Ladies and gentlemen, welcome to the Givaudan 2020 full year results conference call and live webcast. I am Paolo, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is now 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.
Thank you. Ladies and gentlemen, good afternoon, as well as good evening to Asia, and good morning to the Americas. Welcome to our 2020 full year results conference call. Tom Hallam, our CFO, will also be on this call. We will take you through the presentation before answering your questions at the end. The investor news on our full year-end results were published on our Givaudan website at 7:00 A.M. this morning. This is where you can also find the slides for today's presentation, along with the investor news on our website, our 2020 annual report is now available. I would now like to start going through the presentation and invite you to turn to slide number three to go through our performance highlights for this year.
2020 was not only the last year of our five years strategic cycle, like many others, we certainly did not expect such a global pandemic, such an unprecedented situation. About a year ago, very few people could figure out what would happen, equally, how a company like Givaudan would have adapted so well and so quickly. Certainly, a very testing year for us. With this context in mind, I'm very happy to announce an excellent set of figures. I'm also proud to report that we have fully achieved our ambitious 2020 goals. A five-year cycle during which we also acquired 16 companies, a total of CHF 1.5 billion of sales, each one complementing Givaudan with a very strong strategic fit. I would add, the COVID pandemic did not slow us down in making good progress with the integration of the most recent acquisitions.
With this 2020 cycle successfully completed, we started 2021 fully committed to the next 2025 cycle, for which we have presented last August 2020 a new set of ambitious targets, along with a sound strategy. In the current environment, these strong 2020 results demonstrate our market leadership, the resilience of our business model, and the important role we play in sustaining with our clients the global supply chain of many essential consumer product categories. I'm very proud of the entire Givaudan organization for their dedication and agility during this very challenging period, and for enabling us to continue to support our customers to make products available to billions of consumers throughout the COVID-19 crisis. In 2020, we reached sales of more than CHF 6.3 billion, a growth of 4% on a like-for-like basis, and 1.9% in CHF.
Our sales growth for the full year 2020 is clearly ahead of the market. This strong growth was supported by many levers, once again, by the good contribution of high-growth markets. Secondly, by the strategic focus areas, as well as the acquired businesses. The strong performance of the resilient part of Givaudan, representing 84%, which more than compensated the decline of the less resilient part, namely food service and Fine Fragrance, which I will detail further in this presentation. Even though launches of new products were slowed down because of the COVID-19 environment, our project pipeline with our clients remained strong despite the environment, and our win rates are very healthy. We achieved an EBITDA close to CHF 1.4 billion, increasing by 9.6%. The comparable EBITDA margin is 22.8%, up 130 basis points versus 2019.
The free cash flow of CHF 811 million is up 3% versus 2019, which represents a 12.8% of sales. At the AGM of March 25th, 2021, the board of directors will propose a dividend of CHF 64 per share, an increase of 3.2% year-over-year. To complete those highlights, we have fully delivered on our 2020 guidance with an average annual like-for-like sales growth of 4.9% and an average 12.6% free cash flow over the last five years, 2016 to 2020. Let's turn to slide four. Both divisions contributed strongly to our growth. Fragrance & Beauty reached more than CHF 2.9 billion, growing 5.4%, and Taste & Wellbeing reached CHF 3.4 billion, growing 2.8%. Both growth rates are on a like-for-like basis.
The good growth was achieved across most product segments, with particularly strong performance in household, health, and personal care for Fragrance & Beauty, as well as in packaged foods, savory snacks, and immunity products for Taste & Wellbeing. Thanks to the regained momentum of our multinational customers, they grew as fast as our local and regional customers in 2020. Once again, all our strategic focus areas, complemented by acquisitions, have contributed to our growth. To name a few, high-growth markets, health and wellness, naturals, plant-based proteins, and Active Beauty. Let's turn now to slide five. This slide was developed specifically in the context of the COVID-19. As the COVID-19 started impacting China in Q1, rolling from east to west, and as lockdowns and confinement measures were implemented, we have seen two distinct paths within the portfolio of Givaudan, each one with its distinctive dynamics.
COVID-19 had a significant impact on the less resilient part of the business, which represents a total of 16% of group sales and which declined close to 15%. Fine Fragrance, which represents 18% of the division, after a sharp decline in the first half, especially the second quarter, strongly recovered in the fourth quarter, totaling "only" a 6% decline for the full year. As for the Taste & Wellbeing division, the less resilient part, namely food service, was strongly impacted, totaling a decline for the year of 23%. As you can see in this slide, the higher impacted categories bottomed out in the second quarter. Whilst Fine Fragrance has experienced a significant recovery, particularly in the fourth quarter, food service has only marginally recovered in the third quarter but has remained quite depressed throughout 2020.
On the other hand, with increased sanitation and many confined at home, we have seen a very good sales development of the resilient part of Givaudan, which totals 84% of group sales, namely Consumer Products and Active Beauty, which represent 82% of Fragrance & Beauty, growing at 8.2% on a like-for-like basis. The core business of Taste & Wellbeing, consumed essentially at home, which represents 85%, grew 7.4% with a continuous good momentum throughout the year. As you can see, thanks to the natural hedges throughout the portfolio of Givaudan, but also thanks to the market share gains we have continued to achieve this year, the resilient part more than compensated, significantly more, the less resilient part, leading to this 4% growth.
Actually, when comparing the performance of both divisions, it's interesting to notice that the sharper decline of food service, -23%, versus Fine Fragrances, -6%, entirely explains the 2.6% difference of growth between the two divisions. Let's turn now to slide six. In 2020, high-growth markets, which represents 42% of our sales, delivered a 7.4%, continuing to show a good momentum despite the current pandemic situation. Latin America performed strongly, led by Brazil, Argentina. Africa and Middle East and Russia contributed with strong growth levels as well as did China, which actually recovered very fast already in the second quarter. The other parts of Asia have grown moderately. Indonesia and India have posted declines, both more heavily impacted by the COVID crisis.
Our size and our operations footprint gives us a unique exposure to the diversity of these high-growth markets in which we continue investing both with additional talent and new facilities to service the wide diversity of our clients. We have seen in 2020 how critical our geographical balance contributes to natural hedges against a crisis like the COVID-19, where the timing of the pandemic has been quite progressive, with a different intensity depending on the geographies. In the mature markets, representing 58% of sales, we grew 1.5%, led by a strong development in North America. This was offset by single-digit decline in Western Europe and in Japan as a result of travel bans and severe lockdown measures. Please now turn to slide seven. I'd like now to highlight the sales development by region for the group. Sales in Latin America continue to perform incredibly well.
Latin America recorded another outstanding growth with 17.6%, driven mainly by Argentina, Brazil, Mexico, and Colombia. Volume growth and market share gain contributing to 2/3 of the total growth. This means more than 12% in volume. Sales in Asia Pacific were certainly patchier, with the region going through various situations with regard to the pandemic. Overall, the growth in Asia Pacific was 0.6%, with China achieving a double-digit growth throughout the year, whilst India and Indonesia posted sales declines. North America grew a very healthy 5.7%, which I believe is an excellent result. EAME grew 1.1% with high single-digit growth in the high-growth markets of Eastern Europe, Africa, and the Middle East, more than offsetting the softness of mature markets, notably France, Italy, and Spain. Let's turn now to slide eight. The Fragrance & Beauty division grew 5.4% on a like-for-like basis and 4.5% in CHF.
This excellent growth, given the context, was driven by the strong performance of our Consumer Products throughout the year, and further supported by a good recovery of the Fine Fragrance business in the second half of the year. Overall, Fine Fragrance sales decreased by 6% on a like-for-like basis, with sales impacted by the global COVID-19 pandemic. The second quarter experienced a strong reduction in demand due to restrictions in retail and travel retail channels in the major Fine Fragrance markets, performance improved gradually in the second half of the year, especially in the U.S., with an overall worldwide growth of 4.2% compared to the same period in 2019. Consumer Products sales increased by 9.2% on a like-for-like basis against the strong comparable growth of 7.8% in 2019, driven by strong gains in new wins and continuing strong demand for household, health, and personal care products.
This excellent growth was delivered in both high-growth and mature markets, and across all customer groups and regions. Finally, Fragrance Ingredients and Active Beauty increased by 2.5% on a like-for-like basis, with low double-digit growth both in Fragrance Ingredients and in Active Beauty, despite the impact of COVID-19. Now let's turn to the next slide, number nine. Sales of the Taste & Wellbeing division grew 2.8% on a like-for-like basis and remained flat in CHF, mainly due to the negative currency impact. Taste & Wellbeing experienced weaker demand in food service and out-of-home food consumption categories due to lockdowns and severe restrictions on mobility, hospitality, and outdoor activities. It also experienced an increased demand for existing products in categories such as immunity products, juice-based beverages, culinary solutions, nutritional bars, savory, and snacks.
In the key strategic focus areas, sales increased double digits in health and wellness, plant-based proteins, and mid-single digits in naturals. From a segment perspective, beverages, dairy, sweet goods, savory, and snacks all contributed to the positive sales performance, driven by an increased demand for traditional center-of-the-store foods. Sales in Asia Pacific decreased by 1% on a like-for-like basis. In the high-growth markets, China delivered strong double-digit performance, followed by a solid single-digit growth in Thailand, whereas the markets of Indonesia, Malaysia, Philippines, and India were strongly impacted by the COVID-19 crisis, as mentioned earlier. Sales in Europe, Africa, and Middle East increased by 2% on a like-for-like basis. The mature markets of France, Germany, Benelux, and Northern Europe achieved good single-digit growth, whilst the high-growth markets enjoyed continued excellent business momentum, driven by double-digit growth in Russia, Turkey, Maghreb, and Egypt.
The growth was mainly achieved in the segments of dairy, savory, and snacks. On a like-for-like basis, sales in North America increased by 4.3% across all customer segments, and the performance was a result of new wins and the growth of existing business in beverages, immunity products, snacks, and sweet goods. Finally, sales in Latin America increased 10.7% on a like-for-like basis, led by strong double-digit growth in Brazil, Argentina, and a good single-digit growth in Mexico. The growth was driven by the segments of beverages, dairy, sweet goods, and savory. Let's turn now to slide 10. In this challenging COVID-19 environment, in line with the company's purpose issued end of 2019, Givaudan has been and will continue to be strongly focused on doing two things.
The first one is servicing best our customers, and the second one is doing so while protecting and supporting our employees, be those on-site or those who are still working from home. I'm very proud of the entire Givaudan organization who responded overnight with agility and dedication during this challenging period by enabling us to continue to supply essential products to our customers. The vast majority of our manufacturing sites have been kept almost at full capacity, and our teams also did a fantastic job managing the whole supply chain, from sourcing raw materials to responding to delivery challenges in order to meet our customers' needs wherever. It is worth saying that our GBS organization has been a powerful enabler. With respect to the communities, the company established a communities fund to enable Givaudan sites to support local communities that are being affected around the world.
With this, I'd like now to hand over to Tom, who will give you more granularity on our financial results. Tom?
Thank you, Gilles. It's also my pleasure to welcome all of you to the call. As Gilles is taking you through the main aspects of the sales performance, as well as the market and the impact of COVID-19, I'll take you through the following slides with a focus on the operating performance, the cash flow, and the balance sheet of the group. Let me start with the performance highlights on slide 12. Group sales increased by 4% on a like-for-like basis, and by 1.9% in CHF, which includes the full year impact of Drom and Fragrance Oils, as well as the partial impact of the acquisitions we completed in 2020, most notably Ungerer. The group's EBITDA increased by 9.6% to CHF 1.4 billion, and the reported EBITDA margin increased by 150 basis points from 20.6% in 2019 to 22.1% in 2020.
The underlying EBITDA margin was 22.8% in 2020 compared to 21.5% in 2019. The net income was CHF 743 million, or 11.8% of sales. Once again, the group achieved a free cash flow of more than 12% of sales, 12.8% of sales, or CHF 811 million. Please turn to the next slide, which shows the exchange rate development. As we have already seen with our half year results, the Swiss franc continued to strengthen against all major currencies in which the group operates. This resulted in unfavorable exchange rate effects, which are reflected in the growth figures in CHF. Nevertheless, overall, the impact has been limited because our operational and geographical spread continued to provide good natural hedges, and our EBITDA margin remains well protected against these currency fluctuations. Please turn to slide 14.
The gross margin increased from 40.8% in 2019 to 42.1% this year due to continued efforts to increase productivity and cost discipline. The EBITDA was CHF 1.4 billion in 2020 compared to CHF 1.275 billion in 2019. We had a number of one-off items in the year, mostly costs related to the acquisition and restructuring of CHF 39 million, well within the budget of CHF 50 million that we had communicated to you at the beginning of the year. Secondly, we incurred costs for the implementation of CHF 6 million for GBS, and with that, the implementation has been successfully completed in 2020. The underlying EBITDA margin was 22.8% compared to 21.5% last year. I would like to mention that the improvement in the EBITDA margin was a result of the many initiatives and projects that we have implemented over the last few years.
GBS, synergies on the acquired companies, and maximizing the use of our operations footprint with the strong customer demand. The operating income increased to CHF 996 million in 2020 compared to CHF 920 million in 2019. On the next two slides, I would like to spend a few minutes on the operating performance of the two divisions. If you turn to slide 15, we can start with Fragrance & Beauty. As Gilles has mentioned, Fragrance & Beauty recorded a sales increase of 5.4% on a like-for-like basis, and 4.5% in Swiss francs. Acquisitions contributed CHF 191 million. The EBITDA for the division was CHF 677 million in 2020, compared to CHF 555 million in 2019, driven by a strong sales growth and the contribution from the acquired companies Drom, Fragrance Oils, and Ungerer. The underlying EBITDA margin was 23.6% in 2020, up from 21.3% in 2019.
If you now turn to page 16, we can cover the performance of Taste & Wellbeing. Taste & Wellbeing recorded a sales increase of 2.8% on a like-for-like basis and a decline of 0.2% in CHF. Acquisitions contributed CHF 115 million. A continued strong focus on internal costs and continued productivity gains increased the EBITDA by 8.6% from a local currency perspective. On a comparable basis, the underlying EBITDA margin was 22.1% in 2020, compared to 21.6% in the prior year. It's worth noting that in Taste & Wellbeing, we are back to the margin levels that we had before the acquisition of Naturex and one year ahead of plan. Please turn to Slide 17, which shows the amortization of intangible assets. This slide has been updated to include all acquisitions in 2020, and it gives you a perspective of this future expected amortization.
Please turn to the next slide for the net income. The net income before tax was increased in 2020 to CHF 876 million, mainly as a result of the strong business environment and stable non-operating expenses despite slightly higher interest charges related to the recent acquisitions. The effective tax rate in 2020 was 15%, compared to 13% in 2019. The net income was up to CHF 743 million in 2020, a solid increase of 5.8%. Basic earnings per share was CHF 80.59 compared to CHF 76.17 in 2019. Please turn to the next slide to show the cash flow. In 2020, we had again, a strong free cash flow of 12.8% of sales, similar to 2019, which is at 12.7%. During 2020, Givaudan generated an absolute free cash flow of CHF 811 million compared to CHF 787 million in 2019.
Total net investments were CHF 217 million, and as a percentage of sales, net investments were 3.4%. As a reminder, in 2019, total investments were 4% of sales. In 2020, we continued our investments to support the growth in high growth markets, most notably the construction of an additional fragrance facility in China that was completed during the year. Working capital was 24.4% of sales, almost flat compared to 2019, which was 24%. Over the last 20 years, the company has generated a cumulative CHF 9.4 billion of free cash flow. Including the proposed dividend for 2020, Givaudan has returned CHF 5.8 billion to shareholders in the form of either dividends or share buybacks since its spin-off in 2000. As mentioned in previous years, this clearly underlines the strong commitment of Givaudan to return surplus cash to the shareholders.
Based on the continued strong cash generation, the board of directors will propose a further increase of the dividend to CHF 64 per share, an increase of 3.2%. Please turn to slide 21. As you can see from this slide, we have a well-balanced debt profile with interest rates, which we have locked in at attractive rates. At the end of the year, the net debt was CHF 4 billion, with an average interest rate of 1.5% at the end of 2020.
Finally, please turn to the slide 22, which shows the leverage ratio. At the end of the year, the leverage ratio was at 50%, up 300 bps compared to the end of 2019. The increase in the ratio was largely driven by currency swings on the currency translation adjustment in equity, as well as by the acquisition of Ungerer at the beginning of the year. With this, I would like to conclude my section of the presentation and hand back to Gilles.
Thank you, Tom. Let me now come back to our 2020 strategy achievements, which are shown on slide 24. After five years of repeating continuously our 2020 targets, I'm sure by now you are well aware of what we had set out to do six years ago, and I'll summarize those results. Givaudan successfully achieved an average sales growth of 4.9% on a like-for-like basis and an average free cash flow of 12.6% of sales for the five-year strategy period from 2016 to 2020. In addition, we made 16 acquisitions, which I will comment further in the next slide 25. Indeed, acquisitions have been an important part of our five years growth path and are all aligned with market trends and our strategic priorities. Since 2014, we have acquired 16 businesses for a total of over CHF 3.6 billion, including the most recently acquired Ungerer, Indena Cosmetics, and Alderys.
Each one with a very strong and natural strategic rationale as well as a perfect cultural fit. Those 16 acquisitions represent an annual yearly contribution of more than CHF 1.5 billion to our total group sales. We aim at further value creative acquisitions to complement our core capabilities and increase our portfolio of naturals, health and wellbeing, Active Beauty, ingredients contributing to integrated solutions and local and regional customers, as well as new adjacent business areas of technologies like biotechnology. With which we believe we can further provide value to our customers and our shareholders. Let's turn now to slide 26. Let me now briefly walk you through some of the key highlights of how we successfully delivered on our 2020 strategy. Let's start with the first pillar, growing with our customers.
We have significantly expanded our product and customer portfolio in key growth areas, namely naturals, Active Beauty, health and wellbeing, and significantly expanded our local and regional customers, both organically and via acquisitions. We have also developed further our integrated solutions business through existing and acquired capabilities. Let me quantify some of our key achievements in our strategic segments. We have doubled our business in sales of naturals to almost CHF 2 billion. We have achieved the number one position in Fine Fragrance with a 2016-2020 CAGR of 4.7%. We have developed an Active Beauty business of CHF 100 million and an alternative protein business in excess of CHF 100 million. In our health and wellbeing portfolio, we have achieved a 2016-2020 CAGR of 11.4% of sales, which are reaching close to CHF 1 billion.
Our portfolio of local and regional customers represent now 54% of our group sales. The second strategic pillar was about delivering with excellence. It was all about the successful global implementation of Givaudan Business Solutions, GBS, which has been completed in 2020 and delivered not only the targeted benefit, but also fully revealed its full potential and agility in crisis times, such as last year with the COVID. GBS will continue to be of critical importance as we further integrate, as I speak, the systems and supply chains of the acquired companies. Finally, automation, digitalization, the use of artificial intelligence, and continuous improvement of our key business processes will continue to be a priority and have taken many forms throughout the organization. Finally, the third pillar of our strategy was around partnering for shared success.
The objective of strengthening our global innovation ecosystem made a major leap forward with the opening of new flagship innovation center in Zurich during the 2016, 2020 period. We doubled sales from innovation linked to external collaboration. Last but not least, we launched the Connect to Win program to accelerate innovation in partnership with suppliers, and we improved significantly our employee engagement and safety performance. Finally, our society commitment has been well-recognized, and Givaudan earned many awards, including the CDP leadership scores and EcoVadis gold status. These are just a few examples, but each of these objectives has been materialized by many other achievements in our operations around the world. Let's move now to slide 27, our 2021 outlook. With this 2020 testing year, we are very confident in our capabilities and the critical role Givaudan plays in the global value chain of food and consumer products.
For 2021, visibility remains short as the pandemic is still around, and further lockdowns are still on the agenda of many countries around the world as I speak. Our view on the raw material price environment is that it should show a moderate increase of about 1% throughout the year. The entire organization will keep focusing on, in the short term, protecting and supporting our personnel and keeping our operations and supply chain at high levels to support our customers, while at the same time, making sure we keep the current discipline on costs throughout the business. Secondly, we'll continue our focus on integrating the recently acquired businesses in our Givaudan operating platform. Integration costs should be in the range of CHF 45 million in 2021. Finally, we'll focus on implementing our new strategic roadmap for 2021 to 2025, in line with Givaudan's purpose and strategy.
Let me now turn to slide 28 to remind you the highlights of this 2025 strategy. Committed to growth with purpose. This company's 2025 ambition is to deliver sustainable value creation for all stakeholders. Givaudan's 2025 strategy is fully in line with our purpose, whilst placing customers at the heart of our business, supporting them to grow and create products that are loved by consumers. The 2025 strategy is focused around three growth drivers: expand the portfolio, extend our customer reach, and focus market strategies. It is supported by four growth enablers, which are aligned with the company's purpose domains, namely creations, nature, people, and communities. These three growth drivers and the four enablers are all underpinned by a commitment to excellence, innovation, and simplicity in everything we do. Let's turn now to slide 29, that shows the performance commitments of the 2025 strategy.
Ambitious targets are an integral part of not only our Givaudan's 2025 Strategy, but also of our culture. With the company aiming to achieve organic sales growth of 4%-5% on a like-for-like basis and a free cash flow of at least 12%, both measured as an average over the next five-year period strategic cycle. In addition, the company aims to deliver on key non-financial targets around sustainability, diversity, and safety linked to Givaudan's purpose. With that, we have arrived at the end of our 2020 full year presentation. Ladies and gentlemen, many thanks for your attention. Tom and I are now looking forward to your questions.
The first question comes from the line of Celine Pannuti from JP Morgan. Please go ahead.
Good morning. Oh, sorry. Good afternoon, everyone. My first question will be on Fine Fragrance, which had a very strong end year-end. To which extent you think there was a bit of stoking ahead of the Christmas seasons, and how you feel about the year, even if we still have some lockdown in some key developed markets and travel retail, as I understand, has not yet really picked up. The second one is on some of the market performance. Latin America has been very strong. On the contrary, we've seen that Southeast Asia was very weak. What is your feeling about the consumer as we enter 2021 in Brazil? Equally, I think you spoke about downtrading in some key markets. How fast do you think we can see a return of demand in countries like India and Indonesia? Thank you.
Thank you, Celine. Good afternoon. On Fine Fragrance, I would like to say the first thing is that, yes, - 6% throughout the year is a very good result. I think it combines two things. One is the fact that we certainly have gained market share, but the second important reason is the diversity of the clients and portfolio that we have in our Fine Fragrance business, which has a lot to do, yes, with the diversity of clients, but also indirectly of the distribution channels. We are exposed on the more prestige Fine Fragrance perfumes, which are being sold in stores, in travel retail, and so forth. On the other hand, we are also very well exposed to the other distribution channels, obviously indirectly on the internet, but also the door-to-door specialty retail in the U.S.
That's especially true for both Americas, North America and Latin America. Essentially, I would like to really explain this good result by, again, those natural hedges that we have already inside Fine Fragrances. The reason, yes, whatever shape, we can call it maybe a V shape, going down, really down, in Q2, starting to recover in Q3, especially in the U.S., then a strong finish in Q4. I would not put that with the explanation that you're proposing on the stocking up for Christmas. Christmas season in Fine Fragrances is prepared already in May or June. It's a bit too late to plan for Christmas when you are in the fourth quarter. I don't see any stocking for Q1. I don't see that happening either.
I would say that, again, this has to do with, you've seen a bit of the effect of coming out of lockdowns, especially in the end of Q3, Q4. That has maybe had an impact, but also again, a strong rebound, especially in the U.S. and in Latin America. From what we hear, the Christmas season has been okay around the world. I don't see a negative effect that, if I remember correctly, happened in 2009, that you usually have in Fine Fragrance. I think the supply chain of Fine Fragrance is quite well managed, and you don't have stocking in the different sets. One thing to mention is Q4 2019, so the comparable Q4 2019 in Fine Fragrance was actually quite weak. We had also an easy comparable for Q4 2020. The second question about Latin America and Southeast Asia, difficult to read on Latin America.
Given the fact that we have had a very continued performance, very good performance, not only in 2020, but the years before. Even in a COVID environment, this for sure I can explain part of it, which is strong market share gain with very strong wins. That is obviously helping. That is very clear. What's going to happen going forward, difficult to read. We stay confident in Latin America. Southeast Asia, for sure, and especially, if you look at India for Givaudan has been a fantastic track record with double-digit growth in a very, very consistent way for years and years until it was hit by COVID. I believe that once, and hopefully soon, we'll come out of the whole pandemic, we'll come back strongly in India to those levels. When is that going to happen?
This is all going to depend on, obviously, the development of the COVID-19 in India, and I would say the same for Indonesia, which has been especially hit in this region. The timing is really defined by basically the environment around COVID-19, but I'm quite confident, given the portfolio, the diversity of clients that we have over there, that we can come back to good growth in Southeast Asia.
Thank you.
The next question comes from the line of Matthew Yates from Bank of America. Please go ahead.
Hi. Good afternoon, gentlemen. A couple of questions, please. The first one is maybe for Tom around free cash flow. You had conversion just below 13% in 2020. Can you comment about your expectations for 2021? I'm just thinking that your flagging raw materials may become a bit more inflationary. Capital expenditure looked quite low in 2020. Should we expect free cash flow conversion to be lower in 2021, or are there any offsets I may be missing? The second question, maybe for Gilles, is around the partnership you announced with Novozymes late last year. If you can maybe just talk about some of the addressable opportunities here, and what should our expectations be for seeing the financial impact of this and the results?
Okay, great. Thanks for the question. On the free cash flow, I think just a couple of elements, and you mentioned them. First on the CapEx, I would say, look, I think if you look, and Gilles really took you through slide five, and you see the strong demand that we had in our factories. Most of our factories were operating at 100 or close to 100%, with the enforced sanitary conditions. What is the implication for that is it means it's very difficult to take down parts of the facility to do capacity expansion projects, or even in some cases to carry out routine maintenance has been difficult in 2020. Really, since the start of the pandemic, we expected that we would be slightly lower on CapEx for 2020.
If you look really at 2021, I would say probably, as Gilles has commented very much on the markets, until we see some sort of relief in the markets, it will be the same very much on the operations footprint. I think certainly for 2021, CapEx is probably going to be very, very similar to 2020. With that in mind, if you look particularly at inventories and working capital, again, supply chains have been challenging in 2020. We had a strong focus on reinforcing our supply chain in the year. We've actually been holding a little bit higher inventory to meet the significant changes in customer demands through the year. The other thing, really just to comment on, is of course Brexit was on everybody's minds up until the end of the year and a very late signing of the Brexit deal.
We actually had extra inventory at the end of the year just as an additional buffer. I think there is a bit more opportunity on the working capital in 2021. The CapEx, I would expect would be very much in line with 2020.
Your question on the partnership with Novozymes, we are very happy and very much looking forward to this partnership. This is really about partnering together with the champion of enzymes, which applies especially on the home care category, with ourselves leading in the fragrance world for home care. Really exploring together with our clients, how we can make and optimize the respective offering that we have on the fragrance with the enzyme, so that the whole mix and solution has a better performance for our clients. It doesn't mean that it's neither a merger and acquisition, a capital whatever. It's really a go-to market partnership, exploring the possibilities together, and giving this opportunity to our clients. What's the financial impact? Too soon to say. Let's explore together in the first place.
Just to give you a reference point, Consumer Products represent more or less two-thirds of the fragrance division, and 1/3 of the Consumer Products is home care. That's basically the landscape that we have around fabric care, home care, where you can apply that. Very excited about this partnership going forward.
Maybe, sorry Matthew, I just missed one part of your question was on the raw materials. As Gilles said, we expect a raw material environment of around 1% in the year. I think no significant pressure on the free cash flow from that side.
Thank you both. Have a good day.
We now have a question from the line of Jean-Philippe Bertschy. Please go ahead.
Thank you. I have a question with regards to sustainability, and if this is related to the acceleration of the market share gains over the past quarters. Is that sustainability or the innovation or the execution? The second one would be on your R&D priorities for the coming years. If you can share that with us as well, please.
Sorry, Jean-Philippe. The second on the R&D what?
What are your priorities for the coming years?
Priorities. Sorry.
Yes. If you saw some changes with the different consumer behaviors and the consumer changes in the past months, if that would trigger some changes of your priorities?
The market share gains, the fact that we have high win rates, and again, which I think is behind great growth in our growth markets, has to do with many things. In our world, as you know, it takes many things to actually to win a brief, from having great creativity to great ingredients, to great molecules, to great encapsulation systems, to have a great relationship with our clients and so on, consumer insights. Sustainability starts to play a role because our clients are more and more committed, if not vocal about what they want to achieve in terms of making their offerings renewable, their offerings sustainable. This is very much part of our agenda, which again, was launched more than one year ago with our purpose.
Yes, you see a sort of an influx and a trend around having briefs which become more and more, and who have to meet more and more sustainability criteria, which I believe is great going forward. That means that in terms of priorities in the research innovation, well, it's on many fronts. Obviously, the sustainability plays a role. How can we for example for the sort of fragrance ingredients which start from the crude oil feedstock, which by definition is not a renewable resource. How can we make those ingredients sustainable from a renewable feedstock and sugar with enzymes. We have already made many steps. We have a very successful fragrance ingredient called Ambrofix, which has become the most sold and used fragrance ingredient, which is 100% renewable. That's a good example where it's the result of biotechnology partnering and doing some parts internally.
The road is ahead of us and very much expected and awaited by our clients. Biotechnology on the fragrance play, but also on the flavor is going to make an important role. Obviously the whole encapsulation system in fragrance is also a second part in the agenda, which is extremely important. How also can we make those biodegradable, for example, also part of the agenda. Many great exciting parts on the Taste & Wellbeing agenda around naturals, around immunity ingredients, around preservatives, around making some of those, let's say again, applying biotechnologies. That's a pretty exciting agenda we have ahead of us, because at the end of the day, that's what our clients are expecting from us, innovation, differentiating points which make their brands and their products differentiated.
The next question comes from the line of James Targett from Berenberg. Please go ahead.
Hello. Good afternoon. A couple of questions from me. Firstly, just on thinking about the margin outlook for 2021, maybe you could just talk about some of the cost buckets, the balance of the cost buckets this year. The COVID-19 costs you incurred in 2020, how you expect them to compare in 2021, any normalization of business costs, GBS, et cetera, that'll be helpful. Secondly, on cost innovation, you were just talking about some of the exciting technologies and categories that you have there. In terms of your customers sort of pulling the trigger on new product launches, are we back to where we were pre-crisis yet, or are we still at more muted levels? Maybe just a quick housekeeping one on the tax rate as well, if you could just confirm where we stand for this year. Thank you.
Okay, James, maybe I'll take the first one on cost, and I'll cover the tax, and then I'll hand it to Gilles. I think if you look at and you have a lot of detail in the financial report on the various cost elements. I think overall, I would say neutral 2021 versus 2020. Clearly, we had savings, in 2020 related to travel. You've seen, particularly the articles on increased cost of freight. Particularly as we had a very challenging environment with customers, we had a significant increase in freight costs in 2020. I think that overall, we're fairly neutral for 2021. I think you should always look at both sides of the story. We clearly highlighted the more discretionary part of our business from a top line.
Once we can travel as a company, that also means that consumers can travel, and therefore we would expect a pickup on the discretionary side. Overall, I think it's probably pluses and minuses on cost, which makes it neutral for 2021. On the tax rate, we had a couple of one-offs in 2020, which puts us at 15%. Long-term, we have a guidance of between 12% and 14% for the effective tax rate.
Your second question about, I would say the rate of innovation. I mentioned the brief pipeline has remained strong for us, meaning the COVID-19 environment did not sort of see it decline because many of our clients' teams responsible for developing products with us have been active. Obviously, being remote or home officing doesn't help. I would say the work around those, even though a bit slowed down, has still been very active. It's more the rate of launches, as you say. If I take Fine Fragrance for sure, clients did not dare launching new perfumes when stores are closed. That's pretty obvious. Some of those have been delayed.
As well as some other opportunities like we like to call cross-selling opportunities, for example, between Naturex and Givaudan, where you have opportunities to sell some of the Naturex products to Givaudan clients and vice versa. Because of COVID-19, that actually slowed down the materialization of those types of initiatives because clients don't dare taking those decisions whilst you're in a COVID-19 environment. Those opportunities are sort of pushed a bit into the future. On the other hand, in our world, when you have usually less new launches, you also have less erosion because at the end of the day, what defines the growth is what consumers consume, whether it comes from existing products or it comes from new products.
Thank you.
The next question comes from the line of Charles Eden from UBS. Please go ahead.
Hi. Good afternoon. Just a quick question from me in terms of the makeup of your organic sales growth into 2021. Clearly in 2020, if I'm right, about 80% of your reported organic sales growth came from volume growth. Just as we look to 2021, you've talked about some modest raw material inflation, clearly there'll be a bit of delay in taking pricing, but could we expect some positive pricing to return to your organic sales growth in 2021? Thank you.
Charles, thanks. As you said, about 80% of our growth in 2020 was volume. Of course, as you remember, we had some price increase in Q1 on Fragrance & Beauty, and then, of course, what we call the FX pricing throughout the year, as we were really pricing in Latin America. I think as we said, raw materials at around a 1% increase for the year. Of course, it's fairly simple to calculate the price increase that we will have with customers. That's really the only element I think you need to take into account.
Super. Thank you.
The next question come from the line of Thomas Wrigglesworth from Citi. Please go ahead.
Tom, thanks for the opportunity to ask a couple questions. The first one is, could you just remind us, give them a net debt to EBITDA, where you're comfortable going to, both on the upside and the downside case, noting that obviously value creation through acquisitions remains ongoing focus, I assume, for management. That's my first question. My second question, double-digit growth in China in the taste business. Wasn't clear to me if that's the market rate of growth or if you're taking share in China and can we unpack that a little bit? Is that a one-time effect because China's taking share out of other geographies in Southeast Asia? Is there a factor in China that means this high rate of growth is sustainable? Thank you.
I'll start by your question and then hand over to Tom. In China, there's not such a thing as taking share from Southeast Asia to explain China. I can't relate to any one time effect that would explain the China. I think a double-digit growth is essentially what I would expect from China, essentially. Maybe you had a bit of catch-up. The impact of COVID-19 was about two to three weeks on our sales. Maybe you had a bit of catch-up in the course of Q1. Essentially, those good sales developments are simply good share development, good launches of products, and that's it. No other specifics.
Just on net debt, so minimum and max, if you look historically at where we've been and where we've been comfortable, we've been up to 4 x net debt EBITDA, and even probably slightly higher at one point after the Quest acquisition. Minimum has been, I think at one point we were low as 1 x net debt EBITDA. I think, when we've been low, it's really to look at opportunities and that's really, if you look, as Gilles mentioned, the 16 acquisitions where we had a strong balance sheet and we're able to execute those acquisitions over time. As I say, if you look at where we are today, very comfortably within that range. We're just under 3 x net debt EBITDA at the end of 2020, which is very much in line with the two strong ratings that we have.
Just in that context, is the current environment enabling the M&A pipeline? Are there more opportunities coming in, either because of distress or people wanting to sell because asset valuations have been compelling? How do you with where you are in, obviously, having had a very active last 12 to 18 months?
I think, Thomas, firstly on distressed, generally, we are not distressed, and that means that many of the companies we're looking at are not distressed. If they are, that probably means that we're not looking at them because what we're looking for is businesses that are resilient and have survived some of these tests and this is something we certainly look at. We look at the pricing power of the companies. We look at the technologies. I don't think we would be interested in distressed assets as such. The pipeline is good overall. Very much as we've done in the past, bolt-on acquisitions. Of course, sellers always have expectations in terms of valuation. We also have an expectation in terms of price and in terms of creating value for our shareholders. As I say, a strong pipeline, but we remained disciplined going forward.
Okay. Thank you very much. Cheers, Tom. Thanks, Gilles.
Sure.
Next question comes from the line of Daniel Jelovcan from Mirabaud. Please go ahead.
Yeah, good afternoon as well. The first question is in terms of the Consumer Products, which grew very strongly, obviously, as you said, also because of COVID. You think that this will be sustainable maybe because people just change the attitude, or is that growth going to set back a little bit? That's the first question.
Of course, you could consider that it becomes a high comparable for 2021. At the same time, as I referred, we grew 9% in Consumer Products this year, but compared already to an 8% in 2019 where there was no COVID-19. That reflects also the fact that we are gaining market share strongly in Consumer Products. Yes, it's been a bit supported by the COVID-19 environment, but it's also because we are doing well in this segment. Going forward, we stay confident that it's not going to go into a sharp decline simply because we have a 9% growth.
Yeah. The second question is, your fourth quarter with 4.8% organic growth was outstanding. When you look at the two listed peers, one of the listed peers argued with the less selling days, you are gentlemen not to disclose that, I think without the four less selling days for Christmas and New Year, according to my calculation, your growth would have been even double digit kind of in the fourth quarter. Is that the correct assumption or you don't care too much?
Well, your question is a bit too complex. We're not playing and explaining all sorts of things with calendar. The year is what the year is, and that's it.
Yeah.
You also have a different number of days by quarter. We start to explain every quarter because of the number of days from one year to the other, it starts to be complicated.
Okay. The last question. Thanks very much for the slide five, which is very interesting. Is it fair to say when you mentioned that the lower impact in business grew 7.7% last year, is it fair to say that, let's say, just hypothetically, without COVID, your business would have grown maybe even more than that? Is that a fair assumption?
On the Taste & Wellbeing?
No, in general, for the group.
In general. Yeah, but you see what you have to. Well, okay. Th e two things are not exactly the same. You could argue that the dynamics, I think, on fragrance and on, sorry, Taste & Wellbeing are a bit different. If I look at the fragrance, you can argue that, okay, you have shops which are closed, duty-free, people can't travel. That has a direct impact on the Fine Fragrance sales. This is not sort of shifting to Consumer Products. The two things are absolutely decoupled. People, yes, staying at home, they consume more Consumer Products. They can't go to perfume stores, and they don't buy products. Two things are a bit decoupled. Whereas on the Taste & Wellbeing, it's a bit different. The fact that people can't eat outside home, well, they're going to eat more inside home.
That's why the food service going down has an influence on the good growth of the rest of the business. The two things are more coupled in Taste & Wellbeing as opposed to fragrance. If that is clear.
Yes. Sorry. It's quite clear. Can you do anything about food service declining? Small adjustments that you offer more to, I don't know, takeaway service within a restaurant or whatever. Is there any adjustments or you have done already?
You have small alternative models, obviously, of restaurants delivering at home with out of the kitchen of restaurants, delivery at homes, which compensates slightly, but it's not enough to compensate just the fact that restaurants are closed. The only thing that can help food service is reopening restaurants, having more events. You have to imagine, obviously, that also the fact that people are not traveling around the world has also a big impact on food service everywhere. All those things sort of are in the way of having a good development of food service. Again, at the end, people still have to eat something, so that helps on the non-food service side.
Thanks.
I think that was the last question. Maybe we have a last one.
The next question comes from the line of Georgina Iwamoto from Goldman Sachs. Please go ahead.
Oh, thank you. This is Georgina here. Hi, Gilles. Hi, Tom. This is my first call with Givaudan, and I was really hoping to make a good impression, but I have some amusing construction going on next door, so I apologize for the drill noises. I've just got one question left, and it's specifically on flavors and the growth outlook there. It seems to me that naturals are still going strong, health and wellness is still going strong, and the plant-based opportunity is starting to become more visible, and it's certainly becoming more material. Is it fair to say that we'll continue to see more innovation and therefore more growth in flavors going forward?
Thank you. You mean more in flavors than where? For sure, plant-based proteins and naturals are trends that we are focusing on. This is, as I said, clearly part of the 2025 strategy. We achieved more than CHF 100 million of sales for the plant-based alternatives, and this is going to grow fast in the coming years. The whole health and wellness platform is going to continue to grow. All those trends are there to fuel the Taste & Wellbeing division. I don't know if you can say that it's going to mean that the Taste & Wellbeing division will grow faster than the fragrance side, but essentially, that's what we can say at this point.
Okay. Just to clarify, maybe it can grow faster than history, and more towards the rate that we see in fragrance, in Taste & Wellbeing.
The future will tell.
Okay. Thank you.
Thank you very much. That was the last question. I thank you very much for your attention, your questions. I'd just like to remind you that we will publish our Q1 2021 sales on the 13th of April of this year. You are welcome to register to the investor event, which will be and will take place on the same day. Thank you again, and have a great day.
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.