Very welcome to Essity's Investor Day. Welcome to you here in the audience in Stockholm, and welcome all of you watching the webcast. I am Joséphine Edwall, Head of Communications for Essity, and I will be your moderator today. Essity is the leading hygiene and health company, as you know, and our name stems from the word essentials and necessities. We are producing essential products for everyday life and necessities for people's wellbeing, and that's actually why we are called Essity. We have collaborations with, for example, United Nations to support the United Nations Sustainable Development Goals. We also have collaborations with, for example, the Museum of Photography, Fotografiska, and that's why we are here today. Together, we produce joint exhibitions under the theme Hygiene and Health, where we want to break taboos within different topics, and we want to improve the wellbeing all around the world.
For those here in Sweden, if you want to see some of the exhibitions, you can do that today after the event. With this, let's have a look into today's agenda. We will start with our CEO and President, Magnus Groth, going through the highlights of Essity Group and the way forward, followed by our CFO and Executive Vice President, Fredrik Rystedt. After that, we'll have a joint Q&A, and then we'll have the first break. All the breaks and the lunch are just outside, where we also have exhibitions about some of our products and solutions with a special deep dive on medical solutions and also within Tork. After the break, we'll do two of our global units with Global Operational Services with the President, Robert Sjöström, followed by Donato Giorgio, President for Global Manufacturing.
We have a joint Q&A, and Magnus will join in all the Q&As. We have lunch, deep dive into health and medical with Ulrika Kolsrud, and then professional hygiene with President Don Lewis. We have a break, and then our two other business areas, consumer goods with Volker Zöller, and then Pablo Fuentes for Latin America. Q&A. We also have the pleasure to have Vinda here, which is our subsidiary in Asia, and we have the Chairman, Mr. Li Chao Wang, and we have Christoph Michalski, CEO of Vinda. Q&A and concluding remarks from Magnus. Some practicalities. You have the bathroom one floor below. Exits are here in the back of the room, so you all need to know where that is. With this, it's time for you, Magnus. I hand over for you. Welcome, Magnus Groth. Thank you.
Thanks, everyone, for coming to this first Essity Investor Day. I realized talking to some of you outside that many participated in our last Investor Day as SCA. At that time, we were a hygiene and forest company, and today, we are a leading global hygiene and health company. At the time, three years ago, we had not yet announced the split, which of course, subsequently happened, and we didn't know about the acquisition of BSN medical that has led to this transformation. Through these and many other actions, the company looks like this today, sales of close to SEK 120 billion. This is actually a higher number than when we were SCA, so we have really recovered from a growth perspective. We have approximately 47,000 employees, and we are active in 150 countries.
We have also, and of course, maybe most importantly for you here today, created substantial shareholder value. Here is just one graph showing the total shareholder return from 1st of January last year of 28%. Even if you go back to the split, which was mid-2017 or longer, Essity and previously SCA, has continuously outperformed both the MSCI Household Products Index and the OMX Stockholm 30. The reason for this is not all this restructuring, but actually a very, very strong and solid underlying performance in the business, which is where we try to spend 90% of our time. This is the development on top line over the last five years with a growth of 35% and on the adjusted EBITDA, the operating profit of 36%.
Of course, what we didn't anticipate at the time of the last Investor Day and before the split was the unheard of increases in raw material costs, both the duration but also to the extent that the material costs increased to levels we've never seen before during 2017 and 2018. The negative impact was over 5% last year. We were able to offset a large part of that, but still had this smaller dent, as you can see in the development when it comes to adjusted EBITDA. That's what I was planning to say about the history and look at the future based on these six strengths, which I think are what will make us successful also going forward. The first being that we are positioned in sectors, industries, that will continue to grow and continue to be very attractive, health and wellbeing.
In these sectors, we have leading and attractive market positions based on our strong brands. The brands are then, of course, developed not by advertising and promotion, we need that as well, but on a strong innovation funnel so that we can continue to develop better products with an improved consumer experience. Internally, we have a proven track record of focusing on efficiency, cost cutting, and cost savings. We will talk more about that throughout the day as with the other topics to create sustainable profit growth and strong cash flows. Most important of all, this is really the foundation for future success, is to have a strong, successful, winning culture and a very strong management team. I believe this is the best management team in the world. They're sitting over here. You will meet most of them today.
We have changed the organization slightly from 1st of January this year. We have created a smaller and more operational management team. We have trimmed down the staff functions to a minimum. We have the same business units as we had before. They are the ones down in the right-hand corner. In the press release this morning, we actually also gave the relative size of these business units. Starting with the first one there with Ulrika, Health and Medical Solutions accounts for 21% of sales. Consumer Goods 32%, Professional Hygiene 21% again, and Latin America growing very fast, 12%. Not on the picture is Vinda, that Joséphine spoke about, which is then the last 14%. As Joséphine said, that's a subsidiary. It's listed on the Hong Kong Stock Exchange, but with Essity as majority owners.
A very important change in our structure are the three strong global units that you see there to the left that supports the business units. The business units have the full P&L responsibility, so there is no matrix from that perspective. But we see that to continue to improve efficiency, reduce costs, improve quality, and the premiumness of our products, we have the global unit, Global Manufacturing, managing our 90 sites across the world in a very structured and long-term fashion with some programs, like Tissue Roadmap that you heard about, but also, of course, improving every day. Secondly, Global Brand, Innovation and Sustainability. This is an important change where we have moved sustainability from being a staff function into this.
The reason is that looking back, sustainability has been very much focused on the supply chain, which is still incredibly important to reduce emissions and improve energy efficiency and so on. But going forward, we are incredibly successful in doing that, the emphasis is turning much more to the actual products, the packaging, and the sustainability benefits to the users, the consumers, the customers. So we need to get sustainability all straight into our innovation, when we innovate new packaging materials, new materials for the products, and also how to manage the post-consumption waste. Finally, our other efficiency engine here, which is Global Operational Services, that focuses on the efficient end-to-end processes, including logistics, purchasing, IT, and global business services. Everyone is here except Tuomas Yrjölä, who has other obligations.
Out of the 12 worth mentioning, we have six different nationalities, so it is a strong international team that we have here together. Getting back to the attractive categories that we are in, this is the breakdown from 2018. A difference from three years ago is that Personal Care is a bigger part of the pie and Consumer Tissue is smaller. Two reasons, the acquisition of BSN medical, the fast growth of some of the Personal Care categories, like Incontinence Care and Fem Care, but also the fact that we have been pruning our Consumer Tissue business in many areas to manage the very high raw material costs. By geography, not much change with a good balance between Latin America and North America and Asia to balance our leading position in Europe.
From a distribution channel perspective, even though the channels are blurring, we will talk more about that later, I think it is important to note that we have a good balance. More than 40% of business is actually in business to business, and 58% is in retail trade. Of course, with digitalization, this is all changing. When it comes to our mix between retailer brands and our own brands, having a strong European base, it is important to be active also in retailer brands. This mix has changed with retailer brands now accounting for 2% less of our total sales, which is very much in line with our strategy. I would like to add that the retailer brand contracts we have are based on very strong long-term partnerships with customers that we have mostly been working with for decades. So we see this more than just private label sales.
We're really developing brands here. Favored market trends. These will help all our categories to continue growing going forward. One big focus today will be the three that we have added at the bottom. They're all interlinked, because through digitalization, we are able to really develop our business model, but most importantly, it empowers the consumer, but also the customer. Just a reflection here, this could be of course the same lady, maybe it is, who's using digital applications here to manage washrooms, buying our products online, that she's then using in her leisure time. I mentioned the consumer trends, putting the consumer in control.
Again, when you look at the lady here in the middle, you don't know anymore if she's actually buying baby diapers or is she a facility manager who is sitting at home on a Sunday night, ordering tissue for the office on Monday. It could be on the same platforms, of course. It could be both on Home Depot or Staples or Amazon. The lines are really blurring here. Deliberate spending, this is very interesting because the consumer is getting more and more specific in their needs. Just yesterday, I met with one of our long-term joint venture partners, Mr. Takahara, who's the Chairman and CEO of Unicharm, our Japanese counterpart. We were amazed when we discussed this, how similar many of these trends are when it comes to health and sustainability.
Specifically, of course, the trends of pure, clean, original and so on that I think you hear about and that we'll talk about more today. All of these trends, as I said, many of them are global. This is how the markets have developed. If you remember from two years ago, Asia was number one then, but of course, growing much faster and now clearly the dominant market for our categories. At the bottom there, these are categories have a total growth of around SEK 118 million, which means that we account for about a 10% average global market share. We're happy with how we're positioned with strong positions in Asia, in Latin America, that's also growing fast. We are not very active in Africa. As you can see, Africa, of course, has huge future potential.
Today, that's the orange bubble there down at the bottom together with Australia, still very, very small. To capture future growth, we're very much focused on Asia and on Latin America. If you break down this global market, I think it's interesting just to see the difference on the category breakdown between emerging markets and mature markets, where consumer tissue is similar size, 37%. Look at the emerging markets, how big feminine and baby is. These are the first 2 categories that you invest in when you start having a disposable income. Then over time, the other categories develops, being medical solutions, incontinence products. Of course, as the population ages and professional hygiene. That looking to the right, then the mature markets, this is a much bigger part of the pie.
We are very happy to be positioned in this second part, which continues to grow even as the market becomes mature. Medical Solutions, incontinence products, and professional hygiene. This is where we have our leading brands, and I will get back to that shortly. It is also an area that is not yet as consolidated as some of these other big categories. It is a good place to be also for the future. These are our global market positions. I call this my bragging slide. I think this is something to be very, very proud of with leading global positions year after year in incontinence products and professional hygiene with TENA and Tork, and developing extremely well. In consumer tissue, we are number 2. This is where we have our third billion-dollar brand, which is Vinda. You will hear Mr. Li and Christoph Michalski talk about that later.
Medical Solutions, which is our new category or group of categories. We are number 4 globally, but with many strong regional local positions. In baby care, we have actually slipped down one point from being number 4 globally to number 5. This is a result of the very clear strategy that we have communicated that for baby care, we are focusing on margins and profitability rather than growing. One example of this, we actually announced on Tuesday that we were stepping out of a joint venture in Turkey, which was one of now a small number of underperforming local positions where we have tried to turn it around. When it does not work according to our kill or cure principle, we decided to step out. Feminine care, we actually moved down one notch as well, which is kind of strange, and I really challenged my team here. How can this be?
We have been growing our market shares everywhere we are present the last five years, quarter after quarter after quarter. It is a huge success story. The reason is we are not present on all the rapid growing markets, that is why we are relaunching feminine this year in China through Vinda. That is a very important part of our strategy to get back also on a global scale in feminine care. Getting into some more details than we usually do, this is the breakdown between some of the regions. As you can see, in Europe, we have a very strong position. We can use this to get prices up as we have done recently in consumer tissue, and to really create partnerships with retailers and with big distributors.
Also in Latin America, we are now a strong number 2 from a regional perspective, but really challenging the number 1 actor here and growing very fast and outperforming our main competitor. In Asia, we are strengthening our positions. This is still very fragmented. Many players. All the opportunities remain here to be number 1 or number 2, but with a very good starting point. While in North America, we are very much focused on professional hygiene and on incontinence care, where you know that we have been working hard to turn around our incontinence care business, and we will hear about that. It is going very well, and we are growing our market shares in incontinence care in North America. Of course, it is not just about market positions. To make them sustainable, you need strong brands.
We usually say, if you look in our annual report, that we have leading market positions, being number one or number two in 90 countries. Doesn't say much. What if these are tiny categories and tiny countries? It doesn't add up to much. We said, let's show some other numbers that really shows that it's more than that. Actually, 90% of our branded sales is related to number one or number two positions, which means that in a category, in a country, we're either number one or number two. That's, of course, also very much in line with our strategy to be number one or number two everywhere. How is this going over time? Are we winning or are we losing? In over 50% of our markets, we have been gaining market shares over the last three years.
Then there's a significant portion where market shares are stable. This is quite common in our industries. Then we have lost market share, as is always the case in some areas, and you know where they are. It's baby, where we have been working with our margin improvement program. It's to some extent also in Inco Retail with the entry of new competitors over the last couple of years, something that we are working to address now. Then sustainably, we know that categories and brands are investable if you have a large share on the actual market. We have a market share of 30% or above in 40% of our market positions. That shows the strength of the brands in another way. It's different perspectives on the strength of our brands and our market positions.
As I mentioned initially, the strong brands are not based on marketing. You need to provide superior value to the consumer and to the user, this we do through our innovation process. I was in Mercadona at their annual supplier meeting. It's the biggest retailer in Spain last week when they called together their 100 biggest suppliers, we got a lot of compliments there because we've done something no other supplier's done. We have put together our own consumer panel with 250 families that report to us continuously year-over-year on how they are using our products sold through Mercadona, and how they see different improvement opportunities. A very direct and continuous consumer insight process that really, I think, strengthens our position also towards this important retail and customer. We spend 1.1% of sales in R&D.
Doesn't sound that much, it actually puts us on the top 1,000 companies, this is according to PricewaterhouseCoopers, of the biggest investors in R&D in the world, somewhere around place 750. More importantly, in this ranking that was published just a few weeks ago, they said that there are 88 high-leverage innovators. Innovation companies that get a lot of bang for their bucks, we were one of those 88. We're really focusing on building bigger brands, I will show some examples here. These are brands that we believe can add 0.1% or 10 basis points of sales in the first or second year. Of course, that's a huge impact if just one launch can add that much growth in the first year and then continuously. That creates a lot of value.
The growth has to come from not only cannibalizing on existing products, of course adding something new. Winning market share, also on premiumization, so the ability to take pricing. I think you will see all of these products coming back during the day. Digital transformation is becoming an increasingly important part of our innovation. Another figure that we've been discussing is the 5% that we sell on group level. Because when we looked into this in depth, we realized that we are probably very hard on ourselves. When we include the online sales in B2B from our distributors, could be Bunzl or Impact or other distributors, that number suddenly doubles to 10%. We will look into how we define our online sales and also how other companies are doing it because it seems that there's no real standard here.
Including our B2B online sales, it's closer to 10 than to five, growing very quickly. Of course, we want to overtrade here because this is the future. Platforms. Customers and consumers, they want to interact with us, and that's why platforms are important. Baby clubs, platforms for healthcare staff and so on, for cleaning facility management staff. This is a big R&D and innovation area for us going forward. Moving then to the next topic, cost efficiency. The real opportunity in the long term to accelerate savings and efficiencies is through robotics, automation, and analytics. While visiting Mercadona, I also went to our plant in Valls, outside of Tarragona, last week, and it's quite amazing. We have, Don will talk more about this, I've been talking about this for a week now. We have a dozen young engineers from Barcelona.
They buy off-the-shelf sensors, measurement equipment, lasers, they find ways of improving the quality of our tissue, also the runnability of our machines in ways that we thought were not possible. When I asked them, "How much opportunities do you see?" They say, "Every door we open, we see five more doors." They told me that currently during each eight-hour shift in Valls, they collect half a billion data points. Half a billion, are applying advanced analytics now on creating virtual sensors to be able to really, really follow how the machines are running. Fantastic, and developed by us. Cost savings has been so much of a theme here during the last quarters and years that I think I will jump that. You're all aware of the initiatives we have.
Sustainable value creation is important, we have set a number of new targets that are very aggressive. They came out one by one, I want to give you the overall picture, where the most important one is that we have set new targets for greenhouse emissions that have been approved by the Science Based Targets initiative, that they are on the right level, that Essity as a company contributes to keep global warming below two degrees, that's very important to us. This will require investments, we firmly believe this is the right thing to do. Another target I just want to highlight is fiber sourcing, because some of you know that we always say that close to 100% of our fiber is sourced either through FSC or PEFC controlled or certified wood.
We achieved this target one or two years ago, we raised the bar and said it's not enough that it's just certified or controlled. It should all be certified, which is a stronger requirement. Again, our target is down to 76%. We raise the bar, we start again. Very important for us. Of course, and increasingly, and also with our new organization, based on our three sustainability pillars of wellbeing, more from less, and circularity, the opportunity going forward to support our customers and consumers in their sustainability efforts to make them successful, to find solutions that they can use in their sustainability work. Corporate culture, another bragging slide. Only a few weeks ago, we were elected the most attractive employer in Sweden, which is fantastic considering we've only been around for two years, based on 6,200 interviews.
It says something about our culture, I think, where to the right you see the hallmarks of Essity and previous SCA, caring and collaborating, to the left are two new beliefs that we are focusing very much on, being committed to delivering superior results and having the courage to take the lead. I'm sure you will see this very strongly from our team here throughout the day. Portfolio strategy. We've spoken about all these categories and segments. How do we prioritize? We try to boil this down to a super simple slide. This is it. It's a pyramid. Very clearly, Medical Solutions, it's a growth platform, both organically and through acquisitions. It's very closely linked to incontinence products, feminine products. We love it. It's a small category, but we're very successful, good margins, very investable. Professional Hygiene, same thing.
We see that we can grow with digitalizations, with solutions, not just the basic tissue, big opportunities. Baby care, improved by selective presence. Again, we saw the example from Turkey. We are doing incredibly well in gaining share in most European countries and in a few other positions in Latin America and in Asia, but we still have some work to do here. At the same time, we are investing to grow as well with the launch of Lotus Baby in France two years ago, which is developing in a good way. Same in Consumer Tissue. While we've been going through the Consumer Tissue Roadmap talking about restructuring, please remember this is only one part of it, and the most important part is that we're also improving quality for the long term.
We're just now starting up Pablo, a new beautiful premium tissue machine outside of Mexico City that will really support our growth in premium tissue in Mexico going forward. If we take the same perspective but now based on the three business segments that we actually report every quarter, just get that. I think this pretty much covers it. Medical Solutions, a growth platform. Feminine care, incontinence, medical, grow organically. We know that every investment we make really, really helps the value creation of the company while continuing to improve underperforming baby positions. Just to add here, we have had high investment levels in personal care over the last couple of years, as you'll see, and this is something we're doing to improve our competitive position for the long term, and it is working. We're not only buying machines because we're growing.
We're replacing old, inefficient, costly machines that lack flexibility with new, low-cost, much more flexible machines that we can use to innovate for decades to come. It's an important point here. Consumer tissue. Innovate to increase the share of premium tissue. Growth in high margin products. We do, in consumer tissue, have a lot of high margin businesses as well. It's not only cutting and restructuring again. Sustainable and cost competitive fiber sourcing. I won't talk more about that now, but Magnus Groth will talk about that because we had a press release this morning, a new initiative. We'll talk about it later today. Professional Hygiene. Being the global shaper. We're the global number 1. We can move this from being a tissue business to a solutions, a platforms business.
The big opportunity geographically, is to continue to grow double-digit in emerging markets, where we have a relatively weaker position than in North America and in Europe. That's the big opportunity here. That's a summary of where we are and where we are heading. Of course, for this year, to bring us back to reality, the top priorities for this year, only a little bit more than 6 months remaining. Innovations will always be on top of our list, but we also continue with price increases, efficiency improvements, cost savings, which has been, of course, a recurring theme also in the quarter reporting. Growing categories with high margins and capitalize on digital opportunities everywhere. That's the short-term focus. Thank you very much for listening.
With that, I would like to keep the pace and hand over to Fredrik, who will put numbers to all of this. Looking forward to that. We will open up for Q&As after Fredrik's session. Please.
Thank you, Magnus. I will not give a lot of numbers, but just a few, maybe starting off with a few words about who I am. I've been with Essity or SCA for a bit over 5 years. Prior to that, with the Nordic bank, Nordea, as a CFO for about 5 years. Prior to that, 7 years as CFO for Electrolux. I kind of like being the CFO. I guess you can interpret that. What I will talk to you about today is basically 3 things. A little bit about the recent past financial performance. I'll talk a little bit about how we run the company financially, and of course, also finally, how are we going to reach our targets? Those are the 3 subjects. I'll start with the first 1, the financial targets.
Starting with the first one, we aim to grow our sales organically with more than 3% per year. Secondly, we aim to have return or adjusted return on our capital employed of above 15%. We shall, at all times, maintain a solid investment grade. Our dividend policy states that our dividend should be stable and rising. If I just walk through these and start with the first one, the financial or the organic sales growth. You can see from this slide that we have largely lived up to that target over the last several years. Here I adjust for those deliberate exits that we have made in terms of mother reels as an example, or cure and kill exits. The interesting thing is to actually look a little bit underneath these numbers.
What you will see there is that volume contribution or the volume growth is actually quite stable. Volume in our industry will vary to some degree with market development or company specific things, but largely quite stable. It's also the same for mix. We continuously contribute to sales growth through mix. The volatility you see here is pretty much all of it relating to price. Clearly, if you look at, as an example, the final quarter here of Q1 of 2019, the price increases that we have made clearly contributes a lot to organic growth. Turning to financial performance in terms of return of capital employed. Up until 2017, we were clearly heading in the right direction to actually get to our target of over 15%.
The last year or last couple of years of raw material inflation and energy has been a quite major disappointment for us. This is very visible. You'll see it in consumer tissue especially, but you'll see it in all business areas. All our businesses have been very much impacted. It takes a lot of time to pass this cost inflation throughout the value chain to the end customer and consumers. We're actually doing that. If you look at the last quarter or last couple of quarters, all our business areas has had a positive contribution from price increases. Turning to a little bit the details, maybe starting with the inflation on raw material and energy. You can see at the bottom right graph here that, of course, as Magnus already said, 2018 was just monumental from this aspect.
It's also interesting to see this is actually a continuation of several years. This has been a major challenge to the company. We have up until 2017, been able to mitigate this to a large extent by the positive contribution that we get from mix. You see that in the upper left. Of course, innovation is not just paying off in terms of additional growth of sales, it's also clearly paying off in terms of additional profit. Of course, last but not least, the price has been very positive. You can clearly see that. Also in 2015, and now in 2018, we have been able to compensate through price when we have Adverse market impact. Cost remains super important for us in every aspect, whether it's COGS or SG&A.
I'll come back to some of these issues in a bit. The balance sheet, we shall at all times maintain a solid investment grade, and you can see to the bottom right that we are actually doing that. With S&P, we are BBB+, and with Moody's Baa1. When we bought BSN medical, we did that all debt-funded, and as we did with Wausau, we maintained that strong rating. We have been able to fund large acquisitions. When we did buy BSN medical in 2017, we estimated that medical would generate significant cash flow and that our current business would continue to generate stable and increasing cash flows as it had done in the past. Clearly, looking back now in the last couple of years, medical has delivered expected cash flows.
As you can see to the right-hand side, we have continued to amortize on our debt, the underlying debt. Of course, once again, raw material has prevented us from de-leveraging in the speed we would have wanted to do. Looking at the debt number there, in addition to, of course, amortizing, we've also had some negative impact from pension and also from currency. If you take just using S&P as an example, to be BBB+, we will have to have a net debt to EBITDA below three, and we will have to have pre-funds from operations divided by net debt of over 30%. You can see from the bottom left that we are pretty close to these parameters. Right at this point of time, we don't have a lot of space, if you put it that way, in terms of increasing our net debt.
Not a lot of space for acquisitions. As raw material has now stabilized, we expect to continue to de-leverage, and of course, through added EBITDA, also create additional space for acquisition as we go forward. Talking a little bit about the future. As I already mentioned, we strive to reach more than 50% of adjusted return on our capital employed, and we are currently at 12%. We have many initiatives to become more efficient in terms of usage of capital, we want to invest into more higher yielding categories or businesses or segments. Of course, we work constantly to become more efficient in terms of capital. Clearly, the majority of this improvement will have to be through margin or will be through margin. I'll touch a little bit about how we intend to do exactly this.
Before I do, though, if you look at this slide and this matrix, we call it the value creation matrix, and it's a simplified way of explaining how we manage our group and all the units within our group financially. If you look at the x-axis, what you see there is basically growth, and if you look at the y-axis, you see the return. You also see the expression there, hurdle rate. What we have done there is we have set a hurdle rate for Essity as a company, and we've adjusted that depending also for individual countries, depending on the differences of interest rate. It's largely based on the WACC rate, but adjusted for slightly higher normalized interest rate. We have a higher, you can say, internal hurdle rate than perhaps you would calculate when you use your WACC rate.
This is really simple. If you're below that hurdle rate, we will focus, or that unit will focus most of the resources or efforts on trying to improve capital efficiency or raise the margin. If you happen to be above, then of course, most of the focus will be towards growth. It's kind of a simple way of doing this, and you'll see more of that as we progress. Using our different categories as the examples, consumer tissue has a fairly low capital turnover and a very low margin, and most of the growth you see in consumer tissue will be related to emerging markets. Here, clearly, the focus is all about actually increasing margin. If you look at the European or mature markets business, it's very much about cost and of course also related innovations, and you saw an example previously.
Very much about raising margins and in the emerging markets, finding the healthy balance between growth and margin. Looking at baby, also here in our terminology, underperforming, but the problem is slightly different for baby. Here, it's not about all of the business underperforming. Here, there are selective parts of baby which we need to address. In that sense, addressing these different units under, for instance, the cure and kill program is very clear. You'll see some more details on baby just in a couple of seconds. Turning to Professional Hygiene, capital turnover and margin is much better than consumer tissue, and in fact, the business is much more sticky because of the proprietary or captive dispenser-based system. This is, from that angle, more value creative or more profitable.
Also here, we have the ambition to grow, especially in emerging markets, in adjacent businesses, and we believe we can also enhance margins. Turning to Inco, most of the Inco business is really delivering high return. The focus is, of course, naturally to continue to grow that business and expand that growth. There are possibilities also here for margin expansion. One example there is clearly, for instance, Brazil. Taking our newest addition, medical. The return on operating capital for medical is very high. When I say operating capital, I simply just deduct the acquisition-related intangibles. We paid a high price for it, but if you take away the intangibles that we don't reinvest in, of course, the operating profit is very high. This is super value-creating when we grow it, and this is basically what we intend to do.
Of course, obviously, North American business has to grow much better than it does, but there are also so many other opportunities in the medical area. Finally, feminine. We're profitable. We have a super good return wherever we are in terms of feminine. The story for us is pretty much all about growing. If you sum all of this up and you look at Essity as a whole, we have a good return, but of course, we will have to improve. It's not all about growth, and it's not all about margin. It's basically doing both and creating a situation where we become, in our terminology, Star Value Creator.
A little bit to sum up the financial role of our categories, I think what I've been wanting to portray here is that the value creators of our group, basically Professional Hygiene, it's Inco, it's Medical, and it's Feminine. Those are the four, and Baby and Consumer Tissue more have the role of cash flow generators. Now, these statements are true on aggregated level, but it's not necessarily true by segment, because if you look at Consumer Tissue, just as an example, there's super good parts or segments of Consumer Tissue that has a very high return, and we really want to grow it. Of course, there are also parts of, for instance, Inco or Medical, where return has to improve. It's not a general statement, but on an aggregate it is.
Perhaps stating absolutely the obvious, the synergies are really strong with all of these categories in either go-to-market, in innovation, in manufacturing, or in procurement. Just using a couple of examples, Feminine or perhaps Inco Retail would not be as profitable without the go-to-market synergies with Consumer Tissue. Professional Hygiene would not be as profitable without the procurement and manufacturing synergies with Consumer Tissue, and Medical would not be as profitable without the go-to-market synergies with Inco. These are just obvious examples why we actually have the shape and form that we have. Turning a little bit, how are we going to do this? I'm not actually going to spend so much time on all of these issues because this is what you're going to hear the rest of the day.
We are working along all the three dimensions or value creation drivers, growth, margin, and capital. You'll hear all about that during the day. I'll just spend time on a few of these things. Starting with the first one, cure or kill, or margin improvement through cure or kill. It's a program that we originally started in 2016. What we did, we just looked at all our units in our company, we defined all the underperformers. For each of these units, we set a very firm business plan, clear actions, clear targets, and a timetable. For all of those that had a business plan, we constructed a business plan that had an NPV higher than zero, those became the cure candidates. For all those that were below NPV, below zero, they became the exit candidates.
If you look at all of these candidates, roughly about 10% of all our group sales were in these underperforming units. Out of those 10%, 10% or roughly about 1% of the group sales were basically exit. You know most of those. India is a good example. Baby Brazil was another one. In 2018, last year, we redefined this program. We raised the bar a little bit, we also included those that had not yet been fixed. We created a second version, tracking and following up in exactly the same way. If you look at these programs combined, up until the end of 2018, approximately SEK 1 billion of value created or additional margin. Just one way of showing how do we work with this, and I promised you before, just showing some details about Baby.
This is quite interesting because if you look at Baby, as I said, it is not performing where it should be. If you actually look at the details, you can see that we got businesses here that produces really good returns and even businesses that produce really good return and growing, as you can see. There is a cluster there bottom left, and these are the cure and kill candidates. Magnus Groth talked about the exit of the Turkey's joint venture earlier this week. Well, that's the spot to the far right-hand corner. That's the value destroyed here that you see. It's a very consistent program. One other way of showing exactly this is a little bit far-fetched perhaps, but if you look at most of the cure candidates, they actually are in emerging markets. Not all of them.
There's some in also mature, but most of them are. You can see from this slide that we have improved the margin in emerging market quite consistently over the last several years, and also in a very challenging 2018, margins were largely stable. This is basically cure and kill. Cost. We are engaged in cost in so many different ways. Starting with COGS to the upper left, we have consistently been able in negotiations with our suppliers, material rationalization, product cost fix, logistics, all sorts of areas, we've been consistently saving approximately SEK 1 billion per year. It doesn't get any easier, but that's been roughly the number. As you can see here, we have the ambition to do exactly that also in 2019.
The reason I say ambition and not will is simply this consists of several hundreds of projects, and it's impossible to estimate the exact value or outcomes of all of those. In the third quarter of last year, we also announced what we call, a very creative name, a cost saving program that's targeted towards SG&A, so different from COGS. We said that we are committed to reaching a run rate saving of SEK 900 million at the end of 2019. That program is going according to plan. We're still committed to that number, and here we estimate that roughly about SEK 600 million of that SEK 900 will actually come into the books of 2019. Once again, uncertain, could be lower, could be higher, but this is the approximate ambition that we have.
These programs, and we got a few, Tissue Roadmap or cost saving program, as just examples, and you'll hear about that later. They're great and quite useful from time to time, but over the longer perspective, what is even more valuable is a robust cost culture. I just took the example here at the bottom, you can look at our travel cost as an example. This is just representing the continuous cost saving that we do pretty much everywhere, and I could have used conferences here, office space or usage of consultants or some other thing. We save in every area, which is extremely valuable. Capital efficiency is really key, and working capital is one of those areas. If you look at this slide, it doesn't look good because we actually trend in the wrong direction.
Most of this deterioration in the last couple of years is actually due to technical things like raw material increase and to some degree, also country mix. Clearly, we have probably, to be fair, been more focused on raising prices and making sure that we keep our volumes in a very tough market situation than we have focused on working capital. Here there are many things that we can do. As just an example, using statistical forecasting and demand planning will over time bring our inventory down. Using machine learning in our downing procedures will impact accounts receivables. There are many other projects just like this. CapEx, we've been fairly stable, as you can see. 2018 was a slight uptick. We spent some more, and you've heard one example here with Latin America Premium Paper. We have a technology shift in Inco.
We spent some money in terms of how in personal care capacity. This year, we expect that number to be roughly SEK 6 billion. Speaking of the capital allocation that we do, I said we want to over-allocate to high-yielding businesses. If you look at the right-hand side, you can see we are doing exactly that. In comparison to depreciation, we overspend in terms of personal care, we underspend in terms of consumer tissue and pretty much in line for Professional Hygiene. This is only mature markets, but we also execute on a very aggressive growth strategy for emerging markets. Looking to the left, you can see that over 50% of our CapEx actually goes to emerging markets, representing only 35% of our sales and 30% of depreciation. Finally, this is great steering company. It works for us.
It's really helpful, but it's not feasible to do this and execute unless we have the proper incentive programs to do exactly that. We got two. We got the long-term incentive programs. You see it at the bottom here, is total shareholder return in comparison with our competition. If we outperform, we get rewarded. If you look at the short-term incentive at the upper part, it's very consistent with the value creation matrix that you saw before. For the value creation drivers, growth, capital, and margin. If you happen to be a manager for a low-yielding business, you will have a set target that is much more weighted to margin and capital. If you have more the growth orientation, then you will have a much bigger weight on the organic sales growth.
This is how we basically tie the incentive programs to our financial steering. Key takeaways, I hope I've been able to convey how we run the company, that we are really committed to deliver on the strong, superior results and to maintain that financial strength. That's super important to us. I hope that you got at least a flavor on how we intend to reach those financial targets. Of course, finally, that we are really relentless in our effort to drive growth, to drive margin enhancement and capital. Thank you very much.
Thank you, [Silvij]. Please stay on the scene. Please, Magnus, join. Let's open up for the first question. Raise your hand, and when you get the microphone, please state your name and where you are from. Let's start with the back. Thank you, Magnus Groth.
Thanks very much. It's Iain Simpson at Barclays. Couple of questions, if I may. On ROCE, with your 15% target, I think you talked about how ROCE was 10.9, but if you adjusted for BSN, it was 12. When you talked about getting to 15, I think you talked about getting the 12 to the 15. That 15% ROCE target, is that adjusting for BSN, or is that as you report? Secondly, that very useful color on your portfolio strategy. You made it pretty clear that consumer tissue you see as being your least attractive category. Not only is it your largest category by some way, it grew ahead of the business in the most recent quarter and in line with the overall business last year. It looks to be a growth business as much as anything else, rather than a cash cow.
Thank you.
Maybe I can start with the first question. Maybe that was a confusing slide because there were actually two sets of numbers there. One was the margin and the other one was ROCE. If you look at the actual ROCE, it is 12%. It's going from the reported 12% to the 15. The adjustment you mentioned for BSN is actually looking back prior to the acquisition of BSN. For the years 2016 and 2015. We only have one target, which is basically the above 15%, and that's with BSN and with reported numbers. 12%-15%, basically. The second question?
Second question, maybe I could fill in on that. Yes, we had very strong growth in Consumer Tissue. A lot of that is pricing. We're actually creating a lot of value currently in Consumer Tissue through the price increases that we put in place over the last nine months. In addition, we are growing strongly also in China, in Vinda, which is a slightly different proposition because we are committed to being the number one player, but increasingly also looking at increasing in margins in Vinda. It's not growth at any cost. They will grow to maintain the position, but with gradually increasing margins in China. A lot of the growth you saw in the recent quarter actually is price. We're creating value currently quarter-over-quarter here also in Consumer Tissue.
Good. Next question. You already have the mic, I see.
Oskar Lindström from Danske Bank. I'd like to ask a question regarding the cost-save programs and the Cure or Kill 2.0 program, which you mentioned here in the presentation. You reiterated your ambition to reduce costs by about SEK 1 billion in this year. How should we view your ambitions for the years beyond 2019? How long can you go on saving significant sums of money from your operating costs, going forward? What happens when you do reach 15% ROCE?
Fredrik?
Fredrik?
Fredrik.
We never give forecasts longer than the incumbent year, of course, because it's really difficult. It's, as I said, many different projects. You'll hear more about, for instance, Tissue Roadmap and other things related to cost as we go forward. The cost-saving program on SG&A, I mentioned that we approximately will have SEK 600 million. The run rate saving should be SEK 900 million. They will be additional next year. We will be executing this year. You'll have additional savings coming along next year. The constant savings that we make, it's always difficult to estimate. We cannot really give you estimates like that. It's very difficult.
I guess we can only underline, like Fredrik did in the presentation, that this will be a strong focus for us going forward. The way to do it is, we can't identify today opportunities for cost savings 3 years from now. So far we have been able to find new opportunities every year in new areas. Of course, that's also our ambition going forward very much. Efficiency will be a key in achieving 15%, and then when that happens, there's no reason to stop. Efficiency will remain as a key. In the long term, if you have the lowest cost base, you're always on solid ground compared to your competition in the long term. That's something we're striving for every day.
Thank you.
Next questions we have in the back, Margareta. I see Stellan with the glasses. Yes.
Yes. Thank you. Stellan Hellström with Nordea. We saw that you have many strong market positions, but they were maybe not so strong overall in baby diapers. I would imagine that there is some correlation between a strong market position and profitability. I was just wondering how compatible is it then that you want to improve your margins in baby diapers partly by even shrinking the business? Maybe also a comment there on how you view your expansion in France and how that also fits in with this, or is that something that we could see more or that you need to grow as well by also shrinking?
We have been quite transparent on the baby business, and you can really now also see it in the matrix here, that actually Western Europe is a very healthy business where we have the scale in our plants, we have the communication, we have the product superiority, we have the brands. Both our own brands and retailer brands that are very successful and winning. We are actually gaining market share on an aggregated basis since a couple of years in Western Europe. We have these underperforming positions that are mainly in emerging markets. As you could see, there are a few left, even though many of them are quite small now. We continue that process. We also have two big baby positions in emerging markets, Malaysia being the biggest one where we are the market leader.
That also has the scale and the strength of the brand and the innovation power to remain healthy and to develop going forward, even though the Malaysian economy has had some negative impact on also the baby business there and I think all FMCG categories. With Productos Familia S.A. in Latin America, that's our third big baby position in Colombia and in Ecuador, and to some extent, in Peru. We've had a big improvement program. We are not planning on exiting that business, but to really invest to turn around that business that has been challenged. One of the products that we've been seeing here on the slides, and that we can talk more about today, is the launch of baby pants in Colombia and in this market as a way of really differentiating. We are upgrading in this area.
As that gradually improves, which we've seen recently, that really also helps the overall performance of baby. Solid in Western Europe, and then improvements in these other big emerging markets positions, and then some pruning left to do in smaller emerging market positions.
Okay. Margareta, you can continue there, on the third row.
Thanks. Hi. John Ennis from Goldman. Following on from the previous question, where you're effectively a distant player, so maybe number 12. You have the number 12 position in North American Medical Solutions, as an example. Is it sustainable to effectively keep that business, or does that end up effectively falling into the cure or kill category? What would be the cure strategy for that type of business? I mean, is it solely dependent on M&A to boost your scale? A second question would be, when you look at your value creation matrix, if you strip out the cure or kill zones, would that be enough to get Essity into that top left quadrant? Or is that still not enough to necessarily get into the top half of that matrix? Does that make sense?
I think the second, the difficult question to you, Fredrik.
I didn't actually fully understand it.
Sorry
Thank you.
I'll repeat it after.
Okay.
The first question, we can definitely turn around our U.S. medical business, even though position number 12, of course, looks far away. This is very much an aggregate position in, especially, compression therapy, and we'll hear more from Ulrika in a short while. We are the market leader. We're the strongest brand. We are taking strong measures to improve the performance there. We have the right to win in compression in America. When it comes to wound care, and especially advanced wound care, we are growing very fast because we have a product assortment that is attractive and from a small base. Even if we're small there, we see that we have the products and, again, the assortment that's necessary to succeed there. Together with our growing and improving Inco position that strengthens our go-to- market, we believe that we will be successful there.
Going outside in the break soon, we will talk about the continuum of care and how our different categories link together, and we believe that that's something that BSN lacked in North America that we can now add through Essity, which will make us able to turn around the medical business in the U.S. standalone. Of course, if there eventually would be acquisitions opportunities, we will definitely look at them.
Thanks. Fredrik, I'll repeat the second one. I just wondered, when you strip out the cure or kill program, which you said was effectively 10% of sales with both low returns and low growth. If you strip those out, where does Essity sit on that matrix? Is it in the top left quadrant, or is it still not enough to get into it? Is that so?
Is cure or kill enough?
Exactly.
Not really, no, because, of course, obviously price increases that we are executing on is a very key component to raise, for instance, consumer tissue. There's a multiple of things. Cure or kill is one of them, but we are engaged into cost programs, as you say, or as I talked about before, price increases and continued innovation. Getting to where we want to get is the combination of many things.
Yeah, just to make up the math, some of the business that are in the cure and kill program, they don't have as the shorter target to reach the absolute value-creating hurdle rate. We give them a chance to first maybe get to break even and then to really create value. There could be also a stepwise return here in some of these cases.
There is a business plan to get to value creation, positive position, and it's just a matter of time. There are milestones to pass on the way.
Good. Iain, I think the gentleman next to you, we can save time. Yes.
Thanks. Farhan Khan, Credit Suisse. Just one quick question. Well, a broad question, actually, on emerging markets. Could you give us a bit more detail in how you're balancing emerging market top line growth with profitable growth, particularly if you're planning to expand presence in Asia, LATAM, et cetera, and recent experiences with baby diapers in Brazil, India, and now Turkey have been disappointing. Just an add on, if you were to do this organically, could you give us past experience on how long it's taken in a particular market to reach sustainable margins? Thank you.
Yeah. A lot of questions there. To rise with the tide, as you can see from one of my slides of growth, we should be balanced 50/50 emerging markets and mature markets, and we're not. We should grow relatively faster to get to that in emerging markets. Then, of course, you get into, so what does that cost and how much does that impact margins? Clearly, we have increased our margin focus in our big emerging market positions with Vinda, you can ask Christoph as much as you like about that later. Look forward to that. Latin America, very much so as well. We need to grow with improved margins going forward. We are not planning on entering any new big markets in the foreseeable future.
We hope to avoid ending up with things that we would then subsequently have to kill or that would be a drag on margins for the long term. Having said that, there are still areas where we are not profitable, Fredrik, you mentioned Brazil and the Inco business. That's again growing after a couple of really difficult years, I think, for everyone, where we are now adding the medical business and actually a very healthily growing Tork professional hygiene business. It could be up to 10 years before you start making money in a big market like that easily. That's why we are so restrictive with putting new stakes in the ground. We believe that we can grow the relative share of emerging markets fast with improving margins, with the positions we have.
One reason why it hasn't grown faster compared to three years ago, because it hasn't really changed, is that with the acquisitions of Wausau, which was in North America, a mature market, then with the acquisition of BSN, which is also mostly in mature markets, that set us back in the balance. Actually, Asia, Latin America has been growing much faster, but being set back by these acquisitions in the mix.
Thank you.
We do that one, then we'll soon have a break, Linus, then you will have the last question. I know that. I see you.
Good morning, gentlemen. It's Guillaume Delmas from Bank of America Merrill Lynch. My first question is on your non-retail business. When we think about professional hygiene, the institutional channel for TENA or BSN medical, your medical solutions business. It strikes me that these two businesses have two things in common. It's superior margins, also the fact that in the last couple of years, organic sales growth has been well below your 3% long-term ambition for the three of them individually. My question is, how do you plan on addressing this? Is maybe the fact that we haven't seen 3% plus organic sales growth for these three businesses evidence that the institutional channel, B2B channel, has less growth and less pricing power? Second question is on your cost savings. Magnus, you mentioned the digital opportunity there with robotics, with automation.
When do you expect that to meaningfully contribute to your COGS savings? Thank you.
Yeah. The first question, it's a good reflection. I am firmly convinced that we can grow over 3% in all these B2B areas, and that we have had specific issues to address. In Professional Hygiene, it's been very much the negative growth that we've been seeing in North America, where we saw a positive shift now in the first quarter. Other than that, if you take Europe and the emerging market, which have grown really fast, that should put us on a pace on growing above the 3%. Inco, we know that in many of these markets, tough cost pressure, big tenders, and that there's a delay in recovering rising raw material costs because only one-third of the volumes are tendered every year. There's really a lag there, and we've been on something of a negative balance there for the last couple of years.
In some markets, also, with a very strong starting point, there could be situations where most of the tenders are held by us, and we have more to lose than to gain. This goes in waves in Inco. To really get back to growth at a higher rate there, it will be a lot about innovation in order to get long-term pricing also. Then BSN, very much now still at the last stage of integration and learning about the company. We know what to do, and I'm very convinced that we'll get back to above 3% growth in Inco. We were close in the first quarter. The other question-
Digital
Digital. I believe it's already contributing meaningfully, even if we don't follow that or don't even understand sometimes. One thing we'll talk about, Donato, is that we are now using vision systems, for instance, on our personal care lines that completely replaces manual quality control. That's a very tangible example, and we have numerous examples there. To what the size that is, we don't know, but we're seeing the benefits.
On SG&A, if you look at the cost savings program, there is this run rate of SEK 900 million. Not a small part of that is actually related to exactly what you talked about. Robotics, it is a sizable number. It is already happening.
Okay. Last question, Linus. One question, and then we can continue in the break.
Thank you very much. It is Linus Larsson with SEB, and you make it extremely clear how the two tissue businesses, consumer tissue and away-from-home tissue, differ not only in terms of returns, but also in the way you prioritize your capital allocation and the way you do business. Two questions in relation to that. First, when you talk about consumer tissue, and you say you will have a selective presence, and now with Tissue Roadmap nearing an end, my question is, how will you keep that structural change momentum going beyond 2019 and 2020, hopefully? Something that you talked about, you mentioned on the away-from-home tissue side that you are looking at adjacent products. That is nothing new to you, but I am just wondering whether you are signaling some kind of step change, if this will be a bigger part of your Professional Hygiene business going forward.
First question, I think we can save for Donato, who will talk after the break, which is Tissue Roadmap 3.0. How do we continue on this path of structurally improving our profitability of consumer tissue, which is very important, both through efficiency improvement, but again, quality improvements and premiumization. Let us leave that, if you are okay with that, to Donato to explain. The second one, when we look at our Professional Hygiene business, we leave that to Don also. It is actually slightly different. We have markets where we are incredibly strong on selling systems, solutions, adjacent products, just like soaps, we said it a million times, and having really good margins and growth, and outperform the competition. We have other markets and areas where we are not applying the full force of the Tork concept.
That's something that you will see Don talking about, how we're now rolling that out in all our markets, and this very much applies to North America, where we've been less sophisticated in our way of having an end-user customer focus, and more pushing our products through the distributor system. Don will cover that as well.
Great.
Thanks.
Now let's take a 15-minute break. Let's meet here 11:30 A.M. Also I got some questions. The presentation, they will be available after this event on essity.com, as well as the replay of the webcast. See each other again 11:30 A.M.
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Okay, welcome back. Before we start with our two Global Units, I would like to say, on request, we have put the presentations on essity.com. You have them there already. This session is about our Global Units, and we'll start with our President, Robert Sjöström, who will talk about Global Operational Services. This unit is responsible for 70% of Essity's operating expenses, and some other areas. Please, Robert, come up on stage.
Thank you, Joséphine. I will start to present myself in a couple of seconds. I joined Essity already 2009 as head of, at that time, global hygiene category. I continue on being responsible for strategy, M&A, and CIO. From 1st of January this year, I'm responsible for Global Operational Services. We are a new unit, but the things we're doing is not new as such, but we're combining them in a new way. On the slide, you see a lot of facts about our unit. For instance, we are approximately 2,000 FTEs. We are present in 44 countries. We have some main sites, but we also have a lot of smaller sites. We are handling 2.3 million orders per year, over 4 million invoices. We are managing big part of working capital in Essity, and we are delivering 9,000 deliveries today, every day.
As Joséphine said, we're managing approximately 7 billion EUR in cost. If you look into the 7 billion, we are managing 100% of raw materials and consumables sourcing, half of the SG&A cost, 100% of distribution logistic cost, and approximately one third of COGS. We do that via our main functions: Global Sourcing, Global Supply, Global Business Services, and Global IT and digital transformation. Magnus talked about trends. Important to understand for us. We need to understand them in more details as well, how do they impact the different parts we're working with. Sustainability, digital are main trends impacting everything we do, but we also see some other trends. If you look into supply chain, logistic costs are going up everywhere. Why? Because of different things, sustainability, labor supply decreasing in parts of the world in terms of truck drivers, for instance.
We also see new technology coming, self-driving trucks, new machines, new technology in warehouses, and things like that. We also have to reduce CO2 emission. In sourcing, you see consolidation on the supplier side, pulp manufacturers, chemical companies, et cetera. We need to understand how are we really working with them in the best way to, I would say, offset the negative parts of the consolidations to make it a more positive. We also have to manage political risks. We have Brexit, we have potential trade wars, et cetera. We have to make the supply chain resilient. If something happens in one part, we need to be able to source products or material from other parts. In business services, I would say digitalization, digitalization is impacting everything we do, and we're also leveraging all that kind of trends into new technology and new way of working.
Digitalization as such has been on the agenda many years now, the buzzword's becoming reality. You saw Magnus earlier, I will show some examples. All my colleagues later on will talk about how are we implementing new technology in our business, and making business out of it. Importance of data mining, all this kind of master data, whatever you call it in data. We now understand better how we can compute data, utilize data in manufacturing, in sales, in product development, in internal processes, et cetera. How can we use advanced analytics, machine learning, AI, et cetera? Important to say, with all this, you also see a trend. Cybercrime is really also a threat that we need to take into account in whatever we do. We do.
We're working very closely with a couple of the biggest companies in the world, protecting ourselves as good as we can in this area. Priorities. We have four priorities. The first one is meet customer expectations with the right quality of service, meaning we need to work hand in hand with our business units, understanding the customer demand, the customer requirements. We need to understand the different customer segments so we can deliver the right service level to the right customer. Second target priority, continuously optimize cost and working capital. It's not only about cost reduction, it's about the right cost reduction so we can continue to deliver good service to our customers. We need to keep the customer happy. We need to deliver according to the expectations a customer has. We need to optimize working capital accordingly.
We can reduce working capital, if that would impact negatively our service levels, the customer would be unhappy. We need to balance this every day with every customer. Third priority, support profitable growth with scalable solutions. We have heard we have organic targets 3%. We would like to add the M&As on top of that without increasing the cost in the same pace. What we are doing, we will provide platforms, process platforms, system platforms, so we can grow the business without scaling up the cost in the same way. Drive digital business transformation. In Essity, we talk about digital business transformation. It needs to be business driven. This needs to contribute to the business. It's both from a business perspective and from a technology perspective. In operational services, we are the engine from the technology part of it and understand the business demand.
We work hand in hand with all the stakeholders within the company. What are we doing? Global Business Services 2.0 means that we already have been running a program in that part of the business. It's very much about reducing cost, increase efficiency, increase productivity, increase quality in what we're doing. Started in this setup 2012. We have been taking out 220 FTEs. That approximately +20% of cost reduction, if you would equalize it to that. We have increased productivity in payments by 40%, in invoice handling by 20%, taking away manual work by 50%, et cetera. Productivity is super important in this part of the business. How do we do that? We have already started with robotics processes. We have done RPAs. This year we have put in a lot of RPAs, reducing work by 30 FTEs. We will continue to do that.
Organization. We are going from a regional-based organization to a truly global process-oriented organization end-to-end. The beauty with that is that now we'll be able to drive economy of scale, process harmonization, end-to-end thinking, utilizing new technology. Going forward, we are building our digital operational platform. What is that? That's really, I would say, our process machinery. How do we process everything? We take it in, how can we prove it? How can we increase productivity in the processes using RPAs, using advanced analytics, using AI, et cetera? The idea is for 2019 to implement this on 100 processes, increase quality, increase productivity, minimize manual work. We will also use process analytics in processes. Previously, when you had to improve a process, you're starting to talk with people about process and how do you do and things like that. Now we can actually use a digital tool.
We go right into the system. We can see how many times do we touch an order, for instance. We know that we are touching 90% of an order coming into us, even the EDI orders today. How do we know that? Because we do this with analytics. Actually we can also see where do we have the bottlenecks. Why are we doing this? We should be able to. Today we have 90% we touch. It should be 10%. We have huge improvement areas here to work with. Will not happen in one day, but we know what to do. Data mining, customer payments. If we understand the customer payment behavior, we can actually predict how they would pay. That's what we're doing now.
We know we can be preemptive, we can send dunning letters, we can do a lot of different things actually to take away manual work, trying to get money we don't get in time, sending out a lot of letters talking to the customers. If we do it right from the first, we will minimize the manual work, we will improve the payment time, reduce working capital and save cost. We are in many places today with transactional services. We have to be in less places going forward. We are establishing global service desks within the company to support everything we do internally instead of having a lot of different service desks everywhere. We will use virtual assistants, robotics, and things like that. Supply chain development. Our ambition is to create the best-in-class supply chain organization and way of working in Essity.
We're starting from a distributed supply chain some years ago. We have been in a project for some years. Now we established this as one global unit. Focus on sales and operational planning process, take care of all transporting, do all the forecasting, both in demand planning and supply planning. We have done the first part, I will give you an example in a minute. Going forward, we will create the best sales and operational planning process there is. We will do that with transport planning, demand planning, supply planning, use digital tools, integrate fully, limit all kind of manual work, believe in statistical forecasting, AI, et cetera. We also need to look into our footprint of warehouses, distribution, et cetera. That we will do across all BUs, across all categories, across all geographies. Demand planning.
We were coming from a very manual work in demand planning, going into more or less fully digitized. We are today in 33 countries with this. We do it in 7 categories. 80% of the volume we have in the business today are now on statistical forecasting demand planning. We're using machine learning, we're using time series. What have we done? Basically, we have been from process in regional to multi-country standard processes. We go from moving average to dynamic statistical forecasting. We go from manual promotion forecast to machine learning. We go from high manual to enrichment by exception. We go from custom demand planning process to demand planning industry best practice. We will do the same in supply planning, just starting up, we are doing the same now in transport planning. Global sourcing.
You have seen on the charts earlier today that that's been a tough situation for companies like us in raw material. We have put a lot of focus on raw material savings, pulp savings, flexibility programs, et cetera. From 2016, we have delivered EUR 185 million in savings. Going forward, we will continue with what we call fiber optimization, but also how can we replace one material with another, one raw material with something else. That's the thing that we've made an announcement this morning, you will hear more about it, can we replace one fiber with another fiber and mix it into the overall mix and manufacture the same quality of products going forward. We will focus more on indirect sourcing. Given the fact that there's been so much focus on raw materials, we have done a good job in indirect, but we can do more.
We will start a program doing that. We will use digital in everything we do, AI, advanced analytics, digital transformation. We started some years ago, 2014, with one program within Essity, and we are on all aspects, customer, consumers, they do the digital-enabled products, and we do the operational services. Where we will find most of the savings and the pure money, it's in operational processes, end-to-end processes, advanced analytics, AI, robotics, et cetera. With that said, we also are in the challenge that, I would say all big companies out there, how do we gain the capabilities we need. We need to up-skill, right-skill, new-skill in the organization, because we can't just hire new people. We need also to train the people we have who understand the current business we have. We are running a portfolio of activities.
We are now bringing internal stuff to the external world. In the middle here, you have this beautiful baby, that's a chatbot in the Libero Club, which we have been on the chatbot virtual assistants for a year or more internally. Now we're bringing it externally, creating a lot of more interaction with the consumers directly also. We have the digital-enabled products. How do we work with digital transformation. We have one program, we prioritize together, we have one budget, and we steer the business priorities together in the management team. We have cost in control, we have priorities in control, and we are delivering projects on time, on budget. To give you one example, smaller business-led initiatives. That is Tork EasyCube. Some years ago, we thought this is an opportunity. Let's innovate around it, build it. We build it on small technology to start with.
We thought we need some platform to put it on. Now we have put it on Azure platform with Microsoft, who are also contributing with the ecosystem, we'll continue to develop this. Entrepreneurial activities has been done with TENA SmartCare. The same thing, we acquire the company, they develop it a little bit separately outside Essity, but still with Essity people, then we put it on the Azure platform, we can roll it out. It's a very solid platform that will be robust and will work. A few bigger programs that we just finalized an internal HR program with HR process, HR platform. We select one tool for the whole company. We decide what to do, and then we roll it out on time, on budget. Key takeaways. We are delivering value across the whole value chain in Essity. We're driving efficiency and effectiveness. We are delivering savings.
We will continue delivering savings. We are driving the digital business transformation agenda. We have a lot of other things to do as well that will bring value to the table later on. Thank you.
Thank you, Robert. Robert will be back for the Q&A session. Now it's time for our next presenter, Mr. Donato Giorgio, who is responsible for Global Manufacturing, a unit that every day produces 93 million products for personal care. Also, I learned 12,000 tons of tissue products. Donato, please welcome on stage. There you have the clicker.
Thank you, Joséphine.
At our mills, we recover waste paper. Before turning it into pulp, the fibers are washed several times. The other main raw material is pulp, based on virgin fibers from responsibly grown trees. The pulp is mixed with water and ingredients. The suspension is pumped into the paper machine. Water is removed in each step of the process. The tissue is winded up on a core. It has become a mother reel. In the converting, the mother reel is unwound, embossed with different designs, cut into individual rolls or to folded products. The products are packaged and moved to the finished goods warehouse.
Diapers, feminine products, and incontinence products consists of a pad with super absorbents, and a top sheet and a backsheet of nonwoven fabric, which gives the diaper a comfortable shape and helps prevent leakage. The products are manufactured in a continuous process. The absorbent pad and the two sheets are formed. Stretched elastic bands are attached. The absorbent pad and the backsheet are joined together. The top sheet are fed into place. The endless sheet with the complete diapers is cut, folded, and stacked into a bag for its final sealing and packing.
Welcome in our beautiful factories, one of the key elements of our value creation journey. Quickly introduce myself. I am, since January, in charge of our Global Manufacturing tissue and personal care, and for the last 4 years, I've been leading the tissue manufacturing with technology. You can imagine a Tissue Roadmap has been one of my key elements. Since 10 years in SCA Essity, and before in Procter & Gamble, producing more or less everything from toilet paper to Gucci perfumes. That's quick story. How do we will take the lead in shaping the future of manufacturing these categories? We have the 90 production sites. Where we are absolutely proud is that we have mixed factories, consumer tissue, Professional Hygiene, and now we are going to the next step to have consumer tissue, Professional Hygiene, personal care.
What we want to share is that we have a manufacturing excellence capability and excellence in way of delivering in each one of our factories. Whatever makes sense to produce over there, we do there at the best and the best cost. It is our footprint now is really becoming our competitive advantage. The priorities I will cover, of course, start with safety, then we will do cost innovation, we will finish with the beautiful innovation that we just launched today as one of the best example of what Essity stands for. Talking about what Essity stands for, we are a great company and our highest priority in manufacturing, but starting from the CEO, is the health and safety of our people. Tissue personal care, but particularly tissue factories, are very dangerous.
In our industry, there are very bad safety incidents, we are absolutely proud to say that we lead the development of safety in tissue as well as in personal care. We had the ambitious target to reduce 50% accident frequency rate, we are now at 39%, quite confident we will get there. I can tell you, each single accident for us is too much. We are not working to reduce the accident and the incident. We are working to make a total risk-free environment every single day. In some elements of tissue competitors, this is something that is not believable. We demonstrate to the world that we are factories that are running since 10 years without a single incident. A lot of people around the world believe this is not possible, we demonstrate this is possible. Talking then about COGS optimization.
Of course, in strong collaboration with Robert team in sourcing then with the business unit, we work in a SEK 85 billion. We have SEK 85 billion of COGS, quite big part of the cost of the company. What I want to share with you is that we have activities in different areas with different approach that have to touch all the different elements of the COGS, because each different element is particular, and each different element needs different excellence. First of all, state-of-the-art manufacturing performance, which have been building with TPM, lean manufacturing, automation. I will show a bit later that we are now introducing a strongly digitalization to keep it state of the art. Optimize raw material cost in use, environmental footprint, energy, water, and customer proximity. Just some examples.
Of course, these are not all, but some example. Productivity improvement in pieces per FTEs or tons per FTEs, even though we are now introducing high-quality paper, where we need less tons to make the consumer usage, is continuously our focus, and year-over-year, we are improving it, not least with digitization improvement, as I will show you in a second. Energy consumption, in particular in tissue, it's a massive energy consumption. I don't know how many of you are engineers. If you are engineer, you know a terawatt of energy is quite a lot of energy. You can move cities with that. With the program organically that we have between 2008 and 2018, we have saved one terawatt of energy, which for you equivalent to EUR 40 million, is, of course, a lot of improvement for the environment.
Just a small but I think significant example for plastic and for sustainability, just the use of stretch film, so the stretch film for the pallet. Improvement with sourcing, also with the functions how we design the products, in two years, we have reduced 740 tons, 13%. The saving is SEK 1 million. Cost saving and cost consciousness for us is something important. Every SEK million count, every SEK 0.01 count, 740 tons of plastic reduction is something that is massive for the environment. As Magnus and Fredrik said before, we have hundreds of this project. The beauty and our key value is that we collaborate with all the function within the company every day to come with something like this.
Every day, something like this in each factory, in the long term, makes the big difference for the planet and, of course, for our value creation journey. I want to give just digitalization Industry 4.0 in manufacturing. We can keep conferences for days and tons of book about what Industry 4.0 in manufacturing. I have quite a long and bright experience in manufacturing, I want quickly to give you my summary of strategy of what we are doing, what we are going to do. I think it's very famous that in the past 20, 30 years, I'm sure you know Toyota Production System, lean manufacturing, total predictive maintenance, agile productions, basic level of automation. Today, we talk about digitalization, we have LGV, AGV, automated guided vehicle since 15 years in our factories.
This was, with a certain time, made possible to get to very good results, very good productivity, very good cost improvements. What we believe that will make the difference now going forward will be possible building on these elements, that by the way, few companies really have, because everyone has been talking about lean manufacturing since 20 years, but few companies outside automotive has really been able to introduce lean manufacturing, particularly if we talk in a category like tissue. If we introduce the three elements of self-controlled machines, and self-controlled machines means a machine that is able to start, run at the best possible material usage and slow down where it is needed in a completely automatic way, it's the best level of cost. Our machines has to be like a 787 Dreamliner for Boeing. Take-off, run, and land completely automatic with minimum energy usage.
I said a 787, not 737 MAX, because that would be an issue. It's the real one, the right one. Predictability plus, plus. What Robert just shared with the production planning, demand planning, completely in algorithm, we need production factories that take the order, produce exactly what is needed at the moment is needed, and get out of the factory very quick. If you still have machines that are stopping and they have breakdowns and they are not predictable at the minute, you cannot do that. You cannot fulfill the demand that we have, and this is very difficult. Transparency in real time in the data. Real-time flow of supply chain data transparency.
These are the three elements which makes us believing that introducing this on a very high level of lean manufacturing and excellence in TPM that we have, introducing this will make the improvement bigger and faster. This is the example that Magnus just mentioned on Valls. Valls, among many other factories that we have, like Allo in personal care, are factory that has always been top-notch in delivering. Now we see the people naturally transforming and putting digitalization over there. As Magnus said before, we see performances and results that we would not consider imaginable just two years ago. For instance, concrete example in digitalization in tissue. In a tissue plant, normally, you see people take the sample of the paper. By the way, when you take the sample, the paper is already in the storage. This is not effective.
What we have now, we have a completely automatic and continuously monitoring of the production. We use algorithm to predict parameter and avoid basically sampling rate. This is, first of all, in tissue, cost of pulp and cost of material is very big. Whenever you can optimize it's really big advantage. Absolutely the same in personal care. In personal care, the normal way is to take sample of the product, look at this product, measure the parameter, and make like the Japanese were teaching 30 years ago, the statistical process control point by point and extrapolating. This is today old. Today, each single of the million of pieces that comes out of our factories, each single pieces is controlled by automatic vision system, automatic algorithm that have a monitoring of each single pieces.
This is, of course, number 1, excellent for our cost in use of material. This is where we can get the competitive advantage. Number 2, where I'm, for instance, incredibly proud to share with you, is that we are best in class in quality. We are best in class in quality in personal care product as well in tissue product. Here you can see in two year, in two and a half year, two years and one quarter, three years and one quarter, we basically reduce consumer complaint by 57%, coming from 1 level, which was already best in class. When I say best in class, I know because we, for instance, we are shipping TENA to Japan. We have Japanese customer. You can count that Japanese, they complain on every single minimal thing. We compare with that.
We have Mercadona, for instance, where we are collaborating very good to make the best diaper absolutely. What, for instance, makes also us going to the next level is that consumer complaint is not reported on like on the old way, just on the telephone, the hotline. This include social media complaints. We have our factory, our customer service that are connected with social media. We take in also what people report already in social media. I just keep quickly the tissue roadmap. I have to go back. Of course, a big element of the COGS improvement we had in the last three years was this famous Tissue Roadmap. You know the story. You know the background. SCA in tissue was coming from a rapid organic grow and a lot of M&A.
M&A that was coming from acquiring the European Procter & Gamble tissue factories to acquiring the local family-owned company. We had all kind of geographical and also capabilities spread, I would say, puzzle. What we wanted to do, we wanted to transform this to the greatest opportunity we have. That we manage it. We did, we basically classified in A, B, C, D. D were the not recoverable, so cure or kill basically, in the factories. D were the kill cases, where unfortunately, we had factories where technology that were obsolete, wrong location, wrong structure. Eventually inserted in the wrong market. We had to take care to sell or close or reconvert these factories. Of course, this is not fun at all in our job. We had to take care of the business.
Then we had the A factories, the factories that are, like we mentioned, Valls and others, [Ogozhan], where these factories are state-of-the-art. We know that every technology we bring there, every innovation we bring there, will deliver quick results fast. They are the right technology, the right structure, the right capability. They are in the right place. Of course, B, you can understand, is a sub of that. Then we had C, which is basically the case where we have to see factories that needs to be pumped up and really reshaped in a good way from a technological and structural point of view or factory that we have to dispose. On this, we have done intense work. This is intense and a lot of not pleasure work to have eight site closure, 15 paper machine closed with 320,000 tons.
By the way, we closed these 320,000 tons, and we are still producing the same quantity of before to serve the finished product because my colleague in business unit are growing. This gives you the idea in the factories that we are not closed and that we were focusing how much productivity and how much organic improvement we created. We had to reduce 1,400 FTEs. We delivered EUR 165 million up to today, but without promising anything that I cannot do, you understand that we had one structure that was not clean, and now we transform this in an opportunity because now our strengthened structure, our optimized footprint, makes possible that we can allocate the right product in the right factory.
We can focus on fewer factories and pushing all our technological innovation and things and focusing our capabilities. I would say for Essity, the beauty is still to come because now the cleanup activity hopefully has been done. Of course, we will continue always keeping maintenance on this thing, but now we transform a problem and an opportunity to take the lead. Talking about taking the lead, what makes me really, really proud to present to you in the name of the company this morning is this project, this press release we have today, where we announce that we invest around SEK 400 million in Mannheim factory in Germany, which is our biggest tissue factory and one of the most advanced in the world, to start alternative fiber production from agricultural byproduct. This will deliver same pulp quality and same product quality as fresh wood fiber.
It's not at all a quality compromise. We always want only to increase our quality. This is, of course, best case for commitment to deliver more with less and circular economy. Dramatically less energy, water, and chemical usage, up to 50% CO2 reduction, end-to-end in the full tissue supply chain from old forest to the consumer. Reuse of product or local farmers and annual growth cycle. Just for you to understand, wheat straw has been used since the 1960s to produce tissue. This is not a new thing. The new thing is the new proprietary process that we will use to produce tissue in a very high quality in the best environmental way. In the past, the problem of using wheat straw was the generation of sulfur products coming out, which were environmental not good, number one, and number two, they were not cost competitive.
We will have the most clean pulp production in the world with a cost competitive solution using this proprietary process that we signed, where we have the worldwide exclusivity for tissue. Having said that, I just introduce you on this with the video. This is the beauty of our manufacturing world. Ready.
You skipped your key takeaways in order to save time. Thank you. Robert, Magnus, please join us on stage for this Q&A session. Who would like to start? I see somebody there. I'm blind by the lights, but Margherita, you see there? Yes.
Thank you. [Gustav Sherin] from Pareto. We could elaborate a little bit more on the fiber investment that you announced today. I'm curious about what you think could be the sort of mid to longer term scale of your fiber sourcing from this area. Also, any color on sort of return levels? It sounds that they're likely to be quite high. Yeah, please.
You see from the video at the end, it says now we aiming to have three sustainable way of producing tissue from fresh wood fiber, recycled fiber, and agricultural waste. What we are doing now, we are investing in Mannheim in this first big scale installation. Our aim is to start it up end of 2020, as is stated in the press release. Base of that, continue this development innovation, then we'll evaluate what makes sense to do, where makes sense to do, and how to develop. At this stage, we cannot say more because really this is the first time we're integrating something in this way.
Yeah. Can I add to that?
This is a test, even though it's a large scale test. Of course, our ambition is that this would be then cost competitive. Remains to be seen. We will not, however, become our own pulp supplier. We have an exclusive agreement. This is proprietary to us. We want to do everything we can to make this work, to put pressure also on the fresh fiber suppliers and the other fiber suppliers, see how this should then eventually be commercialized. It doesn't have to be us investing in it going forward. It's a way to find new sources of competitive fiber and to put pressure on existing suppliers. That's the main purpose at this point in time.
Do you want to say anything about return levels?
It's too early to say. Again, this is a test facility, even if it's a full-scale facility.
Thank you.
Next question. Okay, Marguerita, it's in front.
Thank you. [Farhan Ahmad], Credit Suisse. Just quickly on the SEK 400 million, this might be a question for Fredrik, is that incremental CapEx?
We've included in the SEK 6 billion
Okay
for this year.
Sure.
Some also for next year.
Okay. The second question is on digitalization. I guess a number of companies and the industry is talking about it. A lot of companies have needed to put out incremental investment in upskilling and reskilling their employees, and increasing their exposure to digital activities. Do you think you can become more digital, within the current business plan successfully? Could it take you a longer time? How do you think about maybe making incremental investments on this?
Yes. I can speak for manufacturing-
Yeah. Then to Robert.
Robert for the full company. Because what I see in the sites, the smartest and best ideas, and actually ideas that bring most returns are the ideas that cost close to nothing. What we are trying to do is, as Magnus said before, we are changing the role of engineer in factory. We are changing the role of process engineer. If you are smart today, you can buy a sensor for EUR 20, EUR 50. By the way, the end of the things that you can do is the same that you could do 10 years ago. The only thing is that 10 years ago, to do the same thing, the same sensor, it cost EUR 20,000, EUR 2,000 minimum. Today, it costs EUR 20. You put in and you run, and you try and you try, and eventually fail or go quickly up.
The cost is not the biggest part, the training program and the, let's say, upgrading of our workforce is something that we have always been doing and we will continue to. This is why I brought from lean manufacturing programs to digitalization program. It, yes, can be done in the existing business plan.
Robert?
Yes, that's correct. If you look at the whole company, we are training people every day, more or less in digital. That's probably to raise, I would say, the overall base of knowledge in the company. Then we are, of course, recruiting also people every day that are coming with the knowledge. As you know, we will not find all the people outside Essity, and we can't. We always have to train our people and upskill our people. We also need people to understand our business. You can't take an engineer with only digital capabilities, believe they will be good at manufacturing tissue, for instance, or sell a product. The combination is real essential with call it on old capabilities and combine it with new tech capabilities.
The thing here is that you don't need that many people who understands the new technology as such, because we also have a big community within us who understand general technology. The ones who understand the new technology, we collect them and put them in center of excellence, then they spread it out with other people. We learn from projects, then we scale up. With that said, we also need to bring in more people. The beauty with the company, like I, we also have turnover in personnel. Once someone is leaving, we are really keen on finding the right person, bringing them in. From an investment perspective, we are scaling up, if you would call it an IT investments over time. As I said earlier, we do it in a rigid cost control. All budgets goes with me in IT.
We don't have any pools of money just going away somewhere. We have it under control, but we prioritize within the executive management what is most prioritized and how do we run it. For us, that's a good model that works.
Yes. You could do more with more money, but we think we are at a nice, good balance where we are and don't expect to see that we will increase investments for these reasons going forward.
Okay. Next question over here.
Hi, this is [Sanath] from Morgan Stanley. One quick question from me. You've given a great presentation about how much you've improved in terms of efficiency, in terms of new technology. My understanding was that, we had a lot of wood to chop in terms of upgrading technology, given we've grown historically with M&A. How far behind or ahead of the curve we are versus competition now, especially the newer project which have come on board in Consumer Tissue, for example?
You mean, talk about the Tissue Roadmap?
Yes.
I can say we are on top or on par. In Tissue, we are absolutely higher in technology. What we develop in paper machines, which are the core of technology, we develop our own process developments. You see that with Wausau, we bought the Atmos. We have the other Atmos in Kostheim. There are no companies at the moment that are able to run Atmos in a decent way, and we run in a best possible way. Tissue, we are leading the technology, and in personal care, we are state-of-the-art. Simple as that. From a cost position, I feel that we are competitive in personal care without doubt, with the large factories that we have now throughout the world. In Tissue
Yes, we have many sites that are state-of-the-art and incredibly cost-efficient, you have a curve here. As we said initially, even though we've seen huge savings from Tissue Roadmap so far, this is where the continued savings will have to come in the coming years. Of course, our competitors are also doing whatever they can to become efficient, but there's more potential here going forward.
Okay, last question before we go to lunch.
Yes. Thank you. Kari Rinta, Handelsbanken. A sustainability related question. You said that packaging and consumables was 25% of your COGS, and you showed an example of plastic packaging and reduction. Yet, I don't see any sustainability targets related to the use of plastic packaging, which is, of course, very prevalent in your company.
We did, through our cooperation in-
Ellen MacArthur Foundation
Ellen MacArthur Foundation, together with 99 other companies. We just signed the common pledge, A Line in the Sand, which means that we are all setting a target to have all our packaging to be recyclable by 2025. That's our first plastic target, and there will be more to come as we develop them. We have a target there that was set six months ago.
All right. Thanks.
Okay, now we will have lunch here in Stockholm. It will be served outside, and you have also the exhibition, and I encourage you to go there. We have our expert in Medical Solutions, Dr. Karsten Hemmerich. In front of you have this, with some products from Medical Solutions Essity in our daily lives. Let's meet again 1:10 P.M. Thank you.
Histoire au bord d'une fantaisie. Proche de l'équateur, un temps placide. Latitude 500, longitude 36. Au cœur de la forêt, à cette interstice. Dans ta terre rude, verdoyante. Tu étais d'une beauté étourdissante. Les oiseaux nous chantaient leur mélopée. Et nous vivions heureux dans la canopée. Jungle sauvage, ouvre tes bras. Il en faut peu pour toi et moi. Prenons racine dans l'émoi. Enfants naïfs ou hors-la-loi. Les pieds plantés dans un ruisseau. Écoute chanter ce drôle d'oiseau. Qui nous invite un peu plus haut. À partager nos idées folles. Histoire mémorable et la rêverie. Que nous vivions ensemble en Amazonie. Un retour aux sources, mais sans artifices. À travers la forêt, on démêle le fil. Dans la terre noire et luxuriante. D'une jungle rude, exubérante. Des arbres millénaires nous ont adoptés. Et nous vivions heureux dans la canopée. Jungle sauvage, ouvre tes bras.
Il en faut peu pour toi et moi. Prenons racine dans l'émoi. Enfants naïfs ou hors-la-loi. Les pieds plantés dans un ruisseau. Écoute chanter ce drôle d'oiseau. Qui nous invite un peu plus haut. À partager nos idées folles.
Sittin' in the morning sun. I'll be sittin' when the evening comes. Watching the streams roll in. I watch 'em roll away again. Just sittin' on the dock of the bay. Watching the tide roll away. Just sittin' on the dock of the bay. Wasting time. I left my home in Georgia. Headed for the Bay. 'Cause I have nothing to live for. Look like nothing's gonna come my way here. Just sittin' on the dock of the bay. Watching the tide roll away. Just sittin' on the dock of the bay. Wasting time. Looks like nothing's gonna change. Everything still remains the same. I can't do what the fair people tell me to do. I guess I'll remain the same. Sittin' here resting my bones. This loneliness won't leave me alone. 2,000 miles I roam. Just to make this dock my home, oh.
Just sittin' on the dock of the bay. Watching the tide roll away. I'm sittin' on the dock of the bay. Wasting time. It's over, I know that. You and I can't go back. Many words left unspoken. Feels as I'm alone. You and I have to know that. Another day soon will shine. The night will bring the cold back. Your heart and mind. There's no way I can breathe without you. Your smile makes it all so simple. There's a wall around your heart I cannot get through. If you find hope is what you're searching. Break down your walls, learn how to let go. Your love will fade away. Why can't we move on? You and I have to know that. Another day soon will shine. The night will bring the cold back. Your heart and mind.
There's no way I can breathe without you. Your smile makes it all so simple. If there's a wall around your heart, I cannot get through. If you find hope is what you're searching. Break down your walls, learn how to let go. Your love, it'll fade away. Why can't we move on? Feeling my way through the darkness. Feeling my way through the darkness. Guided by a beating heart. Well, life will pass me by if I don't open up my eyes. Unspark my being. Wake me up when it's all over. When I'm wiser and I'm older. All this time I was finding myself and I. Life will pass me by if I don't open up my eyes. Oh, wake me up when it's all over. Feeling my way through the darkness. Feeling my way through the darkness.
Wish that I could stay forever this young. Not afraid to close my eyes. Life's a game made for everyone. Love is the prize. Wake me up when it's all over. When I'm wiser and I'm older. All this time I was finding myself and I.
I guess you're back. Are you going to tell me where you went? All the messages I sent with no reply. It's like that. You're just going to walk into my room. I hate how you assume there will always be a place for you by my side, day or night. You know that it's killing me. Why do you always leave? It's not right. We don't fight. I know what you've been through. I'll take the pleasure and pain. Sorrows in your brain. Because I know you're on the run. I'll take the pleasure and pain. You see it's you, my way. Because you are the only one. Now that you're gone. Was what I did so wrong, so wrong? Now that you're gone.
I'm never gonna dance again, guilty feet have got no rhythm. Though it's easy to pretend, I know you're not a fool. I should've known better than to cheat a friend and waste a chance that I've been given. I'm never gonna dance again the way I danced with you. There's no comfort in the truth, pain is the holy outcome. I'm never gonna dance again, guilty feet have got no rhythm. Though it's easy to pretend, I know you're not a fool. I should've known better than to cheat a friend and waste a chance that I've been given. I'm never gonna dance again the way I danced with you. Tonight the music seems so loud. I wish that we could lose this crowd. Maybe it is better this way. We hurt each other with the things we want to say.
We could have been so good together. We could have lived this dance forever. What's wrong has been so wrong, so wrong. Oh, oh. Oh, oh. Oh, oh. Oh, oh. Oh, oh. Baby. Oh, oh. Dancing. Oh, oh. Baby. Oh, oh. Dancing. Oh, oh. Oh, oh. Oh, oh. Oh, oh. Years wasted. Oh, oh. Oh, oh. Oh, oh.
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No cardboard tube isn't magic. It's new Lotus Moltonel Sans Tube.
You keep me young at heart, you had me right from the start, oh you.
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我相信女人动起来就会很美。我是摄影师陈漫，想透过镜头让你明白，你的一举一动都很美。即使不想动的那几天，有全新一代新曲线也能感动起来。新曲线源自瑞典，欧洲进口，拥有动态贴护专利技术的独特剪裁。动态贴护不移位，贴合你的一举一动。做感动派女生，感动就美。
Cuando mi bebé está cómodo y libre, yo también. Por eso ahora con los nuevos Pequeñín Baby Pants, libertad es que nunca pare de jugar. Y que para cambiarlo sea tan fácil como subir, voltear y comprobar. Libertad es que todos durmamos toda la noche y que para quitarlo solo rasgo, enrollo, pego y ya. Con Pequeñín Baby Pants descubrí que aunque muchos pañales protejan, solo los mejores nos liberan.
It's the big game. The stadium is full. There's one minute to halftime. You prepared the washrooms. It's one of the most crucial moments for you and your team. Holdups, mess, empty dispensers could mean fans risk missing out on the action. Of course, this isn't news to you, but what might be is the launch of the new Tork PeakServe continuous hand towel system, the highest capacity hand towel system on the market. With Tork PeakServe, you're armed with 250% more towels that dispense fast, improving the washroom flow for any crowd. Because, as you know, the less time they spend in a washroom, the more they can spend with your business. With Tork PeakServe
Okay, welcome back. I hope you are energized after the lunch. Normally, you are not after lunch, but I hope you had fruitful discussions and maybe saw some of our demonstrations. Now it's time for the session about the business units. We will start off with Health and Medical Solutions. In front of you have this TENA Silhouette, something we just launched. Our President, Ulrika Kolsrud, will talk more about this, of course, TENA, and the interesting products we have in the medical area. With this, you will soon see Ulrika on stage.
I was out shopping with my daughter. She held up a pencil skirt. "I don't think so," I said. Not because of my incontinence, I just prefer minis.
New TENA Silhouette Noir. Just like underwear, protects like TENA.
Thank you, Josephine. Just like Donato and Robert, I am quite new in this specific position. Started 1st of January, far from new in the company. I have been with Essity or SCA since 1995, and I have had the opportunity to work in the different parts of the value chain and also across many of the different categories. Now I feel it is a privilege to work with health and medical solutions, not the least because we so strongly support well-being for people, for patients, for consumers, and also help caregivers to provide the best possible care in a cost-efficient way. Hand in hand with that mission goes the healthy business. We have strong brands in high-margin categories and growing categories. As Magnus said, we stand for 21% of Essity sales, whereof 68% is incontinence care, wound care, compression therapy, and orthopedics is 13%, 9%, and 10% respectively.
We have a global coverage, 70% of sales in Europe, 20% in North America, and 10% is the rest of the world, which is Middle East, Africa, Japan for incontinence products, and APAC for medical solutions. We are also present across all the relevant channels. The fact that we are present across all the relevant channels is one of our key strengths. It allows us to follow the consumer journey and adapt if sales growth shift from one channel to the other. Talking further strengths, of course, our leading positions is the fantastic platform for further growth. We are global market leaders with TENA in incontinence products, and TENA is the expert brand. We are also global market leaders in compression therapy with JOBST. We have global coverage and many other great brands in medical solutions that have a strong heritage, like Leukoplast.
What sets us apart from many other med tech providers, or basically from all med tech providers, is our specific combination of categories that we have, because that enables us to provide integrated therapy solutions. We are also very proud of the product solutions and the product assortment we have with a lot of innovative solutions and a lot of cutting-edge technologies. Talking about channel presence and that we are present in all channels being one strength, that we have actually further strengthened by the acquisition of BSN medical. As you can see in the picture here to the right, that shows the sales split we have between incontinence products and medical solutions in the different channels where we operate, and that illustrates very clearly that we have complementary channel strengths.
For example, we are very strong in hospitals with acute wound care and with fracture management, and that we can leverage to strengthen TENA position in hospital. We have a very strong position in nursing homes with TENA that we can use to expand our assortment with medical solutions. Also, I would say we benefit, of course, from joint negotiations in, for example, the pharmacy. Just one recent example there is in Denmark, where we just got listed with Leukoplast thanks to the strength we have with TENA. Another benefit that we have with now combining medical solutions and incontinence products is that it creates a new innovation platform. Many people suffer from incontinence and other medical conditions, and with us now having a broader scope, we can take a more holistic perspective on the patient and on the caregiver and innovate to solve their needs.
We have complementary competencies. For example, the strong medical expertise and broad medical expertise and experience of clinical studies and data in medical is beneficial for TENA. The capabilities and know-how we have in marketing and branding in Essity is something that we can leverage for medical solutions and to build the medical brands. Speaking about the brands, let's have a look at those and also the product assortments that goes with them. For incontinence products under the brand of TENA, we have, of course, incontinence protection, we also provide, for example, skincare which is especially adapted for elderly skin. Then we have this product, which I think is one of the most known in the medical assortment, the Leukoplast product.
This is part of a very wide assortment of acute wound care products where we have, for example, surgical tapes and post-op dressings and adhesive bandages and so on, both for healthcare as well as for at home. We also have advanced wound care under the Cutimed brand, covering all stages of the healing of chronic wounds. If you have not yet been out to visit the exhibition where you can see how we use the specific products, I really recommend you to do so, because you can learn a lot on the specific products when you do that. There you can also see what we offer under the JOBST brand, which is compression garments and products both for lymphology as well as for phlebology. We have both ready-made products as well as custom-made products in that assortment.
When it comes to orthopedics, I think for those of you or those of us, because that certainly goes for me, who have overestimated your physics in the running track, you might have come across this product, which is in our physiotherapy segment. Besides that, we have also casting and splinting, braces, orthopedic soft goods, and so on in the orthopedic assortment, with the main brands being Delta-Cast and Actimove. Looking at the split of these different segments, if you look at wound care, it's roughly 70/30 acute/advanced. Looking at compression therapy, it's roughly 70/30 phlebology, lymphology. Looking at orthopedics, more than half of our sales is in fracture management. For all medical categories, I would say that the dominating channel is the healthcare channels. Also for incontinence products, we sell most of our products through healthcare channels. 70% is through healthcare channels.
Retail is growing, that is now 30% of the sales. Before we look closer at our position and the market view, let's look a bit on the reason to be for those categories and for those markets, which is actually the conditions that we treat, we start with incontinence. Incontinence is defined as a set of chronic diseases, there are more than 400 million people that are affected by this. That's probably much more than most people are aware of. One out of three women over 35 and one out of four men over 40 suffer from incontinence. The awareness is probably even smaller for lymphedema. One out of 6,000 are born with lymphedema, which is swelling then of legs or arms. Roughly 150 million people get or have lymphedema that they get from, for example, cancer treatments or from infection.
This is not something that you can cure, but you can reduce the swelling, and you can control and maintain the swelling through adequate care and through compression stockings. When we talk lymphology, that is about the disorders of the lymphatic system. When we talk phlebology, that is about disorders of the veins. Here, when we have very mild cases of chronic venous insufficiency, as you see on the first pictures here to the left, then compression stockings is the accepted standard of care. When we talk more severe cases like you have on the pictures to the right, a leg venous ulcer may appear, then you need other products. That's a typical example of where our integrated therapy solutions come into play.
What you need to do if someone has a venous leg ulcer is you need to remove the liquid and rebuild tissue, and you do that with our Cutimed range. Then you need to reduce the swelling and prevent reoccurrence, and you do that with our JOBST range. We have all the products that are needed to treat this condition. Looking at other types of chronic wounds, there are also diabetic foot ulcers, where also our compression, or sorry, our orthopedic assortment is included in the integrated therapy solution. Another very widespread chronic wound is pressure ulcers, and it's not at all uncommon that bedridden people, elderly people in nursing homes suffer both from incontinence as well as from pressure ulcers.
A chronic wound, the definition of that is that it doesn't heal in six weeks, and 1.6% of the population suffer from these type of wounds. Normally, it comes or is based on underlying chronic diseases. Acute wounds, on the other hand, that is caused by external damage of the skin, could be by surgery, or it could be by the daily life and the small or big accidents that happens in daily life, like on these pictures. By the way, can you tell which of these wounds that is protected with a Leukoplast dressing? Can you tell? No. Good. It is the right one. It is the knee. That shows very clearly, of course, how transparent and pliable our products are. It's almost like a second skin. You can see much more of that in the exhibition. I really recommend you to go there.
Talking orthopedic injuries we could do for hours because there are so many, but if we talk about one, the most common one is ankle sprains. 20 million ankle sprains in U.S. and Europe under a year. That shows just how common it is. For those type of injuries, the normal treatment is that you need immobilization with fracture management. You need stabilization with braces and support, and you need to prevent reoccurrence with physiotherapy products. Again, we have products that support the full continuum of care. The high prevalence of these different conditions is also what is driving then the market size and the market growth. Looking at the global incontinence market, it's EUR 9.4 billion, and it's growing by 5%-6%. Europe is slower. That's 2%-3% growth.
We are strong global market leaders with 20% share of market, which is almost twice as much as the closest competitor. In Europe, we have as much as close to 40% of the market. North America, there we are number 4 with a moderate share in the U.S., but a leading position in Canada. If we move to medical solutions, there the categories are growing 3%-4%, and we are number 1 in compression therapy, number 3 in orthopedics, sorry, yeah, in orthopedics, and number 5 in wound care. If you add that up together, that makes us number 4 globally in the categories where we compete and number 1 in Europe. Behind these figures, there is, and I think Magnus Groth was talking about that also, there is some very strong local positions and strong segment positions.
For example, we are number 1 in fracture management, which gives us a very good door into the hospitals. Also number 5 in wound care might not sound too impressive, but we have, for example, a leading position in acute wound care in Germany, which is our biggest market. There are many of those examples across the 100+ markets where we sell our products, that is of course a very good base for continued further growth. There is a lot of growth to capture because if we look at the market trends, they are supporting continued growth in the categories we operate in. The demographic trends are certainly playing in our favor. All of our categories are driven by an aging population. Also on top of that, we see that the prevalence of chronic diseases like obesity and diabetes and so on are increasing.
Also, we see that penetration is increasing, driven by a higher awareness of health and hygiene generally speaking and a higher access to healthcare in D and E markets. I think we all can relate to that we want to take a bigger part or active role in our own treatment as well. There is much more self-diagnosis and self-treatment, which also influences the demand. There is clearly a higher demand of our products and our categories, and there is clearly a higher demand of healthcare. At the same time, the budgets, the public funding is not increasing in most markets. Of course, that puts some pressure on the system, that leads to cost pressure, it leads to reimbursement changes, it leads also to more self-contribution. Also we see market consolidation both in healthcare and retail, which adds on to that cost pressure.
This is of course a challenge for us, at the same time we see that as opportunity and we see a lot of opportunities in that as I will also talk a bit more about later. What is our ambitions then in this market context? Well, for incontinence products, our ambition is to continue to strengthen our global market share position and to shape the category by driving penetration and increasing awareness. Also in compression therapy, our aim is to strengthen our global market leader position. When it comes to wound care, we want to accelerate the growth both to strengthen positions but also for advanced wound care to create more scale. In orthopedics, we want to maintain and build on and leverage the number 1 position we have in fracture management, and by that grow the full orthopedic assortment.
What is the common denominator between these category ambitions? That is to generate profitable growth. In order to do so, we aim to accelerate growth across markets and channels. We aim to leverage our excellent go-to market model to bring new consumer and customer value through innovations to shape the healthcare market, and needless to say also to continuously and relentlessly improve efficiency and reduce cost. We are going to look at some of these priorities. We start with the first one to see now what have we achieved so far and what will we do moving forward. If we look at incontinence products for Europe in healthcare, we have grown above the market. A big part of that business is tender-driven. Of course, our tender excellence process is a very important part for us to succeed with that.
I would say another key critical success factor for us is the service we provide to nursing homes, what we call as TENA Solutions. We have worked with healthcare professionals over decades, and we have developed very good best practice care routines. Based on that, we educate and train nurses, and we combine that with our high-quality products and with access to expertise. I was just in a nursing home not so a few weeks ago, actually, and it was amazing to see the difference our TENA staff is making in the nursing home and the loyalty that creates. This is really a key success factor for us. Also part of the success recipe is to continuously actively work with mix improvements, by innovation or by expanding the offer to adjacent products as well.
Also, we of course implement price increases now following the increase in raw material costs. As someone said before, a big part of our sales is tied up in multi-year contracts, so it does take some time. We have other things, other tools as well. We can upsell within our existing contracts, and that means basically that we sell higher value products by talking total cost of care instead of cost per piece. Moving forward, we aim to just continue to execute on this success recipe. If we move to retail in Europe, their competition has intensified quite a bit with Procter & Gamble entering the category, with local competitors being more and more aggressive, and with retailer brands expanding. We have benefited from the accelerated market growth that has followed both that we and others have invested more in the category.
We are very clearly market leaders with roughly 50% share of the market. How we have succeeded with that is that we have also increased our investments in advertising and promotion, and not the least, we have accelerated our innovation program. As an example, we have invested in new technology in order to be able to provide more discreet and feminine TENA pads assortment. This innovation program continues. We just recently, as you saw in the TVC, launched the first black protective underwear ever in Europe. We, at the same time, upgrade our brand. You see a new logo type, a new packaging design, and also revitalized communication. That is to create more appeal for the women and men who come into the category and specifically in the retail segment. Let's have a look again on how that looks.
I knew being a mom would have a few surprises. Bigger boobs, bust. Nobody mentioned incontinence, though. A little bit of wee is not going to stop me being me.
New TENA Silhouette, the first black underwear that protects like TENA.
The consumers will meet a new TENA both in the shelf as well as on TV. Moving across the Atlantic to North America, there we have managed to turn around the business in recent years. We worked with cost savings across the full value chain and got back to black figures in 2016, earning the right to grow. In 2018, we grew in all parts of the business. We will continue to create value by leveraging now the new technology that we have put in place for our briefs which gives us a more cost efficient as well as better product. Also by having a more rigorous approach how to identify and secure new customers. Also by leveraging the quite solid position we have in the pads segment and differentiated concept of intimawear in order to create a sustainable position in U.S. retail.
Also, we will grow e-commerce, which is a very important tool for us in North America. Not only in North America. In 2018, we grew 16% in e-commerce in self-pay. More importantly, I would say, is that we have more than fair share in that channel. I would say we are very well positioned in order to capture the growth in this highly growing category. We will continue on that path when it comes to TENA, and also explore this more when it comes to medical solutions where we do not have the same maturity today. I think we can accelerate that quite a lot using the capabilities and the knowhow we have with TENA. Speaking medical solutions then, how are we doing there? Well, we have accelerated growth in 2018 in a number of markets: U.K., Nordics, India, Netherlands, and some others.
We have also started to capture the benefits from this complementary channel strength, a stronger portfolio and leveraging cross-selling. Even so, we did not live up to the growth expectations last year. The reason for that was because we were struggling in our two biggest markets, Germany and the U.S. We took some corrective actions to that and have changed the sales and marketing setup in Germany and also sharpened our value propositions and that has paid off. Now we put a lot of focus of course on doing the same in North America. We have put a new leadership in place since February and combining the two organizations. We are sharpening the value propositions. We are in the middle of the integration project, but we've already made some changes in the sales setup, which allows us to better leverage the integrated therapy solutions.
Also of course, we will take the learnings and reapply what we can from the turnaround of incontinence products in North America. That was the first priority. Let's move to the second priority which was about leveraging an excellent go-to market. When we design a go-to market in our business, there are many things to consider beyond the basic go-to market model and optimizing channel presence. Very important, who is the payer? Is it the user, him or herself who is paying or is it reimbursed? If it's reimbursed, is it fully reimbursed or are we talking a co-payment model where the user is paying part of the cost? Are we talking a top-up model where the consumer can pay to get a better quality than what the reimbursement system allows?
Of course, are we talking publicly funded or is it private insurance companies that are financing the products? Equally important, who is making the brand decision? Here we often have to consider two decision-making processes. We have to win twice. First, we have to get on the shortlist of products that the healthcare providers can choose between. We need to get the license to sell you could say. That would normally be with for example hospital management or a buying group of a consolidation of hospitals. Then we want to be the choice at the final selection. The decision maker there could be the prescriber, it could be a pharmacist, it could be a professional purchaser, it could be a clinician or it could be the user him or herself.
All of these different call points, the full set of call points, all of these things to consider looks very different from market to market and also very different from channel to channel. Consequently we design our go-to market locally. At the same time we develop and deploy global processes to drive commercial excellence. If you look at those stakeholders that I talked about, they also have quite different interests. Everything from health economics to the tangible services that you provide to the clinic. In summary you could say that we design our go-to market to leverage the multi-category portfolio and to leverage our scale while targeting the specific needs for each of the stakeholders at the call points based on channel segmentation. Equally important as the channel segmentation is the target group segmentation.
Just to take an example, if you are a caregiving relative and you buy products for your mother that you care for, incontinence mother, for example, you probably have very different needs in terms of products than communication than a woman who just has started to experience mild bladder weakness. Even if both of you buy the products in the e-commerce channel. I think this to me at least illustrates the complexity that we have to deal with in this market. In my view, our ability to manage and leverage that complexity is one competitive advantage for us. Irrespective of target group or channel, innovation is of course important to deliver on customer expectations. When it comes to medical solutions, we leverage a lot the medical expertise in order to deliver relevant innovations.
The examples here to the left are both addressing healthcare challenges to prevent infections. It is Leukoplast with antimicrobial features in the spools and it is a combination of a unique Sorbact technology and one of our foams into an innovative new dressing. At the same time, we leverage Essity's know-how in marketing and consumerization in order to improve the appeal of our products. As we have done here with JOBST adding more colors and patterns and both improving the appeal but also providing new news to the medical device shops. Innovation is an important growth driver, but what this picture shows is that the share of sales of our different segments in medical solutions looks very different from market to market.
That is based on historical focus, different assortments, but what that means is that we have quite a big opportunity already with an existing assortment. Just by rolling out what we already have in the assortment. Moving to incontinence products. There, our recent success stories are pants growth. Pants is the excellent choice for a mobile user. It is easy to take on, take off, it is underwear-like, and so on. It is also a high margin segment that increases the value of the category. There are all the reasons to drive pants penetration and conversion. We have had a quite extensive launch program over the years in order to drive pants conversion. An example is that we have invested in new technology in order to have an affordable range, and we have also gone gender specific. There are many other examples.
That has paid off certainly, and I think that is an excellent example of how innovation drives profitable growth. We also have high expectations on what you see to the right there, relaunching our TENA assortment in healthcare with skin health features. We know that elderly skin is more fragile, so addressing this makes us more relevant both with consumers and with customers. Another important area for innovation is sustainability. We have mentioned that a lot today already. Here, just to mention a few examples from an HMS perspective. TENA Solutions, it does not only reduce the cost of care in the nursing home, but it also has some clear sustainability benefits, improving well-being being one of them, and reducing waste being another one of them. Another achievement is that we have reduced the carbon footprint significantly on our TENA assortment, thanks to smarter design of products.
We aim to continue to be in the forefront of sustainability by leveraging TENA Solutions, by continuously reduce carbon footprints, also by reducing plastics, as well as post-consumer waste. There we have an initiative, a pilot ongoing right now with a partner, Renewi, in order to address post-consumer waste. Our digital solutions play a role in sustainability as they do in shaping the healthcare market. I talked about this, that the healthcare system is under pressure, also we will be fewer and fewer people to care for more and more elderly people. That puts the system under even more pressure, and this is of course a challenge for society. We want to be part of the solution to that challenge.
We want to be the best partner to healthcare in order to reach their goals in providing the best quality of care, respecting budgets, and respecting staff limitations. Here digital solutions play an important role. You probably remember when we launched TENA Identifi some years ago. That is then a data-driven continence assessment tool for the nursing homes. We have learned a lot from that launch, and we've also seen very clear benefits from it. Just an anecdotal example is the nursing home that just got an award the other day for their work with continence care. They had both reduced costs and significantly improved wellbeing, and TENA Identifi was their vehicle to succeed with that. Now we are expanding this to pants as well. At the same time, we are launching the next generation digital solution, which is TENA SmartCare, which is a digital change indicator.
This is only the start of the journey of how we can transform elderly care with digital solutions. This is relevant also for medical solutions to provide adjacent services based on digital technologies. The example I brought here is JOBST LEXpert, which helps the fitters of compression stockings to measure their patients in an efficient and accurate and dignified way. Just to quote a customer in a medical device shop in Germany, she said that, "Well, this device, of course, helps me with the patient, but also it makes my shop look much more modern and attractive." There are many benefits with having digital solutions. For us, of course, it's supporting and strengthening our product offers, it's creating new revenue streams, and it's also creating the connection, the direct connection with the caregivers.
I would say that is not the least important because in this rapidly changing market that we're in, an environment that we're in, for us to build and own the connection, the direct connection with consumers and customers will be increasingly important. There also our websites come into play. For our TENA websites, we have 14 million visits across the 38 markets where we have it, and we have then also this target specific for six different target groups. Here we can create that direct connection both with caregivers as well as with users and consumers. We can shape healthcare market in the sense that we spread awareness and increase the knowledge. It also calls to action. It generates samples as well as purchases because we have the web shop attached to it.
Last but not least, we shape the healthcare market and improve wellbeing, and also at the same time grow our business by improving penetration or increasing penetration. One out of eight patients with lymphedema are using compression stockings, and we know that is part of the best possible care that they could get. Seven out of 8 are either not diagnosed or they are diagnosed but not treated, or they are treated but not ideally treated because without compression stockings. If we look at male incontinence, only a fraction are aware that there are purpose-made products available and we see studies that say that 3% only are using purpose-made products. Of course, what that means is that there is a huge opportunity for us to increase penetration of our products across our categories, but not the least for male incontinence and for lymphology.
With that, I hope that I have left you with the conclusion that we are very well-positioned to drive profitable growth through our market-leading position on TENA and our market-leading position on JOBST, and through our other strong positions in the medical solutions categories. Through our excellent channel presence and our strong customer and consumer offers today and in the future. I also want to highlight this again, the favorable market trends because the demand of our products, there will be more and more people that need our products, and we are committed to support them to lead healthy and active lives. That goes also for astronauts. They also need our products in order to deliver their mission and stay healthy. I can proudly share with you that with our JOBST assortment, we have 100% share of market in space.
With that I say thank you. Thank you, Ulrika. Impressive. 100% market share in deep space. I would like to add actually that with the compression stockings, it is not only for the ones with lymphedema. I normally wear them on events like this. I realized I was in a hurry this morning, I do not have them, but I encourage you when you travel, sit still like this. Compression stockings are really, really good. As you have heard the whole day, innovation is very important for us. A very innovative man was Mr. Conrad Jobst and in the break, again, I encourage you to see Mr. Karsten Hemmerich. I see you over there and maybe you can tell the story how Mr. JOBST invented the stockings in the 1950s.
With this, we are going to go deep dive into our next leading brand, Tork, and to the Professional Hygiene business with Mr. Don Lewis. With Professional Hygiene and Tork, we can help customers to think ahead and support business for big crowds. With this, Don Lewis will soon enter the stage.
We are the crowd experts. We have handled large crowds for years. It is in our DNA. Now we have put all that knowledge and expertise into our latest high-traffic venue solution to get your venue crowd-ready. Because the more people that come, the more your business will thrive. Bring on the people, bring on the crowds.
Good afternoon, everybody. It's welcome to be in front of this crowd this afternoon. A little bit about myself. I'm President of Professional Hygiene. I've been in this role for a little over three years. Prior to that, for four years, I was President over the Americas with all the categories consumer and B2B in North and South America. Prior to that, President of the tissue business in North America. I've come to Essity through acquisition. I've been with the company 16 years, which I think is a really good sign that our company values people that come in from acquisitions that we make. I've been in the B2B business for 30 years, I'm very experienced in this area and I'm very passionate about it too. I'll be the only one not speaking about consumer goods this afternoon, hopefully you'll find it as exciting as I do.
If I may, let me begin by letting you know how our sales are split. Our net sales by region are pretty evenly spread between Europe and North America. 48% North America, 51% Europe. You can see a sliver of sales in the Middle East and Africa. This has been a good growth business for us, although it's very small right now. We brought this into the business unit a little over a year ago, I'm happy to say we've grown at a very good rate of speed and we've had over 50% growth in our strategic products. That's a good story. To let you know about our end customer segment, we're very super focused on our segment strategy. Part of our new marketing organization that we developed through our go-to-market is focused by segment, we use the segment expertise to fuel our innovation.
We not only focus on these five segments, there's many sub-segments and microsegments underneath that we focus on. The biggest is hotels, restaurants, and catering. This is a large area for our company, particularly in North America, where one out of every two napkins is made by Essity in the Tork brand. Commercial buildings being second. We're a little stronger in Europe than we are in North America. The other public interest, industrial, where we're looking to grow, in selective geographies where we could find the most profitable opportunities, healthcare is a good opportunity for growth. If you had a chance to hopefully see some of the displays, the one is the glasses that we have for the virtual reality. We worked with the World Health Organization on this to really help that need of hand hygiene and help educate healthcare professionals.
If you haven't got a chance already, please look at that. Our strengths, a great global business and a great global brand. A very strong innovation pipeline, and you will see through the presentation, this is the cornerstone as to what we do. A highly experienced sales and marketing team, very tenured, but we are also adding new talent to the organization to help take us to where we want to go in the future. Strong environmental position and expanding digital capabilities. We have made a lot of inroads over the last two years to really strengthen what we do here. Superior go-to-market.
When I took over the transatlantic organization, one of the first things we did was look at how we could leverage our skills across the Atlantic and also make sure that we are leveraging the market muscle, but also looking at how we could enhance marketing, digital business development, and so on. Activating an omni-channel approach. We want our customers to be able to buy from us any way they want to buy. We are number 1 professional hygiene brand in the world, and I will give you a couple facts. We are in 111 markets, so we have a vast presence. 200 plus patents. You cannot have this sort of innovation without protecting it. And we not only protect it through patents, but we enforce our patents. That is always a good complement. We have people trying to copy our products everywhere in the world.
95% of our global sales come from positions where we have number 1 or number 2 market share. Though you cannot see with the blue color there, which is where we are present, most of these we have a very strong number 1 or number 2 position. We have placed over 6.5 million dispensers over the last year on an annualized basis. This is important because this helps the pull-through of our product, but it is also a lot of our innovation, and it locks in our customers and creates a lot of brand loyalty. Tork, our brand, is super important. Recently, we added the tagline, "Think ahead." A matter of fact, I made it the topic of my leadership conference this year. You will see how think ahead goes hand in hand with our ambition.
Our offer, for a long time, you have known we have made tissue towel, napkins, toilet paper, toy pa, facial tissue, wipers, cleaning products, dispensing systems, but we have really been expanding our skincare offering, and we have had double-digit growth, cleaning, maintenance, as you will see from our Tork EasyCube and our Tork PaperCircle. A couple new areas as we expand our portfolio. That is why we really changed to professional hygiene versus traditional away from home because it leaves us a lot of opportunities for expansion of our portfolio. The professional hygiene market, globally, we have a 19% number 1 share. It is a bit of an optical illusion. It does not look like it on the slide, but trust me, we are the number 1 global position. In Europe, we have a very strong position with 31% market share and 23% in North America.
A couple of things that I'd like to point out about the two mature markets. As you can see from Europe, we have a very large market share, and it's very fragmented after that. We have a number two and number three, which make up about half of it, and then it's extremely fragmented. In North America, it's much more consolidated. Three players make up almost three-fourths of the marketplace. It's a little different. It's also the same from the customer perspective. We have much more customer consolidation in North America than we have in Europe. Our customer insights are the same throughout the world, but what we do from a channel perspective is a little different, and how we compete in the marketplace is a little different. These are some of the trends impacting professional hygiene.
I'm not going to go through all of these, but if you could look at the top row, I think you'll see through the items that I present today that they're all pretty important to our future and plays well to our innovation. Wellbeing, cost consciousness, and an increased customer experience, digitalization and technology, and growth in e-commerce and office channel. These play very well to how we're positioned for these future trends. A couple other ones I'll focus on is the circular society and sustainability right in our sweet spot, and certainly disruptive business models. As you know, we're working to be disruptive. There has been more partnerships and alliances, and a lot of this is our big customers are getting bigger, which means with our global reach, we're best positioned to help them with their future needs.
As I mentioned, we updated our go-to-market strategy and being the global shaper of professional hygiene solutions. This is something I brought to the table a few years ago because it's one thing to be number one in market share, but it's even more important to be viewed as the market shaper. I want to stress this with everything we do, including innovation. That's why I think ahead tagline that I mentioned, that goes along with our Tork brand is so important. To be the market shaper, we have to have the insights to always be thinking ahead of our customers' needs. If you think of their job running a business, they have a lot of things that are important to them in each day.
I'm not saying that our products aren't one of them, but the easier we can make the purchasing of our products, the better we make their lives. We want to think ahead so that they don't have to. I want everybody in my organization to make sure they think ahead every day to look around corners so that we're prepared for the future, and we can continue to be the market shaper. The heart of what we do is to best serve our end customer. That's the most important thing we can do, and it's the insights of our end customers, which drives our segment strategy and which also drives our innovation strategy. Enhance our value proposition. We need to make sure that people know what the Tork brand stands for. We have a very strong position, but it could always be better.
We need to make sure that the enhanced value proposition is known by everybody. Transforming our channel partnerships. We have a long tradition of going to market with distributor partners who will continue to be important to us, but we have to make sure that our end customers can buy any way that they want, whether it be e-commerce through traditional distribution or any other channel that they want to buy from. We want to make sure that we're there for everybody. Our priorities for growth, for profitable growth, more importantly, return growth in North America, and I'll come back to that in a moment. Execute our segment strategy, build upon our Tork brand, commercialize our innovations, grow our strategic products, and improve our cost position, working in tandem with Robert's team and Donato's team, and scale digital. Returning to growth in North America.
As you know, three years ago, a little over three years ago, we purchased Wausau Paper in North America. I'm happy that we delivered on our synergies that we publicly committed that we would. We did have a little bit of something that we didn't anticipate. We had very large, unprecedented raw material increases. In North America, in particular, it was recycled fiber. Where we had planned on growing, all of a sudden, a lot of the business that looked profitable didn't any longer because of this change. We did shed some unprofitable business. If we wouldn't have, it would've had up to a 2% impact on our margin. As you can see, we've kept pretty steady margins over that time frame. We were able to mitigate a lot of that through price increases and through shedding of business.
Margin improvement continues to be a focus, price increases, and improving our product mix. Really returning to growth has to do with strategic products, go-to-market capabilities, and our e-commerce strategy. I can tell you that we're positioned very well now. The majority of that is behind us, and we're positioned in a good place to grow for the future. Our end customer strategy is very holistic. It's really powered by digital transformation. Way of working in collaboration is part of the theme of my whole management organization, looking at standardizing processes. We even had our leadership meeting this year, which is usually getting our top leaders from across the globe together, and we did it virtually. We were able to hit five times the amount of people that we hit at 10% of the cost. We need to walk the walk. E-commerce, I'll come back to.
Automation and robotics, we're looking at every opportunity, whether it's invoice processing, rebates, to make sure we use automation, and we're using robotics for a lot of our product testing. Data-driven decisions, business analytics, CRM dashboards, digital-enabled solutions. As you can see, we offer both from a customer purchasing perspective and from digital-enabled projects and search and digital marketing. Digital enables us to offer good shopping anywhere, anytime by multiple touchpoints to our customers. It's really holistic e-commerce activation, a 360 account approach, and 360 brand activation. Why this is so important to have this holistic approach, you could look at digital as if you're adding a room to your house.
You can frame the room and just leave it alone, or you could build a room, you could make sure that it's completely decorated, that it's got good music, good artwork, and it's very inviting for people to come into. We want to create an experience that's very inviting for people to come into, that's the exact same experience that they would have if they had face-to-face contact with us. We celebrated an anniversary last year, 50 years of Tork. We celebrated across all our businesses and organizations, and I think you can see by some of these visuals that I won't go through. It's always been a cornerstone of what we do, and it will continue to be the cornerstone in each and every year as we come out with new innovations, and more importantly, looking at blockbuster innovations. Strategic products.
This has been a very good growth story. Our strategic products are differentiated. They usually have some sort of proprietary nature. They have good cost and use stories, good sustainability messages, and they bring us much better than average profitability and hopefully bring value to our customers as well. We've been very focused on growing this. This is mixed development. It's driven by our innovation pipeline, our sales compensation program, and even the programs that we have with our customers. You can see now half of our products transatlantically that we sell come from strategic products or non-commodity type products. If you went back in history, I don't have the comparables because we used to be aligned differently, but 15 years ago, we were in single digits, and we've come a long way since then. Tork EasyCube. Hopefully, you've seen some of the updates that we've done.
Our number 1 software for data-driven cleaning. This IoT endeavor that we've done has proven to be very successful, but we're still learning as we go. We not only have the sensors in the dispensers, but we also offer digital cleaning platforms and also dashboards that they can use. We also have claims, 20% cleaning hours saved, 30% higher customer satisfaction, and 99% fully stocked washrooms. These are claims that we stand behind. We've taken a step further. Certainly, when we introduced it a few years ago, it was in its infancy, but now we have a platform for digital cleaning that can not only be used with our products in the washroom, but could be used throughout the whole facility.
If you remember, if any of you heard me present at the last Capital Markets Day, I referenced the bottom left corner, Gröna Lund Amusement Park, and how they had had great customer satisfaction, always had stocked dispensers. They had less turnover of their facilities people. Now I have all these customers to talk about and many, many more. We've won several awards, as you can see, cleaning and hygiene awards, Interclean awards for innovation, ISSA, International Sanitary Supply Association Award for innovation, and we have a great group of end customers. Sodexo, who's a partner of ours, I met with them. They invited me to their headquarters last year because they were actually awarding their internal people on an innovation team that they had, and the innovation team was rewarded because of the work that they had done with us with Tork EasyCube.
It's a good segue into a video I'm going to present, I think you'll recognize the end customer of somebody you've probably heard of before. There's nothing that makes you prouder than a customer's endorsement of your product. You can see that's a very good story. Now, coming on to our next great innovation, our Tork PeakServe. This is really revolutionary. I was at the ISSA show, the sanitary show, which is the largest in North America. I had a very discriminating customer come up to me that never gives compliments and said, "You really have a game changer here." I said, "I know we do." If you look at this product, it's not a folded towel, it's not a roll towel. It's completely different. It's a continuous fold towel. 35% more capacity than any product on the market.
600 more guests served. 250% more capacity than any standard towel system. It's compressed, so you get 2 times the product in the same amount of space. Three seconds as far as customers flowing through, it really cuts the time, in big events. You could imagine this is a very big product for us. I'm going to show you another slide-
It's the big game
or another video for you.
The stadium is full. There's one minute to halftime. You prepared the washrooms. It's one of the most crucial moments for you and your team. Holdups, mess, empty dispensers could mean fans risk missing out on the action. Of course, this isn't news to you. What might be is the launch of the new Tork PeakServe continuous hand towel system, the highest capacity hand towel system on the market. With Tork PeakServe, you're armed with 250% more towels that dispense fast, improving the washroom flow for any crowd. As you know, the less time they spend in a washroom, the more they can spend with your business. With Tork PeakServe, you can also refill twice as fast whenever it suits you, freeing up more time for you and your team.
Time to respond to the mess and those unpredictable challenges that come with big crowds, making your guest experience better overall. Whether it's the big game, morning rush at the airport, or a sellout concert, bring on the people, bring on the crowds.
If this cooperates, I'm going to quickly show you a little bit about it. Origo is nice enough to let me do some subliminal advertising. This is the way it comes. Two types of packages. Both easy to carry. Remember, it's compressed. It has easy carrying handles, so in the facility, it's very easy to maneuver. Think that with the compression, it takes up little space in a facility, and it also, you can ship a lot more cases per truck. That's some of the initial advantages. The dispenser is high capacity. It's a beautiful-looking dispenser and has a very low profile, about 10 centimeters. When filling the dispenser, and I'll pretend it's not filled, you have these small packages, which has a hook and loop design, so you could put the product in either way, and it won't jam the dispenser.
Just lift this up, push up, it's as easy as that. As far as loading, you just bring the product through. Such as that, put it down, like that, it's loaded and ready to go. You can see it's pretty easy. It's nice looking, and it's efficient. Two other features, you can see by the side if it needs filled, and there's also an indicator light as well. This is our new blockbuster. What's even more important, not only is it a good product and demonstration, but the growth has been phenomenal. We've exceeded our expectations. You can see since launching last year, we're up over 300%. Very great trajectory. As the customer said, we do have a game changer here. I hope you can see the value in this system. I'm super excited about it, as is our sales force.
These are some of the initial successes we've had. Even though we've not had this in the market long, we've already won awards, and we have many visible accounts in several segments: airports, sports, leisure, education, and industry. We're just getting started and many good opportunities ahead of us. Last but not least, we talked about professional hygiene and sustainability performance, wellbeing, Tork EasyCube certainly helps wellbeing from a more from less. We have two products in particular, our coreless tissue and our interfolded napkin, which we've talked about for many years, was probably our last super big blockbuster, and 25% guaranteed savings. The new thing that goes with circularity is our Tork PaperCircle.
Last year at the Amsterdam Interclean Show, I presented on behalf of our company. One of the other presenters was the president of Commerzbank, and he presented about the Tork PaperCircle just because of the value that it brought to his organization. What it does is it allows the opportunity for our customers to actually put what was before washroom waste or used paper towels into a receptacle. We get it picked up, we take it back to our plants. I just visited our plant in Kostheim, and we do a great job there. The team, they've got a great visual for our customers to go through if they care to visit. They take the product, they make it back into usable product and send it back to the customer. It's a totally circular operation. It really isn't a product.
It's a solution that we solve. We're getting great response from customers. We actually can't keep up with the demand on this. It shows how sometimes innovation comes from products, but sometimes it comes from solutions and ideas. I urge you please, the four things I spoke about are on display. If you haven't seen them yet, please make sure you do before you leave at the break. The other thing is a 40% reduction in carbon footprint. By doing this, not only do we help them with marketing material, but they can say that they've reduced their carbon footprint in this area by 40%. There's not many ways that you can do that this easily. In conclusion, key takeaways. I hope you can see the strength of the global brand that we have. Our innovation and sustainability continue to be a core.
We take sustainability into account when we look at all of our innovation. Strong go-to-market, a full e-commerce approach, delivering profitable growth with opportunities both in mature and in emerging markets. One thing I want to leave you with, not counting today, I'll bet you that all of you have something in common, that's that you've used a Tork product this week, whether you know it or not. I guarantee everybody in this room has probably used it. Please continue to do that, please continue to support us. We have 50 years behind us, but in many ways, we have the best ahead of us. Thank you very much.
Please stay. Thank you, Don. Super exciting. So much innovation and digital elements, not the least Paper Circle, which really support a circular society. Of course, I know you always have the customer in focus. With this, Magnus, Ulrika, please join on stage. I'm told we should be a little bit closer to the light for the ones on the webcast.
Yeah.
Who would like to start with the first question? No hands.
Over there, to the right.
Excellent.
Hi. Oskar Lindström with Danske Bank. This is to you, Ulrika, I believe. Within the medical solutions category, which segment do you find most interesting in terms of growth potential for Essity, and why?
I think all the segments have good growth potential. Of course, a segment like lymphology, for example, where there is also a very low penetration, has other opportunities than the ones that are more highly penetrated. It's smaller today but has a big opportunity thanks to that as well. All of them have good growth opportunities. You could say fracture management, as an example, today you can see a shift from fracture management into more orthopedic soft goods, for example, in mature markets. On the other hand, you use more and more fracture management in D and E markets. Also there are growth opportunities.
Following up on that, do you believe the growth is going to be primarily organic? Would you need to do acquisitions in order to achieve that growth within these segments?
I think we have very strong opportunities to grow organically. As Magnus said, the strategy is both to grow organically and through acquisitions.
All right. Thank you.
Next question, Margarita.
Thank you.
John Ennis from Goldman. A couple for you, Don, actually. When you sell a dispenser, do you tend to lock in long-term contracts with those customers? If so, how long is the average duration of those contracts? If possible, could you give us the sort of retention rate you see in your business? Then a sort of follow-up to that as well. You talked about placing 6.5 million dispensers this year. Are they largely to new customers, or is that really a function of your existing customers effectively upgrading their dispenser solutions?
Sure.
Thanks.
For the most part, we lock in our customers for a three-to-five-year period. We look at definitive ROIs when we do that to make sure it's a win-win. In many cases, we also use it as a way to capture data back as well too, and insights from the customers. It depends market to market, but on average, that's the range. When you look at the second part of your question, retention is always an issue. We have very strong retention. I can't give you the exact number, but it's always a number that we're looking at making even higher. With our dispenser solutions, I know we're way above the competition. Your second question, if you could repeat it, please.
Yeah, sorry. It was just you mentioned that you'd placed 6.5 million dispensers.
Yeah.
I wanted to know, is that largely to existing customers that are upgrading their solution, or is it to new customers that you've got?
Yeah. The majority is not. It's usually new customers. There's sometimes that we'll do upgrading. Usually it's not a fact that our dispensers wear out. They're made very strong, so we're usually not replacing because of that. Sometimes when we go through a next generation upgrade to help the appearance and even help our brand get out there, we will proactively upgrade, but the majority of them are new installations.
Great. Thanks a lot.
Hi, thanks. Farhan Khan, Credit Suisse. Two questions as well, one for each. Firstly, on medical solutions, when Magnus bought the business a couple of years back, he did say he is going to use this as a platform to enter adjacent medical solutions or health solution categories. Can you highlight any categories today that could potentially interest you? Secondly, to Don, you said you want to get North America back to growth. Are we in a position today where you feel the business is now sustainable when it comes to the businesses post the Wausau acquisition? Apart from the innovations, which seemingly are fantastic, what other initiatives do you have?
I will preempt the first question because actually, I do not remember that statement. I said that medical solutions was a platform for growth in medical, for sure. That we were happy with BSN medical, actually because it was a step up for us when it comes to being more sophisticated in some of our other categories, but still something that we understand and feel have many similarities in many ways with our existing categories. The platform for growth, I would rather that we, if the opportunity arises to grow through acquisitions, that we grow in existing categories, particularly in wound care and in advanced wound care, but also in compression, as I mentioned earlier. That's really where we're putting our focus. We do not want to get scattered into too many small categories and segments. We will primarily be looking at existing segments within medical.
To answer your question on my business, I absolutely do feel that we're positioned for growth. The integration's behind us. We've done 2 things. We've realigned our sales force. We've added to our end customer sales force. We've also realigned and changed some capabilities, rotated some personnel through. We've also augmented that from the side. I brought in a new head of marketing, a new head of e-commerce with a lot of experience. The head of marketing, I actually brought in from Latin America, a lot of consumer experience. Which, because we compete also with consumer companies, it's really important that we have that look to help take us where I want us to go. Also, the head of e-commerce brings a wealth of experience and has really helped catapult us very quickly into these areas.
Those are 2 things that we did not have before as well. We're also strengthening our sales operations and business development. That was part of our go-to market that was in parallel. We had a lot of things going on at the same time. Now it's time to take a deep breath and really execute. I do feel confident.
Guillaume Delmas from Bank of America. My first question is for Don. You showed a slide that was indicating 1%-2% category growth in North America and Europe for Professional Hygiene. I was surprised by this number. I think it would be more, particularly given the premiumization opportunities and also what we are already seeing in the category. Secondly, by how much do you think you can outperform that category growth given your scale and technology advantage? My second question is on the Medical Solutions incontinence categories. You talked about some structural pricing pressures. Should we conclude that mix is the new price in that particular channel? Or do you actually see some pockets where you would have strong pricing power and becoming a one-stop shop combining Medical Solutions and Inco, does it give you more pricing power? Thank you.
As far as the growth in Professional Hygiene, historically 1%-2%'s been pretty historic. The mature markets, that's pretty much what they grow. What we do feel is that we can grow a little faster than the market, and we can grow a lot faster than the market on our strategic products. On top of that, within my business unit, we have emerging areas. Eastern Europe's growing very fast. Russia's growing fast. I mentioned Middle East and Africa. Those areas. Outside of my business unit, I know Pablo will talk about it, and probably Christoph as well, in the emerging markets, we can grow even faster than that. If you put them all together, we'll definitely grow faster than the market.
To answer your question then on incontinence and Medical, I would say if we talk incontinence, yes and yes, in a sense that yes, of course, it's a lot about improving mix. On the other hand, we are implementing price increases and will continue to do so. I think the difference may be between consumer goods, for example, or consumer tissue, is that it takes longer time since we have such a big part of the business tied up in long-term contracts. With the pressure on the healthcare system, of course, that requires that we adapt to that, and we work with finding win-win-win solutions. Solutions that are good for healthcare, so we can be part of a solution to the lowest possible total cost of care.
Solutions that are good for the patient, also solutions, of course, that allows us to have a sustainable business. That is a lot about driving innovation in the right direction. There are some markets, when we talk about reimbursement changes, it's not in all places that it's going down in amount of money per person. There are also markets that are actually expanding reimbursement. There are some areas where it goes in that direction as well. Okay. I think there, I'll get Ada in the end.
Thanks very much. Just looking at that strategic products segment, could you talk a little bit about the contract design in there? Is it when a customer signs up for three to five years or whatever, do you agree that you revisit the price after a certain amount of time, depending on what's happened to raw materials or whatever? Secondly, thinking about away-from-home tissue more generally in bathrooms, are you able to give us any sense of what the sort of per capita differentiation would be with emerging markets versus mature? Thanks.
The first part of your question as far as the strategic products goes, it depends. We have several types of products in there. If the products are strategic products that are definitely hand in glove with the dispensing system, then we're more apt to have a longer agreement. Some of the strategic products are profitable and value add, but would be less dispenser driven. In those cases, we would not have as long as an agreement. The average time when you have the contractual support, it varies per market and per product, but it could be one year to three years depending on the situation, often with escalators that you could put in from a price perspective. There's not one easy answer to that question. Per capita varies a lot. I've seen the per capita numbers.
To be honest, I can't recite them off the top of my head. In many emerging markets, it's less, but growing.
Do we have here? Yes.
Thank you. Hi. It's a question about North America for incontinence and medical devices. Really, now that the restructuring has happened and the new leadership's in place, how should we assess whether that is a success for you, whether you're happy with progress there? Is it going to be an issue of market share? Is it going to be particular products that you want to see succeed, or is it more about profitability within, say, two to three years that we should be focusing on?
What we are aiming for is to get to growth on Medical Solutions in North America. That would be the KPI to follow. Yes.
Yeah, because growth. Margins are not the issue, it's actually growth.
No, exactly.
We've been losing volume over the last year or two, so having a rather important impact on the overall growth of.
Yeah
Of this category. If we return to growth and then get the additional benefit of scale there, that's the trick. Just to support exactly what you said.
Yeah.
Yeah.
It's different now you ask for medical solutions. On incontinence products, it was different. On incontinence products, it was a profitability issue to start with. As I talked about there, we first needed to earn the right to grow by bringing up the profitability. Now it's a combination of growth and profitability. Whereas on medical solutions, it's the growth we want to get at. A final question before we take the break. Yes.
Yeah. Hi, Kari, Handelsb anken. Maybe a follow-up on the Inco in the U.S. Now you have a number 4 position and maybe 11% market share, you're roughly where Professional Hygiene was before the Wausau acquisition. Is there any sort of benefit from scale in Inco in the U.S. that might motivate you to grow non-organically in the U.S., or is the business structure fundamentally different from Professional Hygiene?
Should I leave to you?
In healthcare, we seem to be growing fine and gaining market share in the last year or two organically. Really doing well there, just winning tenders with a strong go to market and an improved product range and all the good things that we've been mentioning here. In retail, scale is a real issue because we're at or just below 6% market share in retail, we're just clinging onto the shelf as things are now. In much better shape than three years ago when we were also losing a lot of money, which we're not anymore. We have an assortment that is relevant and that keeps us on the shelf, this is not sustainable.
In order to really be sustainable in U.S. retail, we need to double that share approximately to stay relevant, we have plans for that over the next year or two, that's going to take a number of years. It's not any more, again, a profitability issue that we're losing lots of money, this is something we need to fix in the U.S.
Okay. Right on time. Let's have a 20-minute break, we meet again 14:50. Thank you.
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No cardboard tube isn't magic. It's new Lotus Moltonel Sans Tube.
You keep me young at heart, you had me right from the start. Oh, you.
Stay home because of my sensitive bladder? Not a chance. I discovered TENA Lady Discreet. It's designed to be super thin with fast absorption and still protects you from leaks. I get all the discretion I need while wearing whatever I want. Join the 1.9 million British women who trust TENA.
我相信女人动起来就会很美。我是摄影师陈漫，想透过镜头让你明白你的一举一动都很美。即使不想动的那几天，有全新一代新曲线也能感动起来。新曲线源自瑞典，欧洲进口，拥有动态贴护专利技术的独特剪裁。动态贴护不移位，贴合你的一举一动。做感动派女生，感动就美。
Cuando mi bebé está cómodo y libre, yo también. Por eso ahora con los nuevos Pequeñín Baby Pants, libertad es que nunca pare de jugar. Y que para cambiarlo sea tan fácil como subir, voltear y comprobar. Libertad es que todos durmamos toda la noche. Y que para quitarlo solo rasgo, enrollo, pego y ya. Con Pequeñín Baby Pants descubrí que aunque muchos solo protejan, solo los mejores nos liberan.
It's a big game. The stadium is full. There's one minute to halftime. You've prepared the washrooms. It's one of the most crucial moments for you and your team. Hold ups, mess, empty dispensers could mean fans risk missing out on the action. Of course, this isn't news to you, but what might be is the launch of the new Tork PeakServe continuous hand towel system, the highest capacity hand towel system on the market. With Tork PeakServe, you're armed with 250% more towels that dispense fast, improving the washroom flow for any crowd. Because, as you know, the less time they spend in a washroom, the more they can spend with your business. With Tork PeakServe, you can also refill twice as fast whenever it suits you, freeing up more time for you and your team.
Time to respond to the mess and those unpredictable challenges that come with big crowds, making your guest experience better overall. Whether it's the big game, morning rush at the airport, or a sellout concert, bring on the people, bring on the crowds.
Echte Tempo Qualität für Notfälle. Für wahre Kämpfer. Für den kleinen Sonnenschein. Echte Tempo Qualität, immer schnell zur Hand. Jetzt neu: die Michalsky Design Boxen.
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Now Plenty comes in Place Anywhere Pads, it's right where you need it. Wettable, wringable, and strong as gold. New Plenty handy towels. For messes all around, Plenty's at hand.
I'm a man who's in control of his life, I yearn for more. I traveled the earth in search of it. What's better than being in control? Being in total control. Much better. I comb this planet like it was a mustache. Where art thou, control? Finally, after what felt like days, I found the answer. Behold, TENA Men Absorbent Protectors. Security against urine leakage no one will notice. Beautiful. Where does one find such control? Online. Online? Online. Online. Yes, online. Online. Okay, great. Thank you. TENA Men. Discreet protection. Keep control.
Ma, hablamos de cómo era cuando ibas a la escuela, sobre la primera vez que te bajó, sobre cómo conociste a papá. Nunca hablamos de cómo prevenir un embarazo a mi edad.
It's been a while since summer, baby. It's been a while since we fell apart. I did my best to walk away but this mood tonight keeps my head lost. Now I'm watching you from afar and easy. One by one, you stick needles to the heart. To my heart. I know that love will never make it back home. Watch us drift and go. I'm guessing that it's best to let go. I'll always miss the best part of us. The best part of us. I'll always miss the best part of us. The best part of us. Was it loneliness or insanity? I fucked up our possibilities. We may move on into another dream. A youthful love is hard to redeem. I know that time will mend these scars but how I wish you could go back to the start. To the start.
I know that love will never make it back home. Watch us drift and go. I'm guessing that it's best to let go. I know that love will never make it back home. Watch us drift and go. I'm guessing that it's best to let go. I'll always miss the best part of us. The best part of us. I'll always miss the best part of us. The best part of us. I'm kissing you but can't deny the space between us. Far away, absent-minded, just getting through the day. I know you want to be my lover. You want to keep our lives together.
Okay, very welcome back. It's now time for the next session with our business unit, Consumer Goods and Latin America. I'm also very happy to see that we have the representatives from Vinda here, with the chairman and the founder, Mr. Li Chao Wang here. In front of you have Tempo handkerchief, which also we recently launched. Tempo, it's also a very big brand. It's a leading brand, and Volker Zöller is responsible for that in Europe, among lots of other things. Soon, you will meet Volker Zöller from Consumer Goods.
Good afternoon. Before the break, we spoke about the B2B part of our business. Now it's time for business to consumer. My name is Volker Zöller. I'm 25 years, almost 25 years with the company. Had senior management positions in controlling, supply chain, logistics, sales and marketing. Since slightly more than four years now, the business unit president for Consumer Goods. Consumer Goods is around about one-third of the entire Essity net sale, the biggest business unit which we have. From a geographical scope, we have 86% of our business in Western Europe. We have 11% of our business in Eastern Europe, this includes Russia, and the remaining 3% in Middle East and Africa. Categories perspective, two-thirds of our business are in the consumer tissue category, while one-third is in the personal care category, and baby is round about half of that.
What do we consider as our strengths? We have a pretty strong market position. We are among the top 10 non-food suppliers in every European retailer. Partly, we are even a number 1 and number 2 position here. This is super important because we have also the negotiation power. We have a European footprint. European footprint in sales and marketing, but also in the supply chain, important in the consolidating retailer landscape. We have a dual track strategy. That means we are committed to the branded business, but also the retail brand business. This gives us the possibility to use the economies of scale of our retail brand business in the brands, but also the innovation power of our branded business for our retailer brands. To preempt the question, the split in consumer goods is roughly 50% branded business and roughly 50% retailer brand business.
This is different category by category, but for the business unit, it's roughly half/half. We have a very good go-to-market program. I will talk about this a little bit later on. We have a rich innovation pipeline, which is really very much driven by consumer insights and has always sustainability in the focus. We have strong presence in all channels that includes, and I will talk about this a little bit later on, also the e-commerce, the online channel. Our categories, consumer tissue, you can see here we are working with Zewa, Lotus, Cushelle, Edet, Tempo. Very strong brands, all having a number 1 and number 2 position, but we are working with regional local brands. What we have done in the last years, we have moved the positioning of these brands closer together.
It allows us to work with the same innovation pipeline and also with the same communication assets. We are creating scale behind that. Baby care, Libero, of course, our leading brand here, but I will also talk about Lotus Baby in France, our launch, which we did some two years ago. What you can see also on this slide, of course, historically, it's a lot about open diapers and pant diapers, but also we heard a couple of times today the word adjacent products. We have extended the assortment with wipes, with lotions, with washes, using the strengths of our brands here. Ulrika talked about inco, our TENA brand in the retail counter. I will come back to this a little bit later on. Feminine care. Here, actually, we work with four different brands in Europe.
What you can see on the slide is the look and feel of the brands is very similar. Also here, we are creating synergies using the same innovation pipeline, using the same communication assets, and you will see some of them. Also here, you can see on the lower part, yes, it's about towels and liners, but also here we have added tampons, we have been adding wipes, we have been adding a lot of other products using the strengths of our four brands here in Europe. Last but not least, 2% of our sales. On the right-hand side, you see the beauty care category, where we have Demaq'Up as our brand in Europe here with number 1 positions in the German-speaking countries and especially in France. Market shares. Very strong position, Consumer Tissue Europe, with a market share of 28%.
Relative market share to the number 2, more than 2, so a relatively or very healthy market share. You can see Baby Care, 14% market share. We have been taking over the number 2 position from Kimberly-Clark a couple of years ago, and year by year, we are basically expanding the gap to Kimberly-Clark, who is the number 3 in Europe. Feminine care, 10% market share in Europe. This is a little bit of a misleading figure because we are not present in every country in Europe. In the countries where we are active, our market share is significantly higher. Then in the retail channel, we have more than 50% very strong market position. What is happening in the retail market? What are the trends in the retail market? Private labels are increasing.
Retailers are supporting their own retailer brands in order to get more independent from fast-moving consumer good players. We see also brands growing here, and I think this is very much in favor of our dual-track strategy. These are exactly the segments where we are active in. We get very often the question, what about disruptive brands? In tissue and baby, they are not playing any role. What you see is in the feminine category, a couple of distinctive propositions coming on the market. They are not taking significant share at the moment, but it's super important for us to keep the innovation potential in this category very high to fight exactly these brands. From a channel perspective, e-commerce and discount are the 2 fastest growing channels in Europe. E-commerce, we are investing, Robert was talking about this a lot in recruitment.
We are recruiting externally capabilities, talent, We also at the same time developing talent and capabilities within our own organization. Discount, we have a pretty strong presence here. We are one of the biggest suppliers in the retailer brand to discounters, but we have also an increasing share, I should say a carefully increasing share, with our brands here. Brands and discount is not without risk, as some of you might know. Another trend, we see buying alliances and buying groups with increasing strengths. In the past, we have been negotiating locally, We have been negotiating internationally some contracts. Today, we are negotiating with buying alliances, which represent multiple retailers cross-border.
Also we have adjusted our organization in the last one and a half years, and we have now introduced so-called international key account managers who have the mandate to negotiate with these buying alliances independent from the regional perspective. Another one, We'll see a couple of examples in my presentation, it's about digital marketing, digital consumer life on demand. Our marketing mix has tremendously changed over the last years, and you will see, I think, a couple of nice examples. Last but not least, super important, sustainability. Nothing in this slide. You should also see the announcement of this morning, which is a super exciting announcement, that we are investing a significant amount of money in alternative fibers to serve exactly this purpose, sustainability. It's more than plastics.
I think it's a very hot topic in the discussion at the moment, and I think we have a very strong sustainability strategy here, and I think this is something which is a competitive advantage for us. Our category strategies, in a summary, I think no surprise, improve profitability in the light what has been happening in the last 18-20 months on the pulp market with energy prices, but also with logistics costs. It's about improving the profitability. We have offset with the price increases a big part of the negative cost impacts of the last months here, but we are also committed to further margin improvements here. Within the portfolio, very clearly the strategy is to grow our strong brands, while the retailer brands are more supposed to be relatively stable and not growing. Within retailer brands, we are trying to work with the mix.
We have a couple of retail brand contracts where we have very healthy and good margins. We have with others, which have less good margins, and therefore we will very much work with the mix. Baby, improve profitability also here, but the challenge is a completely different one because we have some, as Magnus said in the morning, or Fredrik said in the morning, we have some very healthy businesses and some businesses which really are under challenge. This comes also here, the cure- kill into play. I mean, to avoid any misunderstanding, the focus is always on the cure part, and the kill is the last option. What we have announced on Tuesday with Yildiz was basically then the exit of a business because we had no recipe to win with our partner here. Feminine, we have very good innovation. We have very good communication assets.
We have been outperforming the market now for many years. This is about growing the segment. Grow above the market, gain market share. This is what we are doing. We are very successful, and we will continue with that. What are our priorities for growth? As I said, we are focusing on high margin products, high margin segments. That means we want to grow with the brands faster than with the retailer brands, and we want to grow with the personal care categories faster than with the tissue category. We also want to grow with tissue category. It's super important to bring innovation to work against the commoditization of our categories, and this innovation needs to be driven by consumer insights, but also have sustainability in mind, and you will see a couple of examples. Digital marketing, I will talk about that. I will talk about go-to-market excellence.
What does it mean? Short term, pricing focus is very important for us, of course. It's about consumer tissue, but not only about consumer tissue. Price mix in Europe in all categories at the moment is positive, which I think is a very good sign. Last but not least, it's about the execution of our efficiency programs. Donato talked about a Tissue Roadmap, but we have also the group wide cost saving program, and we have smaller initiatives like value engineering, material rationalization, which really help us to improve our margins here. This is our go-to-market program. It consists of nine different blueprints, which we are continuously developing and upgrading. Basically we have two very big advantages with this go-to-market program. I think this is really state of the art, not only versus our direct competition, but I would say in fast-moving consumer goods.
One advantage is, we can serve every customer in every country with the same commercial approach. In a consolidating retailer landscape, this is a very, very big advantage. The second advantage which we have, we can roll out best practices in our own organization and increase effectiveness of our organization. Some examples of the three blueprints, which are currently in rollout in Europe. Perfect Store initiative helped us to increase the distribution of our products in France and in Germany by 7%-8%. Sales force effectiveness helped us that our field sales people in Germany can visit 30% more stores, but they are also visiting the right stores, where they can really drive sales and purchase. The last one is trade spend, also very important.
We are very transparent in which retailers, in which channels we are investing, that we are investing in the right counter-performance here, so to get the right return on investment in these categories. This is talking about innovation. A pretty cool example, one of our latest launches, it is a coreless, I could even say the first truly coreless toilet paper in Europe here. We have been launching this mid-2018 in Germany and France. It is based on the insight Never Run Out, so you have double the number of sheets on the roll. Nevertheless, it fits into every dispenser. We have a lot of countries where you have dispensers, so you cannot increase the diameter of the roll here. Also sustainability. Of course, no core, you have less packaging, and of course, you have a much more effective transportation, which helps us.
This helps us also to ask for a premium selling price, so the margin of this product is better. With the specification, it is super relevant for online purchase because you have a better utilization of the transport. The good news also, it is incremental, so it is not cannibalizing with the products which we have already on shelves. This is good news for the retailer. It is a high repurchasing rate, so the consumer likes the product. Very important for us, we are attracting loyal retail brand shoppers back to the branded category. This is a very nice example. It is not only our view. You can see on the slide, this is in 2019, the product of the year in Germany and in France. Another example for insight-driven innovation from the Fem Care category here.
We have a lot of consumers who have worries about chemicals in the product, we have launched this range in two countries, in the Nordic countries last year. In the two other countries this year, we are basically in the launch of this one, and this is a so-called free from range, no allergens, no dyes, no fragrances. When you believe in market research, Nielsen says this concept has an outstanding probability of success. Also a very nice innovation based on consumer insights. Capital Market Day 2016, I was on stage, and I talked about adjacencies, how can we stretch our strong brands into new territories? One of the examples was the moist toilet paper here. Also, based on an insight, one-third of the consumers are not feeling clean after the normal bathroom routine with dry toilet paper.
Wherever we had strong brands, we have been launching moist toilet paper. This is an example now from France, Lotus Baby, but we have also Tempo and Zewa, others. We have been almost doubling market share in the last 2 years. Needless to say, this is a margin enhancing this category, so we have higher margins than in our dry toilet paper. You can also see here the growth, 50% in 1 year, 20% in another year. Very nice innovation, which works very well. Staying in France, baby. Talked a lot about baby, especially financials. This is our baby launch in France, which we have done some 2 years ago. Where are we? We have a roughly 6% market share at the moment. We have some periods where we're also above 6% market share.
In strategic retailers, which have been supporting this launch from the beginning, we have even double-digit market share, which I think is a great achievement after 2 years, and we have a very good distribution of these products. We have close to 80% weighted distribution, which of course is a request to be successful. The consumer liked the products very much. 96% of the consumers who use the product recommend the product. This is a super strong figure for all, not marketeers, and the repurchasing rate consequently is extremely high. What we have to manage now is to bring more consumers in touch with this product. This is exactly what we are doing in 2019. We will relaunch the qualities. I think there is a lot of confidence in the organization that we make Lotus Baby in France a success.
Another example from the baby category, actually here from the Nordic countries. Somebody said today, mix is the new pricing. To a certain extent, yes. I think sometimes we are struggling to implement price increases. I think you can improve your margins working with mix. We have put a premium range, the so-called Libero Touch range, on top of our Libero Standard range. It's a fantastic quality based, again, on an insight. The insight is, I always want to have the best perfect fit for my baby. I think we could position this range 25% above the normal range. It's already close to one-quarter of our business in Nordics. With the mix, of course, you have very nice margin effects. Joséphine was talking about Tempo. Tempo is our flagship brand in Germany and in Italy. We are peaking in market shares at the moment.
In Germany, we have 30% market share. In Italy, we have close to 30% market share. This is extremely good. Also here, this is based on a super cool innovation pipeline on very good brands. Tempo at the moment is growing 3 times faster than the market. We can justify with the quality and with the strength of the brand, approximately 30% pricing premium. Also here, the last innovation which we have launched is the so-called washing machine resistant. I think you're all consumers, you know this. You open the washing machine, you forgot a handkerchief in one of your shirts, everything is fluffy. Not with Tempo. This is washing machine resistant, so basically, you keep the consistency of the product. No worries about that. What we are doing also is we are working a lot with designers at the moment.
We make limited editions from these designers and off-take is great. I think this is a real success story. We talked about digital today a lot. Digital has really changed the marketing landscape. We get very often the question, how much money are you really spending on digital? The answer, of course, is different category by category and geography by geography because the digital consumer is the reality in some countries and maybe the future in some other countries. In average, we are spending 25% of our advertising money on digital marketing today. It's quite a significant part. You can imagine, of course, you need also completely different skills to do that. This was a campaign which we had started already 2016, #bloodnormal. Then we have evolved and developed this campaign.
You can also see the power of social media here because we have launched this campaign in five countries. Then it spread out to 32 countries, partly where we even do not have the brands present here. It has a reach of 800 million consumers. A great achievement. I think also externally recognized, maybe the highlights we won in the Cannes Festival, two Lions here. I think we are really state-of-the-art when it comes to digital marketing. This is really, we continue our journey with breaking taboos. We are stimulating a dialogue about certain things where most probably our society has not been talking in the past. Empowering women, et cetera. I think you know this very well. Another great example of a journey is this part here.
This is the Baby Club, the Libero Baby Club in the Nordics. It shows a little bit the dynamics of digitalization and what we are doing. The Libero Baby Club in Sweden was founded in the '80s as a postal club. Basically, we have been sending out by mail letters to young parents in order to advertise our products and offer some consultancy. Beginning of the 2000s, internet. We have changed to an email-based club. Makes communication more efficient. You can be faster, you can customize a little bit. A couple of years ago, we have changed to a platform, interactive, suddenly two-way communication. Now mobility, life on demand. Since beginning of this year, we have basically the club in an app, which is very much appreciated by the consumers.
By the way, when we launched the club, this was the number 1 download in Sweden in this week with more than 20,000 downloads on the first day. I think it's really well accepted. Robert, in his presentation, was already talking about the next evolution step, which is a chatbot, which we are testing at the moment here. This is a super cool recruitment tool. We are in one-to-one communication with 80% of the new parents here in Sweden, our target group, and we collect a lot of data from them, the age of their baby, the size of the baby, the weight. We can customize our product offer for them, but also the consultancy. It's much more than a selling tool. I think the consultancy aspect is a very important one. As a result of that, Libero market share in Sweden here peaking 63%.
I think I cannot stop without talking at least a couple of words about e-commerce. E-commerce is around 4%-5% of our business. Last year it was 4%, this year it's closer to 5%. More than 80% of this business we are doing with omni-channel retailers. To the retailers, we are also doing normal shelf business. 18% we are doing with the so-called pure players who have only an online presence here. The business is in double-digit growth. Q1 this year, we are even growing a little bit faster. I think what is also very important to know is the online shopper ticks differently than the one who buys in the store. We also had to customize our offer with products, with subscription models, et cetera, to the needs of an online shopper. What are the key takeaways from the presentation?
We will continue our focus on the high margin products. We will see also in the coming years a lot of portfolio changes within consumer goods. We have made significant progress. We also had a pressure from the cost side, of course, with our price increases, and more to come in 2019. We have very good impactful digital marketing campaigns, which is a very important part, meanwhile, of our marketing mix. I think we prepare for the future with go-to-market, with sustainability, but also with a lot of innovation. I will not stop without a short fun fact here. I talked so much about strong brands. When do you think you have really reached this status of a strong brand? When others are trying to copy you. This is from a German museum. This is a collection of more than 130 fake copies of our Tempo brand.
You can find everything from Tango. Trump is also here. A lot of fake copies. No further comments here. Believe me one thing, there is only one original Tempo, and this is from Essity. Thank you very much.
Thank you, Volker. Again, a Tempo is always a Tempo. I learned when I went to Germany, you don't ask for a hanky or handkerchief, you ask for a Tempo. Volker, I have to say, I'm impressed how you have balanced the price increases and cost focus, at the same time, driving innovation and customer and consumer focus. Volker was also talking about breaking taboos, and that is very important because taboos and poor hygiene and health is a huge barrier for people's wellbeing all around the world. In Mexico, for example, nine out of 10 girls and women are being abused because of taboos and poor knowledge. Also many women and girls are being harassed at schools, in public places, at home, and in different locations.
This is not okay, together with UNICEF, our leading brand, Saba and Essity, we have partnered with UNICEF to really try to drive a change to empower these girls and women and to have better wellbeing. Pablo Fuentes from our great business unit in Latin America will talk about this and everything else he is doing for this business unit. Pablo Fuentes.
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Hi, I'm Pablo Fuentes. A little bit about myself. I have been in Essity for more than 13 years and working in the FMCG industry close to 25 years in finance, commercial operations, and general management roles. When it comes to Latin America, it's 12% of the sales of the company. As you can see, we manage all Essity categories within our business units, and we are present in most countries in Latin America. Actually, Mexico and Colombia are the seventh and eighth most important countries for the company worldwide. We are present in Mexico, Central America, Brazil, and Chile through Essity. The rest of South America, we manage most of it through a joint venture. It's called Familia. You will see through the presentation that we have outstanding brand equities across the region. Actually, a good example, and we were just talking about it yesterday.
A few weeks ago in the newspaper in Colombia, in the front page, Ipsos, you know Ipsos, they did a survey of the most important companies in Colombia. Familia, our company, our brand, was recognized as the number one in terms of awareness among all the companies, all the industries in the whole country. That speaks for the kind of equities we have in Latin America. We have a high speed to market. We normally are faster than the market to bring relevant innovations to the market. We have strong go-to-market capabilities. We have excellent execution in the point of sales, and we listen actively to our consumers and are able to bring relevant innovations to the market. Sometimes we also do local innovations that are more specific, more relevant to emerging markets.
We have a broad range of products, as you can see from this slide, in all the categories. In some cases, like in consumer tissue, baby care, or feminine care, we have local brand names, as you can see. We always align with the global technological platforms and brand positions so that we can leverage our global scale while staying relevant locally. The hygiene market is worth SEK 12 billion, the hygiene and health market, and it's split evenly between modern trade and traditional trade. It is mostly a branded market, around 90% of it. Latin American consumers are very emotionally connected and loyal to brands. We have a changing retail landscape, especially emergence of smaller format stores like discounters, convenience stores, drugstores, but also web platforms like Amazon and others that are growing very rapidly. Typically, our categories are under-developed in terms of consumption per capita.
With the emergence of middle class, the expectation is that the consumption per capita will continue to grow in the future. We are number one in feminine care, incontinence, and Medical Solutions. In the case of consumer tissue, professional hygiene, and baby, in the countries where we are, in the segments where we are, we are quite relevant and strong. Some examples of our market share in feminine care with the Nosotras brand, we have 65% share in Colombia, and in Mexico with Saba, 50% share. In incontinence, in Colombia, we have more than 85% market share. We are number one in most of the countries in Latin America or number two in a few others. Medical Solutions, we are number one in a highly unconsolidated and high-growth market.
Consumer tissue, we have the number one brand in Mexico with Regio and the number one brand in Colombia and Ecuador with Familia. Professional hygiene with Tork, we are very relevant, especially in the differentiated strategic segments. In baby care, we have very strong positions in Colombia and Ecuador. Our priorities, we are very well-positioned with our brands, with our innovations to outperform in fast-growing markets. We have been growing at a very good level on a very high pace in Medical Solutions, and we want to sustain this high growth to reach scale. We are transforming ourselves in digital marketing and e-commerce to continue leading in our digital transformation. We want to leverage our go-to market and innovation. Together with my friend Donato, we see manufacturing as a competitive advantage.
We have been investing in technology to differentiate our products, and also we have strong focus on cost reduction. In terms of our strategies in consumer tissue, as I said, we want to continue growing in a profitable way, leveraging our very strong branded positions. In professional hygiene, it is about boosting sales with Tork brand. In personal care, we want to leverage our number one position in incontinence to continue developing the category in terms of penetration, distribution, and consumption per capita. In Medical Solutions, it is all about growth. As you said, Magnus, we already have good margins. It is about growing and scaling the business. In baby care, it is a selective approach, and we want to improve profitability where we are. In femcare, it is about fueling growth.
As I have told you, we have very strong brand equities in femcare, and we are moving from menstrual hygiene into daily intimate care, which is a much bigger category, much bigger market where we have the right to win. In terms of our go-to-market excellence model, same as in Volker, we have very strong collaboration and cooperation with our customers, and we have several joint business plans with B2B and B2C customers. We were awarded the number one supplier from Walmart among all non-food suppliers, and we have many other awards in B2B and B2C. We also have a key account management approach by channel. As you know, in emerging markets, there are very different types of channels. We adapt our products, promotions, sales force structure, service level, logistics, depending on the specific needs of each of these very different channels.
We also, through our strong brand equities, are able to increase prices as we get cost increases, for example, in raw materials and energy. We are really proud, and I presented to you also some progress in the last Capital Market Day about our feminine care success story in Mexico. 10 years ago, we were the number three brand, and today you can see we are the number one brand with 50% market share. You can see also on the bullet points the great recipe that we followed in terms of consistency in communication, in brand building, in innovation, and in execution. When we started this journey, we had a really great advertisement with a very catchy challenge to our consumers. It was, "Give Saba just one of your days." This became actually quite well-known in Mexico.
Then as we were being very successful and we were migrating from menstrual hygiene to daily intimate care, today, our positive challenge is no longer give Saba one of your days. It's give Saba all of your days. It's working very well, of course. Some of our cool innovations, we are launching panties to address the nighttime segment. As you saw in the advertisement, we are launching a two-in-one daily intimate liner. We're also upgrading our daily intimate washes around our strategy. Many different types of innovations and news to consumers. We are also very proud, and Josephine, you talked about this, of our sustainability and social efforts. Through our feminine care category, we have reached 70 million young girls and adolescents through different programs. We signed an agreement with UNICEF to engage in a dialogue against violence among adolescents.
We launched an anti-bullying campaign that became viral, actually, in South America, and we reached 60 million girls and adolescents. You should see it when you go online. It's a very good campaign. Going school by school, educating young girls and adolescents about menstrual and intimate hygiene, we have accumulated in the last three years 1.1 million schoolgirls. Don, you talked about professional hygiene, and together with your support, we have built this business in a very rapid way in the last years. As you can see, this happens in most categories in emerging markets and in Latin America, when you have low income per capita, you have low consumption per capita. Of course, as income per capita grows, as middle class grows, the expectation is that the categories will continue to grow. We started in Brazil, the Tork journey two years ago.
You mentioned this, Magnus Groth, we have been very successful so far in Brazil with Tork. Consumer tissue, our priority is to continue growing in the middle tier and also up-tier our consumers to more premium assortment. There are also some underdeveloped high growth, high profit segments like household towel and moist toilet paper, where we are focusing to grow through our strong brands. We are investing in technology. This is a great technology that we can use less fibers and at the same time give consumers softer products. We are just starting this great new machine in Mexico to produce more premium products at a lower cost. We are addressing also underperforming parts of our business through our cure or kill program. One example is in Chile, where we restructure our asset base, our portfolio, to be more profitable.
Of course, we continue in this category to be very focused on cost reduction and efficiency. In baby, we are disrupting the market. We know from other countries in Asia, in Europe, that pants for baby is a better product for consumers and is more profitable. Today, most of the market in Latin America is open diapers, we want to change that. We have very aggressively introduced our pants into Colombia and Ecuador. We are also upgrading our open diaper platform to offer, again, a dual benefit: for consumers, a thinner, better product, for us, a more profitable solution. We are also changing our communication, talking more to millennials through digital media, also in this category, we have strong focus on efficiency. We have been talking about our journey in incontinence in Brazil.
You may remember in 2011, we acquired a small local company, today we have grown to become number 2 player with 20% market share. We did this by leveraging our global regional expertise with TENA. We changed the brand, the assortment, the technology. We invested in local production, we have grown in a very successful way. It is a market that still has many opportunities in terms of distribution to 80,000 drugstores, in terms of penetration, consumption per capita, especially on the light incontinence and pants segments. Medical solution, it's also a growth opportunity. We want to roll out all the global products that Ulrika Kolsrud presented, expand geographically in Latin America, increasing our presence in all the medical specialized stores and hospitals. Also we are doing some great cross-selling opportunities.
There are certain products in medical, as Ulrika Kolsrud explained, that are quite relevant and useful for retail. We have so good and strong presence in retail that we are bringing those products with our retail sales force and expertise. At the same time, Inco, which is typically a retail product for us, we are bringing into the institutional segments through the medical expertise. Good opportunities also in the cross-selling side. Digital, while it's still small in Latin America, I don't know if you knew about this, but there are 451 million digitally enabled consumers in Latin America. We already have the presence of Amazon and PayPal, for example. The conditions are set for high growth. Of course, we have been working very actively with our existing customers to start and lead in e-commerce.
We created one of the first joint business plans with Walmart that only has digital sales and KPIs. We have developed our own DTC platforms with TENA in a few countries. It's not only about engaging with consumers in our platform, it's also about doing web shops and subscriptions. So far, so good, actually. We also shifted our A&P from offline to online gradually. Last year, we reached 106 million consumers through our digital marketing campaigns in Latin America. We also launched a startup accelerator program. Today we engage with 20 startups in Latin America. There are many startups and entrepreneurs in Latin America. Actually, one of these startups has already launched a product that you can see in the picture. It's a platform that connects elderly population with caregivers. In a way, it's an Uber for caregivers.
This is very relevant in emerging markets where you don't have the physical infrastructure for this kind of matching and services. Technology is compensating for the lack of infrastructure with this platform. Hopefully, you can also see it online. It's called Careme. In a nutshell, we are very well-positioned in Latin America through our strong brands in attractive markets that are growing. We are leveraging our innovations to continue growing, and we are well-positioned to win. Thank you very much.
Thank you, Pablo. I want to highlight actually that what you've done for the brand, Tork, with your innovation and the marketing has been like a role model for the whole Essity group. Your digital initiative will be interesting to follow. Personally, I am passionate about the UNICEF, and I know that together with UNICEF, Pablo and his team also try to educate young boys, because if you want to have a change here, you need to start there. Thank you for this. Now, actually it's time for the Q&A. Pablo and Volker and Magnus, join me on stage. While the team is entering, who wants to start with the first question? It's here again.
Thanks, guys. [Mohammed], Credit Suisse. Two questions, please. Firstly, on pants. I guess that goes for baby and adult as well. There's a lot of talk about pants and the high growth and the high margin opportunity there is in the category. Could you give us a sense of size? What proportion of sales is pants now? How does that compare to the market index? Some growth rates would be fantastic. One separate question, longer term, recycled diapers seems to be coming up a lot, I'm hearing a lot about it. What threat or benefit do you see from those going forward?
Pablo.
Yeah, sorry, missed your last question. The first question, because we just looked at it the other day.
Recycled diapers.
which was pant diapers. It is quite varying. You have very advanced markets like Sweden, for instance, where almost more than half is pant diapers. While in many markets now, pants are reaching 30%, which seems to be some kind of natural saturation point in many places. Between 10% to 30%, I would say, is where it is heading in many markets. That is kind of an average that I would give you. While in Latin America, for instance, we start from zero, more or less 1%.
Yeah.
It is a huge opportunity for a first-mover advantage there. I do not know if you want to add something.
No.
No?
It's fair to say that the growth happens in the pant segment, while the open segment is more or less flat. I think this is also why we are focusing a lot of our innovation and activation on the pant segment.
It was recycled diapers.
Recycled diapers. Yes, that's a big theme, and there are numerous initiatives ongoing. We are in an initiative that I think Ulrika mentioned, covering both baby and Inco, and maybe you want to say something about it.
This is a project we are doing with a Dutch retailer. I think we are allowed to name also the retailer. It's Kruidvat, which is one of our strategic retail brand customers. This is really a pilot project where we are recycling, we are collecting baby diapers. It's a pilot project, to be very clear, it's also about testing and developing the technology. It's not so easy to separate a diaper in the different parts here, I think we are both committed, the retailer and us, plus there is a third party, of course, involved in that. I think we have to find a solution to waste, and this seems to be, from a technology perspective, something you really can develop with a lot of potential. This is a project which is ongoing.
We have also TENA, where we can collect from elderly homes, for example, TENA products, and they are also part of this project.
Yeah, Guillaume.
Yeah, it's Guillaume from Bank of America Merrill Lynch. Two questions from me. The first one is on baby diaper in Europe. I thought the slide you showed about personalization and the use of digital, in Sweden was particularly interesting. I mean, it looks like an absolute game changer for the next decade. Now, my question on this is how scalable is this initiative, and do you have to be an ultra-dominant player, like Essity in Sweden, to actually get that to work? In other words, in countries where you are a distant number two to Procter & Gamble, does it create a gap that's going to be very difficult to bridge because they're going to be the leader in terms of data collection? My second question on Latin America, we've been hearing for quite some time now the disruption coming from local small players.
How are you finding life in LatAm? Are players like CMPC disrupting the market and making your life more difficult? Thank you.
I think I can start. First of all, you don't need to be an ultra-dominant player, but you need scale behind that. Then the question is how do I get the data in order to recruit consumers, new parents on my platform here. Then, of course, the strong market share helps. The market share here, of course, helps us very much. The question is more how can I get this data in order to attract that? I think there are many possibilities. We have, for example, a pilot actually for France at the moment with a company which is working in a completely different area. They are more into baby equipment, pumps and stuff like that.
Basically, you buy this equipment before the baby arrives here, and we are cooperating in terms of data to acquire data from them in order to recruit potential new consumers. The challenge is more to recruit basically consumers and bring them on our platform. I don't think a super dominant or whatever strong market share is a precondition. It helps, and you need definitely scale.
What Volker is promising to launch a baby club soon in France.
As soon as we have scale, yes, for France it's, of course, something we want to do, that we have the technical solution. It's more a question of translation and getting scale. Now with a 6%, 7% market share, it's more than worth thinking about that.
Thank you.
To your second question, you're right. Local competitors are very active in Latin America. The way we deal with this is speed to market. For us, it is very important to maintain a very high speed to market and also our cost position. This is why I mentioned in my presentation, for us, and this is why we have a business unit for Latin America. We have a very focused approach on maintaining this advantage of being global, but at the same time, acting locally with high speed to market and with the right cost structure.
Okay, next question. Yes, John.
Hi, John Ennis from Goldman. I had a question just on the structure of your business units. I wondered, why is it strategic to have Latin America separate from Professional Hygiene and the Consumer Goods business unit? I guess, what's the rationale for that setup? Then how do you share best practices between those business units? Because there is obviously a great deal of overlap.
I leave that to you, Pablo.
We were just saying it's for you.
I can take it. Yes. As we were talking, we have a focused approach on emerging markets, where because of the nature and the under-development of our categories, it's very important to move quickly, to grow in a fast way. We have decided as a company to keep a focused approach on an important emerging market region for all categories.
In Inco, for instance, there is no healthcare or B2B sector yet. There is in Brazil to some extent, but not in any of the other countries. It's actually all retail. In the same way, even though Tork Professional Hygiene is business to business, it's underdeveloped, and you're so used, Pablo, to working in all the different channels in this very complicated landscape that it's much more efficient for you to also work with Tork than using all the solutions and all the knowledge from the global operations to move quickly forward in each separate country. I was over in Costa Rica some time ago, and I met a fantastic sales guy, Luis. He had just signed up from Pepsi, I think, and had a history from McKinsey, and he was so successful. In two years, he had just grown the Tork business like this.
I asked him, "So what are you doing?" He said, "With this background, so I found all this fantastic material on how to sell Tork. Looking at websites, looking at the processes, the solutions, the tools and so on. I applied them all rigorously in the market and sales took off." It's also a story I'm telling internally a lot when I'm out and about, that we have the solutions. We can make it work, when we really scale and use those benefits locally, so.
Okay, thank you.
Any more questions? Yeah, in the end.
Could you tell a little bit about the current pricing environment in consumer tissue in Europe? Obviously, over the last few quarters, you have had a good pricing momentum to recoup some of the steep pulp price increases that we have seen. Has the fallback a bit in the pulp price, has that put a stop to the momentum, or?
I think what happened in the last two years, you could even say mid of 2017, we have never seen before. As I said earlier, I am 25 years in the business. Basically, we started what we call a step 1 of price increases, and when the price increases were implemented, basically we already could go for the next wave of price increases. We have a couple of customers in Europe where we had five price increases within a calendar year, within 15-16 months. I think this is a certain momentum, yeah. What we call a step 2, wave 2 of price increases, we have defined is everything what we are going until mid of this year.
As we said earlier in the quarter one report, a big part of the price increases you see already in the quarter one, some more to come in quarter two. We really have to carefully evaluate what is the situation in mid of the year. Is there still pricing momentum here at the moment? We are still increasing prices currently.
Here we have [Monajai] in the front.
Just a question on LatAm specifically. How do you manage your opportunity to get top line growth and momentum and gain share with your margin profitability targets? As I understand, EMS would, as you have highlighted, seen a lot of local competition, you probably have to be aggressive on A&P, innovations. There is a lot of cost involved. How do you marry the two?
Yes, that's a very good question actually, and it varies category by category. As I explained, in the case of baby, for example, we have a selective approach and the clear priority is to improve profitability. In other categories like feminine care, it's all about growth and expanding the market where we play. We balance it category by category, and of course, as Fredrik explained, we all have targets on growth and on profitability. We need to always have this delicate balancing act of growing in a high growth market, but not forgetting about the margins, of course.
Good. Any last questions? Okay, final questions here. Kari?
Yes, thank you. Started thinking about use of social media channels in marketing because now a lot of your products are related to changes in either you get pregnant or you start to menstruate. How opportunistically are you using the new social media platforms to capture those customers when they start to do Google searches, when their social media use patterns show that they are prone to start using some of these products?
I can take it. I wouldn't say that social media is opportunistic. I think in feminine care, of course, you have a couple of times in your life where the probability to change a brand is higher than in other times, and of course, baby diapers is also clear. I think we have a very clear strategy when we are recruiting, how we are recruiting, and I think the key challenge is also how to keep them, basically, loyal to our brands and so on. I think there is a thorough strategy behind that, which we are also testing in certain markets and so on. I don't think this is an opportunistic approach, but there is a lot of thinking behind that.
You mentioned that sorry, this feminine care strategy or campaign that you launched in five countries, and then it spread virally to 32 countries. Do these new tools make it easier to enter new markets, new geographies?
This is opportunity and sometimes also challenge at the same time. The costs for go-to-market have never been as low as they are at the moment, and this is why these disruptive brands play in certain categories. As I said earlier, not really in our business at the moment, but in other categories, they already play a role. Basically, it's a chance for us because we have a very good digital activation, we have differentiating product offer to go into new countries with especially feminine, but to a certain extent, also incontinence. Of course, it's also in the parts where we have strong positions. It's something a watch-out for us where we have to defend. You are right, it offers for us, I think, more opportunities than risks.
Thank you.
Okay. Thank you, Volker. Thank you, Pablo. Thank you, Magnus. Now it's time for our last presentation before Magnus will make his conclusion remarks. It's our subsidiary, Vinda, which is a leading hygiene company in China and the number one in tissue. Vinda is also our partner in Asia, and of course, in China. I'm so happy to have the founder and Chairman, Mr. Li Chao Wang here, who is a fantastic entrepreneur and businessman. I've heard you are a star in your country. Besides Mr. Li, we have Ms. Vicky Pan, who is the CFO. Vicky, you will also translate for Mr. Li.
Just translate that he's a star in his country.
Yeah. That he's a great entrepreneur and businessman. Oh. The third person is our great colleague, Mr. Christoph Michalski, who is the CEO of Vinda. The stage is yours.
Thank you.
Thank you. Okay.
Okay?
Yeah.
Yeah. Thank you.
Dear Mr. Groth, Essity fellows, and investors, good afternoon. I'm Li Chao Wang, chairman and director of Vinda, and I'm also the founder of Vinda. It's my pleasure to participate in Essity's Capital Market Day again. Some of you may know Vinda very well, and some may not. Vinda is Essity's largest strategic partner in Asia. The relationship between Vinda and Essity can be traced back to 2007. Over the past 11 years, the innovative and unique collaboration between Vinda and Essity allowed the two companies to enjoy complementary advantages. Three years ago, I was here to share Vinda's story and evolution. Vinda continues its strong growth momentum with strong presence in Asia's hygiene market in terms of market share.
Today, Christoph, our CEO, and I will walk you through the way Vinda has come so far, how we are doing, and our plan for the future, and our business opportunities in Asia.
城镇厂不断成长壮大。凭借对品质的坚持，高效的营销执行力和创新的精神，我们的产品赢得了消费者、客户、合作伙伴以及投资者的口碑和肯定，并在2007年在香港主板上市。2016年，维达迈出了历史性的跨越，我们整合了当时的爱生雅的东南亚、台湾、韩国的业务，成为了一家拥有14大先进生产基地，拥有1万多名员工的亚洲卫生公司。维达从生活用纸跨界实现了多元化的发展，拥有了生活用纸、成人失禁、妇婴护理以及婴幼儿护理四大品类。现在，我们管理的品牌不单有维达，还有包括德宝、天领、清谷轩等九大主要卫生品品牌，业务的范围遍及10个国家。
Vinda was founded in 1985. Vinda was once a very small factory in a small town. With our commitment to quality, excellence in sales execution and innovation, Vinda has earned high recognition from consumers, business partners and investors. We got listed in Hong Kong Stock Exchange in 2007. Vinda marked another notable milestone in 2016, we integrated Essity's business in Southeast Asia, Taiwan and South Korea, then became an Asia hygiene company with 14 advanced production base and over 10,000 employees. Vinda scales up from a tissue focus only company to a full-fledged hygiene company focused on tissue, incontinence care, feminine care and business care. Today we manage not only the Vinda brand, but also other nine key hygiene brands, including Tempo, Tork, TENA, and Libresse. We have business presence in over 10 countries.
维达没有止步向前，而是鞭策自己，始终坚持创新，发挥造纸领军企业的优势。过去几年我们增长非常凌厉。2018年，我们的营业收入达到149亿港元，上市到今天，营业额收入复合增长率达到了21.8%。今年第一季度，我们取得了13.4%的营业收入自行增长。
Vinda is not complacent about accomplishments. We excel in innovation and give full play to the advantage of a leading industry player. Leveraging our competitive edge, this result in strong growth in our business over the past few years. In 2018, our revenue increased to HKD 14.9 billion, representing a CAGR of 21.3% since listed. We have also achieved 13.4% of organic sales growth in the first quarter of 2019.
我创立维达的初衷是为每个家庭提供优质的生活用纸，让人们享受高品质的生活用品和服务的信念和使命从没改变。那需要维达业务版图的扩展，从覆盖13亿人口扩展到20亿人口的市场。我们也正努力朝着成为亚洲生活用纸用品和服务第一的远景迈进。
I set up Vinda with a very simple intention, that is to provide high-quality tissue product for every household in China. Our mission to provide high-quality hygiene products and service never changes. Today, we aspire to build a broader blueprint from 1.3 billion-2 billion of target consumers across Asia. We are making strides towards our vision to become Asia's first choice for hygiene products and services.
除了做好品牌，维达也要求自己做到一家可持续发展、具有抗风险能力的企业。我们始终坚持可持续发展、创新进取、专业、诚信的核心原则，坚持可持续发展，坚持创新，维持企业的公信力，这都让维达在竞争激烈的市场环境中稳健前行。
Vinda's focus not only on branding, but also to be a risk-averse and sustainable growth company. We always adhere to our core principles of sustainability, innovation, professionalism, and integrity. That is why Vinda has remained trustworthy and has been able to go so far despite the intense competition.
这一页我们想做一下里程碑的回顾。回顾维达30多年来的发展历程，我们做到了不小第一。第一阶段，从创立初期到实现企业规模化，维达是中国第一家采取品牌战略、第一家启用国际化生产标准的纸巾企业，也是中国第一家采用100%木浆的生产企业。34年前，没有人想过小纸巾都需要品牌。但只有建立自己的品牌，企业的发展才能走得长远。30多年来耕耘，维达品牌深入民心，只有提起纸巾产品，维达品牌就有一席之地，今天更问鼎中国第一的市场份额。也靠着强大的品牌效力以及坚守生活用纸的最高标准，我们获得了全球连锁快餐店的相中，1993年成为他们当时唯一指定的中国卫生纸供应商。
Here, I want to give you a bit of history about Vinda. In the past 30 years, Vinda has been highly regarded in many aspects. In the first stage, Vinda started from scratch and then attained economies of scale. Vinda was the first Chinese tissue company to adopt a branding strategy and international manufacturing standards. Vinda was also the first Chinese tissue company to use 100% virgin pulp for raw material. In fact, 34 years ago, no one in China has ever thought about the need to brand a pack of tissue. Yet I upheld my belief that only a brand can strive for success in the long run. Over 30 years, Vinda brand has become widely recognized on the back of our commitment to quality. We are now the number one tissue player in China in terms of market share.
那第二阶段是集团化，不断完善企业的主体结构，培养人才。我们引进先进的管理设备，进行标准化的管理，高级管理。维达是第一家配备全自动化的仓库管理的中国纸基企业。第三阶段是国际化。维达2017年在香港上市。在业务上，维达在2014年整合了爱生雅中国内地、香港和澳门卫生用品的业务。那2016年再次整合了爱生雅东南亚、台湾及南韩的卫生护理业务，将维达业务版图延伸到亚洲市场，迎来了新的发展契机。2018年，我们第10个生产基地落户沿海城市的阳江，这是推动维达在国内市场以及布局东南亚业务版图的重要一步。
In the second phase, Vinda focused on improving its organizational structure and building up the talents pool. We introduced the cutting-edge manufacturing facilities into our operation and carry out standardized management for quality assurance. Vinda was the first China tissue company to be equipped with a fully automatic warehouse. The focus for Vinda is internationalization. Vinda became a listed company in Hong Kong in 2007. In terms of business development, in 2014, Vinda integrate Essity's hygiene business in Mainland China, Hong Kong and Macau. In 2016, Vinda integrate Essity's business in Southeast Asia, Taiwan and South Korea, which opened to new opportunity with foothold extended to an Asian market. In 2018, our 10th factory has been put into operation in Yangjiang, which located in the coastal city in South China, marking an important move to support our growing demand in China and also export to Southeast Asia.
[Foreign language]
We believe in collaboration rather than go it alone. Vinda needs support from its business partner. Essity became our strategic shareholder before Vinda went public. Since 2013, Essity became the majority shareholder of Vinda. This also reflects Essity's confidence in Vinda's capability. Vinda and Essity share the same vision on brand management, product quality, care for community, corporate governance and sustainability. The two company has formed mutual trust. Our collaboration with Essity presents a huge opportunity for internationalization of our business. The complementary collaboration allow us to maximize synergy, so far to realize a win-win situation.
维达继续保持独立的上市地位。作为独立上市公司，对维达有很多优势，利于上市公司的企业管制水平和透明度提升，给予供应商和客户更大的信心，也更容易吸引优秀人才。我们也可以在资本市场融资，支持业务的发展。在法律层面，我们双方还是保持独立性，双方沟通时还要按既定的流程而行。
While Vinda maintain its status as an independent company, this brings great advantage to Vinda. For example, as a listed company, corporate governance and transparency can be enhanced, which gives stakeholders like suppliers and customers greater confidence, and also able to attract best talents. Also, Vinda can tap the capital market to fund its business development. Of course, a listed company is abide by listing rule. Even though companies are under the same roof, we are obliged to maintain independence and confidentiality during day-to-day communication and follow the established procedures.
维达和Essity的创新、独特的合作模式是共享资源，各取所长。那以Essity的业务整合，维达不但取得了Essity的全球品牌的使用权，从生产、销售等一条龙经营权，对维达意义则是接结了Essity的资源，通过Essity的全球品牌管理经验和技术支持，增强我们中国卫生用品市场的竞争力，要有效接触中国及亚洲的消费者。
The innovative and unique model of collaboration between Vinda and Essity allows us to share resources and complement each other with their respective advantages. Vinda not only has attained the exclusive license for Essity's global brands that encompasses the right to develop, produce, and retail the products, but also has access to Essity's rich experience in managing global brands, which enhance our competitiveness in China's hygiene market, as well as engage with consumers in China and other Asia countries.
维达还获得了Essity的研发支持，这是其他竞争对手所没有的。由于Essity全力支持维达，亚洲研发中心在2016年落户在中国，持续为中国和亚洲消费者带来最前沿的消费体验，拉动维达营业额的持续增长。那纵观竞争对手，只有维达透过这种独特的中外合资模式，强强联手，势必在未来10年再将维达带入新的高度。
Vinda also gets support from Essity in R&D. None of our competitors can get as such R&D support as Vinda does. The Essity Innovation Center Asia, fully backed by Essity, was established in 2016 in China. This center continues to provide technical support for Vinda and offer the most innovative products across China and Asia, driving Vinda's continuous growth. Vinda stands out among its competitor by adopting the unique model of Sino-foreign cooperation. This cooperation with Essity will definitely help Vinda scale new heights in the coming decade.
这个图下面这边是1994年我的照片，30年后的李朝旺有变化多少呢？
If you look at this slide, the picture on the bottom, the one in the middle was me 30 years ago. How much change you can tell from this picture?
上个月，中国造纸协会举办了第26届生活用纸国际科技展。超过了800家生活用纸企业和卫生用品相关企业参展，可谓空前盛会，百花齐放。那造纸协会成立1993年，20多年来，透过中国造纸协会的平台，中国生活用纸相互交流进步，促进了生活用纸行业的蓬勃发展。
Last month, more than 800 top players in the tissue and disposable hygiene industry in China attended 26th International Disposable Paper Conference organized by the China National Household Paper Industry Association. This association was established in 1993. Over the past 20 years, China tissue companies share their knowledge and information through this platform, promoting the development of tissue industry.
很多人都不知道，1994年首届中国生活用纸年会是由维达来承办，在维达新会举行。当时全国各地共有163家企业参与。那我们还组织了多场海内企业技术交流的讲座，反响非常好。所以第一届年会由维达牵头举办以来，今年已经进行了26届。那中国生活用纸行业不断朝着规模化、创新、多元化发展，营造了公平竞争和优良的环境的市场环境。
The first annual meeting of the China tissue industry was initial and hosted by Vinda in 1994. At that time, 163 companies participate in it. We also organized a series of seminars focusing on technology exchange for local and overseas company, and received very positive feedback. Now the conference is entering its 26th anniversary since then, and the China tissue industry is heading towards a more healthy business environment with more diversification and innovation. As one of the leader in the industry, Vinda was honored to contribute to the rapid development of the China tissue industry. We are also looking forward to seeing a more mature and influential China household paper industry.
中国的卫生用品市场庞大，潜力非常大。2013年，中国纸巾市场份额达到了RMB780亿，到2018年已经增长到RMB1,160亿。再看纸巾人均消耗，我们从五年前人均的4.8公斤增长到6.4公斤，虽然也超越了世界人均水平，但比起香港、欧美等发达国家地区，还有很长一段距离需要追赶，而这也正是我们中国纸巾业务发展的机遇。
There's huge opportunity in China's hygiene market. The size of the country's tissue market reached RMB78 billion in 2013, and further expand to RMB116 billion in 2018. The tissue per capita consumption in China has risen from 4.8 kilograms five years ago to 6.4 kilograms. Although the tissue per capita consumption in the country is above global average, there's still huge room for growth compared to developed countries such as Europe and the U.S. That gets us great opportunity for China tissue industry.
中国政府提到绿水青山就是金山银山，意思是说社会的长远需要可持续的发展为本，那些落后、不符合环保规定的产能必须被政府关停。造纸行业进行了一场健康的洗牌，这对于像维达这种坚持绿色供应链的企业，无疑迎来了庞大的机遇。中国消费者越来越注重高品质的生活、优质的产品、经济稳定增长、生活水平提高、城镇化趋势推进、人口老龄化等，这一切都推动中国生活用纸快速发展，并且向大生活卫生用品时代迈进。
The concept of Lucid Waters and Lush Mountains are the most valuable assets put forward by the Chinese government, indicates that sustainable development is critical for China's society in the long run. Some outdated production capacity failed to comply with the latest environmental regulation, have been phased out by the Chinese government. The paper industry is undergoing consolidation, bringing huge opportunity to companies such as Vinda that adheres closely to sustainable models. Over the last few years, we see higher consolidation in China's tissue market. Number of manufacturer has decreased from 430 to 230 from 2013 to 2018. Chinese consumer are paying more attention to quality lifestyle and craves to quality products. Increasing household disposal income result from urbanization and consumers quest for quality hygiene products form our ideal context for hygiene business. The aging population will also stimulate the demand for quality hygiene products.
The hygiene industry in China holds a bright future in the longer run.
由于政策的影响，行业的集中度2013年从430家到2018年的230家，5万吨以上的企业是60家。
As I just mentioned, the consolidation is still going on. We see the manufacturer with over 50,000 tons capacity now has reduced to around 60 manufacturer only.
2020年中国老龄化预计将达到17.8%。反观中国成人失禁市场却没有一支独秀的市场领跑者。我们看准了失禁护理的发展前景，要将欧洲最好的失禁护理品牌带给中国消费者。今年第一季度，维达中国市场的失禁护理销售更获得了双位数的自然增长。女性护理市场也将是维达必争战场。我们有好的产品，好的渠道。成人和女性护理的双肩齐下，势必将成为我们新的引擎，驱动增长。
By 2020, aging population is estimated to account for 17.8% of the total Chinese population. Up to now, there's no dominant player in the Chinese incontinence market. We have high confidence in incontinence market and therefore we introduce the best incontinence brand from Europe to Chinese consumers. In the first quarter of 2019, our incontinence business in China records double-digit organic growth and feminine care will be another focus for Vinda this year. We are fortunate enough to have a wide range of prestigious global brands. Together with some and extensive sales channel, these two category will become our engine for future growth.
有好的产品，需要好的渠道铺货。早期维达发展第一渠道是通过经销商，我们设立了公开透明的制度，与经销商保持了健康合作关系。维达抓住销售渠道发展和演变的势头，从2011年开始，我们大力扩展了KA渠道，主攻全国性大卖场，与沃尔玛、家乐福、大润发、华润万家、区域城市等建立了长期良好的合作关系。到今天，两大渠道仍然贡献维达近六成的销售额。
A well-established sales network is another key success factor for consumer companies. Distributor channel was the first type of channel that Vinda developed in early years. We established an open and transparent system to maintain healthy relationship with our distributors. Vinda keeps pace with the changes in sales channel from time to time. We have been expanding our key account channel since 2010 and established long-term partnership with hypermarkets with nationwide operations such as Walmart, Carrefour, China Resources, [Swanca] and Watsons. Today, distributors and key account channels contribute nearly 60% of our revenue.
现在是互联网时代，上网阅读、上网购物、生活点滴都离不开互联网。维达看准这个趋势，早在八年前，我们早于竞争对手之前投放资源发展电商专销团队，并透过网络直播等新颖营业方式，让过去电商渠道所带来的销售以倍增的速度前进。那中国现时各大电商渠道当中，维达的销售是名列前茅的。2018年，维达电商渠道营收占营收的25%。
When it comes to e-commerce, Vinda noticed the trend eight years ago and took the first step to keep ahead of peers by forming an e-commerce team. We enjoy first-mover advantage. We keep up the momentum for high-growth in our e-commerce sales by adopting creative live show campaigns. Now Vinda is one of the leading FMCG companies on all major e-commerce platforms in China. In 2018, revenue from e-commerce accounted for more than 25% of our total revenue. Moreover, Vinda is expanding its business to Away-from-Home segment. Our main customer, including star-rated hotels and chain restaurants. The joint efforts of Vinda Professional and Tork has been enlarging its shares.
有效的供应链是支持维达发展的重要一环，那高效率是符合快消品「速派」的要求。维达不断转型升级，提升设备。90年代，我们引进行业第一台日本先进的造纸机，建立了一座当时国内一流的造纸厂，叫做维达纸业城。2012年，我们引进了意大利全自动生产设备，以及全自动立体仓库，都是面对广大消费者对产品质量以及运送效率提升的升级步骤。那生活用纸作为维达的核心业务，我们目前在中国内地九个城市、10个工厂开展布局。我们建立了设备一流的造纸生产基地，遵循最先进国际供应的标准。今年年底，我们造纸设计能力达到125万吨。
An efficient supply chain is indispensable for Vinda's development. We continuously focus on innovation and advancing our technology. In the 1990s, Vinda was the first Chinese manufacturer using Japanese machine. We also established a first-class production base called Vinda Tissue Paper City in China during that time. In 2012, we introduced the new-generation Italian machine and automatic warehouse, which have significantly improved the production quality and efficiency. Tissue is our core business. We operate 10 advanced tissue production base in nine cities across China and adopt internationally managed standard in factory management. The designed annual tissue capacity will reach 1.25 million tons by the end of this year.
今年我们在管理团队会议上提出「卓越发展，个护创新」的主题，就是发展生活用纸的同时，我们务必要发展好个护业务，特别是成人护理以及女性护理业务。我们目标是透过扩大个护产品的本地化生产，特别是在今年下半年将女性护理产品推到中国市场，为个护业务注入新的动力。而我们在马来西亚拥有两间、台湾一间生产基地，也为发展亚洲个护业务提供有效的支援。可以说，今时今日，维达无论在销售额、产能、规模、品牌支持度三方面都是上了一个台阶。但我相信维达的未来一定会更光更亮。接下来我会将时间交给CEO Christoph，和大家分享维达的发展状况，在中国乃至亚洲的发展机遇。那谢谢大家。
Year of excellence, year of personal care" is the theme we initiate in the Vinda's Top 100 management meeting this year. We must step up efforts to develop our personal care business, especially those of incontinence and feminine care, while also keep developing tissue business. Our goal is to add impetus to the personal care business by expanding local production. Notably, we will relaunch the feminine care products in the Chinese market later this year. We also have 2 production base in Malaysia and Taiwan. All this factory will be instrumental to Vinda's development into a leading hygiene company in Asia. Today, Vinda has scaled the heights in sales, production capacity, scale, and brand awareness. I believe Vinda will have an even brighter future. Now I would like to give the floor to our CEO, Christoph. Christoph will give more colors on Vinda's business and its future prospects. Thank you.
Thank you, Mr. Li. Thank you, Vicky. Thank you, Mr. Li. In the interest of time, I will focus my presentation only on 3 subjects. The first one is to give some color what it means to grow by 10% a year, and the challenge that those things are bringing. The second one, I will talk about digital and the e-commerce side. The third one, I will talk a little bit about our effort on sustainability as a Chinese company. You will find basically more slides in the presentation, which is, I think, available, but I only focus on those things. Here you see since listing, Vinda has grown by 21.3%. If you grow by 21.3%, that's great when you're small, because it's feasible. This quarter, we have grown by 13.7%.
If you extrapolate that on a year, it basically means with 1.2 million tons of tissue, you have to build a factory every year. In 3 years, we need to build 2 factories a year. That is a huge challenge. It's a challenge from a manufacturing perspective to integrate new facilities. It's also a challenge to get your suppliers aligned. The only reason why Vinda is able to do that is because we modularized our factories. When we go out and buy ground, we buy grounds for 500,000 tons and start to build for 120,000 tons. As the time goes by, we will add the same type of capacity. Mr. Li talked about the innovation capabilities of Vinda, and they are by far not just because of consumer products or branding or promotion and things like that.
It is also we have developed systems where basically we buy 2 30,000 tons machine, we put them side by side. It's only one team running them. It's like having the personnel for a 60,000 ton machine, but you have basically 2 side by side. This allows us, with this technology, to train people in one factory and then basically take the most experienced people in the new factories to start them up and then move the personnel around. You cannot imagine how difficult it is to find really qualified staff in China and to keep them over a long period of time. One of the ways how we address that, we tend to be mainly in tier 3 and tier 4 cities in manufacturing.
Within those cities, clearly Vinda is one of the very important employers, therefore, a lot of people with good qualification tend to be quite loyal to our business. The second part is, it is not the loyalty of the people, it is also the automation, and Mr. Li talked about that. When you go to any site in Vinda, you will only find basically quite empty manufacturing sites and empty warehouses. Because of the lack of people and this challenge to get talent, we have automized a lot, and with the rising salaries in China, this is also a good commercial perspective. The second aspect I would like to talk is about e-commerce, the digital revolution in China. If you go to China today, you will see what maybe Europe will look in 10 or 15 years.
In China, the internet penetration is only 60%, but that is 800 million consumers. 98% of them are actually doing it via their phones. It is a huge market. If you go to Beijing and Shanghai and Guangzhou, penetration is 100%. The only reason why it is not 100% across China is because we still have a few areas which are not very rich and where basically the development has not reached yet. If you look at this, we have also very important internet player in China, and you probably know Tencent and you know Alibaba. Just to give you an example, the key difference between an Alibaba and an Amazon in the old days, what Alibaba immediately realized that the value is in the data and not in the e-commerce. It becomes a payment system and insurance system.
It becomes an e-commerce player. It becomes just a facilitator. If you look at the numbers of Alibaba, they are staggering. The turnover of Alibaba is RMB 270 billion, which is the same in SEK. The profit of the company is RMB 70 billion, which basically is kind of a 30% margin. If you take their main competitor, JD.com, which operates more like Amazon in the past and is more an e-commerce player or e-commerce supermarket, the profitability is far from there, and they are basically held up in their growth by the physical infrastructure that they are putting in place. Why have we been so incredibly successful in e-commerce? We showed you the number of 25%. Actually, the number in China is 31%. Why have we been so successful?
The first reason is eight years ago, when the e-commerce revolution started, so to say, or was in its infancy. Vinda realized we cannot give that to the sales force because it will just die. It will be too small and not important, and we do not know how to do it, and we have important things to do and things like that. Therefore, the e-commerce function was basically given to marketing. Marketing realized that, oh, you can sell something, but you can also do great marketing. When I hear the numbers from Pablo and Volker, I am very happy that it went from 0 to 25% in digital. We spend 100% of our A&P money on digital because that is where the consumers are, and we cannot compete with advertising rates and television, which are, for our product, irrelevant and also too expensive.
Then we developed this channel, and I think until 2 years ago, we had a very continuous approach. We are market leader in JD.com and Tmall, Alibaba, Suning, and other platforms. Now things going the other way. All the e-commerce players, in particular Alibaba, realize they have had the information and data of 20% of Chinese consumers, and every more data they want from them will be more and more expensive. They need to find other people where to get the data for, to improve their services and get people into their business. That is why they're investing now in offline. Alibaba, only 2 years ago, started to invest in RT-Mart, and I think the deal was completed last year.
What we see now is basically new formats of supermarkets coming up, where you go into a supermarket and certain things you can pick up and take home if you wish to, but you can also scan them and get them 2 hours later delivered to your home. This is not just for fresh food or staples or whatever. You can also say, "Please cook me that, and I take it home, or you send it to me." It becomes a very interesting way and a different experience for shopping, and it's a huge opportunity for people like Alibaba to collect additional data. As you know, China is very controlled. The Chinese government is a real player in the economy. You heard about the state-owned enterprises, you heard about the banking system.
Alibaba and Tencent have basically broken the monopoly, especially in the financial consumer market. In China, no credit cards. What do they do? They create Alipay, and they create WeChat Pay. Basically, these financial instruments have become a very significant part of consumer life. The same is also true with insurance. Alibaba is a major insurance seller now to consumers in China, but also to businesses. What, I think, makes Vinda successful is we are not set in our ways. We are operating in a very fast-changing environment. When I talk to people about our strategy, it is so high level that it gives you the opportunity to actually fine-tune as you go along. The last point, and I'm sorry, I'm a little bit over time. The last point I would like to talk about is about sustainability.
3 years ago, when you were in Beijing or in Shanghai, you couldn't breathe for, say, 180 days a year. It was quite tough because, I mean, it's half of the year, and we like to breathe every one minute at least. The Chinese government has started to put very serious programs in place. The challenge for China is that air quality should improve by 30% in the current five-year plan. I think Beijing and Shanghai have already achieved a 12%-13% improvement of air quality, and the whole of China is at 7%. If you're interested, this is not government numbers. These are numbers which you can find on your phone. It's called Air Matters. It's an app. Worldwide, you can see air quality, and the change is dramatic. Vinda clearly also contributes to that.
Wherever we can, we go out of coal, we go to natural gas. We always look at cost as well, because clearly that's important. We do a lot of recycling. Water is expensive in China, and we have reached in some factories up to 99% of recycling rate, like in Donato units, which are state-of-the-art. SO2 emission is going down. CO2, I talked about. NOx, et cetera. It's a major part. In Vinda, we use this type of numbers not as competitive advantage to our customer or consumer. We actually use it with the government to tell we are responsible citizen. We are expanding very fast, and we need industrial ground. We need support in order to continue to develop. I'm pretty sure that in the next 10 to 20 years, Vinda will continue on that path. With that, thank you very much.
I think you have two more slides to show before we start. It's your disclaimer you normally have. Don't you want to show that?
The disclaimer. Yeah, sure.
You normally have.
Here we go. Thank you. Here's the disclaimer.
Which is there. Yes. You normally want to show that. I ask Magnus to join us on stage. Nikolas, can we please have the Q&A slide? Who wants to start with the first question? Yes, Oskar, down there.
Thank you for those presentations. Very interesting, again. I have two questions. First one is about the Chinese tissue market, which I read the growth in the Chinese tissue market slowed quite substantially last year compared to previous years. I've read about a number of about 4% growth last year versus historical growth of 8%-10%. Is that your view as well, and what do you believe is behind this? My second question, if I may, is Vinda has now expanded outside of China into other regions of Asia, and you mentioned in your presentation internationalization. Is Vinda interested in a broader global presence as well? Thank you.
Thank you, Oskar. I think, coming to the first question, data in China is a murky affair. Okay? I think the data you have probably seen, what I see at the China Tissue Federation, that over the last 10 year in, year out, the volume growth of tissue has been between 5%-6%. I haven't heard the number for it was still 5%. Value growth is different. Last year, with the efforts of Vinda and other key competitors, there were actually some price increases in the market. If I recall well, the Nielsen number of value growth last year was around 14%. Okay? Quite significantly more.
I think it's a mixture of price increases, a mixture of improving the portfolio premierization of the products which are sold, and then inaccuracy because China is a big market, and neither Nielsen nor Kantar will basically supervise the whole market. That's one. Second question, internationalization, et cetera. I think Mr. Li said it very clearly. Our ambition is to become a leading hygiene company in Asia. From our setup, clearly, we could take the Vinda brand worldwide, and we sell some products here and there, especially with Alibaba online. However, when it comes to the arrangement with Essity, the license of our brand and technologies in personal care are limited to the countries of Asia.
Frankly, if you operate in a country like China, I found it already difficult sometimes to look at Southeast Asia because the Chinese opportunity is so gigantic, that even sometimes, we need to remind ourselves that it's an important business as well. It's growing at lower rates, but nevertheless, it's in the high single-digit growth numbers, which is very respectable. I think Vinda's strategy will be, number 1, tissue in China, number 2, personal care in China, number 3, Southeast Asia, North Asia, to develop the business we bought. I think number 4 for us is a little bit the, we need to get better at B2B. I think we're in the same development stage as Pablo, that we are starting, we are learning, and it's a huge opportunity across Asia in tissue and in incontinence care.
Good. Next question. Yes.
Yes. I think I recall, in the last Capital Markets Day that you saw some great opportunities for feminine care products then as well in China. I was wondering, it seems then that you're doing a relaunch now, and if you can talk about maybe why this didn't progress as you thought, and what you're doing now to improve that.
Okay. When I started three or nearly four years ago, I had a huge ambition. The huge ambition was to say, we need to be really big in feminine and really big in inco. My, a little bit naive understanding at the time was, well, a product like Libresse, which was so successful in Europe, which we had relaunched and was really doing well, would be a great idea for China. How was I surprised by putting the product in the first launch in the market, that actually the marketing mix maybe, but the product quality of a good European product is definitely not a premium product in China. Why is that? That is because the Chinese market is much more influenced by premium brands from Japan and Korea.
The softness of these products, the packaging quality of these products, the execution of the whole consumer mix is, I would argue, quite superior of what we would find acceptable in Europe. If you take Libero, you know Libero, you've seen the shares, all Swedes in the room are happy. Chinese consumer looked at Libero and say, "Well, it's not really soft enough, and we don't like the print on your plastic because it's not clear enough," and things like that. There are differences. What we have learned in the last years is to take the Essity technology, to take the best practice in branding and marketing, then the Vinda Innovation Center in Xinhui, so in Jiangmen, in our home base, is basically adapting these products to the market.
What we have done in the last two years is to buy machines in order to be able to produce products to higher quality standards. Initially, we imported, that was also not very good because of lengths of supply chain and things like that. We are now finally happy to use all the learnings we had from Libresse in the world, especially also from the examples that Pablo mentioned in Latin America, and are now preparing our real launch in the market. I am very confident. It doesn't mean we haven't grown. We have grown 30% in feminine over the last 30 years, three years. It is not an issue of growth, but I am much more ambitious than that when it comes to future market shares. That is the learning, and that is where we are.
Just one more question, if I may. I remember also back then that you said, you talked about you had a far better market share in the e-commerce channel than overall.
Correct.
Also wondering there if you can update us on how you have been able to defend that share.
When we started eight years ago, we had the amazing market share of 100% of a very small business. It was great. Clearly, today in China, the e-commerce channel is not a niche channel anymore. It's a large channel, and everybody is there. Our share in e-commerce will always be larger in e-commerce than it is offline. That has to do with the fact that Hengan's sales force is double our size, and they're better on the sales force on the ground, and we're better on e-commerce. That's normal. However, in e-commerce over time, the consumer will decide. It's not a niche anymore. It's now about consumer preferences again, and the strength of our brand. I think with the Vinda brand and the Tempo brand, we have some fantastic brands.
Vinda is structured from mass market to really premium, and Tempo put a super premium on top. We are covering the whole market, which allows us price increases as we have done, and which allows us, I think, to win the game, to defend our share in e-commerce. It's not because we were there first today. It's because consumer preference will drive choice.
Good. Then Margareta, yes.
Thanks, Farhan, Credit Suisse. Quick question from me. Clearly, you just mentioned that your sales force is half the size of your competitor, and online has helped you get that distribution expansion into cities outside tier 1, 2, 3, et cetera. Do you feel now that you're equally distributed across China, or can we still expect further distribution gains from Vinda?
Yes, you can. Vinda, when Mr. Li, 30 years ago, created Vinda, it was basically, as you said, a small factory in the south of China. Okay. So our market share in the Guangdong region, which is not big for China, it's only 100 million people, is 40%. Over time, we moved to the west, to the center, so Hubei province, around Wuhan, et cetera, and our market share is around 25%. We moved to the east, and there we are now close to 20%, growing very fast. You go to the north, and we're about 12%, and you go to the northwest, we might be 10%. There are still areas where we can grow.
I think that it's not just because of distribution improvements, because the competition in these regions is quite different from very premium market in Shanghai to quite straw pulp type, low quality things in the west and the northeast and northwest.
Policy we learned earlier today.
Okay. Okay. Without the Phoenix process. Basically, I think it's still the growth will come from our ability to implement our products on shelf and from the innovation and the premiumization we bring to the market.
Any more questions? Yes.
Thank you. Two questions from me, please. On incontinence in China. SCA started to train nurses, if I remember well, six, seven years ago. On paper, this addressable market is absolutely huge. Yet, when I look at the total sales of Vinda, incontinence remains relatively small. My question on this is, why is it taking so long to build a meaningful category? I know you're starting from scratch there and you have to build a category, but why is it taking so long and what are the prospects for Inco in China as a result? My second question is on margins, because a few years ago, Vinda had a EBITDA margin, which was more than 500 basis points higher than what it was last year.
Putting aside the raw material headwind, is there anything structural there, increased cost of doing business with marketing spend going up faster than the sales? Would it also be down to e-commerce maybe being dilutive to your overall margin? Thank you.
Okay. Do you want to?
Yeah, I translate the question from-
Okay. Yeah, okay. Should I take?
Yeah. Do you want Magnus to also answer question one too?
To?
To address the question one too, yes.
Okay. Yeah. Maybe let me find the answer, and then Magnus maybe can complement that from an Essity perspective. First of all, the Chinese incontinence care market is only RMB 7 billion compared to tissue, RMB 88 billion. Okay. Therefore, doing big investments and just striving forward creates a loss rather than significant growth in sales. It's a very tiny market in China today. There are a number of reasons for that, but they are changing. The first reason is that China is very future-oriented. Before a grandmother would get money from the children who are working, she would rather invest that in the baby because of one-child, two-child policy, and therefore, all elderly are generally stepping back in consumption. The third reason is, in China, the category is so small, it's very hard to implement it in offline.
Online is much more easier because you have the thing there and et cetera. That is a little bit the thing. Magnus, maybe you want to add then how we collaborate, and we have the best help you can wish for, I think, very clearly. When it comes to nurses, I think we are a little bit slowed down by the regulatory environment in China. If you want to be a nurse in China, you have to belong to a hospital. We can train nurses, but we can never train nurses in a way that The scale because it so much depends on the medical profession.
What Mr. Li has initiated two years ago is that we actually are setting up with a charity in Guangdong, a significant nursing home, and we use that as a springboard to demonstrate what good nursing and incontinence care is looking like. Training nurses, we have realized, was a good thing for these particular things, but we were not in control where these nurses then were used. Whether they're then suddenly used in intensive care or were they used in other things because we are not master of the allocation of that resource. Okay? Magnus, you want to say a few things about incontinence care?
Well, only that we are, of course, completely committed to taking the number one position also in China, and that we are watching the opportunity develop and trying to find a way. Another thing that maybe you did not mention is that with now the relaunch of feminine care, we have an opportunity to add light inco on top of that, which was an area where we didn't really focus. Going forward, we believe that that's an area to grow, maybe before going straight to the heavy inco users in nursing homes, which is, as you described, not a very big part of the inko market. We're actually focusing on a different part now also of the inko market in a relaunch in this area, fitting very closely to our fem care relaunch.
The last question you ask, basically on margins and dilution and things like that. Clearly 2018 was an exceptional year, we're not go into then. Actually, I think we did quite well if you think that raw material prices went out by 46% in China, and it's 55% of our cost. What you have seen in the past, particularly since 2015, is our willingness to invest into personal care. Before we reach scale in personal care, you will basically see very slight improvement in gross margin, much higher A&P sales and marketing cost, and basically a slightly dilution on the bottom line from that.
What we discussed on the board is very clear, Mr. Li reminds me every day that go for double-digit, but make sure you deliver a high single-digit EBIT margin, in order to keep the house in order. That's what we try to achieve. Everything which goes above this high single-digit EBIT margin is reinvested for growth when the growth opportunity has superior gross margins than the average of Vinda's company.
Thank you, Christoph. I think that was really good concluding remarks. Christoph and Ms. Tan, Mr. Li, they will stay a little bit more after this. If you have any more questions, we can continue where we also offer some drinks, finger food, and some mingling. Thank you, Christoph.
Thank you.
Thank you, Mr. Li, and thank you, Ms. Tan.
Thank you.
Thanks, Vicky.
Thanks.
I want to take the opportunity, before I hand over to Magnus, to thank all of you joining this day for your participation and the questions. I hope you enjoyed it when we are describing how we want to improve wellbeing, but also create value for different stakeholders. Now I hand over to Magnus for the concluding remarks.
I hope to leave you with two lasting impressions. One is, of course, that we are completely committed to continuing the value creation journey, and that's what we're working with every day, and that we are very, very consistent both in our strategy and in our execution, and I think these bullet points summarizes that. The other maybe more important thing I would like to leave you with is, I hope that you now also agree with me that this is, if not the best, one of the best management teams in the world. With them, definitely we will continue to be successful because I'm of the firm belief that only by having a winning culture and by working closely together as one team, and I think we heard numerous examples of that today, will we be able to be successful going forward.
It's so important now in this fast-paced changing environment with sustainability possibilities, digitalization possibilities, and all the other things we've spoken about, where at the same time we need to become more efficient and raise prices, so on. It can only be done as a team, I feel myself very proud about what we've heard here today and hope that you feel confident that this is the team that can do it. Also, I would like to thank you for your active participation. Before Josephine reminds me, we have one of these as well. Now you've seen it. Thank you, very, very much for being so engaged this entire day with a lot of information. Look forward to a little bit of more informal discussions right now. Thank you