Ladies and gentlemen, welcome to the Givaudan 2021 half- year results conference call and live webcast. I am Alice, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for question at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Gilles Andrier, Chief Executive Officer, accompanied by Mr. Tom Hallam, Chief Financial Officer of Givaudan. Please go ahead, gentlemen.
Thank you, operator. Ladies and gentlemen, welcome to our 2021 half- year results conference call. I'll make this call together with Tom Hallam, our CFO, who will take you through the presentation before answering your questions at the end. The company news on our half-year results 2021 were published on our website this morning. This is where you will also find the slides for today's presentation. Along with the media release, you will find our 2021 half- year report on our website. I'd like now to start going through the presentation. I invite you to turn to slide number three to go through our performance highlights. I'm very happy to share with you both the excellent sales growth and the strong financial performance for the first half of 2021 we published this morning.
For sure, going back six months ago, as we started the year, the outlook for 2021 was full of uncertainties, difficult to predict consumption patterns in a world showing very mixed signals, both from an economic standpoint and from a pandemic standpoint. As our half-year 2021 results demonstrate, our sales continued to benefit from a robust demand of the resilient categories, while the 2020 pandemic impacted categories strongly rebounded. These strong results demonstrate that our strategic choices for the coming five years make perfect sense. Many of the consumer trends, if not all of them, on which we have built our 2025 strategic plan, have been amplified by the pandemic. Health, beauty, home and personal care, wellbeing, naturals, alternative proteins, to name a few.
The pandemic has certainly not stopped us to continue investing on innovation, to continue to be best positioned to support those different growth spaces with our clients. We made as well an excellent progress with the integration of our recent acquisitions over the last months and for the rollout of SAP and GBS onto the acquired sites. In a nutshell, our 2025 strategy is well on the way. In the first half of 2021, we reached sales of CHF 3.4 billion, a growth of 7.9% on a like-for-like basis and 4.7% in CHF. This was achieved across all markets, all segments and all customer categories, supported notably by high- growth markets, local and regional customers, and many of our key strategic product categories. Like what many of our customers do, the true comparison for 2021 is versus the pre-pandemic levels, namely first half 2019.
I'm happy to share that Givaudan has grown 12.3% on a like-for-like basis versus 2019. In other words, despite the virus still being quite active in many parts of the world, the pandemic has not stopped us from growing faster than the pre-pandemic CAGR rate. We achieved an EBITDA of CHF 809 million, growing 10.2% compared to 2020. It represents an underlying EBITDA margin of 24.2%, improving from 23.7% in 2020. Free cash flow reached CHF 186 million, representing 5.5% of our sales, the same ratio as for the first half of 2020. I'm very pleased with the strong performance of our business, with all parts contributing to these excellent financial results.
In an environment which still contains many uncertainties, we have shown our resilience, our focus on supporting our customers, and our ability to capture opportunities and assert our market leadership whilst keeping our employees safe on the Givaudan site. Let's now turn to slide four. On a like-for-like basis, our Fragrance & Beauty division grew 10.1% and our Taste & Wellbeing division grew 6.1% versus 2020. As I mentioned earlier, this performance was driven by the virtuous combination of the resilient categories, which continued to grow on top of the double-digit growth of last year, and the very strong recovery of the more discretionary categories, namely Fine fragrances and foods ervice.
Once again, all our strategic focus areas, complemented by acquisitions, have contributed to our growth, namely health and wellness, naturals, local and regional customers outperform sales with our multinational customers, which also showed, by the way, a good momentum. When compared to 2019, this represents a growth of 15% for Fragrance & Beauty and 10% for Taste & Wellbeing. Actually, all customer categories, all regions, and all product categories, with the exception of food service, are above 2019 levels. Let's turn now to slide five. Since the start of the pandemic, a relevant way to look at our sales development has been to split our portfolio in two main categories. On one hand, the resilient categories, accounting for 84% of our group sales, which include consumer products and Active Beauty, and the core business of Taste & Wellbeing.
It is worth highlighting that after four consecutive quarters of strong growth, we are back to single-digit numbers in Q2 2021, against the very high comparable of Q2 2020. Overall, the resilient categories grew 5.8% during the first half of 2021, with an equal growth across the two divisions. On the other hand, we have the high-impact categories, accounting for 16% of group sales, Fine fragrances and foods ervice. As you can see, these categories have grown 22.4%, strongly recovering, especially in the second quarter, against the strong decline of last year's second quarter. Fine fragrances showed a very strong rebound in the first half of 2021 as retail activity picked up, customers maximizing the direct selling and e-commerce channels. Our Fine fragrance sales were also certainly supported by consumers redirecting what they had not spent on travel, restaurants, and entertainment to those beauty categories.
Again, if we compare to pre-pandemic levels, Fine fragrances is 13.1% above 2019 on a like-for-like basis. Food service has also strongly recovered in the second quarter but has remained below pre-pandemic levels for the half year as corporate hospitality, sporting, and artistic events have generally not resumed in most geographies. Let's now to turn to slide 6. In the first half of 2021, high-growth markets delivered a 10.4% growth, continuing on the regained momentum we already saw since the end of 2020. This was achieved despite the current pandemic still impacting major high-growth markets such as Latin America, India, or Southeast Asia. Latin America kept performing very strongly in its three major markets, namely Brazil, Argentina, and Mexico. Africa and Russia contributed with strong growth levels as well as Asia Pacific as a whole.
China, which recovered from the pandemic as early as the second quarter 2020, continued on a very strong double-digit growth, whereas India reported single-digit growth and Southeast Asia, notably Indonesia and the Philippines, remained more challenging. In the mature markets, we grew a more than healthy 6.1%. The recovery of Fine fragrances and foods ervice supported the strong recovery in North America as the economy reopened faster than most other regions. Western Europe also recovered strongly as many markets reopened, whilst the mature markets of Asia, notably Japan, remain affected by the pandemic. High-growth markets made up 43% of our overall sales in the first half of 2021, a consequence of the acquisitions we made in mature markets, combined with the currency situation in the high-growth markets.
Our presence in high-growth markets has always been a key driver for our growth and continues to be one of our key strategies for 2025. Despite recent hiccups in some markets, structural demographic trends, the ever-growing middle class, and the strong urbanization trends will continue to support the growth of these markets, especially in Asia, where urbanization and the middle class are still below average. Our market position and our operations footprint give us a unique exposure to these high-growth markets in which we continue to invest, both with additional talent and new facilities to service the wide diversity of our clients. We have seen in the past 18 months how critical our geographical balance is, creating natural hedges against a crisis like the COVID-19, where the timing of the pandemic has been quite progressive and with a different intensity depending on the geographies. Please now turn to slide seven.
I'd like to highlight the sales development by region for the group. As you can see, all four geographies have contributed to our overall growth, none of them achieving a like-for-like growth below 5%, all of them significantly above 2019 level. Sales in Latin America continue to perform extremely well and remain ahead of the other regions, with another outstanding growth of 21.2%, driven mainly by the three key markets of Argentina, Brazil, and Mexico. Volume growth contributing to 80% of this growth. Latin America is 36% above 2019 level on a like-for-like basis. North America is also delivering an outstanding growth with a 7.5% like-for-like sales performance as a result of a much more favorable pandemic situation and a strong rebound of the economy and the consumer demand.
The growth in Asia Pacific was 6.3%, with double-digit growth in China and single-digit growth in most other parts of Asia, with the exception of Southeast Asia. Finally, Europe, Africa, and the Middle East grew 5.5% with a very diverse situation across the various markets but generally supported by the strong recovery of Fine fragrances. Let's turn now to slide eight. The fragrance division grew 10.1% on a like-for-like basis and 7.4% in Swiss Franc. This double-digit sales growth was mainly driven by the strong rebound of the Fine fragrances, particularly impacted by the COVID-19 pandemic and the acceleration of the Active Beauty business. Fine fragrances sales increased by 34.5% on a like-for-like basis against the first half of 2020, when sales declined by 16.4%. In the first six months of 2021, there was a strong rebound of the existing business across all customer groups.
In addition, new business wins contributed to this strong performance. All regions delivered strong double-digit sales growth, including Western Europe, where prestige brands showed a very strong rebound after having suffered strongly from the COVID-19 pandemic, particularly in the first half of 2020. North America and high growth markets also recorded strong double-digit sales growth. Consumer products sales increased by 4.1% on a like-for-like basis against the very strong prior year comparable of 11.8%, which was driven by an increased demand for household, health, and personal care products related to the onset of the COVID-19 pandemic. The growth in the first half of 2021 year was achieved in both high growth and mature markets, and across all customer groups. The sales growth was led by fabric care, followed by personal care and home care.
Sales of Fragrance Ingredients and Active Beauty grew by 14.4% on a like-for-like basis against flat sales in the prior year. Active Beauty saw a very strong rebound in the first half of the year and reported mid-double-digit growth in both high growth and mature markets. Fragrance Ingredients reported strong single-digit growth driven by key international and local and regional customers. Let's turn to the next slide, number nine. Taste & Wellbeing sales were CHF 1.8 billion, an increase of 6.1% on a like-for-like basis, and an increase of 2.5% in CHF. The strong sales performance was driven by new wins and good business momentum across all regions and mainly with local and regional customers.
Whilst the sales performance was still affected by the impact of the COVID-19 pandemic across many countries, there were positive signs of recovery in certain markets where increased vaccination rates and progressive reopening resulted in higher demand for food service products, particularly in the second quarter of 2021. In the key strategic focus areas, sales increased double-digit in plant-based proteins and high single-digit in health and wellness and naturals. From a segment perspective, the positive sales performance was mainly driven by beverages, savory, and snacks. Sales in Asia Pacific increased by 5.1% on a like-for-like basis. In the high-growth markets, China delivered strong double-digit performance, followed by solid single-digit growth in the Philippines and Vietnam, whilst Indonesia and Thailand were still impacted by the COVID-19 pandemic. In the mature markets, growth was driven by Australia, Korea, and Singapore.
In South Asia, Africa, and Middle East, the business grew by 3.5% with double-digit growth in India, Algeria, and Nigeria, offset by primary sales decline in South Africa. The growth was driven by beverages and dairy for the region. Sales in Europe increased by 1.7% on a like-for-like basis. The mature markets of Germany, Italy, Spain, and Sweden all achieved good single-digit sales growth, whilst in the high- growth markets, there was excellent business momentum driven by double-digit growth in Russia and Poland. Throughout the first half of 2021, the region was still impacted by the restrictions related to the COVID-19 pandemic, with some relaxation in those measures being seen only more recently in a number of countries. On a like-for-like basis, sales in North America increased by 6.1% across all customer segments.
The strong performance was a result of new wins, a rebound in food service, and the growth of existing business in beverages, immunity products, savory, and sweet goods. Finally, sales in Latin America increased 23.4% on a like-for-like basis, led by a strong double-digit volume growth in Mexico, Brazil, Colombia, Chile, and Argentina, and across all segments. With this, I'd like now to hand over to Tom, who will give you more granularity on our financial results.
Thank you, Gilles. I would also like to welcome you all to our conference call. Gilles has taken you through the business performance of the group, as well as the main aspects of the market and regional development. On the following slides, I would like to focus on the operating performance of the group as well as the two divisions. Let's start with the performance highlights on slide 11. Group sales increased by 7.9% on a like-for-like basis, which excludes the impact of acquisitions as well as the currency impact. In Swiss francs, sales increased by 4.7%. The reported EBITDA increased to CHF 809 million compared to CHF 734 million in 2020, and the underlying EBITDA margin remained very strong at 24.2%. Net income was CHF 481 million or 16.3% of sales compared to CHF 413 million in 2020.
The free cash flow as a percentage of sales was 5.5% compared to 5.5% also in 2020. In the following slides, we will cover the group's performance in more detail. Please turn to slide 12, which shows the exchange rate development. Once again, the Swiss franc strengthened against some major currencies in which the group operates but is more stable against others in comparison to the prior year. The impact is less pronounced in major mature market currencies and more pronounced in some emerging market currencies such as the Brazilian real. We still believe that our operational and geographical spread continues to provide good natural hedges, and our EBITDA margin remains well protected against these currency fluctuations. Please turn to slide 13, which shows the group operating performance. In 2021, the group continued to achieve productivity gains and demonstrate a strong cost discipline.
This resulted in a gross margin, which improved to 43.9% in 2021 compared to 42.2% in 2020. Referring to the previous slide, although we are naturally hedged at the EBITDA margin level, currency movements can cause some fluctuations on individual lines of the income statement, including the gross profit. As I mentioned, the EBITDA increased to CHF 809 million in the first six months of 2021. In this period, the group incurred costs of CHF 7 million related to acquisitions and restructuring, compared to CHF 24 million in the previous year. As you can see on the bottom right of the chart, our underlying EBITDA margin was 24.2% in 2021 compared to 23.7% in 2020. This increase is driven by productivity gains and a strong cost discipline. On the next two slides, I would like to spend a moment on the operating performance of the two divisions.
Please turn to slide 14. We will start with Fragrance & Beauty. The Fragrance & Beauty division recorded a sales increase of 10.1% on a like-for-like basis and 7.4% in CHF. The division recorded CHF 375 million of EBITDA compared to CHF 333 million in 2020. The margin showed a good increase compared to the prior year, driven by higher sales as a result of the recent acquisitions in the division and our actions taken to contain expenses, as mentioned at the group level. The EBITDA margin was 24% on a reported basis and 24.2% on an underlying basis. If you now turn to slide 15, I will comment on the Taste & Wellbeing performance. The Taste & Wellbeing division recorded a sales increase of 6.1% on a like-for-like basis and 2.5% in Swiss Franc.
The reported EBITDA increased to CHF 434 million from CHF 401 million in 2020, again, as a result of continued productivity gains and strong cost discipline. The reported EBITDA margin in 2021 was 24%, and on an underlying basis, the EBITDA margin was 24.3%. Please turn to slide 16, which shows the net income of the group. The income before tax increased to CHF 566 million from CHF 488 million in 2020. The non-operating expenses were slightly lower compared to prior year, CHF 47 million in 2021 compared to CHF 52 million in 2020. The net income was CHF 481 million or 14.3% of sales. The group's effective tax rate increased to 15% in 2021 compared to 14% in June 2020. Basic earnings per share increased to CHF 52.19 in 2021 compared to CHF 44.8 in the first semester of 2020.
Please turn to slide 17 for the cash flow performance of the group. During the first half of 2021, Givaudan generated a free cash flow of CHF 186 million or 5.5% of sales, compared to CHF 178 million, also 5.5% of sales in 2020. The operating cash flow for the first six months of the year was CHF 415 million compared to CHF 389 million in 2020. The group continued its investments to support the growth in all markets. As such, total net investments was CHF 120 million, and as a percentage of sales, net investments were 3.6% in 2021 compared to 4.3% in 2020. Working capital increased to 28.3% of sales compared to 27.9% in 2020 due to temporarily higher inventory and accounts receivable levels related to the good business momentum and the continuing COVID-19 pandemic.
Overall, the group showed a strong financial performance in the first semester of 2021. I'm very happy with these results and the free cash flow delivery in the first six months of this year. Please turn to slide 18 to look at the amortization of intangibles. We've updated the projection here to reflect the latest acquisition in Myrissi, which we completed in the first six months of 2021, and it gives you a future perspective of the expected amortization. If we turn to slide 19 to look at the debt profile of the group. The group continues to have a well-balanced debt profile with a weighted average effective interest rate of 1.48%. Furthermore, on this slide, you see the maturities of our debt profile as well as the average interest rates for each debt maturity.
With this, I would like to conclude my part of the presentation and hand back to Gilles.
Thank you, Tom. The company's 2025 ambition is to deliver sustainable value creation for all stakeholders of Givaudan. Givaudan's 2025 strategy is fully in line with its purpose and places customers at the heart of its business, supporting them to grow and to create products that are loved by consumers. Let me remind you the main foundations of our current strategic cycle. The 2025 strategy is focused around three growth drivers. First one is about expanding our portfolio. It's about extending our customer reach, and it's to have a focused market strategy. It is supported by four growth enablers, which are aligned with the company's purpose domains, namely creation, nature, people, and communities. These three growth drivers and four enablers are all underpinned by a commitment to excellence, innovation, and simplicity in everything we do. Let's turn to slide 22 on our performance commitments until 2025.
We have initiated our new five-year strategic cycle, and as I mentioned earlier, so far, business trends, customer needs, and consumer behavior in an environment impacted by the pandemic are confirming and reinforcing our strategic choices. Ambitious targets are an integral part of Givaudan's 2025 strategy, with the company aiming to achieve organic sales growth of 4%-5% on a like-for-like basis and free cash flow of at least 12%, both measured as an average over the five-year period strategic cycles. In addition, the company aims to deliver on key non-financial targets around sustainability, diversity, and safety linked to Givaudan's purpose. I'm confident we are on the right path to deliver this ambition. Let's turn to slide 23. Let me now give you some facts about the coming months.
H1, the first half, has demonstrated a strong recovery of the categories most affected by the pandemic and the further development of the categories which revealed as being resilient in 2020. We are quite confident in our choices, our capabilities, and the important role that we play in the global value chain for food and consumer products. The pipeline of briefs with our customers is strong, demonstrating their appetite for innovation and the trust in Givaudan. However, there remains a high level of uncertainty related to the continuing COVID-19 pandemic. We clearly remain focused on operations by protecting and supporting all Givaudan personnel, by focusing on maintaining operations and supply chain performance at high levels to support day-to-day our customers, and continued cost discipline throughout the business.
Finally, integration of the acquired companies onto the Givaudan's operating platform continues as planned, and we are progressing further with the implementation of the 2025 strategy. Ladies and gentlemen, many thanks for your attention. Tom and I are looking now forward for your questions.
We will now begin the question-and-answer session. Anyone who wishes to ask a question or make a comment may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands when asking a question. Anyone who has a question or a comment may press star and one at this time. The first question comes from the line of Celine Pannuti with JP Morgan. Please go ahead.
Good afternoon, everyone, and thanks for taking my question. First, I would like to ask about the growth outlook. You said that what was the resilient part of the business has been resilient. If I look on the two-year average, sequentially, we have seen a slight deceleration. My question is it possible for you to give us an idea of what is the underlying demand now, maybe that we are entering some form of normalization? The corollary to that question is, in Emerging Markets, I've seen that sequentially there's been a deceleration. Any views that you have when we hear that some of your customers need to raise prices a lot and maybe there could be some elasticity on demand? That's my first question. My second question is on raw material inflation. You have reiterated 1% cost inflation for the year.
If you could confirm the good visibility that you have on that. More importantly, how should we look at your cost base, maybe as we look a bit further out when a lot of the other industries are seeing cost inflation. Do you think that your raw materials are specific that you would not see that? If you could comment on that would be very helpful.
Okay. Thank you, Celine, for your question. Well, I'll start maybe by the latter. On raw material inflation, we can confirm that we are within basically the range of what we originally stated in January. 0%-1% of raw materials increase for 2021. The confidence that we have in this visibility is driven by the fact that we have a number of contracts with suppliers, and we obviously have managed to source ingredients throughout the year as well with those sorts of levels of prices. For sure, we see inflation with other categories. The question was what will happen in 2022? That's a bit too soon to articulate a number, because a number of contracts needs to be negotiated, and the year is not finished.
We'll make sure that we give an outlook on the raw materials development next year towards the end of the year. On the first question on the growth outlook, I'm not so sure I have the same reading of our own figures. Actually, however you take it, Celine, on the resilient business, and if you take, for example, I think the question was especially on the consumer products, one has to look at half-year to half- year. Whether you take a CAGR over from 2019 to 2021 or from 2020 to 2021, we actually are on a very regular pace of 8%. It's true that we have had a very strong growth in Q1, which sort of decelerated in Q2. Overall, the half- year still has a good growth.
I would say the same thing has happened a bit in Asia Pacific. I'll give you, in a way, it's the same reason for both cases, meaning that in Asia, and especially on Taste & Wellbeing, we have seen a very strong growth in the early part of the year, in Q1, which sort of was lower in the second quarter. In both cases, that has to be put onto the account of the fact that we have seen maybe a number of clients sort of preparing on a sort of in a hasty way, an urgent way, preparing maybe for the post-COVID by ordering a lot in the first quarter, and then slowing down in the second quarter. This is not from what we hear from our clients, what we see driven by sort of a difference in consumer demand across Q1 and Q2.
It's really another pattern which has sort of been stronger in the Q1 versus the Q2. Overall, if we read our figures half year to half year to half year, over three years or two years, the pace is really the same. Nothing to be, I would say concerned about. The only question in terms of outlook, which is difficult to make for the second semester, is simply the fact that it is really to look at the comparables of Q3 and Q4 of last year, and for that you have all the figures. That's basically what I can say for those two questions.
Yeah. Thank you very much. Just on the point I was making about price being raised across the board, it is not only in EMs, but as well in VMS by some of your clients or many. Do you expect this could have an impact on consumption and therefore on demand ultimately for you?
You mean the price increase of our own clients? Is that what you're saying?
Yeah. The elasticity of consumption given higher prices.
Yeah. Well, so far we have not seen any trends in this direction, any effect to this. Anyway, I count on the, I would say the natural hedges that we have, because don't forget, we are again across all clients, all categories and so forth. When you have consumers trading down to other categories at lower prices, we are still there. We have seen that in the financial crisis, we have seen that in economic crisis, we have seen that every time where those natural hedges help us to recapture consumers on other categories or other clients when they leave the more premium categories. So far, we have not seen any effect of that.
In a way, we could argue that fragrance, flavors, value-added ingredients around Active Beauty, again, are critical to the consumer choices, the way brands communicate around those consumer benefits, and in a way help supporting basically the sales and whatever happens from a pricing standpoint. We have never seen this effect of elasticity on our sales from an overall standpoint.
Super. Thank you so much.
The next question comes from the line of Jean-Philippe Bertschy with Vontobel. Please go ahead.
Good afternoon, gentlemen. The first question would be on your comment, Gilles, that you are investing in new facilities. When I look at the strong growth over the past three years, if you take LATAM or Active Beauty, if you still have some capacity, if you have to invest in additional capacities or facilities in those areas, I think LATAM is one-third more volume than in H1 2019, as an example. The second one is on M&A. If you can give some color on the impact on both growth and gross margin improvements, and especially on Naturex, which probably was outperforming in this crisis. A sub-question would be on your ambition in the makeup. You spent quite an amount on b.kolor makeup, and what is your plan with that stake in this company, please?
Okay. Thank you, Jean-Philippe . New facilities, CapEx expansion. Well, if we look back where we are growing extremely strongly, first, I would say China, India. Those two markets we actually have invested quite a bit. Actually, the largest investment we ever made was for the fragrance compounding room in China. Every time we make those very significant investments, it gives us, well, depending on the growth rate, but it gives us 5 - 10 years of capacity to grow within those sites. You increase capacity as you go by adding equipment and so forth. In Latin America, for sure, we have plans to further expand some capacity, but this will be within the range of what we spend in terms of CapEx, 3%-4% for the group. We can really accommodate for those types of facilities.
It's a good problem to have in any case, adding capacity to sustain growth. So far we are well-equipped in terms of capacity. The second question about M&A. I'm really happy about the fact that we did not comment that, but it's true that if you look already at the end of 2020, or if you look at the first half of 2021, that especially the acquisitions which went into Taste & Wellbeing, but also the one like Drom going under Fragrance. You can see from the EBITDA level that we already brought most of them to the level of the division pre-acquisition. That includes also Naturex, which basically, yes, there is still some things to be done in terms of rolling out SAP, GBS and so on. Still a bit of savings to be made.
So far so very good, bringing all those assets, and that's to name a few, Drom and Ungerer, obviously Naturex, Expressions Parfumées, basically to the level of the division. We are very happy also about what Naturex brings in terms of growth. When you think about immunity products, natural extracts from Naturex represent roughly 40%, and let's say 80% of that is in the U.S. That has been booming in 2020 and continues to do extremely well. Those are the types of, when we talk about 2025 and when I talk about portfolio expansion, that includes those types also of products, which in such an environment with the pandemic, really plays a very good role. In terms of M&A, we are really happy. If you just think about the value creation, as you've seen, obviously we passed the CHF 40 billion mark in terms of market cap.
I would say that acquisitions and the way we have created value through them, has contributed nicely to this increase. It relates to b.kolor, well, it's a very interesting step into a category which is part of beauty. If you just think about let's say, the market of beauty in terms of retail, I would say to make things simple, it's 1/3, 1/3, 1/3. One-third Fine , 1/3 skincare, and 1/3 makeup. We are quite active, obviously, in Fine fragrances. We have made great progress with Active Beauty in the skincare. Active Beauty is also a success story for Givaudan. It's going to hit more than CHF 100 million this year. It's growing high double digits. It's really a success story. Makeup is really about exploring how we can participate with high value-added, not only ingredients, but solutions.
Actually, what's very interesting with b.kolor is that in a way, they have the same sort of business model, combining ingredients to create solutions which are specific and customized bespoke for the brand. This is really something that we want to explore, build upon, alongside of b.kolor. Very happy about this step into this sort of third leg of beauty where we never really participated. Yeah. I hope I answered your three questions.
Thanks very much.
The next question comes from the line of Heidi Vesterinen with Exane BNP Paribas. Please go ahead.
Hi, good afternoon. The first question is on Taste & Wellbeing. If foodservice keeps improving, should we expect retail to slow further? Are there any new initiatives that could keep retail growing regardless of what happens out of home? On inflation, you had said 1% for the full year. Could you tell us what it was in H1? I wondered if you plan to add strategic stock in H2, given it is an uncertain environment out there. Another one, lastly, on margins, a related question. Given that many of your customers are warning on margins, given high raw material costs, do you see incremental appetite to reformulate or perhaps even price pressure or resistance to take pricing from customers? What's the outlook there? Thank you.
Thank you, Heidi. Inflation on raw mats, essentially, it's across the two. We've seen 1% in the first half, and we continue to have the same level in the second half, so overall 1% of inflation. We usually don't play too much building stocks to play the market in a way, because that's also eating a lot of free cash flow. Those strategies are used in a sort of a minimal way. Your questions about margins. Sorry, I did not understand. On the margins, you said the high.
On reformulation.
The reformulation. Sorry. On the reformulation, we have not seen any ask, any request so far to reformulate. Again, this demonstrates that it's the importance of those ingredients basically in the consumer liking, in the consumer behavior. If you start to play around with the whole sensory profile of a product for cost reduction reasons, you really take a risk on the performance and the success of the brand. Plus, we account for so little in the end products. It doesn't really help on the whole cost of the formulation. This is really not something we have seen. This is something which is being used when you have an increase of our own raw mats, and there we work with our clients sometimes to reformulate and try to mitigate some of the cost increase. On Taste & Wellbeing.
Your question, you said on food service is improving? Is that what you said?
If food service improves.
Yes, if food service improves.
Yeah.
Yeah. What happens to retail?
Yes, what you don't eat outside, you eat inside and vice versa. At the same time, you still have potential increment net benefit because in food service, you have a lot of things around. For example, sports events or corporate events in hotels. All those events basically are being served and help the development of the food service. As the activity increases, can help the food service without necessarily cannibalizing or reducing the rest. Yes, there might be an incremental improvement, but you have to also be mindful that food service, quote-unquote, only accounts for CHF 400 million-CHF 500 million of sales out of CHF 6.3 billion, CHF 6.4 billion.
Thank you.
The next question comes from the line of Matthew Yates from Bank of America. Please go ahead.
Good afternoon, everyone. A couple of questions, maybe the first one for Tom. You talked about cost discipline helping the margins. Also in the introductory remarks, you emphasized that things like travel and entertainment are probably still well below pre-crisis levels. Can you just elaborate for me in terms of when you say cost discipline, how much of that is just transitory or temporary savings that haven't gone back into the business yet? How much is perhaps maybe more fundamental or sustainable? The second question, maybe for Gilles. There's an awful lot of distortion at the moment from the comp effects of last year, and you talked about the customer restocking, getting ready for reopening. Are there parts of the portfolio where you believe you're meaningfully taking share from your competitors because of your better product offering?
Yeah. I can start with the second question. Well, to answer the question on market share gain, we are the first one to publish, let's wait for the other ones to publish to answer more accurately this question. If I go alongside of what has happened for the last, not only year, but I would say years, we certainly have gained market share from some of our key competitors. I'm confident that we are, if not market share gaining, but clearly being at the level of the market. Let's see how the others are doing. Again, we are very happy about the sales development on all fronts. There is something that I think needs to be reminded since we are comparing to competitors. Givaudan has the sort of broadest natural hedges across the three dimension client, products, and geographies.
This is really something that I think is helping delivering those consistent results. This is part of our strategy, this is part of the way we do acquisitions, this is part of the way we define the spaces in which we want to grow, usually the spaces where we have low market share. This is really the consequence of those natural hedges, is the consequence of the strategy, and I think that helps us growing well against competitors. The first question, Tom, maybe you want to
Thanks, Gilles, and thanks for the question. I think, if you look really from a macro perspective, I think the easiest thing to do is look at the improvement in the margin, this first six months compared to the first six months of 2020. On that incremental growth of just under 8%, we had an EBITDA margin of 31%. When we are growing, we are growing at a higher margin to our existing margin. A couple of the items that you mentioned. You mentioned travel, and clearly, we were not traveling in the first six months of this year. To be very honest, we were probably not traveling for four months out of the six months last year as well. On the other hand, and of course, you've seen this from many companies, and Gilles also referred to it.
If you look at some of the ancillary costs, particularly freight cost, has been extremely high in the first six months of the year. Just the general transportation cost is high. Very specifically, the so-called Texas freeze, which had an impact on us. Here we were absolutely determined to make sure we continue to supply our customers. Of course, that came at a certain cost. I think, as I've said, probably last year, it's swings and roundabouts. You tend to have one cost bucket going up, the other one going down. Overall, we maintain a very strong cost discipline.
Thanks both.
The next question comes from the line of Daniel Bürki with Zürcher Kantonalbank. Please go ahead.
Yeah. Good afternoon, gentlemen. I would have a question regarding your restructuring costs. They are much lower than we thought. It means you are ahead of plan with the integration of all the companies, or is more coming maybe in the second half? If you could elaborate a little bit on this. Thank you.
Actually, Daniel, I think we're probably slightly behind plan simply because of the way that we're operating today. If you look at many of our facilities, as Gilles and I both mentioned, we're very much focused on meeting the demand of customers. With an extremely high volume demand, it's challenging really to also look at, let's say, the supply chain and the footprint. We're slightly behind. It's more a timing issue. There will be some in the second half of the year and probably some more coming into the first half of next year as well.
Thank you.
The next question comes from the line of Lisa De Neve with Morgan Stanley. Please go ahead.
Hi. Good afternoon, everyone. So far we've talked a little bit about reformulations and market shares, coming back to that and more broadly, what are you seeing in the consumer pipeline in customer briefings? Is there a difference between regional and multinational customers? Is there a notable difference between certain categories, for example, between Active Beauty and plant-based? Alongside that, you mentioned a number of new business wins. I would like to understand if this references to, again, you taking share, is this a better market backdrop or is it you growing into newer markets such as plant-based, functional nutrition, and so forth? A bit of granularity around that would be very helpful. Thank you.
Well, it's a bit of everything. That's the magic of our business. Yeah, first what we see in terms of the nature, and that's always interesting to analyze the what we call the brief pipeline. What's the nature of the briefs that we receive? Essentially when we say that the strategic choices that we have made around naturals, around clean label, around plant-based proteins, but as well on the core business, around Fine fragrances, around fabric care, using more capsules, for example. The importance of making fragrances performing on fabric and so forth. All those things which are, in a way, consumer-driven, for more cleansing, caring, but also enjoying, are true and have been amplified, especially the thing on health and have been really amplified by the pandemic.
The thing which comes on top is also the whole, let's say, This is very much our customers driven, basically much more demand and appetite for sustainability. Meaning that, even though you could argue that what we make in terms of ingredients have a very small CO2 footprint, extremely small CO2 footprint, we are still part of the journey that we are embarking with our clients to make products and to, whether on the ingredient side or the way our perfumers and flavorists formulate to make those formulations less CO2 impactful. The element of sustainability is coming on top and is contributing to the nature of the briefs that we see. What's the difference between local and regional clients and the large ones? Usually it's about time, it's about the speed of the execution of locals is quite fast. The appetite for risk is quite high.
The granularity of understanding consumers and so forth is also quite fine. That's also the typical differences that we see across those categories of clients. Yeah, in terms of new business, this is at the heart of our business. To grow, and to grow faster than competitors, it's all about winning more briefs than the others. That's as simple as that. Simply because, as you know, the arithmetics about our sales growth is a combination of an erosion of our existing business, which we can't do much about because that's what is being driven by our clients, by consumers, and we can't really act upon it. This is compensated by enough new wins to have a net growth of whatever, 4%-5%. That's the part that we can influence.
Winning more briefs on the brief pipeline that we work on a continuous basis is the key to grow and to grow faster than the others. Yes, when we grow faster than the others, it's just a question of winning more business than the others. That's driven by a combination of a number of things, which is basically the magic formula maybe of Givaudan or at least in our business, which is about client relationships, innovation, and so on, and making products which are successful on the shelf for our clients.
Okay. Thank you very much for that.
The next question comes from the line of Isha Sharma with Stifel. Please go ahead.
Hi. Good afternoon, gentlemen. Thank you for taking my questions. I have actually just two left. One is on plant protein. You mentioned that you saw strong growth at plant proteins. Could you just tell us the size of this business, and how should we expect this to develop? The other question is on the opportunities in Active Beauty. We've been talking a little bit more about Active Beauty recently, and you've renamed your segment Fragrances as well. Just wondering, where do you see the opportunities the most, because the competitive landscape seems to have not changed. What are you doing differently that puts you at an edge compared to competitors, and where should we see the business developing? Thanks.
Yeah. The size of the plant-based protein, actually, it's a very exciting space because we actually started innovating, developing specific ingredients then, which are usually called taste modulators, combined with flavors to make solutions, which actually make those proteins, those alternative proteins, whether it's made of peas, of soy, or whatever other source of proteins. It's all about making those things taste good. Because that's extremely key for consumers. At the end of the day, it's not good enough to say I replace animal proteins by plant-based proteins. If it doesn't taste good, consumers won't try a second time. The business now, the business size was CHF 66 million in the first half. We are talking roughly, we are at a pace of CHF 130 million-CHF 140 million for a full year and growing very fast because we started maybe four years ago.
How far can it go? Well, it can go quite far. Difficult to define, because it's a new space. It's a new space for consumers. It's all going to be defined by the fact that our consumers are going to pick up the plant-based proteins proposition. A lot of startups, a lot of existing clients are investing into this space. I think whether it's a risky one or not, we ought to be in this business because the likelihood that it's going to be big is high. We are very well-placed in this field, if not the best placed in plant-based protein. The Active Beauty is also a space which we came into as an adjacent space to Fragrance and to Fine fragrances. Why is it successful?
I think we achieved a good combination of the acquired company in the path of Induchem, of Soliance, but also of some other small businesses. We managed to expand a portfolio which is becoming much diverse, wide. We are becoming a significant player in the space of highly specialized Active Beauty ingredients. On top of that, the value proposition of Givaudan, which I think is unique and very important, is that all of those ingredients are natural but made in a sustainable way with biotechnologies. That's very unique, because it's a very good way to make products which are claimed to be natural, but in a sustainable way. That I think also explains the success. The third thing which I think explains the success is the unique combination with our Fine fragrance clients.
We have access in a very intimate way with most, if not all Fine fragrances beauty players in the world. We leverage the relationship with those to actually present and work on Active Beauty ingredients. Some of those thoughts to answer your questions on both sides. Now I think we'll take the last question, operator.
The last question for today comes from the line of Kenny, Cathal with Davy Research. Please go ahead.
Good afternoon, folks. Thanks for taking my questions. Two questions for me. Firstly, for Tom, just how should we think about operating leverage in the second half in the context of a recovery in Fine fragrances and food service? My second question relates to natural extracts and the beverage category. Just interested to know your comments on the opportunity set around that. I think you referenced that was booming in North America. They're my two questions. Thank you.
Just on the operating leverage, if you look at the half-year numbers last year when we saw significant decline in Fine fragrances, and in food service, there's not such an impact on the overall margin. If you look at the relative size of the businesses, 16% of the portfolio is discretionary, 84% is resilient. Overall, it has very little impact on, let's call, the operating leverage. You see it actually even in the first six months of the year. It's more driven by the total leverage of the group and the use of the facilities rather than any single category overall. Maybe on the natural extracts, I'll hand it to Gilles for the comments.
What I refer to is those, what we call the phytoactives or immunity-boosting type of natural extracts, which is, again, a legacy family of products which had been developed by Naturex and which we thought was really attractive. That's also part of the reason why we acquired Naturex. As I mentioned, 80% of that is very much in the U.S., and that goes into not only beverages, but all forms of applications, because that's really a sort of a nutrition type of natural extract that you add to a number of applications. Those things have been really welcomed, especially in the context of the COVID-19 pandemic in the U.S.
Thank you.
That ends our Q&A session for our half-year results. I thank you very much for your questions. I'd like to welcome you in person or virtually. We'll have a sort of a hybrid half- year conference on the 26th of August in Zurich. That session that day will be dedicated on our nutrition, health, and sense offering, which I think will echo some of the questions you asked about this space, which is quite interesting and exciting. Thank you again for your questions.
Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.