Good morning, and good afternoon to everyone, and welcome to Nestle's 3 months results conference call. I'm Dessi Tempoli, Head of Investor Relations. And here with me are our CEO, Marc Schneider and our CFO, Francois Roger. As usual, first, we will present our results, and then we will open the lines for questions. I take the Safe Harbor statement as read.
And now I hand over to Marc Schneider.
Thank you, Dessi, and a warm welcome to our conference call participants today. As always, we appreciate your interest in our company. I'm pleased to report a solid start to the year, which is fully in line with our guidance for 2018. Growth was broad based across our geographies. It was also in line with the expectation we articulated in February that our 2018 organic growth would improve over the levels we saw in 2017.
I would therefore like to reiterate and confirm that expectation. I was pleased with the improvement we saw in the U. S. Market where a rebound in pet care and strong growth in coffee creamers were the primary growth drivers. The continued good growth in our zone, EMEA, proves that the attractiveness and consumer appeal of our brands were prevailing over the retail pressures in Western Europe.
The strong performance in Zone AOA was not just calendar driven. It was broad based across our markets there and I was particularly pleased by our success in China across all categories. Our Q1 organic growth confirms my assessment from the February conference call when we discussed the softness in Q4 2017. I described most of the issues at the time as transitory in character. We still have work to do when it comes to our categories nutrition and water.
In Brazil, our 4th largest market continues to see a challenging trading environment. On the positive side, I would like to confirm that all our innovation, portfolio management and efficiency initiatives are fully on track. And the migration of our Nutrition business from a globally managed entity to one that gets run by the 3 zones has been implemented very well. So all in all, a busy quarter that points in the right direction when it comes to the year 2018 and our midterm objectives. Let me hand it over now to Francois for a detailed review and I'll be happy to answer your questions afterwards.
Thank you, Marc. Good afternoon or good morning to all. Let me begin with the highlights for the 3 months. We started the year with organic growth of 2.8%. Excluding the Confectionery business in the United States, organic growth was 2.9%.
RIG was strong, accelerating to 2.6%. We continue to be at the high end of the food and beverage industry in terms of volume growth. Pricing was 0.2%, largely reflecting lower levels of inflation in emerging markets. The net M and A impact was slightly positive at 0.2% as we are actively pursuing our portfolio management initiatives. Foreign exchange was a negative 1.6 percent, mainly reflecting a weaker dollar.
And our total sales in Swiss francs were $21,300,000,000 a 1.4% increase on a reported basis. This slide illustrates the performance of our sales for the zones as well as for our globally and regionally managed businesses by geography. Our growth was broad based both in terms of organic growth and RIG with all geographies showing an acceleration in RIG versus last year. The most notable increase in volume came from AMS and more specifically North America. Pricing was softer than last year industry geographies.
Let's now review our growth dynamics between developed and emerging markets. The rig acceleration seen at Group level is coming from both developed and emerging markets. In the developed markets, the improvement is coming from North America, where we have started the year with solid rig supported by positive pricing. In the emerging markets, we had a meaningful improvement in RIG versus last year in both MNR and AOA helped by China's good growth. Pricing from the emerging markets was less, most notably from Brazil, which continues to be impacted by deflationary pressures and to a lesser extent also from Sub Saharan Africa.
Before discussing the dynamics for each of the operating segments, let me remind you that Nestle Nutrition is now included in the 3 zones as of January 1, 2018. Starting with Zone Americas, where sales were CHF6.8 billion, real internal growth was 1.6%, pricing was slightly negative at 0.4%, resulting in an organic growth of 1.2%. Excluding U. S. Confectionery, the zones OG would be 1.4%.
The Zones improvement is largely due to a return to positive growth in North America, driven by good results in Pet Care, coffee creamers and frozen pizza. The U. S. Confectionery business, which was divested at the end of March, continued to weigh on results for the quarter. In Latin America, RIG held stable versus the full year 2017, but pricing was negative putting pressure on the zone's organic growth.
Brazil in particular faced a challenging trading environment with deflationary pressures as mentioned earlier. Pricing in Brazil remained negative in most categories, particularly in dairy, following the price reductions taken in the second half of twenty seventeen. We are gaining market share in Brazil, which should position us well if and when the market rebounds. Moving on to Zone EMEA, we sales of CHF4.7 billion. Organic growth was 2.2%, consistent with the level achieved over the past 2 years.
RIG accelerated to 2.6 percent. Pricing fell by 0.4% as a result of negative trends in both Western Europe and Eastern Europe. All 3 sub regions sustained positive rig. As you might recall, last year we shifted to a category focused approach for MENA. So let's now look at the dynamics by category for MENA, starting with coffee, where organic growth remained robust, thanks to a strong rig, fueled by successful product innovations and renovation such as Nescafe in the U.
K. Pet Care continued to be a good growth driver delivering mid single digit rig with strong results in Russia. Culinary and Dairy both saw improved organic growth. Confectionery in M and A started the year with higher rig versus 2017, largely helped by a good performance in Western Europe. On pricing, we are facing a period of high comparables in coffee following price increases taken in early 2017.
Moving on to Zone AOA. Sales for the quarter were CHF5.3 billion. Organic growth held strong at 4.7 percent as lower pricing of 0.8% was compensated by an increased rig of 3.9%. China saw strong growth, helped partly by the timing of Chinese New Year. And in China, all categories contributed positively.
Southeast Asia maintained positive rig and pricing, led by good organic growth in both Milo and Maggie. Ambient dairy and nutrition were more subdued with difficult comparables from last year. The South Asia region grew well with positive rig driven growth across nearly all categories. And finally, the developed markets in AOA, namely Oceania, Japan and South Korea sustained positive rig more than offsetting negative pricing. Confectionery continued to be strong in Japan.
And in Oceania, the highlights were Culinary and Pet Care. Moving now to Waters. Organic growth was soft at 0.5% as RIG declined by 1.2% with subdued performance in Western Europe and in some emerging markets. Pricing increased by 1.7%, reflecting strong cost inflation, mainly in distribution. For Water in the developed markets, rig was negative as the inclement weather negatively impacted demand on distribution, especially in Western Europe.
Growth in North America improved moderately with pricing being the main driver as a result of cost inflation, mainly in distribution. In the U. S, we launched sparkling water ranges under our strong regional brands. In the emerging markets, both MENA and Eastern Europe showed accelerated organic growth versus the full year 2017. China and Brazil were negative in the Q1, but as you know we have recently announced the disposal of the Water business in Brazil, keeping only a selective presence with our premium brands.
And finally, we finish with the other businesses, which includes Nespresso, Nestle Health Science and Nestle Skin Health. As from this year, it also includes the Gerber Life Insurance Business. You may recall that in February, we announced that we are exploring strategic options for this business, including a potential sale. Total sales for the other businesses were CHF2.7 billion. RIG was strong at 5.2%, pricing contributed 1.2%, resulting in organic growth of 6.4%.
Starting with Nespresso, which held strong mid single digit organic growth with a positive quarter in all three zones. Momentum decelerated slightly in Western Europe, but growth in North America remained very promising as organic growth showed continued acceleration. Nestle Health Science maintained mid single digit growth driven by Medical Nutrition, which delivered more than 6% organic growth. The acquisition of Atrium was completed at the beginning of March as we continue to execute on our portfolio management strategy. Nestle Skin Health started the year well with good growth, positive in terms of both rig and pricing.
The Aesthetic business continued to be a highlight, especially in North America. Moving now on our performance by product group. Our growth continued to be broad based with all categories positive. We'll start with powdered and liquid beverages, which sustained a strong organic growth. RIG was robust, reflecting a progressive acceleration in Coffee throughout 2017 and into Q1 2018.
Waters, we already discussed. I will move to milk products and ice cream, which were softer this quarter, owing almost entirely to negative pricing in Brazil, following a sharp decline of close to 20% in milk prices as from the second half of last year. We had strong organic growth and RIG in both M and R and AOA. Nutrition and Health Science delivered strong growth as all three main businesses in this segment, Infant Nutrition, Nestle Skin Health and Nestle Health Science showed improvements since the full year in terms of both OG and RIG. The overall growth of Nestle Nutrition across the three zones was at 2.2%.
While this shows an improvement against last year, it is still below our expectations. In Prepared Dishes and Cooking Head, growth was mainly coming from the Ambient Culinary segment. Confectionery had a strong start to the year, partly helped by an earlier Easter. RIG was positive in nearly all markets except the U. S.
Growth for the category would have been 120 basis points higher when excluding the U. S. Business. KitKat continued to grow well, sustaining strong mid single digit momentum. And finally, Pet Care, where we finished with 4.7 percent organic growth, the highest level since 2016.
This is mainly coming from an improved momentum in the U. S. Where we are starting to see the returns on our investment in the fast growing Natural segment as well as in e commerce. Other developed markets like the U. K.
And Australia also did very well. With that, I will conclude by confirming our 2018 outlook. We expect organic sales growth in the 2% to 4% range. The underlying trading operating margin is expected to improve in line with our 2020 target. We are expecting restructuring costs of around €700,000,000 and we also expect an increase in underlying EPS and capital efficiency.
I'm now handing back over to Dessi for the Q and A session.
Thank you, Francois, and thank you, Marc. With that, we move to the Q and A session, and we open the lines for questions. So the first question is from Eileen Ku from Morgan Stanley. Good afternoon, Eileen. Please go ahead with your questions.
Thanks, Dusty. Afternoon, Mark and Francois. I've got two questions. The first one is on Zone A. So could you just confirm that nutrition is now about 30% of this zone?
And your press release said that China had strong growth across all categories. So does that include nutrition? And if that's the case, then what are the markets in AOA that drag the Nutrition number down because you said it was below expectations? And then the second question is on pet food in the U. S.
It's great that you've seen better momentum here in the quarter. If I look at it a bit more long term, you have been growing below the market here given that you're under indexed in that natural segment. I think it's about single digit percentage of your sales. Do you see Nestle being able to close the gap and get back to outperformance versus the market again? And if so, how do you get there given it's becoming quite a crowded space, particularly with some of your more specialist manufacturers now going into the grocery channel as well?
Could you talk a bit about that? Thanks very much.
Thanks, Arlene. Let me take the second question and then maybe Francois can handle the first one. So on petrochem U. S, we were quite encouraged by the progress we've seen. I think there's some general trends underway that we are playing beautifully towards premiumization, more natural products and improving the ingredients and just basically playing the same trends that we've seen now for several years and making sure across all our price ranges that we're moving in that direction.
I think you're seeing in this category some of the same overall fundamentals that apply to other categories where some of the small to midsized players collectively do take a bit of share from the larger ones. We can probably, through our success, slow that down. Is it possible to totally stop it? I'm not sure. Nonetheless, when it comes to improving our product lineup and also when it comes to exploiting digital opportunities, I felt very encouraged by what the team has done, and I think that, that will continue throughout 2018 and beyond.
Good afternoon, Eileen. So I'll take the first question about Nutrition. So AOA is by far the largest part of our Nutrition business. It contributes to slightly less than than 50% of the total nutrition business. In we had an improved momentum far as Nutrition in AOA is concerned.
That being said, it is clearly below our expectation. We are, let's say, around the mid single digit growth in AOA, but this is clearly below our expectation. In China, we see we saw an improved momentum across categories, including Nutrition. But clearly, once again, in terms of nutrition, we do expect to grow at a higher level.
Yes. And Aileen, if I can build on that, so for China, I think what we wanted to point out here is that we saw positive growth in all categories, which as you know in some previous years and previous quarters was not always the case. We had some real disappointments there. That was not the case in this Q1 2018. That was not meant to say that we're totally happy with where we are in nutrition because I think as we discussed in previous conference calls, there's a significant opportunity especially from cross border e commerce and especially when it comes to the top end of the market premiumization that we just need to do better on.
So we're not happy with the results that we want to do better. But nonetheless, it was true that growth was positive in all categories in the 2nd largest market for Nestle.
And sorry, can I just follow-up on that?
I'll now move to Jean Philippe Birche from Vontobel. Jean Philippe, good afternoon.
Thanks, Cecilia. Good afternoon, gentlemen. The first one would be on the U. S. Excluding pet care, is the growth still positive?
And maybe to give some colors on the different other segments like the other segments of the frozen foods? The second question would be on the recent acquisitions you made. If you can maybe update us on them like Blue Coffee company or chameleon or even Atrium, which look to which seems to perform quite strongly in terms of growth? Thanks.
Yes, Jean Philippe. Again, starting with the second one, we're quite pleased with all the small to midsized deals we've done in 2017. But I do want to remind everyone that while some of them are contributing to our reported growth, they're not yet contributing to our organic growth in that market because as you know for that they have to stay with us for 12 month period after close. So again, they're helping on the reported growth, but not on organic. Overall, in the U.
S, as we pointed out, in addition to health care in addition to pet care, we were encouraged by the coffee creamers. We were also encouraged, for example, by the pizza business. And by and large, I think, aside from the U. S. Confectionery business, which as you know closed at the end of March, we've seen a fairly broad based success in the market.
Thank you. Thank you, Jean Philippe. And now we move to the next on the line, James Edward Jones from RBC. James, good afternoon.
Good afternoon. Good afternoon, Dessi. Marc, I'm paraphrasing, but at a meeting a couple of months ago, you said you consider what you say very carefully before you say it. That being so, why did you
think it was worth putting
the point about 2018 sales growth being better than 20 seventeen's in the full year press release back in February, but not this morning. So are you feeling any less confident about it? And the second point, can you help me understand why pricing is so negative in Brazil? There's been pronounced currency weakness. And I thought the way it generally works with consumer staples companies is when the currency is weak, you put up prices.
Why isn't that happening here in this instance?
Yes, James, thanks for your question. So clearly, I think in my opening remarks now, I pointed out that what we said about 2018 still holds true, and that is an improvement over the OG levels we've seen in 2017. As you see from past quarters, I try to keep my quotes very brief and to the point and hence for a Q1, so no particular need to repeat it, but it did repeat it at the beginning of this conference call. So it's fully confirmed. When it comes to Brazil, I think a lot has to do with the development of dairy prices in that market and then that feeding through into some related categories, for example, nutrition.
Got it. That's very clear. Thank you.
We move now to the next on the line, and that is Martin Deboo from Jefferies. Martin, good afternoon.
Good afternoon, Desi. Just two very quick ones from me, probably more for Francois Xavier. Francois Xavier, what do you how are you seeing your input cost position now in FY 2018 as we're 1 quarter in? I think at Q4, you were saying a slight decrease, if I understand the transcript correctly. Is that still the case?
And within that, could you comment on any pressure you're seeing from the big topic of the quarter, which is freight costs in the U. S? And one second one very quickly is just what was the Nestle pricing variance in North America in Q1?
Thank you. The input cost, I confirm that we expect to have some tailwind in the year 2017. I think we mentioned in the full year call that it was around €200,000,000 We are slightly lower as of now for the full year 2018. That being said, the time it reaches our P and L, it will be probably more recognized in our accounts in the 2nd part of the year because we are still suffering a little bit from the headwind that we had last year in terms of commodities, which was CHF900 1,000,000 additional cost. But we confirm that it will be positive for 2018.
You are absolutely right that we have some significant pressure coming from transportation cost and freight cost in the U. S, which I think is confirmed by all players in the industry. It does affect some of our businesses more than others and more specifically water because obviously these products are relatively heavy and they need to be shipped in certain distances. So it is clearly an increased cost. As you know, there are certain number of reasons for it, lack of drivers, lack of trucks and so forth, but we confirm it.
Pricing in North America, yes, sorry. Pricing in North America is territories where we are still enjoying positive pricing.
Thank you, Martin. And the next questions are from Warren Ackerman from Societe Generale. Warren, good afternoon.
It's Warren Ackerman here with SocGen. 2 from me as well. On the first one, Marc, you said in your prepared remarks, there's more work to be done in water. And although weather wasn't great, admittedly, in Q1 and it's a low season, you can't be happy with negative rig and 0.5% OG given the breadth of your water portfolio. What needs to be done fundamentally with this business?
It seems very developed market weighted. I know you're entering sparkling water in the U. S, which is a help. But I mean, what do you need to do to really grip this and start getting that business growing much better? And then secondly, just staying back to this whole pricing debate, I'm very interested to see that you've changed your policy on incentivization to move away from just paying on rig to paying on organic growth from the 1st January this year.
Do you think that has been to drive rig, which has been the primary way they've been paid, but that's now changing. Do you think that's going to help change behavior? And if so, how quickly do you think that might happen? Thank you.
Thanks, Warren. So on water, there's some minor issues to be addressed in Europe. I think a key part relates to North America. As you know in North America, we're really engaged in 2 different types of the water business. There's the premium international waters that we import and then there is a variety of regional brands.
And those were also the ones that saw the launch of carbonated varieties this year. So again, I think we did do a lot of work already. We fully expected the Q1 to be somewhat on the soft side. Having said that, I'm more optimistic now that some of the things we've put in place, including, for example, those carbonated launches that happened in the Q1 will start to pay off. And so starting now for the remainder of the year, I'm more optimistic.
And so I think a lot of what needs to be done has been done already. The key market to watch is the U. S, which is close to 2 thirds of the Nestle Waters business.
Okay.
Regarding incentives and OG, I think as I explained as part of the full year conference call and on the road shows, I believe that going forward, this is a more balanced way and it will certainly be a good reason for people to consider pricing upsides where and if they present themselves. But I think this is not a 1 quarter type of thing. So when I described the change in incentives too, I did not expect that within a quarter or 2 would already show some results. So this to me is a 1 to several year kind of thing, but we do want to be sure that on pricing, we're using all possible upsides. And as you know, the picture is quite different from market to market.
In some areas, you have little pricing opportunity. In others, you have more. And so we wanted to be sure that people have more flexibility to pursue pricing where that's possible. It was not only about incentives. I think I explained that we also have been preparing a whole lot of pricing and analytics tools that we make available to all markets, being sure that we share best practices across all markets.
Okay. Thank you.
Thank you, Warren. And the next on line is Patrick Schindeman from ZKB. Patrick, please go ahead.
Good afternoon, Marc Francois and Dessi. I know that Nestle is here for the long term. But despite the fact the market is also looking at the next quarters, A competitor has warned today that quarter 2 will be most likely weaker than quarter 1. Is this also a best guess assumption for Nestle because of each year earlier Easter? That's my first question.
And second question again on pricing. You have mentioned that you expect some tailwind in 2018 from raw materials. What does this mean in as a best guess for the full year on price increases? Thank you.
Patrick, on the first one, we're trying to be helpful, but at this point, what we don't want to do is get into quarterly guidance here. So I think what you should take away from the call is our satisfaction with the start to the year and also a good amount of optimism when it comes to the full year 2018, but I'd like to leave it at that.
Regarding pricing, so the amount that I mentioned in terms of tailwind for 2018, think it's relatively small related to the size of Nestle. So I don't think that it will be it will have a major consequences on pricing for the latter part of the year. Be aware of one thing as far as pricing is concerned is that last year we were at 0.8% of pricing for the full year. We had 0.2% in Q1. The difference between the two is almost entirely coming from emerging markets, where we had basically pricing coming from currency depreciation and offsetting currency depreciation, which we don't really have now.
And I'm talking there of Brazil, to a large extent, Russia and maybe some countries in Sub Saharan Africa.
So best guess could be for less pricing than for the full year. The next
question from Mitch Collett from Goldman Sachs. Mitch, good afternoon.
Hi there. You said last time you updated us on your potential areas for acquisition focus that consumer health was still part of your thinking. There seems to be fewer and fewer consumer health assets out there. Is that still a category you see as attractive? And then some of the emerging growth drivers you've mentioned, whether it's natural pets or e commerce or pets or premium waters or sparkling waters.
Would I be right in thinking that those growth drivers are margin accretive to the group?
So Mitch, on your first one, consumer health, yes, I can fully confirm our continued interest. But let me balance that by reiterating all the things that are stressed in London. And that is, we stand for a disciplined and very focused approach. What we're not interested in is building a broad based consumer health portfolio that is from soup to nuts. And so it really has to be focused on some of the core things that we bring to the table.
And as you know, nutrition and metabolism expertise is at the core of what we do. And hence, when there's broad based portfolios for sale, that may not be right up our alley. However, when, for example, an Atrium business was for sale, that was clearly something that we were interested in. To your second question, all of these opportunities you mentioned are clearly of interest to us. And here again, it depends on the merits of individual opportunities.
Is the pricing right? Is there a chance to get a decent return? So when it comes to our financial approach to all of these, it's important that on the one hand, we want to be opportunity driven. On the other hand, we also want to be disciplined and want to be sure that we're not overpaying.
Thank you, Mitch. And the next questions are from John Cox from Kepler Cheuvreux. John, good afternoon.
Thank you, guys. Thanks, Dessi, Marc, Francois Xavier. Two questions from my side. One is on the whole Agical group of supermarkets and the dispute you had over the last couple of weeks or so. It seems that a lot of these guys want to go to common European purchase prices.
Is that a new new we have to worry about in terms of pricing, I. E, your pricing was negative in Europe zone in Q1 going forward? Is that something of concern to you? First question. 2nd question, just sort of digging around a bit on what Patrick said.
Is there any reason or any sort of things we should think about for Q2 compared to Q1? Or is it really remove the U. S. Confectionery business and growth should be running around the same level? Thank you.
Thanks, John. So on the European pricing, I think every time you have a geography that has large market side by side that have some pricing differences, yes, over time, it's a safe bet to assume that those will converge somewhat. And so I think the broader trends that we're seeing here should not be surprising. And that's clearly something that we have to adjust to by improving our cost structures and also think the category led approach across Europe that Marcos Tempore has been spearheading is very helpful in making the most of that situation. Specifically, while I don't want to sort of comment too much on the AGI core situation, I want to just make it very clear that we are in ongoing negotiations there.
And of course, we will only agree to a balanced arrangement and only sign when we're satisfied that we get something out of an agreement. So this is not the time for one-sided concessions. Regarding Q2 and at the calendar, I mean, yes, clearly, the way Eastern falls is one thing to consider. The fact that U. S.
Confectionery is gone is another one to consider. Again, beyond that, what we don't want to do is get into quarterly steering here.
Thank you, John. The next one on the line is Alan Oberhuber from MainFirst. Alan, good afternoon.
Yes. Good afternoon, Dessin. Good afternoon, Marc and Asa. I have a question regarding the restructuring you mentioned. In which area could we expect that it could be?
Because last year, as you've seen, so a lot of in mega nutrition. And the second is regarding the U. S. Coming back. 1 of the slower growth categories is obviously ice cream.
How is ice cream doing?
Yes. Could you expand on both questions? I'm not sure I fully understood where you're coming from.
Okay. The first question is regarding restructuring, regarding the announcement. In which area could we expect these restructuring to go? Mainly last year, we had a large restructuring, in particular in Skin Health. And the second question is regarding the U.
S. In ice cream. What is ice cream doing? How well is ice cream doing at the moment?
Okay. So on the second one, in the U. S, starting last year, we worked on a profit improvement program in ice cream. Basically, we look at some of the good practices we saw from our Fornary joint venture and we're trying to apply those to our next largest ice cream business, which of course is in the U. S.
And I think that's coming off nicely, so quite encouraged with that. Overall, as you know, there are quite some significant market trends here towards sort of lighter health conscious options and we're trying to adjust to that by launching products that go in that direction. On restructuring, we did not give specific point as where the money is going. As we go through the year, we'll fill you in and let you know where that money is spent. But again, it is part of the broader plan that we laid out to you last September towards our margin target for 2020.
Thank you, Alan. Thank you, Alex. And the next and last questions are from Robert Bausch Schmidt from Liberum. Robert, good afternoon.
Good afternoon. My two questions center on the U. S. As well. One, I believe, Xavier, you made some comments about U.
S. Sorry, prepared dishes and cooking aids ex the U. S. And how that was dragging the number down. Can you give some more granularity on what's going on that would be dragging that down?
And secondly, can you speak to U. S. Baby food and how your performance is trending in that area? Thank you.
Sorry, could you repeat the first question because I didn't hear well the first question.
So I'll pick up my handset here. In your prepared remarks, you were talking about Cooking Aids and Prepared Dishes and how the U. S. Was dragging down that result and you gave a number how it would be growing excluding the U. S.
Can you give us some more color about what's going on that is dragging that down specifically? And secondly is U. S. In baby nutrition. Can you tell us how your business is performing there?
Thank you.
Robert, the comment that I made about the U. S. Was about confectionery, excluding confectionery, not excluding prepared dishes. But I can say a few words about U. S.
Frozen. So we believe in the category and we have embraced new trend. The category growth has improved and it is now healthier than it was. We have a business that we are happy with because it has good cash flow and margin. We have different growth trends by product.
So we have mentioned pizza, which is doing well. We have a lot of innovation there with DiGiorno. The Hot Pockets is doing well as well, and we relaunched part of the offering with a more healthy proposition. We are suffering a little bit more maybe on some other subcategories like staffers because of tough counts and lean cuisine is a little bit softer. But overall, we are fully committed to the category.
U. S. Baby Food, it's a category where we have invested significantly over the last few quarters. We are renovating part of our other offerings and we moved into organic and natural as well. So this relaunch is in progress and it's too early to draw any conclusion.
We have some issues in Q1, but which we have temporary issues in terms of inventory shortages for our pouches. But on the other hand, we did well with infant serial. So I think that we need a little bit of time to assess exactly the outcome of this relaunch and repositioning of the Gerber brand into natural and organic.
Thank you, Robert. In fact, we have one more question from Alex Smith from Barclays. Alex, good afternoon. Please go ahead.
Hi, good afternoon. I was
just curious, looking across your product categories, the only one which is showing price decline in Q1 is confectionery. Presumably, Brazil is a big moving part of that. I think it's quite a big business for you. But then your zone, I mean, is also showing price deflation. So I was just wondering is the price deflation in I mean, are really predominantly down to confectionery?
And if so, what's the driver behind that? And are you therefore not seeing that much price deflation in your other categories in EMEA? Thanks.
I confirm that confectionery is a category where we had significant negative pricing, but we had very good rig as well during the quarter. As you know, the early Easter helped a little bit there. The negative pricing was largely led by Brazil indeed, which you picked that up very well. In EMEA, we had some negative pricing as well versus last year, but it mainly came from Russia actually. So it was not so much from Western Europe.
So it was mainly coming from Russia, which is what I mentioned along with Brazil and Sub
Saharan Africa. Okay. And thank you, Alex. With no further questions, we come to the end of our session today. Thank you, Marc.
Thank you, Francois. Thank you very much to everybody on the line who attended the conference call today. If we couldn't answer all of your questions or if you need more details, you know where to find the Investor Relations team. And we look forward to speaking to you again at our half year results conference call in July. Thank you, and goodbye.
Thank you.