Good morning, ladies and gentlemen, and welcome to our 9 months results conference in VIVE. This conference will be held in English, but you can also follow it in French or German using the headsets provided. Or if you're watching the webcast, you can choose the right language by clicking on the respective link on the webcast page. I take the Safe Harbor statement as read. So now let's start.
Paul, you have the floor.
Thank you, Robin. Welcome to our 9 month sales conference. I welcome also all the people following us via the webcast. And here on the podium I have Francois Xavier Roger, our CFO who has taken over the 1st July. Many of you have met him before.
He has taken over from Wandling Martello who is now in charge of Zone Asia, Oceania and Africa. In the room we have I have my colleagues, the Executive Board of Nestle. And in the Executive Board, we have also a new member, Mardi, Mardi Battato, who took over as Executive Vice President in Charge of Operations from Jose Lopez, who retired at the end of September. And Marty has very vast experience in manufacturing and in the technical area has also been previously Market Head of Pakistan. So Marty welcome.
Also we have in the room the CEOs of Nestle Health Science and Nestle Skin Health and they're also available for possible answers. You've seen our 9 months sales figures this morning and I must say after a good performance the first half of the year we were impacted in the Q3 by the Maggi noodles in India still ongoing and the rebate adjustment and there's the Skin Health. And we're not happy with that because it actually hides a very first of all an increase in internal growth that has increased to 2% actually in the 3rd quarter almost 3% real internal growth. And that reflects actually what's underlying. It reflects the very positive momentum we have in our base business across all the different categories and across the world.
We see continued good solid performance in Europe. Nestle Waters is continuing on a very, very good growth path. Nestle Health Science is growing also strongly. We have made and continue making good progress in Latin America. We saw also a significant improvement in North America in many categories, but especially in frozen food.
I contrast this contrast a little bit with a slower recovery, recovery indeed, but slower than expected in China. But I will give now the floor to you Francois to give a little bit more light on the details.
Thank you very much, Paul, and good morning, everyone. As always, I will present to you the group 9 months sales figure in detail, and we will follow-up with a Q and A later on. Starting with the highlights, we had sales of almost CHF 65,000,000,000 with some headwinds from foreign exchange worsening. It was actually minus 6.7% in the 1st 9 months. We had some positive support as well from M and A, contributing 0.4%.
Our organic growth lies at 4.2%. After a good start of the year, the Q3 got impacted by 2 exceptional items, the first one in Nestle Skin Health and the second one with Indian New Zealand. Coming back to the Nestle Skin Health 1, we took a one off charge in prescription drugs in the U. S. Where we decided to adopt a more conservative estimate to rebates.
In India, as you know, our products and our new Dawns Maggie new Dawns have been off the shelves for the last 6 months. Our real internal growth is at 2%, which is an acceleration from where we were at in H1. We were at 1.7%. We see that as very encouraging. We believe that it shows really the fundamental health of our underlying businesses and it shows a good progress that we have made.
In terms of full year outlook, we project organic growth of around 4.5% for the full year with improvements in margins and underlying earnings per share in constant currencies and capital efficiency. Moving now to the geographies. These slides cover both the locally managed, regionally managed and globally managed businesses. You can see that we have strong and accelerating growth in AMS and EMEA. The 3 zones or the 3 regions are positive in terms of rig.
In AOA, we got affected by Magi Noudons, but we see clearly an increasing rig in both AMS and EMEA. When looking at the profile of our growth between developed markets and emerging markets, we can see that the distribution of our sales between Developed and Emerging Markets lies about where it was before at 57% for Developed Markets and 43% for emerging markets. In developed markets, we see an acceleration with an organic growth of 2.2%, which really shows the success that we are achieving in terms of innovation and the fact that we bring relevance to consumers. It also shows our ability to adapt to fast changing consumer needs. In emerging market, we are still enjoying a strong growth with encouraging results on the growth in terms of organic growth lies at 6.8% and which is we believe good taking into consideration the fact that we couldn't sell Indian New Dons for the last 6 months.
Moving now to Zone AMS. We have sales of CHF 18,500,000,000, RIG of 1.2 percent of OG of 5.8%. We saw a very good acceleration in both OG and RIG. The growth accelerated driven by improvement in the U. S.
And the continued momentum in Latin America. We had positive growth in North America. If we start talking about our U. S. Frozen range, as you know, we did a lot of work in order to renovate, repackage, reformulate, reposition our frozen food franchise, and we are happy to see that the results are coming.
We have been positive for 7 months in a row now, months on months in growth for our frozen food business in the U. S. And if we look at the Q3 of the year, we were positive and even high single digits in growth against the same period of last year. Moving to Coffee Mate. We are still enjoying high single digit growth in the last quarter and we see that as well as a consequence of all the innovation that we are putting through in terms of flavors, in terms of ingredients and new natural platform.
As you know, we have a strong business in Pet Care in the U. S. It has improved since the last year and we are still positive in Pet Care in the U. S. We are still feeling some impact of negative impact from the Benefool unfounded claims, but we have strong performances as well from Purina 1, Brightman's and the Super Premium Dog Food.
Moving to Latin America, it continues to be a good growth driver, we have in spite of a difficult macroeconomic environment. We have good growth in Mexico across all categories: coffee, pet care, ambient dairy, nutrition and so forth. This really shows once again in Mexico that innovation, renovation and excellent execution really pays off. I mentioned Mexico. I could mention as well Chile, Ecuador, Colombia.
In Brazil, our business has been resilient in spite of the global macroeconomic environment and we are flat.
If I
look at the categories that are really driving the growth in Latin America, I would mention mainly Nescafe del Che Gousto, pet care. We have commissioned a new plant in Mexico and we have increased our capacity in Argentina. I will mention as well confectionery as far as Latin America is concerned. Moving now to Zone EMEA. We have sales of CHF 12,000,000,000, RIG of 2.5 percent and OGV at 4.1%.
There again same growth accelerated growth as what we experienced with AMS. The acceleration of the growth continue and we believe that what we have been doing in terms of innovation and premiumization is also paying off in spite of a difficult trading environment. Category wise, Pet Care, Nescafe Dolce Gusteau and Nescafe soluble coffee were the main growth engine across the zone. If I take the 3 different areas of Zone Imina, all of them have been contributing to the growth. If I start with Western Europe, we are facing clearly a deflationary environment.
In spite of that, our OG is driven by is positive and is driven by volume. Some countries are doing very well. France has been able to sustain a good performance. Benelux, Austria are doing are achieving very good results. And in Germany and in the U.
K, we see our business improving as well. Moving to Eastern Europe. We have had good growth in Russia and Ukraine, which has been essentially supported by pricing. We decided a few months ago to limit our price increases in Russia and Ukraine after the depreciation of the currencies, and it is now bringing interesting results because we are gaining market share both in volume and in value in Russia and in Ukraine. I mentioned Ukraine and Russia, but I could mention other countries as well where we are doing very well Poland, Baltics, Bulgaria and Romania.
Moving now to Middle East and North Africa. There again, we experienced solid growth driven by Nescafe and Confectionery. Our local management is doing a great job, delivering growth in spite of ongoing challenges from political and economic volatility. Moving now to Zone AOA. Our sales have reached CHF 10,500,000,000 with a RIG of minus 1.4 percent and OG at minus 0.5%.
We had solid results in AOA in developed markets, which have been overshadowed by ongoing challenges in India and in China. In India, as you know, we have been impacted by the fact that we did not sell our Maggi Noodles for the last 6 months. We are doing whatever we can in order to put them back on the shelves. The Bombay High Court has ruled in our favor a few months ago to allow us to put these products back on the shelf provided that we go through 2 different sets of tests, which are currently ongoing with independent laboratories. The impact of the fact that we could not market these products is to the group organic growth year to date about 30 basis points and to the Zone AOA it is about 170 basis points.
Moving now to China. You remember that I gave a cautious outlook during our H1 results. We have made good progress in improving the fundamentals in China. We have reformulated our product. We have invested in innovation and renovation very much like we do in Europe.
We have seen good results for our confectionery franchise with 2 Fuji. We have seen very good results for Nescafe ready to drink, for Nescafe soluble coffee. It's a little bit softer for ambient dairy with Yinlu. But clearly, we see an improvement of the Fundamentals, which is visible, but we believe that it may take a little bit more time than what we expected. In AOA, in developed markets, the performance has been really driven by KitKat and Nescafe.
Japan continues to sustain a solid growth, helped by innovation, the same story as what we experienced in Europe. Innovation is making a difference in a deflationary environment. Moving now to our globally managed businesses, and I will start with Nestle Waters. We had sales of almost CHF 6,000,000,000 with RIG and ANOG at the same level around 7%. Water continues to be a great success for Nestle.
We benefit obviously from consumer trends, the fact that consumers are moving towards safe and healthy beverages. Just for your information, we see now that in the United States, we expect the water volume to overtake the volume of CSD pretty soon, which is quite a dramatic change over what where we were a few years back. We benefit as far as our Nestle Water business is concerned from a good geographical footprint and a balanced portfolio. And we have a contribution from across the portfolio. Nestle Pure Life is growing double digits.
Our international premium waters, San Pellegrino and Perrier are enjoying good growth in premium segment with high single digit growth. And our local brands, some of them appear on the screen, continue to perform very well with a strong momentum that we have enjoyed over the last 2 years. Moving now to Nutrition. We had sales of CHF 7,800,000,000 in the 9 months period with a RIG of 1.4% and OG of 3.4%. The growth was a little bit lower than what we had in the past, but the fundamentals remain very good.
The category is a little bit slower worldwide and we are facing some temporary issues, but the growth is broad based. We had some issue because we had some strong comparatives and especially in China in the first half of the year. And we are feeling a little bit more lower pricing, mainly as a consequence of the fact that milk prices are getting lower. And we have a little bit of volatility in Asia, Latin America and India. The fundamentals remain anyway very good.
Moving now to China as far as Nestle Nutrition is concerned. Our infant formula growth is really led by the super premium range, Illumah, which continue to grow from a geographic point of view and we continue to expand as well in e commerce. Wires in China and Nestle overall in infant nutrition continues to gain share. Our Meats and Drinks are enjoying a solid growth pulled by the purchase segment, which continues to be very strong. Infants and Real is doing well, led by Russia, U.
S. And Poland. Let's now move to other businesses. As you know, other businesses is composed of 4 different businesses: Nestle Professional, Nespresso, Nestle Health Science and Nestle Skin Health. In Skin Health.
In total, these four businesses account for CHF 10,100,000,000 in the 1st 9 months and our RIG stood at 4.4 percent and OG at 5.5%. I will start with Nestle Professional. The growth accelerated driven by emerging markets and driven by beverage solution, mainly coffee. Developed markets remained a little bit slower due to the continued challenge of the consumer environment. Nespresso, we continue to enjoy a good performance with international expansion.
We are really driving the premium portion coffee segment through quality, innovation and direct consumer access. As an example, we keep on launching new limited editions. The latest one that we launched, Milano and Palermo Grand Cru, have been very successful and they have been the most growth. The growth is also coming from the fact that we keep on opening new boutiques. We have opened 14 new boutiques this year and we continue to expand on a from a geographic point of view and to gain new consumer reach.
Talking about Nestle Health Science. The growth is broad based with Europe and AOA as highlights. Once again, it is about innovation and product rollouts, which are really driving performance. Nestle Health Science is clearly accretive to group growth. Nestle Health Science has 3 platforms: Consumer Care, which is growing double digits Medical Nutrition, which is enjoying a good high single digit growth and Novel Therapeutic Nutrition, which has been facing a little bit of issues lately because we had one of our products in the gastrointestinal segment, namely LOTRONEX, which had to face the launch of generic.
Overall, for Nestle Health Science over the 9 months, we can say that the business is performing well. I won't say too much because Greg will present the business in a few minutes. Moving now to Nestle Skin Health. The low sales in the quarter relates to our prescription business in the U. S.
As you know, we are providing discounts to the trade and directly to consumer so as to facilitate their access to our products. Such discounts are reflected in our accounts through accruals on a monthly basis. In Q3, we reviewed the assumptions relating to these accruals and we decided to adopt a more conservative estimate that resulted in a one off adjustment in sales. It is very important to understand that this adjustment does not impact in any way the underlying growth and the fundamentals of the business, which remains both healthy and strongly accretive to Nestle. Moving now to the product breakdown.
If we look at breakdown by category, starting with spodered and liquid beverages, Our organic growth and real internal growth accelerated compared to the first half of the year. Rig improvement was mainly coming from Mexico. Growth is driven by coffee both by Nescafe soluble coffee, coffee system, Nescafe Dolce Gusto and Nespresso. Also soluble coffee in Mexico and China had a significant contribution. Water, I won't cover it because I talked about it before.
Milk Products and Ice Creams delivered a 0.9% organic growth. The slight improvement in growth was largely thanks to ice cream, which had a very good summer. On the other hand, ambient dairy continues to be affected by challenges in India and in Brazil that we are currently addressing. Coffee Creamers sustained their good performance in Zone AMS led by the CoffeeMed brand in the U. S.
Nutrition and Health Science, this segment includes as well Nutrition Nestle Nutrition, Nestle Health Science and Nestle Skin Health. The performance, as I described earlier, has been impacted by the exceptional events in Nestle Skin Health that I covered earlier. Prepared dishes and cooking aid, it has been helped by a positive progress in frozen food in North America where the first result of the turnarounds are promising. However, the negative impact of the Indian noodle case has affected our results. Confectionery, we are experiencing a strong organic growth driven by pricing in emerging markets and KitKat is sustaining a good growth momentum in most countries.
Pet Care to finish. Organic growth and real internal growth accelerated. Europe and Latin Americas continue to be very strong. North America remains soft affected by these low benefit sales. However, we are seeing clearly some gradual improvement in the recent months.
To summarize the 9 months period, I would say that these results are solid results. We have made good progress in many businesses and geographies. I think it demonstrates the health of our underlying business on Dementors. It demonstrates our capacity to innovate. It demonstrates our capacity to grow in difficult markets and in difficult environment and our capability to turn around businesses whenever needed.
Our rig has increased and is in line with our expectation. Our OG is short of expectation, but this is due to exceptional items, namely Maggi noodles in India and Nestle Skin Hales. Our full year outlook, once again, we project to get organic growth of around 4.5% for the full year with improvement in margins and underlying earnings per share in constant currencies and capital efficiencies. Once again, the business fundamentals are good. That brings me to the end of my presentation and I will now hand it back to Paul.
Thank you, Francois. It's nice to see a little French accent coming in. But you saw the results. We walked you through the details and I hope we could convey with you the real intrinsic strength of the figures and underlying businesses and also the geographic spread of that strength. And I think that's particular to Nestle.
The strength of Nestle's business is actually linked with its fundamental strategic direction. It's a direction that is linked with this famous nutrition, health and wellness. And actually that strategy is even more valid today than before. Why? Because the consumer is changing.
The consumers are changing in the 6 expectations towards that agenda. It is expecting while we get the older population to have dimensions, the awareness, looking for more rational and scientific dimensions in food is going in other direction. Yes Nestle is all about nutrition and finance. It's about enhancing lives. That's our strategic direction.
And you're going to see I'm going to link it up of how we manage our portfolio. It is all about enhancing life with science based nutrition and health solutions and that for all stages of lives, so that we can help consumers to care for themselves and their family. That is the clue. That is the purpose of everybody in this company. 340,000 people are working towards that end.
And that end is the fundamental base of our value creation. We work in this every day. And we do that and I have mentioned that and shared that with you. We do that through our fundamental food and beverage business. That's what we are.
We're almost 150. Next year we're going to be 150 years old. That's what we have done from the onset. It is all about good food, good life first and to deliver and to offer tastier and healthier choices in food and beverages. And that again for all stages of life every moment of the day for every consumer in the world.
And that is what characterizes us. Yes, at the same time the last years we have been building up new platforms that go in that direction by extending the boundaries of nutrition. But for us that do embrace and that do promise very, very strong valuable profitable growth in the future. We have Nestle Health Science that we started in 2011, and we have Greg who's Greg Behar, who's going to walk us through that, what have we done, where are we up to, what is the expectation. And then also last year, we brought in Via Galderma Nestle Skin Health, where we see so much compatibility with health and the scientific platforms too and the promise of healthier and quality of life.
So let me walk you through this fundamental concept of inner strength of our portfolio. It's all about portfolio building, a portfolio that promises building blocks that are projecting good growth. It is building product services. It is building platforms that deliver differentiation and that with strong potential value creation, but on the line of Nutrition Health and Wellness. And we evaluate and judge our businesses.
We evaluate the new businesses we engage in basically on TRICARE TUE. I see there. It has to fit our purpose, Nutrition, Health and Wellness. It has to be or project profitable growth. We have to be able to win in the categories where we engage in.
And then also the relationship with what intensity of resources we need to do that. And that is not only finances. It's not only return on invested capital. It is also our R and D setup, our talent that we have and our resources in general. And then we take action and where we really have good traction and we accelerate.
We have increased investments in different areas of our business because they do entail and they do promise good growth, profitable growth or we have to protect the solid base businesses that we compete in with leadership or we have to fix. And that is what we have done and are doing now for so many years. First, our base business, and you have heard about our sixty-forty plus It's not just a small tool. This is a fundamental philosophy with which and an action with which we go about our portfolio. That is really driving nutritional arguments in our base business to build into people's lives nutrition health and wellness arguments in daily life.
The biggest driver as I said is sixty-forty plus. It is all about testing and turning our portfolio towards what we have called Nestle Nutrition Profiling System. It's a profiling system that defines criteria that are based upon up to date science and nutrition science and public health recommendations, be it from authorities such as the WHO, U. S. Institute of Medicine, European Food Safety Institute etcetera.
So it is a framing that is neutral, it's objective and it has and we drive science to it. Some figures around this and you see them there. We have a policy on sodium and sugar saturated fats. This isn't just a policy. This is driving our R and D.
This is driving our reformulations. And the last few years we have reformulated because it's substantial. We have reformulated 44,000 products for nutrition and health consideration. 22,000 products reformulated only on the axis of sugar, fat and saturated and sodium. 27,000 products with increase in nutritional ingredients and arguments.
We are in permanent we have permanently 1 third of our SKUs, 1 third of our products that are going through this process. And actually today, this strategy is more relevant than ever because the consumer is moving in that direction. The expectation of the consumer is moving in that direction. Be that he is health aware and asking for free from gluten free, lactose free, meat free. We have them moving to move a bit more towards more vegetarian and plant based options.
He is looking for authenticity, clean label, organic natural, local, etcetera. These are all the dimensions that actually are a part of the Nutrition and Health and Management agenda. So we have been working on that for so many years. So we have responses. And you can see a good example of that is what we have done with frozen food in United States.
This was with clean cuisine, Stouffer's also with Jordan Pizza Hot Pockets. And this was an overall approach. This was and I have mentioned that in February reconnecting with the consumer base. This was linked with new products, new formulations, repositioning communication, lean cuisine with marketplace is playing into that. And we have improved new health benefits, opening it up not having it on a narrow base of health of lean, but on healthy diets and healthy eating.
We have the same done with Stouffer's on trend, building in more ethnic cuisine arguments there too. And the new campaign is working well too. Well, the first signs are very strong. We are there we are outperforming definitely the category. The share trends for both lean cuisine and stores are positive.
And as we are a leading player there, the whole has lifted up the whole category. You may have seen also that we have new capabilities in Solon where we have our frozen business in United States with the state of the art PTC Product Technology Center where actually that is driven. We have brought in from different parts of the world our capabilities in there to have really the frozen food center I would say of the world. And that is a fantastic base to build further for the future. We have spoken about China and China is on the same path.
It just takes us a little bit longer and why? Well, I think there are other dimensions to the complexity or to the challenge in China, which is also the trade. We have spoken about the trade. And now we have to deepen our footprint. The global environment of China is a little bit softer too.
But there's so much good going on in China. We have been increasing the relevance again to a moving consumer also in China on the same axis. We have increased the relevance of our categories. We have also strengthened our route to market capabilities with expanding distribution. And coffee in general, be it instant coffee has almost double digit growth and market share gains.
Coffee, RTD coffee is growing very, very strongly. We have also our joint venture business with ChufuXi that is growing very strong etcetera, etcetera. E commerce, the e commerce is definitely the platform and that we are embracing in China. It is growing almost doubling for what goes for the year. It is going up at 7% 6% 7% of our sales in China already and going strong.
Yindu is a challenge. And Yindu is a challenge because Yindu is a product that combines all the different challenges, distribution to we have reformulated and new products have to commence still in the latter part of the year and that is still to grow. Faster infant nutrition going very well in China Health Science also. So China is a mixed bag, but it's recovering. It is not recovering as fast as we think.
It is not recovering as vigorously as we think. But I do believe the momentum is building up. And definitely China is we remain extremely optimistic for China. China is a focus area for us. We have invested and we see positive momentum coming back.
At the end of the day, portfolio management is all about it's not with new expectations going for new brands. Portfolio management is investing in our brands we have. They have that promise. We have the signs. We have the brand equity with the consumers.
It is caring for our existing brands and that is what we have done and we take time for that without losing time. We are investing in our brands. Kit Kat is a good example. Kit Kat is almost 80 years old and Kit Kat is more vigorous than ever. Kit Kat a few years ago was in 40 markets.
It's now rolled out in 80 markets and growing double digit. It is a multibillion brand already and still has a huge potential. Nespresso you know the story about Nespresso. It is investing upfront on the real the right things with the right arguments and give time to that. But then we are now in over 65 countries.
Same thing with Deutsche Gusto more recent. It's not it's almost 10 years old. It's over $1,000,000,000 business rolled out in 70 countries. And that's a capability that Nestle is embracing more and more. It's going after our brands and investing in them.
And then I have a small little personal thing which is Kaia. Kaia is I'm confident it's going to be the same We're going to start very humble. I have mentioned that was my little frustration, intimate frustration. Nestle known for its chocolate expertise and all that not being in the luxury segment. Well, we're going to embrace this potential.
Khaje is a 200 years old brand. It's the oldest one of the oldest brands we have in our portfolio. It's iconic. It stands for Swissness. It stands for that authenticity and knowledge and expertise for the finest chocolates.
Where are we going to start? We're not going to start broad. We're going to start narrow. We're going to embrace actually an iconic brand 200 years old with the newest of the newest which is e commerce and blending that into a winning platform. We've started in a few markets U.
S. A, Germany, U. K, and Asia and China. We're going to be there in a few days' time. We're going to raise it with partners and Amazon is a partner helping to build that up there.
We're going to be in specific airports only for Geneva, Zurich, Dubai and Singapore to start with. But I promise you this is going to be a good story and I invite you to walk this journey together with us. It is building on existing brands, building the new dimensions, building the new arguments into it. E Business that brings me also to E Business. I have mentioned the E Business as one of these priorities of our company.
And it is a priority that we have been working on quite intensively. We have brought in talent. We have built up the teams centrally and linked up with the markets just like we have done with our acceleration team. You may remember our digital platform of social media. There again, we have been building these teams.
They have been planning and rolling out our strategy and plans. We are engaging with the major players in that field on all access be it the brick and mortar, the pure players etcetera. And that is going very strongly for us. So we think we have the ingredients to accelerate what we already have. Nestle and E Business is already over €3,000,000,000 business for us.
It's closing into 4% of our sales already. Small looks small, but it is substantial. But the most important part is it gets traction and we have the structure and the mindset to go after that. Another thing is a strengthening portfolio is divesting. It is really going after what we don't see fit strategically or we don't see fit for profitable growth and making these choices.
And we have accelerated our action behind that last years. And We when there is a clear absence of fit, we have to alienate it from the business. And if we finish and I hope soon our digital business, I'm not going to walk you through it, but you see we're going to have in the last 4 years divesting an equivalent of CHF 2,600,000,000 sales, which have substantially. You see these are many, many small things, but also some other things. It's not a matter only of divesting.
It's also fixing in creative ways certain businesses. And that is exactly what we have announced a few days ago that we are setting up a joint venture for ice cream with R&R. R&R a partner with whom we have been working already for over 10 years, 14 years I think. And we are setting up a fifty-fifty joint venture there where we're going to bring in Nestle our businesses of Europe as a whole, also increasing including European frozen business, although we exclude pizza. We bring in our ice cream business in Egypt, Philippines, Brazil and Argentina.
And that's going to create being R and R a focused player in the ice cream business. That joint venture is going to create a leading player in the ice cream business and is really going to have all the ingredients because we put together the competencies and the knowledge of these both companies. Nestle has strong branding capabilities, the out of home distribution network, impulse and ice cream, R and R competitive manufacturing very, very sharp on take home etcetera. That complementarity is definitely going to be a very strong, strong player in the ice cream business worldwide. Portfolio management is also and I have mentioned that is building for the future too.
It is building intrinsically what you have for the future but also growing and seeing what is up there as an opportunity that is in line with your strategic direction. And that is exactly what Nestle Health Science and also Nestle Skin Health is It is expanding the boundaries of nutrition. It is actually marrying or bringing together the needs of society, which is the length of nutrition and health is extremely increasingly relevant in society means has value. And then also the science that is not allowing to give the right answers there. And that is what we have been doing over as from 2011 with Nestle House Science.
I may ask Greg to walk us through a little bit what have we done, what are we up to, what is the nice promise you have for us?
Good morning, everybody. Thank you, Paul. It's a pleasure to be here today and provide you an update on the progress we're making with Nestle Health Science. Nestle Health Science was created in 2011 based on 3 things. First of all, on a big idea, which is the ability to capture advances in Nutrition and Science and to create new markets.
2nd, the base business already existing with Medical Nutrition and a few strong consumer health brands. And third, the support from the group, from Nestle, with its ability to create new ventures, new company very successfully, but also this new dimension of Nutrition, Health and Wellness. I joined a year ago to lead Nestle Health Science and are focused on building on the foundation, first on the vision that Peter Brabeck and Paul Bauke established for Nestle Health Science, but also on the foundation that Louis Cantel has built to establish Nestle Health Science. We're making great progress on establishing our strategy and accelerating growth. And I'd like to focus today in providing 2 main updates.
First of all, provide you more insights into the opportunity of Nestle Health Science of this market as well as providing you clear concrete example of how we're accelerating growth today and driving profitability. Just to start, a brief overview. Nestle Health Science at Nestle Health Science, we are forging a greater, more integral role of nutrition in the management of health for consumers and patients, but also for caregivers and healthcare providers. We are transformational. We're transformational in terms of how we're innovating with our current pipeline, but also how we're making strategic investments in key novel therapies.
For example, the investments we've made in the microbiome or how we're transferring new technology and new science into new product opportunities. We are accelerating growth. We have great momentum today with our current portfolio, but we're also capitalizing on the macro trends externally. And third, we're building a breakthrough pipeline. We have already multiple very innovative projects in our pipeline to address unmet medical need.
We believe that with that we are the company where nutrition becomes therapy. We're extending the boundaries of nutrition, health and wellness and we believe that the potential of this company is CHF 10,000,000,000. Our strategy is based on 3 main pillars and business area: Consumer Care, which is driving strong brands and differentiated products, as well as for consumers who are going to pharmacies and retails, those are our main channels and it's mainly a self pay market. 2nd, medical nutrition, which is mainly reimbursed in institution, hospital, nursing home and nursing care based and it's mainly driven by the recommendation of healthcare professionals. And third, Novel Therapeutic Nutrition, which is a business still in the making.
Here, we want to develop proprietary nutrients that are addressing specific disease, specific conditions. This is a business that's mainly prescribed. Each of the business area are focusing on key categories. Healthy aging is a good example, inborn errors of metabolism is another example as well as gastrointestinal and brain health. Now we're also accelerating growth by capturing macro external environmental trends such as the aging population, which is very clear for everybody, the growth of chronic diseases, for example, Alzheimer and Obesity, but also how cost pressure actually changing the marketplace in Health and Care, We're driving it's driving more self pay, but also the need for the need and the search from consumers to access safe clinically proven and sound nutritional products with solid health economic value.
And some of our products in the hospital setting, for example, have shown an economic benefit, a cost saving per patient of 9% to 25%, which is significant. And last but not least, Paul also mentioned a real trend change in the patient empowerment, patients and consumers that are fueling demand for health related products, but also an increased evidence of how science is supporting the use of nutrition in health. We have the winning mix of ingredients to be a successful company. First of all, we benefit for the tremendous capability in the largest and most respected nutrition, health and wellness company in the world, Nestle. We have already a very solid global footprint.
We are number 1 or number 2 in 7 of our top 10 markets. We're gaining share every day. And we have also very strong credibility with healthcare providers, with regulators reshaping the environment, for example, with the U. S. FDA and in China.
Our pipeline is growing stronger and stronger with more than 40 very innovative projects and we have more to come. We also have a unique combination of capabilities in nutrition, in fast moving consumer goods as well as pharma. And we continue to make strategic investment in our manufacturing footprint as well as in our development innovation network in order to drive innovation, efficiency and quality. With that, it makes us also a partner of choice to accelerate innovation externally. And that brings me to one of our key ingredients for the long term success of Nestle Health Science, which is our innovation engine.
We first have the innovation engine from Nestle in terms of route to market capabilities, but also with its R and D network. And a very good example is the Institute of Health Science, which is a unique biomedical research center based in OPFL Lausanne, where they have unique capabilities and analytics to link diseases with nutrient requirements. Our external innovation network is growing stronger and stronger. And in the last 12 months, we've made key moves in order to strengthen that ecosystem. We've expanded our venture capital network with a strategic investment with flagship ventures.
We've invested in the most innovative company in the microbiome area, Cerus Therapeutics. And we've also invested in Lipid Therapeutics, the company developing a very novel therapy in ulcerative colitis. Just last week, Stephane Catzicas and I have announced an investment of $70,000,000 into a novel into a NPTC, a product technology center, which will be entirely focused on Nestle Health Science and based in New Jersey. So now let me give you a closer look at each business area, starting with Consumer Care. It's about driving big brands, strong brands, differentiated products.
We have Boost and Meritan and we're focusing on the healthy aging category. Here we're reaching consumer who are active every day, actually consumer who wants to restart fresh every day. And physical mobility, cognitive function are key benefits for them, which we are focusing on. We have the potential to build a powerhouse in Consumer Care by accelerating our pipeline, by extending new categories such as healthy growing and gut health, but also by expanding our geographic footprint in key growth countries such as China, Philippines, Mexico. And 2 great example of boosting brands in Consumer Care in the healthy aging category.
For example, Boost in the U. S. Intended for senior consumers who struggle to get the right amount of nutrients. Boost in the last 4 years has gained more than 8 share points and actually 1 third of that this year and is growing 20% year to date. We have launched new presentation, new formulations to provide the same amount of nutrients in half the size or less calories.
And with Meriten range in Europe, we're growing at 36% year to date. And here we're providing several new variations to address bone, muscle, joint health, as well as reducing tiredness and fatigue. So those are 2 great brands, 2 great examples of how we are broadening our activities in the healthy aging category. Our second business area is Medical Nutrition. And here, this is our largest, most established business and we already provide a broad range of nutrition specialty addressing specific health issues in the hospital setting, nursing home as well as for specialty physicians.
We're accelerating growth. We're outgrowing the market. We're gaining shares I mentioned before and we're focusing on geographies where there is a lot of growth potential such as Asia and Middle East. In this market, we're driving for leadership. Let me just highlight a few great success stories with VITAFLOW, a company providing diets for life, people suffering from inborn errors of metabolism.
They require specialized diets in order to grow and survive. And VIVITAFLO is a success story, delivering double digit growth year after year. Another good example of success is our food allergy business and the cow milk protein allergy. Children affected by this allergy have a significant unmet need. 70% of them have skin rash, 60% of them have important digestive problems.
And our product range today already improved the quality of life of these children and we're growing 30% year to date. This is good, but we are aiming for leadership in the food allergy segment. For patients with that require tube feed and enteral nutrition, we are expanding our product range with more differentiated products. And a good example is the launch of the Ella pump in Europe, where we are bringing an easy to use pump which enables a continuous real time dose tracking nutrition dose tracking. So now this takes me to the 3rd business area, novel therapeutic nutrition.
As I mentioned, this is a business in the making. It includes Prometheus, a leader in GI Diagnostic, gastrointestinal Diagnostics. Here we're focusing on therapeutic areas based on unmet medical need as well as solid clear scientific evidence. We're focusing in gastrointestinal health and brain health and we are also expanding our proprietary technology platform that has significant impact on disease state. And the microbiome, as I mentioned before, is a very good example.
I'd like to provide you a little bit more of perspective how we're building our pipeline at Nestle Health Science. Here taking the example of the category of gastrointestinal health. We have a range of programs ranging from nutrition, prescription and diagnostic. Here, 2 examples, Project RUM and LTO2. Both are addressing an unmet medical need and are focusing on inflammatory bowel disease.
Patients suffering from inflammatory bowel disease are today are either treated through drug treatment or surgery and they very quickly escalated to biologics. And there is evidence that a targeted nutrient solution will help these patients be on drugs. With Project VARM, we're helping patients by providing an improvement in the inflamed mucosa to get back to normal. And in Project LTO2, we have a product that heals the protective layer of the mucosa. Both projects are synergistic.
They have the potential to be gold standard nutritional therapy and are additive to drug treatment. So let me conclude and summarize. Nestle Health Science is a unique company that's shaping new approaches to health management for consumer and patients. Nestle HealthSense is
a key
is playing a key role in nutrition, health and wellness and is well positioned to succeed. We're accelerating growth and we are accretive to Nestle. Thank you very much. Paul, back to you.
Thank you,
Greg. You see it's fascinating what good food can do. And that is what Nestle Health Science is all about. It's already a business, because you're looking out front there in the future, but it is a multi building business today accretive to our performance. And that is the base we build upon.
We have strong brands and you have a fantastic pipeline building up. But there's so much to be discovered still and how nutrients interact with health and we are there. And there's so much value to be created in that equation and that is what we embrace. Yet again that's Nestle, an end company. Short term today and yet also reaching out for the future and building these platforms.
And actually Nestle Health Science has both of them. You have a business today driving and growing very, very nicely and profitably and yet reaching out for also building that for the future. It is all about and I have mentioned it and I stop here about consistency, consistent and sustainable profitable growth with returns. And that is and I have I wanted to share with you this how we go proactively about portfolio. At the end of the day, it's all about portfolio, building the right platforms, building the right arguments in the existing brands, building the right signs, so that we can create value differentiation versus competition, giving us the winning arguments.
And I think that is what helps us. We have a broad portfolio. We have a spread geographic spread that is unique. And I think that's our strength that we have today. At the same time, we go also of doing that very, very efficiently.
So and driving waste out and efficiency bringing efficiencies in the operations. But they didn't want to focus this time unless we're going to have opportunity to do that. With that, I think we are ready for questions.
Thanks, Paul. For those of you on the call, And now let's take the first question from the call. The first question is from Eileen Ku of Morgan Stanley. Eileen, go ahead please.
Good morning, everyone. Really good to see all of you. So two questions from me, please. So first of all, on China and Zone AOA, is it possible to give us more color? So for example, in China, did you see a sequential improvement in your organic growth versus the previous quarter?
And then recovering regarding recovery being slower than expected, is this category specific or are you losing share? And for infant formula in China, can you just give us a bit more color on the dynamics you're seeing there? So for example, promotional intensity market share, e commerce development? And then just for zone AOA generally, what's driving negative pricing in this region? So that's my first question.
And then secondly, on U. S. Frozen, it sounds like you've had some encouraging results so far. What kind of sustainable growth rate do you see for this category longer term? Would you be happy with stability?
Does that constitute a recovery for you? And are you happy with the results to date of your joint advertising campaign with your competitors in Frozen? Thanks very much.
Well, China has actually three questions, but we do see sequential improvement in China. We have mentioned that we have different categories that are really going strong like the big businesses in Nescafe and be it in instant coffee and RTD. We see also we see our joint venture getting good momentum on that. The specific we see in fund nutrition and Nestle Nutrition, we see Nestle Health Science going well in China and getting traction. It is a slow increase.
We would have we were more optimistic, but you see also the environment of China is playing there. But Yindu is where we have done quite a bit, but still a few products and innovation to go for. And the negative category specific I would say that it is has a general undertone of China that is a little bit in slower growth mode, but we have specifics category by category and there's much many categories going very well and getting back to what we used to. On negative pricing, the milk arguments and coffee per se, you've seen the raw material pricing there. So there's a little adjustment to keep the pricing competitive, I think I don't know, wondering if you want to say some more on this?
In terms of negative pricing?
No, in general, if you want to on China because you're very close to China.
Yes. Hi, Eileen. Nice to hear from you. No, we are actually let me unpack China for you. Like Paul said earlier, we have our core F and B business that actually is the fundamentals, it's very encouraging.
So when Paul talked about soluble coffee, we're growing at 8%. When we talk about RTD, we're actually growing at 26%. And also from an e comm standpoint, it's interesting. If you look at Paul, you talked about the F and B, where like 5% of our sales now is going through e com, growing at 70 some percent. And if you look at e com for total China, it's now 14% of our sales, growing at about 50% year on year.
So a lot of encouraging signs, and Paul is right, where we need to improve and where we continue to work on is the Enlou business. And even in the Enlou business, we have new innovations coming in the pipeline. So that should we should start to see the impact of that in coming up in Q4 and going into next year. I am very optimistic about China and about AOA. And so in terms of pricing, the other question that you have in terms of pricing for AOA, Paul is right.
We do have commodity price benefits that we have in order to stay competitive in the marketplace with lower pricing. And also we have launched a lot of a whole slew of new products in the zone. So anything from KitKat Green Tea in Malaysia to Nescafe Creamy White and Nescafe Barista Style. I mean the VSCO sign and obviously as we launch these products we do have support in the retail trade in order to get them going. So was there any other questions in terms of that was it?
We had in USA, Marlene. In USA, the frozen, we see we not only see motivating growth coming back. We have seen good growth double digit growth in our frozen business in the last week. So we're not going for stability. We're going for growth.
It's a fantastic category. We have fantastic brands in there. We have the complementarity of different offerings in that category. So we have leading positions. We have the best knowledge and the best development center there to really go and link that category, our brands with the consumer expectations.
And actually it's very strange that the frozen food was under pressure over the years because there's no better category to answer exactly what the consumer is asking for, which is lean labeling. Frozen allows that technology is the best technology to conserve all nutrients and to offer combined offerings that give a balanced diet. But it's for us to connect that with the consumer, for us to link this category with these arguments to the broader population. And that is what we did as brands, as a company and together with other players in that category because we believe it has all the right arguments. And that is what we're doing.
So we're not going for stability or say keeping our no we're going for growth. This category has all the arguments to grow and it's showing. So and it's not one time effort. I think what we have to do there in that category is always sharp and connect permanently with the consumer. We lost it a little bit because the consumer has moved dramatically fast call it millennials.
But I think we are now there to and have the capabilities to stay really attuned with what they expect now.
Next question. Yes. The next question from the call is from Celine Fanuti of JPMorgan. Celine, please go ahead.
Yes. Good morning. Sorry, I'm going to go back to AOA because I still don't try cannot manage to reconciliate your performance in Q3. So you're down 3%. I think you mentioned Maggie being a hit.
We think it's about 280 basis points, so that could make you flat ex Maggie. Can you talk about what and I understand that China is improving versus Q2. So can you help me with the moving part there to understand why AOA, even ex Maggie was weak despite the weaker comparative? That would be my first question. And then my second question is on Americas.
Two points here. You said Brazil was flat, which sounds like a pretty deceleration versus H1, if you could explain what's going on and why was pricing so low in Americas was as well this driven by Latin America? Thank you.
In a way, I must say, Maggi, India has an impact. We don't over bone with it, but it has a dramatic impact. We have no Maggi noodles on the shelf for the whole quarter, no for more than 5, 6 months. So it has an impact. Then you have also the negative pricing on organic growth that weights dramatically because milk and also coffee is very, very strong in our portfolio.
And I would think that is the main reason. We thought a faster recovery in China would compensate. It's slightly slower in there. That's where we are. Underlying, I'm optimistic for the future.
It's not going to be a flip flop all of a sudden. There's a momentum that is building up. But once we're going to add that, it's going to be solid. Latin America, Brazil flat. Well, more or less if you see Brazil and you read that the environment is not going so well.
And yet at the same time we have been very, very resilient in Brazil. We have very good underlying categories there. Milk is a little bit more in the pressure with coffee and competition is doing well. So all in all, Brazil is not Latin America. It's big.
It's not Latin America. We have Mexico. We have Chile. We have Colombia. We have Peru really going very well close to double digit growth.
And that is what gives us strength of that continent. So the pricing is low because again there's so many milk arguments in our portfolio coffee too in Latin America and that plays in. So basically to stay competitive we have rolled out some of the price the softer pricing into our pricing. So basically that said, I mean the underlying growth taken Brazil that is neutral and which is actually a good performance if you see a little bit of general macro environment of Brazil, I think is a good result.
And Celine, if I may add something regarding the pricing AMS, in zone AMS. Obviously, the adjustment that we did, the one off on Nestle Skin Health is impacting AMS, which is the reason why you see a lower component of pricing in the 3rd quarter.
Thanks. The next question from the call is from Warren Ackerman of Societe Generale. Warren, please go ahead.
Good morning, everybody. It's Warren Two questions from me also. At the first half stage, you were pretty clear that there would be an acceleration in the organic growth in the second half of the year. That was a clear message. But obviously, we're sharply lower in organic growth terms in Q3.
I know you've called out the two reasons, Maggi Noodles and Skin Health. But I'm a bit confused because the Maggie India issue was also the case in Q2, given it was off the shelf for 6 months. So was it worse in Q3 versus Q2 for Maggi Noodles? And then the changes in your assumptions you've made in skin health, can you just go through what those are and what impact that had on the organic growth in Q3 or maybe some impact on sales so that we can understand why really there's been this slowdown in Q3? I don't really I can't really triangulate it all up.
And then just second question, again one for Wang Ling if she can. Mean, it's good to hear, Wang Ling, you're positive on China. But at the end of the day, this is another weak, very weak quarter in Zone AOA and it's now 5 or 6 weak quarters in a row. I hear all the improvements on e commerce and the India issues and everything. But I mean, can you maybe just walk us through what your priorities are for the zone in the next sort of 18 months, 24 months?
And do you genuinely think that you can get the growth back to mid single or high single digit organic growth? And maybe talk about some of the other countries around China, which we're hearing from other companies. Southeast Asia has been significantly impacted by the devaluation and the slowdown in China. Just your kind of just general priorities in zone AOA and what you think you can do with the zone would be great. Thank you.
Okay. Warren, on the Magne Uhl's first second quarter, third quarter, actually the hit was fully in the Q3 because of the we still had products on the shelf and we have been retaking it more or less at the middle or the end of the second quarter. And that goes over in accounting because you have to bring it back in. You retake from the shelves. So the full hit, the full blast on the organic growth was definitely in the Q3.
And now we're not back on the shelves yet. So it's not helping there either. So that's explanation. And honestly, Skinny have you talked on China, growth of China 5 to 6 quarters, well, OneLink is only 1 quarter in. So and her priority is to bring growth back.
So maybe you want to say a few things more. What are your priorities? They're very clear, but share
them. Thanks, Paul. Clearly, my priority is to get growth back. And I thought I was impatient, but my boss is even more impatient. But let me go back to the India, the Maggi noodles thing.
In Q2, we still have sales of Maggi noodles. And going into Q3, we not only had the impact of Q3 of noodles not being on the shelf, but also taking back sort of like the whole pipeline coming back. So I think it was Francois who said in his discussion earlier that it was actually worth 6 months that basically hit select Q3. So that's setting aside. So that's what's happening to Maggi Noodles.
And also we had mentioned earlier that we're really pleased that the Honorable Bombay High Court had rolled in our favor and we have actually gotten some results and it's been clear. So we are hopeful that we can get back on the shelf sooner than later. So that's India. Aside from so if you think about the challenges that we've had, it's magnitudes in India, it's China growing, coming back even though the fundamentals are really encouraging. We do have some construction sites, so to speak, which is an example that we've given is Yindu.
And then obviously let me go walk you through the rest of the AOA. It's amazing to see the impact the growth that we're seeing from developed markets. So Japan, for instance, is growing year to date at 5%, which is amazing for a market that has been long perceived as static. And I'll come back to that when I talk about priorities going forward. Australia, the same thing, about 4.9% growth.
So for 2 developed markets, that's really encouraging. Now moving on to emerging markets, if you think about Sub Saharan Africa, we have I think the World Bank has lowered the growth projection and yet we're seeing really good growth. And so if you look at the west of the continent, our business in Nigeria was really slow in Q1, but came back despite Q1 was because of the election, the impact of election, but it's come back despite the low the falling oil prices. So we're really happy with the performance in Sub Saharan Africa in terms of Southeast Asia, which you mentioned. It's so exciting to see in markets like the Philippines where our trust rating is so high, highest in even in all of Nestle world and we have share of wallet is really high.
All of our categories are really growing faster, faster than market. And so yes, we have some challenges in but countries like Malaysia where it's there are some market issues. But overall, I'm very, very bullish. So going forward, obviously, I have been visiting a lot of markets the last 4, 5 months and really encouraged to see the caliber of people, the critical mass of people that we have, the passion. I spent 7 days in India, for instance, in Delhi, in one of my trips and it was amazing to see the dedication of people, the passion of the people to grow the business.
So people obviously is leveraging on the strengths we already have, the brands, the products. The thing to also share, I'll come back to Japan. To be able to grow in markets like Japan at 5% and transform an Escafee brand to the innovation, not just in terms of product, but also in terms of business model. And how do we replicate those types of successes to other parts of Zone AOA is going to be key. And no, but I so people leveraging people, leveraging brands being making sure that we continue to develop the e com channel is going to be a lot of the things that we'll focus on.
But going into the balance of the year and going into 2016, we'll be focused on a few things that's really going to move the dial. I think was there anything else?
No, Anthony. AOA is a growth zone for us. So we're confident it will. It has to come back soon. And I think also e commerce is very important in AOA and expect it's like a silent clover that we are embracing there.
So that's going to come back. Just on the Maggie, with the product safe, we always stated that. It is now proven true and it's going through the process of reproving that through accredited and accepted labels that that doesn't mean it's back on the shelf. There's so many administrative hurdles there. We wouldn't we don't like them, but they are there.
We have to pass. And we're working very intensively from our side to have the manuals back on the shelf. That's not because they are okay and safe and that we have them and that's a pity, but we're working on that. There was a question on Nestle Skin Health.
Maybe before I move to Skin Health, for Maggie Houdon, just to give you a little bit more color. Actually in H1, we did not have sales for 40% of the time. Mean, the 9 months period, we didn't have sales for 60% of the time. So the impact was actually stronger in the 9 months period than it was in H1. Coming back to Nestle Skin Health, let me just recap on what it is exactly.
We had low sales, which is purely related to our prescription business in the United States. As you know, we are providing discounts both to the trade and to consumer through rebate cards. And the U. S. System is structured with a co payment between the patient and its insurance company usually.
Such discounts are reflected in our accounts on a monthly basis, and we have to take a view on what the discounts are based on a certain set of assumptions. And in Q3, when reviewing the issue, we decided to have a more conservative policy a more conservative view on the level of the discount on rebal that we are providing. Once again, this does not alter in any way the fundamentals of the business. Important to understand that Nestle Skin Health is strongly accretive in terms of sales growth to Nestle. We don't provide we're asking what is the impact.
The impact is lower than it is for Nestle New Dawn. We don't provide the detail of ourselves by for each business. So I cannot give you the detail, but be aware of the fact that it is lower. It is significant to the group, but it is lower than for Newtons.
Okay. Thank you, everybody.
Thanks. The next question from the call is from Jon Cox at Kepler Cheuvreux. Jon, go ahead please.
Yes. Good morning, guys. Sorry, I just want to come back into that Skin Health. If you look at the Others line, it looks like you've gone from 8% to 0 quarter on quarter. That would actually indicate something like 125 basis point impact from that skin health in the quarter.
Could you maybe just talk me through where I'm doing something wrong there? You mentioned it's not as bad as the noodles. I think you've 30 basis points for noodles year to date. So then that would be lower than I assumed in the quarter. If you could just talk us through that.
And then just in terms of will we see this impact now in the upcoming quarters as the whole business is restated in the skin business? Or is it, as you say, just a one off now and that gives you confidence, obviously, to talk about 4.5 percent organic sales growth for the year, which would obviously imply somewhere around 5.5 percent organic sales growth for Q4? Thank you.
Okay. For the Skin Health division, it's when you look at the category other, it includes other items as well because as I mentioned, we had the impact of the generic launch of LOTRONEx as well, which impacted ourselves in Q3. Be aware as well of the fact that the comps were not really favorable in Q3. So there are other factors than purely skin health in what you see as others.
Things like LOTRONIC, it's nothing to do with our strategic purpose. It just came with an acquisition. And general income is in these businesses that has a material impact. Straight away you go to minus 50%. But these are things these are excuses.
Fact is we have to have enough power to compensate for that. It is more the skin off correction which just ones up and that's it. So it's not something we're going to have over time.
Thanks, Amish. The next question is from James Targett at Berenberg.
Two questions from me. Firstly, just on Maggie India quickly, just to manage our expectations. I appreciate there's a lot of bureaucracy which needs to go through in order to get the needles back on the shelves. But just in terms of timing, are we talking by the end of Q4? Or is it could it be a Q1, Q2 thing next year?
Just give us an idea of time frame. And then secondly, just as we have Greg on the line, just on the CHF 10,000,000,000 of Swiss francs business for Nestle Health Science. I was wondering what are your market size expectations assumptions, sorry, for that sales figure? What do you expect that to be at the time of the $10,000,000,000 sales? What are they now?
And what sort of time frame do you expect to get there? Thank you.
Let me answer that. Mag India, when do we want to as soon as possible. When is that? We don't know. We're working very intensively with the authorities.
I've said product safe, tests are done. I think there's one test to commence still. Hope and confidence is going to be posted. But then still we have to go through quite a lot of administrative hurdles to get it back and I don't want to express. I'm an optimist and I hope as soon as possible is it going to be this year still.
I'm not going to say because I have learned a lot and I'm not going to express whatever because then it's not only in our hands. We do whatever we can to have the product back on the shelves so that we can serve the Indian consumer there. And I will leave it there. We have a little tone of frustration. But on the market size SEK 10,000,000,000 I took note Greg.
I think SEK 10,000,000,000 is a number. It's just to say this is big. This is not small. And I think that is what you're up to. This is a market in the making.
This is not a defined market still. There's lots of dust to settle. This is all new. But if you think about it, we're speaking health and that's big. Value creation linked to health is tremendous.
You just think about the pharmaceutical industry and all that. We're not going there. We just want a true nutrients bring health arguments. So what is the market? What we have calculated internally is a little bit the playing field of Greg grows between €30,000,000,000 €50,000,000,000 for the time being.
That is the narrow definition for the time being, but it is shifting and growing. So the €10,000,000,000 is actually more a mindset focus area to say let's game for that. Think too small. How many years it's going to take? I hope not too many.
We're going to sort that out. We have our timelines. We have our plans. We have our pipeline, we have our lunch timeframes and it's going to build up. But the €10,000,000,000 is more to give you a feeling a little bit.
We're not thinking small here as we think in quite sizable dimensions.
Thanks, Paul. The next question is from Adam Spielman at Citibank. Adam, go ahead please.
Hello. Thank you for taking my question. I'd like to come back to a question that was asked previously. At the half year, you said or implied organic growth was going to accelerate. And clearly, it didn't.
You knew when you made that statement that Maggi noodles weren't going to be available. So that can't be a change in your expectations. So I'm just wondering precisely if you can tell us what did change. That's one question. I've got a follow-up question as well if I can.
Yes. First of all, we were confident, etcetera. I was confident to have the Maggi noodles back on the shelf as soon as possible. We knew they are safe and we felt that we thought that we would have the Maggie. We don't.
There's hurdles. There's complexity. And that's well the reality came in there. We didn't like it. But that's and that component then with a specific other issue etcetera that's it.
That's reality. I mean what is important to me is that the underlying businesses and even the business that were challenged like frozen food, we have answered them and they're coming back. And in geographies, we have a worldwide spread session made of a slower recovery. It's not that there's no recovery. It's a slower recovery than expected again.
Maybe, yes, you're right. We were too optimistic maybe in the mega case of having the time line and then maybe China. But underlying, I'm very, very confident and optimistic.
Okay. Thank you. That's very clear. And then the second question is about really, I suppose, the accounting again on this onetime charge in the U. S.
And I'm wondering particularly how that will affect your margins and profit. Is it that you are effectively reducing sales, but trading operating profit will be unaffected, which I guess means to say that the margin will go up, underlying cash flow is unchanged? Or will there be a profit impact as well when we're thinking about that for the full year?
The impact is top and bottom line, but the business is accretive to the Nestle. So that is what matters to me. Active portfolio management is moving and the proportions of the accretive dimension in your portfolio in the right direction. Skin Health in spite of even that one off charge is accretive to the vessel model, which is what we're looking for.
Okay.
Thanks. The next question from the call is from David Hayes at Nomura. David, go ahead please.
Thank you very much. Good morning all. So I just came back to Nestle Health. Thanks for the presentation. It was very useful.
I just wondered picking up some of the dynamics you've seen in the quarter in terms of the rebates. We've seen, I think, mention of generic entry you mentioned earlier. I just wonder if you can talk about the risk profile of Nestle as it changes as that Health business gets larger, whether there is a more volatility to come into the Neste model, whether that can be managed and how can that be managed? And then my second question was just on Water. Obviously, a great quarter, nearly 10% growth, it looks like.
Some of your peers have called out the weather dynamic and sort of adjusted for that. I wondered if maybe you could give us some indication of how much of that was just weather comps and how much of it is underlying improvement in the Water division? Thank you.
You as follows, do we have a higher risk profile as a company?
I think we have
a higher risk profile
as a company. I think we have higher risk profile as a society in general if you think where we are moving as a society over markets etcetera, etcetera. I think we have been building actually to compensate for that portfolio spread and guide us actually what we're doing. In certain areas, yes, you have higher risk and in certain businesses you do have risk, you have also higher upsides. And so but for me the most important part is how we hedge through portfolio, through geographies, through the right arguments, through differentiation.
I think that is what we're doing. So we have this one time. I would not extrapolate this one time as all that's going to be necessary for the future. That is actually what we're doing building portfolios to balance things out. But there is higher upside and I go for the upside.
On water, weather, yes, we had a good summer. But I think the fundamentals are deeper than that. I think the brand dimension we have and with Nestle Pure Life, it's the biggest brand strong in argument, strong in personality, strong in footprint worldwide and rolling out and going deeper. And then you have our international brands like San Pellegrino and Prie going almost double digit growth very profitably and rolling out further and having that stronger more intrinsic dimension. At the end of the day, water is the best hydration.
And there's lots of noise people know that and they embrace that and they go for a healthy hydration. Healthy hydration Nestle is working on healthy hydration to each other business and it reflects. And then you have a sunny day and it helps a little bit more. Yes, we take it. Thanks.
Thank you very much.
Next question from the call is from Alain Oberhuber at MainFirst. Please go ahead, Alain.
Good morning, everybody. Thank you very much for taking my question. I have two questions. The first is regarding Nestle Nutrition again. When could we expect that the growth could come back in China in particular at a similar level?
And then on that issue, could you talk a little bit more about the 3 different channels? And the other question is about milk and ice cream. Obviously, you talked about milk being weak and particularly because of Latin America. But regarding the hot summer ice cream, I felt could have been much stronger. Could you give us a little bit more insight about your ice cream business?
Are you speaking Nestle Nutrition and Industry specifically in China? Is that your question? Or is it in general? You speak about the similar growth of what? Can you be more specific because
Yes. Just regarding you gave us a couple of insights regarding China about the different channels. But could we get a little bit more which channels are performing currently well? I assume you talked about e commerce, but talking more about the other channels like the modern trade channel or also the baby and multi store channel?
Yes. Well, National Nutrition in general is saying, are we going back to similar growth we had before? I think we had that accelerated growth that was a category that's really going very fast, started to be part of landscape in China. To get back to these growth figures on a slower base, it's much bigger base now I think now, but it's going to be vigorous. I truly believe we have the arguments.
You have also the price setting a little bit to more acceptable levels because the price differentiation in China was quite huge. We weren't there, but in general the competitive landscape was quite high prices. That is resetting somewhere. The 3 channels, we do see a shift from modern trade, the classical modern trade towards baby stores where you have more specific added value premium products talking more directly to the consumers looking at in the baby stores. And e commerce is definitely a channel that has, I would say, grown very, very fast.
It's not even e commerce per se. It's e commerce, but bringing from the outside. And we've wide our embracing that and we're nestling increasingly. So but there is a channel shift definitely to towards these baby stores and e commerce in Nestle Nutrition in China. Milk and ice cream, I don't know you speak about pricing or ice cream is not growing, but we don't give you a specific on ice cream.
Ice cream has gotten in United States a good exploration. We had a relatively good summer in Europe too and have been working there too. We have disengaged from certain parts of the ice cream business in certain parts of Europe too. But what matters is that we are building up a winning leader there together with Alonara. I'm really enthusiastic about what we're building up here.
The complementarity of capabilities of both companies, the fact that we have been working with them for 14 years and this fundamental trust relationship of going forward. The purpose that we have together and share that purpose very vigorously is really a very, very, very inviting promise. And I hope we can land that as soon as possible. We are in advanced talks. I'm confident, but we still have to land the talks and then start rolling it out what we see in 2016.
What do we do here? Well, we want to have a leading growing profitable business here. I really think we have the ingredients to do that. Looking forward to it.
Thanks, Paul. The next question is from Patrick Schwindeman of Societe Canton Altbank. Patrick, please go
ahead. Good morning, Paul. Good morning, everybody. Do you think the current consensus of an EBIT margin improvement of 10 basis points in Swiss francs is realistic, bearing in mind the current ForEx environment? That's my first question.
And second question again on this Kinehealth rebate adjustment. Could you give us the impact on earnings for the full year? This would be very helpful. Thank you.
Jose, is there anything?
No, we are not disclosing the detail for the skin health adjustments that I mentioned before. Regarding the margin, you saw our guidance, which is what we had before, which would mean that we expect an improvement in our operating margin for the full year against last year.
In local currencies, right? But do you also think in Swiss francs it would be realistic to have a slight improvement?
No. Our commitment is improving margin in constant currency because we don't have an impact on the Swiss francs. I would like to, but we don't. So you see the Swiss francs again has almost a 10% negative for the year to date. So it's real money.
But you will help in the second half definitely help in the second half? Sorry, I don't
Can you repeat your question? We didn't hear at the beginning.
But you also will have the help of lower input input costs in H2 as you have mentioned lower milk prices, lower coffee prices. So in terms of margins
Yes, you see that's a little bit the advantage we have, it's a bag of things, positive, negative. But also our raw material and packaging bag, basket we have is positive, negative. We have milk, yes. We have coffee, yes. We cook or no.
And actually, give and take, it balances things quite out. And it is no such a thing that you have lower raw material prices, lower mill prices, although they're coming back and they're coming up again that you're not isolated. You have to react. You have to be competitive in your pricing. So but all in all, what we say is we go for increased margin in constant currency and that is what matters.
It is what we're aiming for. That is what we promised.
All right. Thanks a lot.
Thanks, Patrick. The next question is from Jean Philippe Bertschy at Vontobel. Jean Philippe, go ahead please.
Good morning, gentlemen. I would have a question on capital allocation. Your buyback is completed in a couple of weeks or days. You were like not too active in M and A. Your CapEx is quite low with regard to your volume growth as well.
I don't think you need some extra capacity. You're generating more than €10,000,000,000 free cash flow probably in the coming years. You had some divestments as well in the past months or years. If you can share with us your plan for next year, you have as well your 150 anniversary, what's your planning as cash to shareholders?
Tom except the 150 years in these integrations.
Yes. And the second one would be, if I may, on M and A. What is your plan in Nestle Skin Health? You like invested, I think, something like €50,000,000 in Brazil. If you can share with us as well maybe your priorities in different regions of the world?
You want to talk about our problem we have with cash?
No. We
don't have any problem with cash. I think that the share buyback, we are just completing the share buyback program, as you know. We have not communicated anything for next year. That being said, you know that our priority is clearly to support the need of the business, invest in renovation, invest in CapEx as well. We have a clear dividend policy, which is well established, which we maintain, which is to increase or maintain the dividend in absolute value in Swiss franc.
After that, we have not communicated further than the current share buyback program for the time being.
On Nestle Skin Health, I promise we're going to dedicate some time in the future about the Nestle Skin Health just as we have done with Nes and Health Science 2 so that you can get more insight there. But it's clear Nes and Skin Health that we have mentioned that it is accretive in growth. This is a growth platform. It has to be a profitable growth platform. But growth equals investments also in the future.
We have done some acquisitions basically when it was still Galderma, quite important acquisitions to bring in capabilities and platforms. And that is what we are doing. We're going to be wise there because this is a new field although we have very experienced people who know the category very well. But it is we want to embrace the health nutrition health and wellness equation there. It's about skin health and that is what we're investing in.
Investors in Brazil has to do with capacities, building up capacities and bringing also efficiency in our operations. That's basically what we're doing. But promise we're going to get back to this in more detail in the future.
And if I may, with regard to
Thanks, Jean Philippe. We now have a question from the room over there, please.
Ralph Atkinson here from the Financial Times. I have a question about your sales targets and expectations. You've lowered your forecast for expected sales growth again this year. Do you not think that with economists expecting slower growth globally, talk about secular stagnation that you need to be perhaps less ambitious with your goals and forecasts in the years ahead?
Look, yes and no. I mean there is a slower growth environment projected And yet at the same time, I think our company should be ambitious and engineer and build in the drivers to go for growth. We want to outperform and actually yes we lowered we adjusted actually to a reality that we had. Now this year our expectation which is yes an expression of reality to practice that this is outperforming the market big time and strongly. And that is what matters.
It's a relative game too. It is outperforming the global GDP. So I'm the first to say we don't sell GDP. You see what is projected worldwide growth for the next year. The EBITDA margin has projected again 103%.
Well, we're going to see. But I feel we have to have an engine and build the engine to have good growth. We are yes adjusted to reality a little bit yes, but the ambition is there.
Thanks. We have another question from the call, Gary Gallagher of Deutsche Bank. Go ahead please, Gary.
Good morning, everybody. Thanks for taking the call. I just had 2 questions.
Sorry, can't hear you. No, we don't hear you. Can't
hear. Hello?
Hello. Can you hear me?
Yes.
Hi, good morning. Apologies for that. A couple of questions from me, please. Firstly, just on the U. S.
Frozen business and recovery there. Is there any comments we need to be aware of in terms of pipe filling there that maybe inflated the performance through to the end of the 9 months we should consider? And then secondly, if I look at the business on a product basis, and I appreciate that there's a regional dynamic here as well, but the confectionery business stands out in terms of the price you've been able to achieve there relative to the other categories. Could you comment about that a little bit, please, and how sustainable you see that? Thank you.
On confectionery, and then I'm going to give you Laurent. Laurent was responsible for Zone Americas to give some more light and color to our frozen business. On confectionery, first of all, we have a little bit of a bias of confectionery and slightly higher inflation countries like Russia and all that. So that's why you see that pricing dimension in there. So that's little more than that.
But on frozen Laurent, can you give us some more light on the pipeline, the ideas you have? Yes. This is way beyond the pipeline. Of course, there
is a sell in impact at the start, but we are now 5 months into the relaunch and we see market shares and market shares is sell out. We see market shares improving. We see the growth and that's also sell out of the category growing. And actually the biggest concern today and that is to show the impact and the magnitude of the relaunch is not so much the demand but to supply the demand. So we moved in a matter of weeks from having a demand issue to having supply issues.
So the demand is coming extremely strong. The market shares are improving steadily. And we are confident with the pipeline of initiatives and the investment that are lined up that we can keep the momentum going forward.
Okay. Thanks.
But it's a good problem to have capacity, but it's a pity though. But anyhow, it's proving it's
solid. We have another question from the room over here.
I remember just a year ago, you said it's dangerous to change the targets, the aim. And now you do it exactly, you expect 5.4.5%. So you changed the Nestle model and the strategy? What does it mean?
No, we don't change the Nestle model. Model is growth and there is numbers. You can have them. So actually you're right. It's dangerous to lower your tariffs.
So I do dangerous things. Because I'm convinced also if you lower an organization reacts to that. And so I always want to but I have to have a sense of reality too. We have some magnitudes. You cannot overpour that.
So these are the things adjusting to. For me still the pride of objectives of ambition is there to outperform the market. And even a 4.5% is part of the Nestle model in the sense that the Nestle model is a line we want to work over time. And I'd say that over and over again that this saying you failed, I don't feel it. 4.5% is also part of a line you walk.
And a situation like slow growth, the environment, we got some questions in that direction, how do you, etcetera, I think this is quite commendable to maintain. And I want the whole organization to focus on that to aim at that. And guess what we have done that over time. We're just in another reality temporarily. So we have another question from
the call from Kartik Swaminathan of Bank of America. Kartik, you have the floor.
Hi, everyone. Thank you for taking my questions. Just two small ones, if I may. Number 1 was on the potential changes to European and other parts of your global ice cream business. I wanted to come back to that point and ask why now?
And secondly, why specifically have you entered into negotiations PAI as a partner? So specifically, what did they bring to the equation that Nestle is not capable of by itself? And then on the second question, I think there's been quite a lot of discussion on the top line. But in terms of reacting to the slower than expected recovery, should we assume that Nestle will put more investment behind advertising and promotion to recoup that position? Or is this still within the bandwidth of your business plans?
Thank you.
On
ice cream, Europe, why now? Well, because we feel the conditions are there to do it. To tango, we have to be 2. And so we have been working with R and R for quite a few years, 14 years I think it is. The environment, the mindsets, the possibility to engage, therefore, openness to do that, the trust, all the elements are there to converge towards a joint venture.
We are in the process of that. So we are in advanced discussion. Why NRR exactly for the same reason. First of all, there is a trust relationship. There is a sharing of common purpose.
There is 14 years of working together and knowing each other. There is the complementarity of capabilities. We are very good and we have strong brands. We are very good in impulse. We are very good in out of home.
They are very good in traditional retail. They have strong capabilities in profile, the production and operations, etcetera. Bringing that together is going to be creating a very strong leader in that category. So we're looking forward to But that's why the stars are aligned and it goes and because these things are based on trust. There's 2 dimension, trust and common purpose.
And that's what we have now on the table. So and we're embracing it. More advertising, we have been increasing our support behind our brands in the last years and I project to see that going forward. Why? Because think about it, the more you have science nutritional arguments, the more you focus on strong brands and you do rollouts that comes with communication, comes with connecting with And that is what we are doing.
E commerce is linked to that too. They're embracing the new digital media. We are embracing that and investing in there. So I do see intrinsic to our Nestle strategy, it's intrinsic to our strategy that we're going to connect, communicate, engage, dialogue much more with consumers than even before. So and that's why we have to free up the resources.
And when I say the resource allocation, it's all about that. It's not only investment financially. It's also PFME as we call it, brand support, is linked with R and D time, it is how do we use our talent, talent is limited, where do we put them behind. So that is linked with this fundamental priority focus areas as we say resource allocation. PFME is definitely one very important one and it's going up.
We have another question over here from
John Neville, Wall Street Journal. Mr. Boolkah, this is my normal question. You said obviously with the organic growth, the path you like to take over a long period of time. But with this year, that will be the sort of 3rd year in a row that you don't make it.
So I was wondering, is there any kind of considerations of having maybe a new model to reflect the sort of tougher economic situations out there? Because also are a global company, you're constantly facing problems in some parts of the world, obviously the MAGA this time around.
But there's always going to be
some constant thing on top of that. So is it time to look at a new model or what's going on there? And my second point is this partnership you're working on now with R&R, is that the model you're going to be looking towards now with your kind of your portfolio pruning? Are you going to be looking more towards joint ventures and that kind of thing as opposed to divestments? I know you said in my thoughts you want to improve your businesses, but ultimately there could be some divestments.
And if the divestment route is followed, will that be down, this joint venture route
preferably? You're always taking my ambition against me. But look what we have is the model is over time. I cannot stress that enough. And I do believe we have to organize ourselves.
And then you have downturns in general. You have an environment, you have etcetera. I'm the last to lower my ambitions. I feel we should we own it to ourselves as an organization. Actually we are externalizing internal ambitions.
Well, you can't take that against me, but I'm not going to back off in the longer term you see. But I have to have a sense of realism and that's what we have expressed now because of specifics. Models, partnerships, is this a new model? You see, you move straight away from selling off all new models. No, we embrace different.
And I have been showing that a few moments ago. Portfolio buildup, how do you think portfolio? It is first of all embracing what you have and give arguments and connect with the right differentiation, creating value inside what you have that is building strengthening your portfolio. What you have and it's really promising invest even more or protect what you have. Then it is to you have certain areas that don't fit and you saw the criteria strategic fit, Is it going to have returns?
What is the resource intensity? What is the profitability and profitability growth you project in there? Well, if it doesn't fit strategically or it doesn't fit when it doesn't fit strategically, I would be inclined to alienate over time, because we should have products and we should have categories, we should have brand that add to our strategic direction of Nutritional and Other. And Mother. So or it doesn't have a promise of being enjoyable in the future means financial returns.
Well, yes, you separate. But if you see something that you have something that is precious, brands, capabilities in order form like an air cream And you see that you can combine that with another then I go for joint ventures and it's not new. We have joint ventures. We had beverage partners worldwide on beverage. We have a joint venture with General Mills on breakfast sales for many, many years over 25 years.
So I think there's a strength of Nestle to be able to not have one size fits all. And we have expressed in our business. We have different business models. We have locally managed businesses. We have regionally managed businesses.
We have globally managed businesses. We have startup like businesses, Nespresso. We have now 2 platforms that we're building up with in another business modeling. And I think that's a strength of our company that we can embrace different ways of answering opportunities in a meaningful way. So and I'm really looking forward to that Jean Pancho because speaking about common purpose, I mentioned it before.
There is to have this be complementary and have the same purposes and trusting each other is a good combination and that is okay. And the
growth you can get back
to 0.6% again in the future?
It's a
line we have walked and actually over time we have walked over 6%. Nobody says you should. But and we are way between that over time.
Okay. So we will have another question from the call this time. Mitch Collett of Goldman Sachs. Mitch, you have the floor.
Great. Thank you. Given that you
sorry, can you hear me?
It's a terrible line, I'm afraid.
Is that better?
Nope.
Is that better?
Sure, please.
Short question then.
Okay. Given that you can't give us an exact number on the impact of Nestle Skin Health, can you perhaps give us the growth rates for Nestle Professional, Nespresso, Nestle Health Science and Nestle Skin Health? And if you can't do that, can you perhaps just let us know whether each of those businesses accelerated or decelerated in this quarter versus last quarter? And then secondly, given that the growth model is slightly slower now, I would just like to ask Francois Xavier if he thinks that there might be an opportunity to more aggressively target costs. I know previously you said you don't think so.
I wondered if that perspective had changed. Thank you.
We don't you are asking if we could disclose the detail of the other categories. We do not disclose it. The only thing I can tell you is what I shared already is the fact that we saw an acceleration in the growth in Nestle Professional. We saw a slight acceleration as well for Nespresso. And we had good performance for the 9 months for Nestle Health Science.
And you know what the issue was for Nestle Skin Health, but we don't provide the breakdown by category. So with the rest of the question, we could not hear what the question was. Sorry about that.
Let's take another question from over here please, Sergio
Iolfi. Sergio Iolfi from Neurut Social Zeitung. Sorry to nag you again about this Nestle model. Is the range 5% to 6 percent, which was something that I think Nestle has proclaimed and it's not something that the media or the analysts have demanded. Is that range 5% to 6% still valid now?
No, we have said that for the year we're going to do 4.5%. I would say the Nestle model is valid, growth over time. And I do believe we should have an ambition of 5% to 6%.
Okay. So we have another question from the call, Alex Smith from Investec. Go ahead, Alex, please.
Hi, good morning. I had a follow-up on Adam's question in terms of what has changed with regards to your expectations since H1. You mentioned Maggie and you mentioned China, but I was just wondering the price deflation or the competitive pressures that you're seeing in milk and coffee, does that come into play in terms of your changing expectations? I guess it's just that Q3 pricing at the group level was much softer than what we saw in H1. And similarly, are there any other categories that you're seeing price deflation?
Because again, that Q3 pricing seems a lot softer versus H1 across the majority of your zones in your categories? Thanks.
Well, it's a combination again. It's a combination again I have to say. It's clear that the softer pricing is a result of many things. We have mentioned already the specifics and the specific correction that we had. But it is also a reflection of milk prices going down and reflected in our pricing to stay competitive in coffee in certain regions too.
Yet again it is compensated then with some of the inflationary environments in certain other countries. Again, this is a mixed bag. Fact is that in general for the quarter we saw sulfur pricing because of all these events. Part of these events are not going to be repeated in the Q3 in Q4.
Okay. Question from the room over here please.
Katzeeka, Harvandeepay. Hello. When Maggie returns to the stores in India, will you ask the authorities for the compensation for the loss you took in or out of the court?
You want me to be combative. My focus goes in getting the product back. And there we have to engage. We're working with the authorities to get them back. And actually we got just news that we had 3 labs to test and the 3rd lab came in safe too again 100%.
So the product is just to confirm what we always said, the product was safe and it's a pity to see that we had to do and go through this, but that's how it is. So we are engaging with the authorities and we want to do that in a good mood. You really want to see combative attitudes and I'm not going to answer that. I don't think we win by combating with whom we have to work together.
And then we have time for last question from the floor. Over there please. Good morning, Hoch, AWP. A question on Cahier. How much time do you think you need to get really successful with this brand at Switzerland?
Depends on how you define the success. Cahiers is a brand in Switzerland. We know that. But what we are doing here is positioning it with a specific offering on the international platform although narrow and through a specific which is e commerce and some airports. So there I am very ambitious over time, but I think we have to be humble.
This is a market that is established. We don't want to go frontal. We think we have an angle. The arguments are the origin, the sweetness of the thing, the flavor, the quality. So I want to go gentle and firm and deep rather than broad and mode of noise.
And I think I'm confident though that it's going to gain traction over time. My people they know that they have a special emotional relationship with this brand. It is the most traditional iconic brand in chocolates in the world and we let it there. So we're going to start to make it shine. It will take some time, but somewhere we have a good relationship with time.
We can we are very, very nervous and short term and we want to and at the same time we can pay certain things out. Kairi is one of them.
So we have time for a final question from the conference call. It's Adam Spalmann again of Citibank. Adam?
Hello. Thank you. I just we've had a lot of questions about sort of what's gone wrong, I guess, but I'd like to focus on what's gone well. Can you tell me if Dolce Gusto is accelerating? Or is it just continuing its growth?
That's one question. And secondly, Pet seems to be doing well in a lot of markets. And I was just wondering if you can put your finger on why it appears to be it appears to me to be accelerating. What's really driving that? Thank you.
Okay. Sorry. I didn't hear that. Dolce Gusto accelerating. Well, actually it is maintaining pace on a bigger and bigger and bigger base.
And so also we started almost 10 years ago in Europe and it is still going strong in Europe growing double digit in Europe. So it's a fantastic story, a little bit overshadowed sometimes with another brand, but it is something that we're rolling out. We are in 70 plus countries now and growing very strong on a much bigger basis over EUR 1,000,000,000 and growing more than double digit. So accelerating, well, actually yes, and the value it adds to the company and the importance of being accretive to the company, it is accelerating. Pet is doing well because it is one of these categories that has embraced the nutritional awareness agenda very, very deeply.
And the relationship of owners pet owners to their pets is that argument nutritional parameters. There's different arguments. But the science we have, the products we have, the brands we have in spite of some brand issues, not issues but challenges in certain areas. But it's so strong the profile that we have, the innovation and renovation that we have. And on that premise of Nutrition and Environmental is very strong.
Good alignment in the organization working well. Europe double digit growth very, very strong. AOA good potential to be built up. Latin America going strong gaining market share and having no new capacity to answer our success. North America continues consistent growth.
We had their specific and funded acquisitions about the brand and all that, but that is what brand and leadership is all about. You have to live with that. We have to answer that and I think we do. But why is Pet going strong? It is because it is embracing as a mono category with strong brands, the nutritional and environmentalist agenda just as we are doing with the rest of our portfolio.
So it is actually the best proof that when you go about good arguments and you build them into your brands, you connect, you create value. All the products that we have in our portfolio and that way as a side comment that do have and answer very well the nutrition and wellness framework that we have set up are actually having higher growth organic growth than the rest. Nutrition Health and Wellness translate into a product is a growth driver. And that was actually the in the tone of my presentation today. That is what defines our portfolio.
That is what defines our underlying strength of our presence these categories. So and that is proactive portfolio management. So with that, I think we come into the end. Thank you very much for your attention also all of you following us through the webcast and well looking forward to a Q4.
Thank you, Paul. As usual, we are happy to take any follow-up questions via e mail or Twitter, and I'm sure you know the addresses. Thank you very much.