first one is on the kind of the one off contributors to the strong growth results. You say that China ice cream effect and LatAm early trade loading are all equally weighted.
So can you maybe just give us an idea of what the growth rate would have been, I guess, without those three factors, if you could? The second one is on margins. Clearly, there are some mix effects going on with if you look at refreshments having a very strong quarter and clearly, that is a lower margin business. So is there a a significant drag from maybe lower margin areas of the group, which could put into question the expected margin improvement for the year?
Thank you.
Thanks, Harold. Well, you're absolutely right calling out the one off contributors. You've got them spot on. I think looking at the growth rate, taking those to one side, I think we'd say around about a range of 3.5% to 4%, something like that. The mix effect on margins, obviously, we're managing many, many different things as we look to close the year.
There's no change really to our guidance on margins. We expect to see a steady improvement in comp for the year. That's despite the increased headwinds that we have from currency translation that Andrew called out. Of course, we you know that we manage the business locally and let them take pricing on a local basis, thinking about affordability, thinking about competitive dynamics, etcetera. And that means that in terms of current comm results, including the impact of foreign exchange, we have to manage the portfolio to do that.
So we've got positive mix. We've got negative mix. We have more headwinds in the current rate comp from our currency perspective. But overall, we think we can manage that with no change to the guidance and margins.
Okay. And if I could just add one to your first answer. So essentially, what you're saying is in the Q4, the LatAm effect will simply reverse boost, but the China factor will largely continue. So I guess the 2 of them together offset each other with ice cream just no longer being a booster. Is that the right way of thinking about it?
Absolutely right, Harold. Spot on.
All right. Okay. Thanks very much.
Thanks.
Thanks, Harold. And our next question is from Warren Ackerman. Warren, go ahead please.
Good morning, Andrew. Good morning, Graham. Warren Ackerman here at SocGen. Two questions. First one's on North America.
I think I heard you say that Q3 was around 3% for Unilever and the market growing 1% to 2%, so taking market share again. I was wondering whether you're able to kind of walk us through some of your key categories in the U. S. With regards to your kind of growth rates in the subcategories versus the market. I mean, I know you call out ice cream, but I was just interested particularly in personal care, especially in areas like deodorants where you've been obviously fighting quite an intense battle with Proxor.
So any kind of color on the U. S. In terms of where you are versus the category would be great. And then just secondly, on just going back to China, I appreciate the soft comp points and Andrew's color on what you're doing in e commerce and channels. But are you able to tell us what is actually happening on the ground in China and underlying terms?
What kind of category growth we're looking at year to date versus last year and maybe some color again on sort of market share trends in key categories and perhaps just confirm that there's no further destocking in China? Thank you.
Thanks, Warren. Look, I'll probably take the first one on North America and let Andrew have a think about the China question. In North America, you're absolutely right, 1% to 2% market growth is what we're seeing, relatively patchy and quite a variation, canopy by category. We are seeing an awful lot of couponing and price investment in the marketplace. We've come back a little bit on that, which has meant we've seen a little bit of price growth pulling through.
And that delivers the result for Q3. Importantly, we're gaining share overall in North America. And overall, consumer sales, we think, are growing about 2%. So it's been a strong Q3 of growth. A little bit of impact from the in ice cream from one of our competitors exiting the market for a period, which we called out.
But that's not been a very big impact in North America. It's one of the regions that's been least affected by any of those special factors that I mentioned. What has been happening on a category level, I'd summarize it as strong PC, strong ice cream, weaker tea and weak spreads. And just to drill into that a little bit, with the innovations really landing well in North America, the dry spray cores are all landing in North America very successfully. That dry spray deal has been one of our most successful launches ever in North America.
And as I said in the presentation, about €100,000,000 we think for the year overall. With that, I'll maybe hand to Andrew for China.
Yes. I think there's no doubt that the level of uncertainty in China has increased given the economic slowdown and the currency adjustment and stock market volatility. But it is worth remembering that for our markets, we saw the big slowdown happening during 2014, so last year. In fact, in recent quarters, market growth rates stabilized at around the mid single digit rates. That includes e commerce.
I talked about the structural channel shift on the call. So what we're seeing in terms of our own growth is we're seeing mid teens growth in the Q3 on top of a soft prior year comparator. It's all coming from volume. E commerce sales, we talked about and round about 6% of our retail sales probably this year. And we're seeing an improving underlying momentum in personal care and laundry.
As we pointed out, as Graham talked about, the soft comparison will be there again, a little bit less perhaps in the Q4. We're going to continue to invest for the longer term with a strong innovation pipeline, continuing to build that distribution out and accelerating e commerce most recently with the strategic partnership with Alibaba.
Andrew. Can I just come
back quickly, Graeme? Just on U. S. Hair care, is there any comments that you can make there?
It's been very, very competitive, Warren. It's over the last several years, really, it's been we brought a lot of innovation into the marketplace. We've had a lot of success in share there. We reached number one position, I think, in Washing Care, which was quite a milestone for us. But it continues to be extremely competitive.
Now some of the price improvement that you see in the quarter is because we've been becoming a little bit we've dialed back on some couponing and that's what we think is the right strategy and healthy behind the brands. But it's the same thing. It's bringing innovation to the marketplace, and it's investing behind that innovation that's we'll stay the course of that.
Our next question is from James Targett. James, go ahead please. Do we have James? If not, then we'll take a question from Javier Escalante.
Good morning, everyone. I would like to kind of clarify something in China. It has to do with your commentary, if I understood it correctly, that you are gaining share in detergents and hair care. Does it reflect a change in competitive strategy by Procter, which is your main competitor there, which is something that has to do particularly in detergent with the local players. And then if you can comment on Brazil, the underlying category growth as economy continues to slowing down and unemployment has increased and whether you are gaining share, what was your underlying growth rate in Brazil, that will be very helpful.
Thank you.
Thanks, Javier. I'll take the question on China and then hand to Andrew for Brazil. In Air Care specifically, I wouldn't like to comment about direct competition with one single competitor. What I'd like to talk about, if it's helpful to you, is around local players in Laundry. I think you touched on that in your question.
We still think that local competition in the Laundry category in China is very significant. They're very steady and very strong companies like Blue Moon and NICE, etcetera. So local competition, it continues to be very vibrant with a good a good performance in the quarter. As Andrew said, the growth rate has stabilized. It's at lower levels than we've seen historically, but still an attractive growth rate.
And I think what's significant is the shift in where the growth is from the Tier 1 cities in the hypermarkets into the Tier 2 and Tier 3 cities. And I'd just like to highlight something that Andrew touched on, which is that our strategy is to improve our distribution and reach into those parts of the economy and the market, which are where there is more robust growth and things like e commerce certainly help us to do that.
Yes. In terms of Brazil, I mean, first of all, if just take a step up to Latin America overall, then even adjusting for the phasing issues that Graham talked about, we'd still have had double digit underlying sales growth for Latin America with positive volumes. Now specifically for Brazil, we've seen strong volume growth in the Q3, and that was helped by the announced price increase that's come into effect on the 1st October. And you will that should then translate into an increase in price growth in the Q4 as we recover devaluation related cost increases. But our underlying business, we're actually very pleased that the volumes are holding up well given that the country is in
recession and consumer demand is clearly under pressure.
So our innovations are doing well. The OMO pretreaters doing very well. We've just launched some refill packs for those. Baby Dove is also doing very well. You remember that was only launched in October last year, but is doing very well so far.
So And then on the margin, a bit of the price, the incremental pricing, as we see
the pricing in Latin America has been double digit around.
So what was the incremental price increase that you announced in October, just in order of March? Thank you.
Yes. It's worth bearing in mind that we've been increasing prices in Brazil necessarily to recover costs for some time now. So we have more than one price increase last year, for example, and we are taking new prices and we are lapping old prices as we go through. So what we talk about in terms of price increase now won't all be incremental because the old price increases will drop out if you see what I mean. So it will vary category by category, but it's up to 10% depending on the category.
So I'll just make a general point, Javier, about Latin American pricing. And it really is it's a window on our world in the emerging markets. And the it's a number of of course, there's devaluation, strong devaluation in that part of the world. And we think about emerging markets, they're sort of breaking into 2 groups, some which where currencies have held up more strongly, for example, India, China and Mexico would be examples. But then Brazil, Indonesia, Argentina, etcetera, where we've seen devaluation.
And we're market leader in those markets. And it's up to us with the team on the ground reading the impact on consumer spending power, measuring the cost increase and very much a key capability and the leadership teams there to be able to make the right pricing decisions in the marketplace. So it's pretty much business as usual, albeit we're seeing stronger devaluations than we have perhaps in the last 7, 8, 9 years.
Thanks. Thanks, Javier.
Thanks, everyone.
And the next question is from Jeremy Fialco. Jeremy, go ahead, please.
Hi, good morning. A couple of questions from me. First one is on H2 margins. Do you necessarily expect those to increase given these comments you made about the currency back? So clearly, your minds will be up for the full year.
Do you stand by the point you made in H1 that the expansion in H2 will be less than it was in H1? Or do you think the margin in H2 could be faster to slightly off? And then the second question is just on your innovation phasing. Has that been a factor at all? It certainly seems like you've had some pretty good successes across your portfolio.
Would you say there were perhaps more landing in the 3rd quarter than ordinarily and that could have played a role in the pickup in growth? Thanks.
Hi, Jeremy. First of all, on the margins, I think we there are many, many moving parts. And so I wouldn't we know with great confidence to say that we're moving forward. As I said earlier, there's a currency impact that has to be managed. We've got more momentum buying the top line and there's mix going on behind that.
So we have to pull all the levers. It's one of the things that we do is to make sure that we can just deliver that consistent uptick in the margin, steady as she goes. So your question sort of implied it's plain sailing now. I wouldn't describe it as that, but we're reiterating no change to our guidance on margins for the year, and we'll just get on with the job of making sure that we deliver that over the course of what's left now, 10 weeks or so.
Yes. Maybe just to add one point on commodities, which is clearly a driver of pricing and also factory margins. We had guided to commodity costs, including currency effects, so commodity costs in local currencies. We had that they were slightly up in the first half. We had guided to expecting them to be slightly down in the second half.
Given the latest currency moves, it now looks more likely that they'll continue to be slightly up in the second half of the year.
So we'll see a little bit
So there'll be a little bit of pressure there. But that's again one of those things that we are managing through in order to deliver the steady margin improvement for the year as a whole.
And that's one of the reasons we think that we'll see continued price coming through the balance of the year.
Yes, exactly, yes.
Jeremy, on your question on innovation phasing, I think we called out at the beginning of the year that we would have a stronger second half in innovation than in the first half. And that's what we're seeing come through. There is, of course, between Q3 and Q4, we don't really view things between Q3 and Q4 as such. I mean, innovations come in and hit markets according to the capacity of the market to absorb things like listing and getting proper investment and execution by building distribution and penetration. These are the things that we focus on.
So I think during the 2 halves, yes, we expected the second half to be stronger from an innovation perspective. We're very pleased to see that those innovations, which are pretty distinctive innovations, are starting to pull through as we expect and be a really big driver of growth. I've got a list in front of me here. And it is impressive. And what's impressive is how broad based across the categories it is.
We called a lot of them out in the presentation, but just a few more in Personal Care. So I have naturals in the U. S, in my old market of the U. K. And in the U.
S, simple micellar cleansing water, for example, have been there. It's strong stuff and we'll carry on with that because innovation, we think, is a critical driver of consistent growth.
That's great. Thank you very much.
Yes. Thanks, Jeremy. I think we should now have James Targett. James, are you there?
Hello. Good morning.
Hi, James.
I apologize for earlier. Two questions from me. Firstly, on e commerce, I just wondered if you could give some color on the growth of e commerce at the group level. Obviously, you mentioned that China figure, but just at the group level and if there are any particular end markets contributing to that. And then secondly, just on your Food Solutions business, I wonder if considering the pickup in the U.
S. Markets and some stabilization in Europe, any comments on the outlook for that division? Thank you.
Hi, James. I'll do the e commerce one. And if you wouldn't mind, Andrew, doing Food Solutions, that would be great. So e commerce, yes. So globally, the channel is growing at about 20%.
And across our business, we're growing at about 40%. I recall though that it is very different market by market. Andrew mentioned the 80% growth rate in China that's taken that market up to 6%. I can talk for ages really and quite passionately about our e commerce business in the U. K.
And Ireland, which is our biggest e commerce business that's growing in the mid teens and is 7% or so of the business in the U. K. And actually, the 3rd biggest market is France. What's interesting are the different models that are emerging for e commerce and how they pop up and become a significant shift in the way in which consumers shop, the way in which you communicate with consumers, the way in which you fulfill market by market. So, yes, globally 20%, but much more exciting when you get into a market by market perspective on it.
And that's very much how we organize behind e commerce. We have 5 different models, the way in which we think about e commerce. There isn't really one single e commerce model, and we don't organize around that. But in key markets such as China, such as the U. K, we have dedicated teams and it is a big driver of growth in both of those markets now
and a substantial part of our
overall business. Yes. And a substantial part of our overall business.
Yes. And Food Solutions. Food Solutions is a little over €2,000,000,000 business for us. It's growing solidly. We're not going to call out the specific growth rate of Food Solutions or indeed by region, but we're happy with the performance in the year to date.
Okay, thanks.
So I think we next have Robert Jan Vos. Robert, please go ahead.
Yes. Hi, good morning. I have two questions. Just to be clear on Latin America, are you saying that volume growth Q4 will be lower than what you reported in Q3? Or are you saying that it is likely to be negative in Q4?
And my second question, policies, if it has already been answered, but I missed that part. You earlier at half year results, you said to expect full year pricing to be lower than the 1.7% reported at the half year results. Considering what you said on lead and pricing and also on raw materials in general, is that still your view on pricing for the full year? Thank you.
Thanks, Robert, Jan. So first of all, on Latin America, and then I'll give you a response on pricing, but also pass that bit of that over to Andrew to give a bit more color on it. But yes, indeed, LatAm volume growth, as we see the reversal of the volume which shifted from Q4 to Q3 because of the announced price increase in Brazil and the systems change in Mexico. That will mean that Q4 volume will be negative in Latin America, we expect. Secondly, on pricing, when we talked about pricing earlier in the year, we hadn't seen the further shift in devaluation in currencies.
And of course, what impacts pricing is local decisions the the year, and therefore, we thought that pricing would start to ease. As Andrew mentioned earlier, what we're seeing now is more devaluation. And therefore, in local markets, costs are going up in local currency terms. And therefore, we expect that there will be a little bit more weight behind pricing in the continuation of the year. And that's the reason why we think the pricing growth that we've got will continue through the balance of the year.
Andrey?
Yes. It clearly will vary by region. It's likely to remain high in Latin America and some of the other emerging markets. But elsewhere in some of the other emerging markets, it will stay low, probably stay low in North America and it's likely to continue to be negative in Europe. So overall, unlikely to reduce from the current levels for the time being.
Next, we have Rosie Edwards.
Could you just talk a little bit more about Russia? Obviously, you said that I think volumes were negative potentially in response to kind of price increases. What are you seeing in the market there? Are you seeing kind of consumers trading down? And which kind of categories are kind of stronger or weaker?
Hi, Rosie. First of all, just a quick refresher on Russia. We've got about a €1,000,000,000 business there. It's about 2% of the company. And about half of that is in Personal Care following the acquisition of Calina a couple of years ago.
What we're seeing in Russia is obviously a lot of volatility. Combination of the sanctions and lower oil prices are obviously weighing heavily on the economy. And there's been an awful lot of currency volatility, the big devaluation in Q1 partly recovered. But where that has pulled through into what's happening on the ground is a couple of things. I mean, quite a lot of pricing was taken in the Q1 and Q2 in the marketplace in Russia.
And it moved very quickly. There's still a fair bit of price being taken. It's a little bit less, and that's the reason why we've seen an uptick in Russia. It's very, very competitive as we go category by category. I'd call it categories like tea where we compete against local competitors and skin care where we're competing against more international competitors.
But basically in Q3 in Russia, we saw growth in the high single digits. That was still all driven by pricing. Volumes remain under pressure, a little bit negative. Volumes have been negative for the last for the whole of the year so far. But as we see pricing start to ease, that's the route to bring volumes back up in Russia.
Okay. We have one last question on the line, which is from Carol Zotta. Carol, please go ahead.
Yes. Good morning all. Two questions, please. The first one is with regard to pricing in Europe that it continues to be down quite a bit and a big bulk of deflation is coming through. Can we expect pricing in Europe to decline further?
And the second question would be on 2,060, probably early days, but what about can you say already with regard to raw materials deflation, inflation in 2016 and currency impact? Thank you.
Hi, Carl. So, first of all, in Europe, where I've just come from managing one of the largest and most impacted markets. First thing I'd say is that the European markets are different. It's easy to talk about Europe as one group, but my one of my big learnings from the last couple of years is the differences that exist country by country in Europe. But the one thing you can say about them all is that they're challenging markets.
And that price deflation is very much the new norm, as I said in the presentation, and very widespread. Now why is that? Value conscious consumers, the continued growth of the discounters. We all love a bargain. I'm Scottish, so maybe me more than most.
But we've all been conditioned now to look for value, enjoy receiving value, and then sometimes treat ourselves with the money that we've saved. And add to that very high competitive and promotional intensity and a great deal, it's not just within the supplier universe, but also within the retailer universe. And suddenly add all that up with a benign commodity environment and you get the sort of deflation that we're seeing just now. Overall, we don't think that the price growth, as Andrew just said, is going to tail off from its current levels. So we've got good growth in Europe in the quarter.
And quite encouragingly, on a year to date basis, we're almost flat now in our developed markets overall. As Andrew said, strong deflation continuing in Europe. Our assumption will be that that will continue. And therefore, we don't think our price growth will tail off at any time soon. With regard to your question on commodities for 2016, if only we had a crystal ball that was that accurate, I think it would be folly to call where we'd be in 2016 commodities.
And certainly, if commodities are hard to call, then currencies are probably even tougher because what we've seen is that they tend to move even faster in an even more volatile way. So I think we'll just rely on our model. And just to reiterate, I think it is the breadth and variety of our portfolio, the reach that we have that's enabled us to deliver a strong set of results in an extremely volatile environment. It's very much it's who we are and how we do things. We have a broad, diverse business that understands how to act in these markets and how to manage volatility and will manage the totality of the portfolio to deliver that consistent result even though the markets remain very volatile.
Okay. We'll bring the call to a close there. And if there are any further questions, then Anscar, Steve and I will be happy to take them as soon as we get back to our desks. I'll now hand back to Graham to conclude.
So thanks, everybody. And thanks from Andrew and I for your time today. If I could sum up in just a few words. We remain on track to deliver another year of competitive top line growth combined with steady margin improvement. Strong innovations, our approach of sustaining investment to drive consistent top and bottom line growth a resilient portfolio and sharper category strategies position us well to deliver long term value creation into the future.
That would be my closing message. Thank you, and enjoy the rest
of your day.
This conference has been recorded. Details of the replay number and access codes can be found on Unilever's website. An audio webcast will also be available on Unilever's website, www.unilever.com and on the Investor Relations app.