Good morning, ladies and gentlemen. Welcome to our nine-month sales conference here in Vevey. The conference will be held in English, but you can also follow it in German and French using the headsets provided. If you're watching the webcast, you can choose the right language by clicking on the respective link on the webcast page. Let's start. Paul, you have the floor.
Thank you, Robin. Good morning, ladies and gentlemen, and welcome to our nine-month sales conference. Thank you for your interest in our company. I want to say welcome to everybody who is following us by the webcast. Thank you for your interest in our company. On our podium, we have first Wan Ling Martello, our CFO. On her left, we have Roddy Child-Villiers, Head of our Investor Relations. On my right, I have Robin. Robin Tickle, Head of Corporate Media Relations. I have here in the front row my colleagues of the Executive Board who are there also to answer questions maybe later on. We're holding this conference of the fall back in Vevey after few years having been traveling. Also we have changed the format.
We are combining now the investor/analyst call with the press conference, that's because also as these events are webcasted, we felt there is an increasing duplication of interesting points that we want to cover. We do it in one conference, and we give it enough time to answer all your questions. That's why we have combined it. We came back to Vevey for once after, I think, three years traveling. First we went to New York, then Paris, and last year we were in Shanghai. Basically what we wanted to convey with also having it in different physical locations was showing and sharing with you how our strategy that we have been sharing with you in many occasions is actually getting done, being done in the markets. Because that's where the action is, that's where the results are brought in.
In New York, we had actually in our biggest market, all the aspects of our strategy being explained to you through the different divisions that we have there. In Paris, we were focusing on innovation because that was already in quite a downturn in Europe, and how we could grow in Europe and specifically in France, was sharing with you the strength of innovation and how we want to go about our own agenda in spite of all the negative headwinds to innovation. Shanghai was the dynamism, what's happening in the emerging markets. We speak about the emerging markets. It was really to share with you how we have increased our presence there, how we have increased our engagement in this country that has fascinating prospects.
It was actually an example of what we are doing also in Africa, what we are doing in Latin America for so many years. It is engaging for the long term and building the capabilities there. You saw earlier this morning our sales figures of the nine months. I would say they are sound, healthy sales figures. They are broad based, and they show continued acceleration of growth, specifically real internal growth, which is the volume growth. It is the growth that reflects market position and leadership. It is broad based. It was around all categories, also geographies. We also are quite proud to show that still in Europe, in spite of all the negative consumer confidence and all that, we can show growth way ahead of the market.
Also how Zone AOA has picked up in growth again, has increased their speed and growth. I don't want to steal the show of Wan Ling. Wan Ling, please, the floor is yours to comment a little bit on our nine-month results.
Thank you, Paul. Good morning, everyone here in the room, and a happy Thursday to everyone who is listening in through the webcast. I will take the safe harbor statement as read. It has only been two months since we reported our first half results, so there should be no surprises for you in our nine-month sales. Our sales, consistent with the first half, were driven by a broad-based improvement in our real internal growth or RIG, as we call it. This performance has enabled us to confirm unchanged our guidance for the full year. Our nine-month sales were CHF 68.4 billion, with an increased RIG of 3% and pricing of 1.4%, which was unchanged from the first half, giving organic growth of 4.4%. One meaningful issue in the last few months has been the strengthening of the Swiss franc against most currencies.
There has also been significant weakness in a number of emerging market currencies, such as those of Brazil and India. Our currency impact for the nine months was negative 2.5%, down from -0.9% at the half year. Coming back to RIG, I would highlight in particular the performance of Zone Europe, where we are growing in a no growth environment. And of Zone Asia, Oceania and Africa, where we have seen a strong acceleration in the RIG. The broad-based growth, like Paul alluded to earlier, both in emerging and developed markets, is one confirmation of Nestlé's commitment to being the AND company, A-N-D, AND. If you recall back in the full-year roadshow, we talked about Nestlé being AND company, developed, emerging, PPP, premium, investing for the future, as well as delivering for the short term.
In this case, we are determined not just to benefit from the growth in the more dynamic emerging countries, but also to grow in developed markets as well. With all the excitement in recent years about the potential for growth in emerging markets, it is sometimes forgotten that developed markets account for around 50% of the world economy. One of the points of difference in Nestlé's growth has been that we are equally focused on growing in developed markets, seeing no reason why we should limit ourselves to that 50% of the global economy that is driven by emerging markets. With the slowdown in emerging markets, our continued focus on the developed markets is perhaps becoming an even greater differentiator. In the first nine months of 2013, we grew 1.1% in the developed world, as well as 8.8% in emerging markets.
Among product groups, I would highlight, in particular, the consistent good growth in pet care and the acceleration in both confectionery and powdered and liquid beverages. Our pattern of growth with all areas contributing positively is the same whether you look at our operating segments at the zones and globally managed businesses, which you can see on this slide, or whether you look at our product groups, which you can see on the next slide, all have contributed positively to our organic growth in the first nine months. This next slide pulls together all our globally and regionally managed businesses into the three regions. Again, all three grew. In Europe, we achieved RIG of 1.9% and organic growth of 0.9%. Somewhat unusually, but it's a pattern we've seen already this year, our RIG in Europe was higher than our organic growth.
This reflecting deflation in some categories, particularly coffee and chocolate. In the Americas, we had RIG of 2% and organic growth of 5.1%. In Zone Asia, Oceania and Africa, we had RIG of 5.8% with organic growth of 6.9%. These last three slides demonstrate both that our growth is broad-based and that ours is a strong performance given the economic environment we have today. Let's now take a look at the performance in more detail, starting with Europe. As I did at the first half, I will discuss both the zone and the globally managed businesses together by region. There is nothing I can add to the debate about the challenges facing many economies in Europe. What I can say, however, is that our Zone Europe management has refused to give in to the macro issues, instead focusing on identifying opportunities to grow the business.
Successes have included addressing the needs of cash-strapped households, as you would expect, but also more counterintuitive, perhaps, innovation focused on premiumizing our categories. They have been also very focused on increasing distribution of our products, ensuring our products are present not just in supermarkets, convenience stores, but in all channels. Channels like hard discounters and e-commerce and online, newer and faster-growing. This has resulted in a good market share performance for Zone Europe. Let's have a look at the categories. Pet care has continued to deliver mid-single digit growth with good performances in its key markets, both in Western and Eastern Europe. Brand highlights include Gourmet, ONE, Pro Plan, and Felix. Pet care is an example where we have increased distribution, particularly in Eastern Europe.
Our coffee activities have also continued to perform well with both Nescafé Dolce Gusto and Nescafé Gold gaining shares, while Nespresso has continued to accelerate. The pizza business has been picking up momentum throughout the year. Both Wagner and Buitoni brands are accelerating. Confectionery is also growing with highlights including Russia, the U.K., Germany, and France. KitKat is performing extremely well. Turning now to our globally managed businesses, nutrition shows good growth in Russia. The Western European businesses continues to be generally slow due to economic environment and overall category slowdown. However, our innovations, particularly in infant formula, are showing good results. Waters had a good late summer in Europe. The U.K. grew double digits, which is a highlight, but there was growth in many markets, including France and Greece. Regional waters performed well, and Perrier and S.Pellegrino maintained their strong momentum from earlier in the year.
Nestlé Professional's performance is being impacted by the poor dynamics in Western Europe for the out-of-home markets, though it continued to enjoy strong growth in Russia. Moving now to the Americas. Consumer confidence in North America has, if anything, slightly deteriorated since the half year, although there was a bit of a good news coming out of the U.S. last night. Our growth for the 9 months has continued to be driven more by RIG than price. Pet care continued to grow and shows solid growth fueled by innovations such as Beneful Healthy Smile and Tidy Cats LightWeight Litter. The frozen food category remains subdued, particularly the continued weakness in the diet-related segment impacting our Lean Cuisine brand. We're seeing stronger performances in Stouffer's as well as pizzas, where I would highlight the success of our DiGiorno pizzeria launch.
In ice cream, we continue to see good performances in super premium as well as in snacks, but weaker performance in premium. Häagen-Dazs Gelato launch earlier this year has achieved really good traction. Chocolate, creamers, and coffee activities are all performing well. In Latin America, growth this year has been more driven by price than RIG, reflecting currency weakness in the region. Brazil accelerated, driven by the large dairy category, while Mexico's growth was a little weaker. The picture was mixed in other regions, though all contributed to the region's growth. Some categories for the zone in the region were pet care, chocolate, biscuits, culinary, cocoa, and malt beverages. The globally managed businesses continue to have a strong year in the Americas. Water and infant nutrition made good progress in North America and continue to be highlights in Latin America, growing double digits.
The North American water market has been highly promotional, but we have chosen to be more focused on profitable growth than driving market shares in this environment. Our growth there was driven primarily by Nestlé Pure Life, Perrier, and S.Pellegrino. Infant nutrition, the performance in North America was driven by dynamic growth in its formula business and continued momentum in meals and drinks. Nestlé Professional also delivered growth in North America despite the tough trading environment. We also saw good progress by Nestlé Health Science, and this is a continued good performance by Boost in North America. Next up is Asia, Oceania and Africa or AOA. The trading environment, no surprise, continues to be affected by the broad-based economic slowdown. As you know, it's been like that for about a year, as well as increasing civil unrest.
That said, we have seen our improving RIG momentum, already evident at the half year point, accelerating further in recent months, such that the zone achieved a 5.8% rate for the nine months, up from 4% at the half year. It is true that we have benefited from easier comparables, but growth was also driven by our initiatives in the zone, as well as by us resolving some of the issues we discussed earlier in the year. Issues including the loss of our Syria factory and stock levels with distributors. Most markets contributed to the improved growth. China did slow down. The slowdown there impacted most categories in the zone. Having said that, our Chinese business continued to outperform the market, delivering high single-digit growth for the nine months.
Markets and regions have been performing well earlier in the year, such as Japan, Malaysia, Indonesia, Africa and South Asia, which includes India, Sri Lanka, and Bangladesh, continued to do so, accelerating in recent months. We saw an improvement in the Philippines as well as in Indochina, but we still have work to do in both markets to ensure sustainable growth. The Middle East accelerated, but the region remains extremely unstable, no surprise. Looking at the zone's categories, I would highlight the performance of culinary, dairy, chocolate, and both powdered and ready-to-drink beverages in the emerging markets, and chocolate and coffee in the developed markets. Turning now to globally managed businesses. The water business continued to grow well. Infant nutrition further increased its strong momentum, with both formula and cereals contributing. Markets to highlight include South Asia, China, the Middle East and Indonesia.
Nestlé Professional is performing well generally in the region, though its big business in China has slowed during the course of the year. This completes my review of the nine months' sales performance. I'd like to summarize: the environment continues to be tough. You know what? Instead of focusing on underlying trends, we continue to focus on creating our own opportunities to grow. Our performance is broad-based, with all regions and categories contributing. We have growth momentum in the business, particularly in RIG, and we maintain our full year guidance unchanged of organic growth around 5%, together with an improvement in margins and earnings per share in constant currencies as well, of course, as in our capital efficiency. I thank you very much. I will now hand it back to Paul.
No, thank you, Wan Ling. Yes, indeed. I call it sound performance because of broad base, but also it shows the gain in momentum that we have seen already in the second quarter behind growth, real internal growth that is really driving our positions in the markets, et cetera. To reflect the and company that we have been expressing sometimes to you, too, that is that we combine. That we're not going for one or the other. We have it broad based through the categories. Also, the different price points that we have been offering to the consumers. That is very relevant when the consumer is subdued and also to all the categories.
Well, I also said in the press release that actually in difficult times, and these are not easy times, I don't think they are ever easy times, but we are particularly challenged in these last years, that the difficult environments, difficult times are ideal times, are good times to really challenge ourselves too, and see if we really can enforce even more our fundamentals that are driving our success, that is driving our businesses. These drivers that are going for growth like innovation renovation, like distribution, like how we connect with the consumers, or those that drive our performance. Like are we structured? Are we using our structure to the right extent? Are we driving efficiency? Are we leveraging our size into scale and into competitive advantage? These are the things that actually, when you are challenged, are to be also asked for.
Yes, indeed, we are permanently challenging ourselves on these, and that has been the driving force and the driving condition, how we have been able to deliver profitable growth during all these years. You see here, the growth, the blue bars, the growth that we had in the last 10 years. Giving us an average of 6.1%. Doing that again in the mentality of the and, with an increase in margin, as you see in the red line that is on top of it. We have been able to drive what we then came to call the Nestlé Model, which is the logic of the top line, bottom line increases over years.
The Nestlé Model is to do that consistently over a longer time, and do that on a line that we said that we work, which is a span that is between 5%-6%. You see, we have overdone that, in average to 6.1%. Sometimes we were way above that, sometimes we were slightly under that. That's the line that we work. The Nestlé Model is a model that is stretched over time. It doesn't have the nervousness of quarters, and how we engineer everything we do around it. This is driven by innovation renovation. This is driven by putting the money and resources behind the right ideas. This is driven by building our capabilities in the world. This is driven by putting the right people in the right places in the past, and it's going to be also in the future.
This is also driven by the fact that every time we challenge ourselves, and we ask ourselves if we do the right things with the right inspiration. Driving performance over time is first of all linked with, yes, indeed, the right inspiration, the right strategic direction, and then also create the alignment of all organization behind that right direction. That is what we come to call our roadmap. The roadmap, you see it here, we have shared with you that in many, many occasions. The roadmap is all centered around the Nutrition, Health, and Wellness. Nestlé is all about nutrition. With that, we define clearly what we want to be as a company. That is giving the purpose of 340,000 people all over the world that have to wake up in the morning and drive that agenda. What does it mean, Nutrition, Health, and Wellness?
It means that we want to, through food and beverages, allow people to make healthier and tastier choices every day, every moment of his life. By doing so, build quality of life for himself and his family. That is what we want to drive. That is the purpose of this company. That is what is in the center of the roadmap. The roadmap also, and I have shared that with you in many occasions, is defining very clearly what do we want to leverage? What is our strength that we want to scale up? With which we want to go and drive performance. You see there the competitive advantages.
It is our portfolio, our mix of brands and products, that is linked with our research and development, that is driving the permanent innovation and arguments into that portfolio, that is linked with our worldwide presence and how we drive our value creation in every part of the world. It is linked definitely with people, because it's people driving everything else. We have also in the roadmap defined where we want to growth, defining where we're going to look for growth, and we have shared that with you, too. I think the biggest argument of growth of this company is what is in the core of our DNA, which is nutrition. Nutrition, health, and wellness.
We have shared that also in other occasions, the value creation potential just by driving that agenda, just by driving the arguments in our portfolio that is allowing these tastier and healthier choices, and doing so, creating a better quality for all societies. That's the biggest agenda we have. Growth to be found in emerging markets. That has been played and argumented in many occasions. Out of home, 50% of what people spend on food and beverages is out of home. We want to play there, and we have built and are building still our platforms and our base for the future there. Premiumization, we have mentioned that, too. Much value, so much rational and emotional arguments to be built in that premiumization. We have defined what we want to be, what we want to leverage, where we want to grow.
We say the third part is how we are going to do that efficiently and effectively, and that is consumer-centric innovation, really going for what the consumer values and engineer and create products and proposals around that. That is done with efficient operations, do that efficiently and effectively. Bring that product where the consumer is looking for it. That is to be everywhere where the consumer wants to touch your products, distribution. It is also consumer engagement. If you have done all that, innovated rightly, done it efficiently, distributed well, you're proud and you connect with the consumer to say that you're ready for him. You engage in a dialogue, which is now through digital media and social media, even more easier.
That is all based on, and I mentioned that before, our values that we have as a company, our principles that is driving this dimension, but is most precious to us, trust. Trust is the base of how interrelate with how we interrelate with society. Trust is basically what we most share as the most important dimension of our relationship, and we do that through creating shared value. We feel really that our company can only be successful if we interrelate well with society and all stakeholders, creating shared value. Yes, indeed, that is the roadmap that has guided us, that has aligned the organization to deliver over time, even in these turbulent times that we live today. Yes, indeed, these turbulent times, we call it the VUCA world, volatile, uncertain, complex, and ambiguous world. We call it the new reality.
I am sure we have selective memory. The new reality was always new for everybody, also in the past. Fact is, a little bit of new trends and all that, or events have intensified over the last years and have given the impression of many challenges. The new reality is felt by many challenges. The crisis is indeed deeper and longer. We just came out of one in the United States, so it is good news this morning. Still a lot of work to be done, but at least that was a decision on the 11th hour. Unemployment is going up, and it's quite sticky, and we see that in many parts of the world. Emerging markets that have given us so much tailwind are slowing down a little bit. I see it rather as a good sign to get back to levels that are sustainable.
The sustainable growth and environment that allows to continue on a slope is more important than acceleration. It's acceleration, and I think that is happening. With many challenges, and yet indeed in the world today, many opportunities, too. That's how you drive a company like Nestlé, is to see, yes indeed, be aware of the challenges, but see the many opportunities. I have been sharing them with you, not at least the emerging consumer. 80% of the world population is working for a better tomorrow. The emerging markets are emerging. That, I would say, is the biggest single driving force because there's so much collateral trends coming with that allow so much for this company to offer and to grow with.
Yes, indeed, the global awareness of healthier lifestyles, that play so much into our hand as a company because that's what we want to do. That's what is part of our DNA. There's new technologies and science that are converging into new platforms that allow this company also to play and to drive innovation even faster. Yes, indeed, there's a continuous change, a continuous dynamism in the world, and our roadmap is tested against that and is valid. It is valid. We always ask, is it in every part of that still driving us in the right direction? It is. It is most relevant than ever. It is all done in a faster world, and I think to maintain competitive intensity, we have to drive things faster. We have to increase this sense of urgency that is needed and that we have to challenge.
That gave us somewhere also behind this roadmap. Look at today, the times of today, the new reality, we have to have clear six priorities. The first one is this making choices. It is really to go and define things, say yes to certain things and no. We have to make these choices, sometimes tough, but it is a matter of faster, sharper decision-making. As we are decentralized, this is a very important dimension to take as a priority in our organization. The other one is seeing these opportunities I talked about. Really then not also identifying them, defining them clearly, but then organizing the resources behind it to embrace these opportunities and to really go after them. You have to organize around opportunities. The third one, priority was also do that with a very acute sense of what the consumer values.
What is it what the consumer values really? Because sometimes we are too inside out, and we should be much more outside. Knowing what are the worries, what is what drives his decision-making, what is what really worries and is valued by that consumer. That means also the same time that what he doesn't value, we should take out, and we should not put resource behind things that is not having any value for the consumer, and there's so much upside there, too. This has all to do that we are in a value creation business, not in a price business. You have heard that we are very conscious about that, too. Fourth dimension is trust. I mentioned before, this creating shared value.
How we interrelate with society at large as a company is a very hot topic that is very relevant and even more so today than yesterday. We have engaged and are engaging with multiple stakeholders. Everybody has a voice, and what is more, they are heard. Social media is bringing a whole new dimension to that trust building capability that we are engaged in. Brings me to the fifth priority, embracing digital. A company like ours has to engage fast and deep into digital, having two phases. First of all, this whole social media, and then also the third on the other side, the e-commerce.
That's why we have set up our Digital Acceleration Team here in this floor in our building, where we have young people, normally it's linked with young people, this whole digital world, from all our markets, bringing their knowledge, sharing it with others, and creating a corporate knowledge that is much deeper than before, going back to the markets and driving that. That's why we have now Digital Acceleration Teams in many markets already. We are connected through that world in a much more intensive way. You see also how we can link up with big players in digital, like the Twitter or the Facebook or Google, for that matter. You may have seen lately how we also with Google have deepened the relationship as they have called their new Android KitKat release, which is really giving you a great break.
The sixth one, again, it's all about people. I cannot stress enough how serious we are of looking for the right people. The right people to drive our business with the right attitudes and the right aptitudes, the right culture, the right values. As we are decentralized, we have to rely on the right people, definitely. There again, we pride ourselves of loyalty, but also on diversity. In a world that is globalizing and opening up, diversity is very important. How we have flexibility and people going from one place to another, driving that agenda, but also driving what we value so much, which is our principles and values throughout the world. Only speaking about diversity, in this building alone, we have almost 100 nationalities, bringing an understanding and making us understand the world in a much deeper way. Well, we have these priorities.
These priorities, we have also the third, the last one, sorry, I would say skip that. Very important, expanding the boundaries of nutrition. I told and I shared with you, Nestlé is all about nutrition, and we do that through these tasty and healthier food and beverage choices that we create permanently, driving the agenda through the whole portfolio there. Yet also, we are aware of potential future platforms that we are going to give to this company. Big opportunities in the future. It is science-driven. It is driven by the fact that we have a much deeper understanding how nutrients interact with the human body and with health to a larger extent in society.
Compared and phased to the healthcare costs in our society, that linked with how the developing world is really developing and building also these dimensions in their society is a fascinating opportunity. These are the priorities we have, and priorities induce also a plan of action, and I would say a short list for action. I want to share with you three dimensions of my short list, that I have on my short list, which is a consequence of having put these priorities. I share them with you here. It is linked with strengthening our portfolio and making choices, grasping opportunities, and evaluating consumer values. They bring three dimensions to us. Three dimensions that are the short list for action. You have it here. It refreshes our focus on certain areas that were present.
We just have to sharpen our focus on them and really give us no escape for them. There is strengthening our portfolio. I'm going to get very shortly into it. Allocating resources, too, because at the end of the day, there's resource efficiency that matters, and then also mastering our complexity. Let me say a few words on the first, on portfolios, and how we want to strengthen them, because I have mentioned before that we were able and we will be able to deliver the Nestlé Model because we drive a very strong portfolio. Portfolio of products, portfolio of brands, a mixture of value creators that is accretive to driving our profitable growth. We have done that in the past, and you do it through different actions, and you do it through innovation like we did in the past.
You see here only a snapshot of a few that we have done in the last years. It actually started 150 years ago with a very innovative product that continues over a new chocolate, with the milk chocolate. It has with the Nescafé that just before the Second World War came into the world. With the Nespresso model that we had done later on, with Dolce Gusto later on. With so many innovation, you have heard over and over again that whole Purina and the strength of Purina has been innovation. You see actually classical products like KitKat, where we are exploring flavors, where the consumer is open to that. It is a permanent drive of innovation that is, in my eyes, the strongest force behind our dynamics and behind our strength of portfolio.
Also then through the normal products, because there is bigger even innovation that are so nice to mention, but there's so much more capillary innovation behind our brands that is driven by our 60/40+. This mindset that we have in our organization where we drive through all our products and portfolios, these pleasure arguments of taste, and we should have preference and taste, and yet also through the Plus and nutritional arguments. That is quite extensive. There's thousands and thousands of tests and projects that are driven, that is driving the 60/40+ mindset. One third of our portfolio can be said is permanently going through that test, and we turn our product portfolio, each of them, over every five, six years, we turn them permanently towards that better agenda. That's one way of driving a portfolio and one very important one.
The other one is yes, indeed, also acquisition, partnerships, and also divestitures. Acquisitions, and you see here quite a few ones, they should reinforce our strategic directions. They should be accretive to creating, be accretive to the Nestlé Model, drive business. As I always said, this has to be accretive to both sides. You have Purina, Gerber, the last so many years. Yinlu and Hsu Fu Chi in China, where we have built our capabilities and presence in a market that is important for Wyeth Nutrition. We need to build even stronger our core of our business. Prometheus and Pamlab, the latest link with all this new opportunity of Nestlé Health Science are all nice examples of that. Also on the other side is divestitures.
When something doesn't really fit strategically or doesn't really add to the Nestlé Model and is a drag, we have to take decisions there and divest. Why should we drag on the performance? That is what we have done in the past. I think there is opportunity there also for us in the future. We actually had it always, but what we have done is now through the enablers like GLOBE and all that, is build in global total transparency. We have standardized the criteria to manage this whole portfolio management tool. We have created, in other words, global transparency. We define a portfolio through building blocks, and the building blocks are categories and markets. We have this dual dimension of each category and market. Each category in a market, we call it a cell.
We are analyzing 1,800 cells worldwide. This is quite an undertaking. Still, through that transparency, you can agglomerate and you can pull certain cells together, you can open them up so you have different ways of going around this. That is what we have been doing the last years, is building that transparency even further. We have created a global standard language to talk about. We have built it into our business plans, be it on markets, be it on categories, to make that really more an active part of. That is what we've done. Products, brands, categories, markets, combining that and give transparency. Criteria are. How does that cell fit into our strategic direction? It should be accretive to creating our agenda. It should be profitable growth enabler.
Why should we stay with categories that are having no prospect of adding to that profitable growth? It should be also test against the resource intensity. One very explicit one is return on invested capital, but it's more than that. How much PFME we put behind it, marketing spend, how much talent and resources, human resources we want to put, R&D resources, et cetera. At the end of the day, you have three possibilities. Of course, you're enthused that it's really accretive. You invest and invest even more to drive it faster, stronger, deeper, or you say there's a problem, but I believe we can fix it, then fix it, and you have to have deadlines there and milestones instead of just dragging on.
You cannot, or you don't see the end of the tunnel of underperformers, well, then you have to just divest it or get rid of it. That is a relatively sharp language, but that's what we should do. That is also linked with making choices, really knowing what will consumer value. As you see, again, there is logic in there, too. The fact is, if you have to divest, then it's not a matter of if, it's a matter of when and how. Do that in a timeline, elegantly do it as we have to do. These are the, I wouldn't say the marching orders, but as a mindset of which we have now in our company going about that. I would say to a certain extent, a little bit less tolerant.
We were a company that would really believe in our promise, but sometimes belief may blind you if there's no real possibility of certain cells to be accretive to divest. That means also invest heavily behind the right things, too. It's definitely, and more so that part. The second part of focus that came out of these priorities is allocating resources. I mentioned it, resources are multiple. It is talent, it is people, it is our management time, it is R&D time, it is marketing spend, and it is also capital. It's money. Let me speak more specifically about capital, the financial resource that we put behind our products. In the last years, we have been proudly telling you this is the right time to invest. The world is growing. Many parts of the world are starting to grow. We have to invest there.
It's the right time to invest in people. It's the right time to invest in capabilities. It's the right time to invest in capacities. We have been building capabilities, specifically in our capacity of innovation through R&D or R&D network. We have opened up in Beijing in 2008, an R&D center that goes about nutrition, safety, and life science. In Abidjan, more linked with raw materials, cocoa, and local raw materials and ingredients. India, more of that also in the same way, local raw materials and our portfolio position products. We have been closer to home, integrating our system technology center because so much value is created now through systems, and we have a scale there again to be leveraged. We have also built out our PTC, Product Technology Center in Konolfingen. We have invested quite heavily in capabilities.
We have constructed from scratch a Nestlé Institute of Health Sciences, where we are going to build the corner, the building stones, create the building stones for our Nestlé Health Science initiative. We have invested in capabilities. Also, we invested in capacities, and we were also, on that side, proud to communicate new facilities, be it in Nigeria, Turkey, India, Brazil, Dubai, Congo, in China, quite sizable factories. Also in Europe, closer to home, U.K., we have a water factory, also in Germany, we have a new factory for Dolce Gusto in Spain. So in many areas, also in the U.K. and the United States. In short, over time, we have been able to build and strengthen our global presence. Here you see how we have been building these capabilities and capacities. We have been investing really in the capability to innovate and the capacity to grow.
You see here the darker points are the new factories and the new R&D capabilities in the world. You see how we are really mapped into the presence of the world. We have operations in almost 200 countries, 470 factories in almost 100 countries too, 34 R&D platforms. So definitely we have been building and keeping our competitive advantage of, I would say, scale and presence in the world. Well, that comes at a price. You have to invest, and that is what we did. In the last three, four, five years, we felt it was the right time to accelerate our investment in the world and to build these capabilities because we saw and felt that potential and that opportunity. That raised capital investment, and that went above a 5% line. We were normally between 4% and 5%.
Now, what I feel is it's the right time now to use it, to leverage it, to sweat the assets, and to leverage what we have now. That's why we have imposed ourselves the discipline of bringing it back then to the normal levels between 4% and 5%. That in an organization like ours has a meaning. That's a capping. That's something we did, and it's going to induce true, also, better resource usage, because SKU management and thinking it over, and turning the time twice before investing is going to create a very healthy discipline of sweating our assets and bringing into the equation much more prominently the dimension of return on invested capital. The last point, the last thing I have on the short list is mastering complexity. That's always a killer because complexity. We are living in a complex world.
We indeed are a complex company. We are a complex company by decision, by strategic decision. Many years ago, Nestlé has opted to be in different categories because we felt if you want to be the nutritional wellness company, you have to offer products that can be part of people's lives in a meaningful way. At the same time, if you really want to drive innovation through more science and R&D, you need scale. You cannot build a system like we have if you have one category. You're very focused on that. We've all the merits of focus, yet we have to see how we combine the different, the bigger, broader portfolio of products with that advantage of size and scale, yet also maintain focus and sharpness on the other side. That is how are we going to go from managing complexity to mastering complexity?
That is, again, something that we have been doing. That we have been doing so during all these many years, and that is what has built our structure. That first sight, you see it here on this chart, may impress by the complexity. As indeed we have worked, you see here, different categories. You have there product and liquid beverage, powder and liquid beverages, water, milk products, going over pet care. You have Nestlé Waters, Nutrition, Professional, different categories. Yet we have organized that first in a matrix way. We have geographies that goes over this certain parts of the products, we have also global managed businesses. We have indeed a matrix organization. That is because we have always privileged the generating demand. What drives demand should dictate structure. We are not one size fits all.
We do have different business models, we do have also one fundamental argument, that is we are a true believer of decentralization. Food is local. Bring the decision-making as close as possible to where the consumer is. These dimensions are driving the organization like we have it here. Now that we have been building enablers to be able to manage and to master that complexity through GLOBE, that gave the transparency, through the NBSs, that created the scaling up of the back line and starting to split, clear up the back line and the front line, the Nestlé Business Services, NBSs. We have been implementing the NCE, Nestlé Continuous Excellence, how we drive value creation and efficiency and driving waste out of the system, specifically more in operations, but driving it further out now also to the broader dimension of our company. That's the reality. It has certain complexity.
It was, and it is, a strategic decision because it gives us the right arguments. It gives us the right presence. It gives us the possibility on enabling tools, enabling platforms that really translate size into scale and scale into competitive advantage. Yet, at the same time, we have to ask the right questions. Permanently say, is this working fine? Is this working well? Is this effective and efficient? In a human organization like ours, you can always ask these questions and answer them with, "Yes, we can do better." These are the questions we are asking. We are really asking the tough questions, like are we keeping things simple? Are we actually keeping simple things simple? Are we bringing unnecessary complexity? Do we take the right decisions in the right places? Do we have ownership of decisions in the right places?
Do we have dual reporting systems? Do we have too much travel? Do we have or are we using new technologies to the extent that we could drive out bureaucracy or paperwork or et cetera? I can only tell you that whatever, there is upside. That is something that we felt as an executive board, we should go after that and see and how we organize to really bring also in the same mindset of NCE. This is not a new project. This is just an initiative that allows us or should allow us to leverage what we have going on in this company, which is basically linked with this continuous excellence, asking the right questions. You see it here, definitely it is size to scale to competitive advantage. We have gone a long way.
I still believe there's an upside, that is what we will do. It is not managing complexity, but mastering it and making that intrinsic part of our competitive strength. Ladies and gentlemen, a short list for action. Coming out of the six priorities which are embedded in our roadmap, that is what I want to share with you. That is linked with asking the right questions, that is linked with the roadmap that gives us a strategic direction. That is linked with six priorities. This brings us that short list of three things to where I feel personally, we should give the highest attention to. It translates, in other words, in consequences that are linked with portfolio decisions. It is linked with resource allocation, it is linked with, yes, indeed, accepting our complexity and being invited to really build efficiency into it even more.
As I said in the beginning, these are challenging times, this is the right time to ask the right questions and to build this company even stronger. We have been delivering what we call the Nestlé Model, which is a model that projects continuum and growth over a line or around the line of four or five to 6% with margin increases. Why? Because it is intrinsically linked with our value creation agenda that is linked with nutrition, creates more value for the consumer, more margin, we want to do that in a permanent way consistently over time. For that, we have to build our competitiveness through the questions and through the priorities and through the focus areas I shared with you. With that, I think I'm through my presentation.
Thank you, Paul. For those who are on the call, if you want to ask a question, please press star 1 on your phones to join the queue. If you want to withdraw your question, please press star 2. Out of consideration for other participants, please limit your questions to two as a maximum. Let's take the first question from the room, please. John?
Hi. John Revill, The Wall Street Journal. Today, you've reiterated your guidance for 2013 organic growth. You think it's going to be around 5% this year. I was just wondering, Q3 seems to have improved a little bit, and a lot of people think that Q4 may improve as well. I wondered, what's your view for 2014 on organic growth? That's the first question. The second one is, emerging markets seem to have improved a little bit. Do you think you've kind of turned the corner there? Or if there's any concerns over there particularly to do with currencies, because they seem to have sort of taken a big bite out of you in emerging markets.
First of all, we said we're going to be around 5%. Yes, indeed, I believe that the acceleration that we have should continue in the fourth quarter, too. Now you ask for 2014. See, the Nestlé Model is this line that we want to walk of 5%-6%. For all what I said just before, what we want to do, the questions we want to ask, the answers we want to give is to assure that over time we continue walking the Nestlé Model. Which is yes, top and bottom line at the same time, quality growth, profitable growth over time. Again, do I commit already to that? Well, it looks logical. If this is the model that we want to walk online year after year, that basically that is the intention we have, clearly.
If you put 5%-6% next year, it's doable?
We've got to work for it. I think it should be doable. We see some colors coming back in many areas of the world in spite of some slowing down. There's the levels that are totally allowing us to project that growth. Yes. On the emerging markets, you say it's slowing down and turning the corner. I didn't feel they had to turn the corner per se. What you see is a little bit slowing down of growth and certainly emerging markets. Now, the first to say, if you have huge countries growing double digit during many, many years, it has shown over and over again that you get an overheated engine. You have to stabilize a little bit to have enough capacity or possibility to have sustainable growth. When big economies are growing 7%-8% Well, I want to be part of that.
That's a good base. If that is projected in a way that is more continuous, instead of having a 15 and then a two and then a 12 again, I'd rather go for a seven, eight permanently, consistently, and that allows also society to absorb that growth in a more continuous and sustainable way. Actually, I see it rather positively than negative. What we also have to see is the developed world really taking the right decisions there and starting to grow again. I mentioned it before, the crisis is much deeper and longer than we would have expected, although with a little bit of thinking. A problem that was in the making for many years normally takes a few years to get out of it, too. What we see is indeed a differentiated or a different reaction to it.
Some governments are more daring to do the right steps. The others are not there yet, but I hope rationality is going to prevail.
Thank you. Let's take another question from the room. Olga.
Yes. Thank you very much. I'm sorry to bother with rumors, but if I remember correctly, you said on the investor call that there would be no big acquisitions in the near term. Is my thinking correct that the report from La Repubblica this morning that Nestlé is looking at Ferrero is then wrong? No interest for that. Secondly, in terms of disinvestment, what is the timeframe? When can we expect to have some concrete decisions and communications on that? Until the end of the year or next year with the full year numbers, just to have some clarity on the timeframe of that. Thank you.
We say no big acquisitions, normally they should. We spoke about bolt-on, that stands. I'm not going to comment on speculations and that, indeed, maybe in the press this morning. I have no comments on that. Our acquisitions, I speak now linked from what's in the press now, our acquisitions indeed bolt on. We did quite a sizable one, though, with Wyeth. A good one. Gives us a lot of work and a lot of joy. It has to be strategically fitting. Again, it should fit into the whole logic of portfolio management. There we see more bolt-on opportunities than big ones. On the timeframe of divestitures, I'm not going to answer concretely, when we say we're going to go about that, we are serious.
That doesn't mean that we want to give the timeline the priority. It should be the right thing to do, it should be done in the right way, that's how we're going to go about that. There's firmness behind this focus. There's things going to be happening in a reasonable timeframe. Just give time to time, as I always said, without losing time.
Let's now take a question from the call. We have Thomas Russo, Gardner Russo & Gardner. Thomas, you have the floor.
One way I was impressed to hear your reference to Boost in North America. I just wondered if you could spend a second describing the size and the opportunity of that particular product. Secondly, Wan Ling, your observation that China was up high single digits. Can you highlight where that growth came from most forcefully?
Boost, maybe, as we have here Luis Cantarell. Luis, if you could answer that question, as you are responsible for that and enjoying it.
Yeah.
You need a mic.
Yes, Thomas. Boost is enjoying good growth, not only this year, but also in the last years. We have been completely renovating our offer. We have one of the best tasting products yet delivering the good nutritional values. This is a brand that is in the hundreds of millions CHF, and we will expect this brand to continue growing as we speak in the future. We have already plans to continue pushing this brand in U.S.
It's a fantastic brand name, too. Boost.
Yes.
It's giving us a lot of enjoyment and growth. Yes. China, yes.
Yeah. Hi, Tom. I take it that you are not in the U.S. otherwise you must be up really early. Anyway, now China is, like I said, did slow down. We are really still happy with the rate of growth. In virtually almost all categories, we are outperforming the market. That's the good news.
Thank you very much.
Thank you.
Let's take another question from the room. Ueli.
Ueli Hoch, AWP. We've seen quite a rise in cocoa prices in the last couple of weeks. Could this have impact on the margins in the next month or quarters in some product categories?
Well, that's like a rhetoric question. It is clear that the prices has gone up quite sharply again, that's a little bit of reality we're living in permanently. It's called other raw materials are going up, others going down. As cocoa prices, that we have, it's a very important raw material for us, we really watch that market very closely. We try to be smarter and do the right things. For me, the most important thing is that we shouldn't price to the consumer with the same nervousness that raw material prices are sometimes going, sharp increases and then decreasing again.
Again, I say, we try to read through these nervous trends, what the underlying trend is, and try to manage our business with these projected lines of costs, which are much less nervous, because you cannot just price consumer with the same nervousness and increase prices, decrease prices, et cetera. That is actually what is defining also, if you add it all up, that's a little bit the pricing that you see reflected globally in our company. Back in 2007, 2008, when we had this huge spike of all raw materials, I got the question also, how is Nestlé reacting to that? Well, I answered, we're not going to price on the peak of what we feel is not sustainable. That's going to come and rationalize back into that trend that we have seen. It's going to be higher, though. That's what actually happened.
The raw material prices are higher because the fundamentals are that 80% of the world population is starting to eat differently and more into these raw materials. The same thing with cocoa prices. We have to read through these nervousnesses of trends and do and create some stability in our prices. When it confirms over time to be higher, our prices are going to be higher, too. Then again, it's not only prices. Can we drive more efficiency into it, et cetera, to compensate? You cannot do one-to-one pricing to consumers. Less so today when the consumer is really price sensitive.
Let's take the next question from the call. We have Warren Ackerman of the Société Générale. Warren, you have the floor.
Good morning, Wan Ling. Good morning, Paul and team. It's Warren Ackerman here at SG. A couple of questions. The first one is, could we dig into North America in a bit more detail? It's your biggest market, representing a quarter of your sales. There have been a lot of concerns giving competitor comments. I'd just be interested to know what you think the category growth is in the U.S. in the first nine months of the year, or if you've got a Q3 number, and then what your growth is in the U.S. compared to the category growth. It's hard for us to see that because of Latin America being included in the numbers. I'm just interested, where are you winning share? Where are you losing share in the U.S.? Are you seeing any evidence of destocking in the U.S. market? That's the first question.
The second one is just on Chinese infant nutrition. I was wondering whether you can give us an update as to the trends that we're seeing in China, especially in light of some of your competitor recalls. I mean, what is your growth in Chinese infant nutrition? I know Wyeth is not yet in the organic numbers, but if you could give us an idea of the growth rate year to date or in Q3, maybe your market share position as you see it. It seems to me that you may have taken leadership position now in China baby. Is that right? Thank you very much.
Well, let me organize here. North America, I am going to give it to Chris. In North America, definitely, we have the Americas. North America is more volume driven growth than price driven growth. There again, you have to go. We have different categories, different dynamics. Maybe, Chris, you can give some light on that question.
Sure. No, that is very true. We do have in North America very different categories, different dynamics, and it is one of the strengths we have. It is true it is our biggest market in the Nestlé world, but because of that breadth of products and brands, even in the difficult economic times that were talked about earlier, even though we do not have the tailwinds when it comes to the economy and to consumer sentiment, we can still do well. To talk maybe a little bit about the major categories that we have, or the largest category, as you know, is pet care. Pet care continues to have very strong leadership in the U.S., again, driven by strong innovation, some of them Wan Ling had already mentioned earlier. The next biggest category is frozen food for us.
If you dig in a little bit deeper into frozen food, you will see that it is a bit of a mixed picture. When you look at the regular, or we call them the prepared foods, the frozen prepared foods like our Stouffer's brand, there we are gaining some good share. We are seeing some good positive momentum in the Stouffer's business. If we look at our pizza business, last year, as you know, the category and our business was suffering last year. This year, the category has flattened off, and we are, in the case of DiGiorno, gaining share and overall basically holding. Hot Pockets as a segment, the handheld snacks, actually increasing as far as the segment goes. That segment is increasing in volume, and we are also growing with Hot Pockets. The challenge is with Lean Cuisine in the individual nutritional frozen segment.
Here it is a function of a few different things. There is a perception in frozen, which seems to be hurting this segment, which we are addressing and addressing, in fact, on behalf of an industry, talking about the virtues of frozen food as a real ideal way to keep freshness in. Issues with pricing, we are trying to get the price value relationship correctly, so we have taken some actions in that range. Also innovation. In the past, this segment has not had the rates of innovation that we had seen in years prior, and we are coming back with that now with items like Salad Additions and Honestly Good, which have recently been launched. If you dig down even deeper into other segments, for example, mentioned earlier, coffee, we are showing growth. Coffee enhancers, also good growth, gaining share in powders in this area. Confectionery also showing some strong growth.
It's a mix, overall, because of our breadth, because of the strength of our brands-
positive about the future for North America.
No, thank you, Chris. The second question of China infant nutrition, let me respond that. Infant nutrition and the whole industry, milk industry, and infant nutrition specifically, is a category that has shown very strong dynamics, growth, like many other categories, specifically infant nutrition is a very sensitive one. There were some issues, I must say. We're not involved in these issues, still, this environment has some nervousness, and that's clear. It is all about trust. We have two big dimensions there in the sense of Wyeth with their arguments, with their trust relationship, et cetera, and Nestlé, and we have to play that in harmony together.
We see that whole industry is also because of, we speak about kids and children, babies, there is a framing that is really much more explicit there, we welcome that because this is a serious industry that has to be taken serious in every part of that industry. We see our self-imposed framing that we have really value there. Are we growing? Yes, we are growing. Is it something that helps us in the growth of China? Definitely. There is something that drives us in infant nutrition worldwide. Yes, there's something that is accretive to that, too. I would not say leadership. This is a market that's still in the making. We have two expressions there, Wyeth and Nestlé, we are doing, I hope, all the right things there to keep that growth going in a very meaningful, responsible way.
Yes, let's take the next question from the room.
Can I just come back on something? Can you just confirm in the U.S. that you're not expecting any de-stocking pressures in the next coming quarters, as has been widely reported from the biggest retailer in the U.S.?
De-stocking, I think some of that has happened already. I hope that the biggest wave is over. That gives us also a bit of a refreshed, positive feeling.
Okay, let's take the next question from the room, here in the front, please.
Hello. I'm Katsuhiko Hara from Nikkei News. I have a question about Nespresso. You have been losing some court cases over the patent of the capsules. Do you think you will go on and fight even more in the court, or would you consider change your strategy, maybe change the distribution, have it sold in the supermarkets in the future?
Well, first of all, court cases. First of all, there's no change of strategy. The strategy was not only court cases. It was, and we always said that there is to win in the quality of the cup of coffee, in an Nespresso, to have the best Nespresso experience with Nespresso. It is clear that we, as we are an iron company, we fight on different fronts. If we feel that our intellectual property, where we have invested so heavily in, is being betrayed or used, then we defend, and that's fair play. That's how the industry is settled and set up for. Sometimes we win, sometimes we lose. We may agree or not, but we have total respect for the decision made there. We see if we can take that step further or not.
The whole focus, all the energy at the end of the day, goes to driving the business model of Nespresso, driving the value and the fundamentals of that brand that is linked with a more holistic experience that starts with the highest quality in the cup, with some excitement of innovation, new flavors, new blends, also linked with design, linked with an experience, linked with being linked up with that society through the club. That is where actually the value lies. That's where we focus on. It is not to be found in the retail world because the whole concept of Nespresso is geared and engineered around a direct relationship. We stay put to these principles, and I think it's the right thing to do. They're showing in our growth and the strength of the brand that it is the right thing to do.
Let's take the next question from the call. We have Eileen Khoo at Morgan Stanley. Eileen, you have the floor.
Morning, everyone. Eileen Khoo here from Morgan Stanley. Two questions. The first one is actually on coffee. Earlier this year, you mentioned that you had lost share in some of your key emerging markets, for example, in mixes. Is this recovering now? Can you just update us there? On Nescafé Dolce Gusto specifically, can you update us on where you are with your global rollout plans? How many countries is it in now? How big is the business now for you? When you say double-digit growth, are we still talking 40% plus? The second question is actually on AOA. Can you please update us on whether you still have any supply chain disruptions here that are still ongoing that might actually improve your performance in the coming quarters, or are things pretty much normalized now? Thanks.
We have mentioned in coffee, certain markets we lost some market share, I would say basically it was driven by 3-in-1. You may know this is a very strong category with lots of growth, many players coming in there. That is something we are working on. Specifically, we have gained and have good, strong market positions there. As we were, quite in many markets, the innovator, the initiator, it is clear that when new players coming in, they want a part of the enjoyment. Answers have to be given again there through marketing support, through innovation, through quality, we are playing on all these fields. In Dolce Gusto, I would say, the rollout is indeed going very strongly. It was quite European-centric when we started. It was here. I think we are now almost 50 countries with Dolce Gusto.
50 countries rolling out, having very nice growth figures in all these countries where we started. What's nice about Dolce Gusto is still in Europe, where we started, where it is now for six years or seven years, in the market, we see very interesting growth figures, too. We see that this whole coffee business. Let's take Europe, where we have so many players really playing very well and with very good arguments, how this whole market is dynamic and that it is indeed, in spite of many other initiatives of other players, that we can keep our agenda going and keeping gaining market shares because we are going into that market with these different offers. We have Nespresso, we just mentioned it.
We have Dolce Gusto in systems that is retail-based, having many additional arguments actually, that other players don't find so easily through different brands that we have. We have the out of home and all the models that we are introducing, be it Milano or be it Nescafé Alegria. You have these different angles. You have the Nescafé, where super premium is again doing very well through Nescafé Gold in many markets like Russia. That's the nice thing about the coffee market, that we have this complementarity of going about a market that is showing so many signs of dynamism in an environment that is actually not giving that for free with any consumer confidence that is low. That same dynamics is translated in all markets in the world step by step.
Nespresso is extending its geographic footprint in its own way, city by city, country by country. Dolce Gusto is enrolled in through retail in these markets. We have the Nescafé arguments, and Nestlé Professional is rolling out all their new offerings, too. It's a fascinating journey. In AOA, I may give it then shortly to Nandu, who is here also. The supply chain interruptions, I think that's going to be part of AOA, our Zone Asia, Oceania and Africa. We call it actually sometimes, with a little wink in the eye, the zone CNN. There is always something in the news. It's a pity, though, it is our reality. It has been our reality for many years, we have interruptions.
We have mentioned to you in Syria how we hold on to our factory, 350 people working there, to the last minute until it was really bombarded and looted completely. We are rewiring all these things. It's a permanent issue, a permanent challenge, I think we have the right people to do that there. That's one of our strengths, how we can rewire them. Maybe some more light on it very shortly, Nandu.
Look, if your question is specifically on have we been able to replace the supply that we have lost out of the Syria factory? The answer is yes. We have replaced that supply. If your question is do disruptions continue across the Middle East, across the northern part of West Africa and other parts of the zone, disruptions continue. We have seen, you read the news and you see, in fact, in general, the situation is not getting any better from a stability or trade environment point of view. As Paul mentioned, we cope with that. That's what we are good at doing.
Actually, the Middle East is showing nice growth with this rewired supply chain, it would be easier with total stability. That's why sometimes we're quite unique in being there.
Next question from the room. Great.
The video-
I'm sorry, you need the microphone.
A mic for the webcast, yeah.
Yeah.
Will you buy back shares, and will you divest Jenny Craig and PowerBar?
Well, buying back shares, no. That's not on the agenda. It's always a possibility, but that's not part of the agenda now. On the others, I will not answer that because, as I said, we're serious about things, and we have to give time to time without losing time, and you're going to be timely informed.
We have a question actually from Cheick Aboucone, the Tribune de l'Economie in Côte d'Ivoire, asking about CapEx over the last two years and for 2014.
Well, that is linked with part of my presentation where I said our CapEx in the last two years, globally speaking, and by intention of creating that necessary footprint and capacity and capabilities, has been over 5%. We had in the past a, I don't know if you can speak about a cruising speed of capital investments expressed in sales, in percentage of sales, but we had a capital investment between, I would say 4%, 4.5%, give and take. It went up above 5%, 5% to 5.5%. Which was the right thing to do at that time. Now, I feel it's the right time now, too, to use what we have invested in and leverage it. We have all the capabilities, we have the capacities now, and that is exactly what we want to do.
We, for 2014, have said we want to cap that definitely under 5%, between 4% and 5%. That's where we are. That's the instructions, or the guiding that we have imposed ourselves to. It is basically back to a certain cruising speed. It's still a sizable investment, though.
Let's take the next question from Yvon over here in the room.
Good morning, Yvon Retif from Le Figaro. I have two questions. First one about your portfolio management. You said you had identified 1,800 sales. Well, is that too many? You also said that you had a short list. Can you tell us a bit more, explain us what are your priority in terms of investment? Will it be a few non-profitable sales or many small sales that doesn't fit anymore with the portfolio? My second question was about price, especially in Western Europe, given the competition between retailers, how do you see room for price increase in the coming months? Thank you.
Well, first of all, this whole portfolio management, indeed, we have many sales. You say, are there too many? It's like we have many SKUs, are there too many? There is always some too many. That's why we have this tool to give that transparency, because at the end of the day, averages are done by over-performance, under-performance. How far were you and how long do you want to have under-performance? I don't want to socialize all categories, all sales to the same common denominator of you have to deliver X and Y. There has to be judgment. That judgment should be done with some criteria that we all share so that we have one common language. This portfolio management is not something, oops, new to Nestlé. All of a sudden, we're going to talk about portfolio.
We had already in on level of SBUs, on our Strategic Business Units or in the markets or in the zones, portfolio management. What we did is to make it more capillary and to have it much more visible and to standardize some criteria so that when we speak to each other, more when we agglomerate certain dimensions like sometimes you have to agglomerate because the world is changing, is integrating. That is now allowed in a much more simpler way through, I would say, the tool or the sharpening of our tool that we have now. In order to do that, you have to have also capabilities of data standardization. That is what GLOBE gives us, to be able just actually to see and to look the reality, which is complex. I mentioned that. We are in many markets, we are in many categories.
When you add it all up, you have 1,800 sales. We are able to do that actually by simplifying with a push of a button. The axis we are calculating or plotting is basically strategic fit. It is resource intensity, and you can open it up, resource intensity in CapEx or resource intensity in R&D. You have many angles to do it. How big is the growth potential? Can we drive and win in these categories? Because you can be in a category that grows, but you have no capability to win. Well, all that is now pulled out. We have one common language, and we go after it. If you say, what is your short list? Well, it is not my short list. It is our short list here, of all of us, looking into it from different angles and discussing.
We're building the answers of that short list into the, we call it the strategic business, the global business plans, which are made per category worldwide. That is translated into zone plans. That is taking that transparency into consideration, and then the market business strategy plans. It is translated not just in a list of categories or sales that we then shoot down like ducks. That's not how it works. We build it then into the logic of a plan that is more holistic than that. It results in you put more resources behind because that's the most enjoyable business that needs that resources, or you fix it, or you get rid of it. That is the translation that we have, which is much more, I would say, sharp as an intolerance than we may have before.
Pricing in Europe, maybe you, Laurent, you're the specialist of that now. First of all, our pricing, we wouldn't like third parties to manage our pricing. Our pricing. It should reflect the value that we see. Again, value with consumer value. We still see what we feel we build into that product. Yet we are part of reality. It is true that there is not a lot of ambience of high pricing. You've seen also, we have been sensitive to it. Also, raw material prices have a load certain things. It's more a combination of things. Maybe two words on pricing in Europe, and that linked with retail dimension of Europe.
It's clear that we have seen in the last months deflationary tensions building up for a number of reasons. The very first one is that there is no growth in the marketplace, so everyone is fighting for a share of a shrinking pie, and that is building up tensions. That's one. The second one is that the commodity environment, especially on the coffee front, has been relatively mild. That has also fed those deflationary tensions. What have we been doing? Basically, when we price, we tend to first make sure that we stay competitive at all times, and we protect our market shares. That's one. The second one is that we make sure as well that we capture the value of our brands, of our products, in the eyes of the consumers and protect our gross margins, which we have been achieving, if you see the H1 numbers.
Going forward, I don't see the markets will really pick up. You have seen the unemployment numbers that will hamper the growth going forward for a period of time. Taxation as well is impacting available income. It's most likely that markets will remain subdued. When we look at the commodities, always difficult to forecast, but we see some inflationary tensions building up. Cocoa has been mentioned, dairy is another one. What I can assure you is that we'll make sure we stay price competitive and capture the value of our brands in the eyes of the consumers. That will dictate our pricing strategy going forward.
Let's take the next question from the call. We have Warren Ackerman of Barclays. Liam, you have the floor.
Good morning, it's Warren Ackerman from Barclays here. Just sort of related to that last comment there, you touched on specific commodities that are going in your favor or going against you, but I wonder whether you could give a sort of comment overall how your commodity basket is looking for the second half and maybe sort of into 2014. Related to that, do you still expect margin progression to be slightly softer in the second half than it was in the first half? Thank you very much.
Wan Ling.
Liam, in terms of commodity, we will guide commodity assumptions for 2014 during our full year, when we publish our full year results. We'll have to wait for that. In terms of balance of the year, we're not changing our debt guidance, which is low single digit for the balance of the year. Was there another question?
Margins. Have you seen margins projected as they were first of all now?
No. No.
No, we have mentioned it. We have mentioned it, first half, you mentioned that the projection that we had first half, the margin gained 50 basis points and all. Does have to be extended too. That's not how we manage business too, because the dynamics are during the year. Our commitment there is to have margin increase, though.
Yeah.
In line with what we have been delivering in the past too, that should be rational.
Yeah, just building on what Paul said, our trading operating profit margin was up 20 basis points in H1. Obviously, like Paul said, our commitment is to improve margin year-on-year. That's all we can say at this point.
Our next question from the room, Matthew Boyle, please.
Thank you. Matthew Boyle with Bloomberg. Regarding L'Oréal, I know you said you're keeping all options open. I just wanted to know if you'd be able to help us out in terms of the timing of a decision. Do you expect to say something early next year? Do you expect it to be at the AGM? Can you give us any sense in terms of when you expect to let us know about that? Thank you.
Yes, we have mentioned that we keep all options open also to the option of saying when and where we're going to say it. You're right in your first sentence, we keep that as an option.
Let's take the next question from the call. Patrik Schwendimann of the Zürcher Kantonalbank. Patrik, you have the floor.
Hi, Paul. Hi, Wenling. My first question is regarding your organic growth guidance. You're mentioning a further exploration in quarter four compared to quarter three. Which regions and product categories would you expect to accelerate, and where would you be a little bit more prudent for the future? That's my first question. Second question regarding your water business, which had a slight slowdown in quarter three. You were mentioning a tough promotional environment in North America. Could give us some more flavor? What was your growth rate, in the water business in the U.S., maybe in the emerging markets and in Europe? Thank you.
Do you want to take the organic growth?
Yeah. We don't manage our businesses on a quarterly basis, but for the balance of the year, we do expect that growth should continue to accelerate, which is what you've seen in our nine months results. We expect that to come from just like broad base, just like nine months, all regions, most of the categories accelerating for the balance of year.
The other question about water, we have John Harris here, so who is managing our water business. Actually, who is here for the last time. Because you're retiring. You're still too young to retire, but you look young because you drink a lot of water. Please, comment a little bit on the slowdown and the acceleration in some other areas. Please, John.
In terms of water, particularly as it pertains to North America, we had a slowdown in July. We had a very good month in September from a water standpoint. Some of it was weather related. We're back on growth trend in terms of water, particularly in North America. North America was hit with a lot of competitive pricing as regards to private label. Private label really took the prices down in the month of July, we decided that we were going to protect our margins, which is what we did. We are coming back. I also want to comment on the strength in North America as it pertains to Perrier and S.Pellegrino. Both those brands, which are basically our premium sparkling brands, show tremendous growth.
We're pleased with the growth there in terms of North America on the sparkling brands, which helps us from a margin standpoint and profitability standpoint.
Thank you, John.
Should we take the next question from the room over here? Thanks. Please.
Christina Görke from Bilanz. I have two questions. You mentioned your cooperation with Google, Roche does cooperate with Google in getting more information about patients' needs. I wonder, could that be an option for Nestlé to cooperate with Google in getting information for customer needs? The second one would be, you point very strong on the healthiness of your business. On the other hand, the basis of your business is more or less a lot of unhealthy products. How does it fit together? Are you going to change anything there? Thank you.
Well, with Google, Patrice, maybe a word or two on Google. You have been behind this fantastic KitKat Google relationship, the relationship with Google is much broader than that, patients' needs and some ideas about digital and collecting data.
Yes. Thank you for the question. I think on Google, of course, what has happened with KitKat was in fact the result of or an outcome of a deep relationship that we have initiated with them now two years ago in search for excellence in social media and especially in search, which is, of course, where Google can bring a lot. We have several projects with Google in several parts of our businesses where we are working together at finding this excellence in search. One can be, of course, how by deepening relationship and communication and interaction with consumer, we can service consumer better. Being patient, being a young mother or a young consumer. These were done, and this is where they came when launching their new Android, which, as you may have known, was always branded with some generic confectionery brand.
They asked us if we could do things together for the first time for them and brand the new Android version KitKat, which we embraced, and we did together, I think, very well. The last count, to give you an idea of the impact, was we were close to 1 billion tweets exchanged among people with KitKat Android brand mentioned in the tweet. This is on top of all social media happening, promotion, and so on, that we did together, which was a first in the world. That's part of it. That's part of the way we work in marketing cooperation. We have this with Facebook. We work with Twitter. We work with Google because this is the new way that we have interaction with consumer, that you enter conversation with consumer.
Thank you, Patrice. Your second question is, Nestlé, you all talk about nutrition health and wellness. You talk about how healthy your products, et cetera, are. You talk about, then you have chocolate. Shame on you. That's what you're saying. I don't think that's what you believe in. You want to provoke, I do believe there are not really unhealthy products you can have, but we don't have these. It's easy to say you have unhealthy diets, but we should be part of building healthier diets and more understanding. We have said, actually, our agenda of nutrition, health, and wellness goes about first pleasure, balance, and understanding. We have to be part of driving these three. Pleasure because people stay with things that they like. You're not going to force something as being part of people's daily life that he doesn't really like at all.
Pleasure is important. That's why we have 60/40. We want to be preferred as a taste. Second, we have to have balance. Means it has to be possible to be part of a diet, of a healthy diet. For a healthy diet, you need people with understanding. We have to do education. You have to be transparent on the label about the intrinsic qualities and nutrients of the product you serve. You have to link up with that label through the digital media now and internet and all that, so that you can even go deeper into explaining what the product is all about, how it is made, of what it here, and what it there. Also, you have to educate people in nutrition. We were not educated in nutrition before. When I was at school, I never was. We see that coming in.
We are pushing that. We have the Nestlé for Healthier Kids program that is just going about that. That is nutritional education in schools, and it's not us, our program. It's just driving with the authorities in the respective countries, that program, and building or educating children that can go in a more balanced way about healthier diets. We bring in our portfolio, whatever pleasure we can with more goodies and less baddies. We have less, and we are investing an incredible amount of money in how can we deliver preference of taste with less sugar or less calories in general or less fat. We have our internal policies that are really driving this agenda, where we're putting an amazing amount of time and resources behind just to do that. It is possible, science is being created to be able to do that.
We are definitely a company that thinks about healthier diets in a more holistic way, driving that agenda, which is not only products. It is products, education, transparency, et cetera, R&D, science. I think that's a much more honest answer to the question than saying, let's get disengaged from whatever may be seen as negative. We know it's going to be part of people's lives anyhow. Let's disengage our understanding, our R&D, our science, our knowledge. Let's disengage from that category and let alone. I'd rather have a company that says, "No, we want to be there." We can leverage our science there too, and bring and be part of a broader dimension of healthier diets and healthier lifestyles. Indeed, we accept that we may be criticized for it, we're going to stay engaged. That's why I said, engage with stakeholders in that dialogue.
We do truly believe that we sometimes pushed in the corner as, "You're a big part of the problem." I do truly believe, honestly believe we are rather part of a solution if we work together on this in a more balanced and honest discussion. We do see an incredible openness of all parties involved in shaping that nutrition dimension in our societies. It's so much part of healthy lifestyles. Yet, at the same time, it could be part, if you don't go about it seriously and honestly and responsibly, could be part of driving unhealthier. We want to be part of the first dimension of being part of the solution.
We have another question from the call. We have Robert Waldschmidt of Bank of America, Merrill Lynch. Robert, you have the floor.
Yes. Just a couple of questions, if I might. You've talked about North America and what's going on there. I was wondering if you could give us some color on Latin America, given there's been some concerns about slowdowns at market levels there and what you're seeing in market levels and indeed within your business, given it sounded like you're seeing accelerations in those regions as well. Back on Europe, you mentioned that Nestlé Professional is not doing so great. Can you give us a steer in terms of, is that actually literally negative? If so, how much? Thank you.
Well, let me answer that. In North America and Latin America. Well, Latin America indeed has, I have been quite a few years in Latin America. Latin America is still Latin America. Means we see some inflation coming back, some nervousness too in big countries. Latin America is basically shaped and made by two countries, Brazil and Mexico. They have their challenges. Mexico linked with North America. I do see that the arguments of labor and all that is coming back, so the factories, the industrial dimension is taking some new colors and that should give growth in the future. Brazil has some questioning that they do to themselves, I think rightly so. There are certain things that has to be sorted out. There's quite a worldwide events coming up too that create some nervousness and some opportunism in certain areas too.
I feel also these countries, what you see in general, apart from some exceptions, in general, the democracies in these countries are in my eyes, the fundamental basics that I believe this continent is going to continue growing interestingly, apart a few exceptions made. The political authorities or leadership in these countries have seen that through democracy, through stability, there's so much value to be created. They do still have, in my eyes, in many areas to do the structural reforms, that would allow to have even more growth flourishing through these countries on a longer term. What we see though is yes, indeed, some inflationary, way far from what we've known, some inflationary dimension coming back. That is linked in with price increases, linked in also with a more subdued demand, which goes in hand in hand.
I do believe that the fundamental balance is still there, though, for growth. Nestlé Professional has two dimensions. First one, which is internal, which is external. The external one is a big part of the business of Nestlé Professional as we have it, was linked with the parts of the world, the developed markets that are subdued, where consumers are cutting on their spending of going out of home where we were and et cetera. That is one. External headwinds. Internal, not headwinds, internal things that we are doing is, we have a few years ago defined, said in this huge market that we have, which is out of home, we have to pick our battles. We have said we're going to go for branded beverage solutions and really building the capabilities and answers there in a very strong and proprietary way.
Also the customized food solutions, branded food solutions too. What we're actually doing is, I would say one step back to jump better. Actually to see how we then build the capabilities. That's where we are with these two trends combined. That's a little bit what is reflected in our results there. I truly believe that we are doing the right things and that we're going to enjoy that Nestlé Professional dimension, which is one of our growth pillars. Definitely, we're going to enjoy that in the future.
We have a question from the room over here.
[Cesar Moreira da Economica], São Paulo. Mr. Bulcke, what was really the impact of the valuation of the Brazilian currency on the business this year? Secondly, we can expect that Nestlé will increase still more the prices in Brazil since the inflation is getting higher.
Well, look, I'm going to answer that. Well, it's impacting on consolidation, too. I mean, Real has lost a little bit of color. It was one of the stronger ones a few years ago, and now it lost some color. At the end of the day, although we sell the same or even more tins or chocolates and all, or milk If you consolidate in CHF, it's less. That's how it is. That's something we cannot drive at the end of the day. What it does, though, as I mentioned before, it creates, because of the import dimension that you still have to say in certain areas, it creates inflation. Inflation is translated into price increases, and we had to increase certain prices.
We do that always, We do it holistically in the sense we try to compensate as much as possible. We are very local producing, so we have actually a competitive edge there in the sense our local production capabilities that we have are much more linked with the realities and the dynamics of cost structures of the markets per se or the countries per se. It would be worse if we would import everything. Brazil, which is for Nestlé actually an exporting market, this is not really affecting us directly there in that sense. We almost, I would say, produce everything that we sell. With few small exceptions made, everything we sell in Brazil is produced in Brazil. That is a competitive edge we have.
We have another question on the call from Jeremy Fialko of Redburn. Jeremy, you have the floor.
Hi. Good morning. Jeremy Fialko of Redburn. I've just got one question on your pricing in the Zone AOA. That looked like you had a very good acceleration in RIG in the quarter, but your pricing actually turned slightly negative. Really, could you talk about where you're seeing that negative pricing? I'm guessing that coffee will be where you're getting most of it, and how you might think it's going to evolve given the fact you have had some quite big currency devaluations, and therefore would need to put up prices to offset those. Thank you.
Nandu, a very specific question. If you could give a short answer to that.
Yeah. Firstly, Zone AOA is, you have to understand, 25% of our business is developed markets, where the dynamics are similar to Europe in terms of deflationary environment, and 75% of our business is emerging markets. In emerging markets, the bulk of our business comes from the PPP segment, and it's the lower population groups which really face the pressure of an economic slowdown and inflation at the same time. What we have chosen to do is to build volumes, is to grow market share, to improve gross margins, and to do this all at the same time that we also drive cash flow and working capital. Personally, I see this as a very positive evolution of our business competitiveness and strength going forward.
In general, I would say if we have low pricing, which is sometimes we have higher pricing, lower pricing. Pricing is linked with many factors. A major driver is raw material prices and costs. If we have very low pricing in general now, it is the best proof that we are sensitive to consumers' expectations and needs, and how we reflect our cost structures also, our efficiency drive and all that into the prices. I would see that as rather positive.
We have a final question from the call from Binta Dreve at Exotix. Binta, you have the floor.
Good morning, and thanks for the presentation. I just had one question. You mentioned the recent slowdown in emerging markets. I just wanted to know if you could shed some light on smaller markets in the EM region, i.e., Africa, and more specifically Nigeria, just to have an understanding of what's going on at the moment, and what's your expectation for fiscal year 2014. Thank you.
Looks like Nandu, quite a lot of interest in your zones. Many things happening, but I give that to you. Africa is a continent that we always believed in very early on. Many years there. We have invested heavily. It is also a continent that has quite a lot of stories to tell. Fascinating, but also a lot of volatility and turbulence as well.
Yeah. Thank you, Binta. Good question. Across Africa, we see continued growth. That's the underlying story. Now, within that, we of course see pressures, as I mentioned earlier, political disturbances, when you take the northern part of West Africa, where safety starts to become a concern. It's not as easy to reach products and distribute products as it was there earlier. Those effects continue. In general, inflation or a currency devaluation has an effect also on purchasing powers. Those issues continue. We know how to deal with that. Our market shares are strong, our market shares are growing, and our business continues to gain in strength and penetration in West Africa, in Equatorial Africa, in South Africa, and also in the northern part of Africa, in Egypt, in Libya. We see good acceleration of our business across the continent.
Thank you, Nandu.
I thought that was the last question from the call, in fact, we have another one from Jeff Stent at Exane. Jeff, you have the floor.
Good morning. Just a very quick question. Is 4.5 around 5? That's the question.
I don't know. Versailles is around Paris. Look. Around 5 is our commitment. We're going to see where we get.
Okay.
Good question, though. A little bit of a strange question for being the final question. Is there some other question from the room here, or No, it doesn't look like. Anyhow, no. First of all, once again, thank you for following us and being here for us, for the persons here in front of me, but also for you watching and following us through the webcast. I really thank you for your interest in our company. It's always nice to be able to share with you what is up in our minds, what is pushing us, what is enthusing us, what is challenging us. Sometimes we are called, sometimes. I take that actually as a compliment. They say Nestlé is like a Force Tranquille.
Somebody in France said that, "La Force Tranquille." Yeah, it's a compliment, yet at the same time, I say, "Wait." If they just would know the, I call it the intrinsic, the internal competitive intensity we have, and how we really ask tough questions, and how we are challenging ourselves mutually and ourselves collegially, and how we go and build capabilities, and how we send people out there in difficult places that many of us wouldn't like to go to, and how we find people with their families doing it. This intensity, how we have built in also this external looking permanently into our way of deciding, of evaluating our actions. That is something we want to share. Sometimes difficult because we are sitting in this room or in the webcast through these new technologies.
You look out and you see the lake, and it's all pleasant and nice. Well, I can tell you, there is a lot of intensity that drives these performances. It doesn't come from nowhere. It is driven by people. It is driven by the 340,000 people we are. With that, I just want to close here. Maybe you say a few words. This new format, we're going to be open to your comments on them to see if we drive that in that sense further. I must say, for us, it's helpful to do it combined because we can really build all messages together and share that with you with a little bit more time then. I leave that a little bit also to your feedback. Robin.
Thank you, Paul, and as usual, we're happy to take any follow-up questions via email or Twitter, and I'm sure you know the addresses. Thank you very much.
Thank you