Good morning, and welcome to our 2019 results press conference. My name is Christoph Meier. This conference will be held in English. If you watch the webcast, you can choose a German or French translation on your screen. On the podium, we have our Chief Executive Officer, Mark Schneider, and our Chief Financial Officer, François-Xavier Roger. In the room, we have several members of our group executive board, the three CEOs of our zones, Laurent Freixe, Zone Americas; Chris Johnson, Zone Asia, Oceania, and Sub-Saharan Africa; and Marco Settembri, Zone Europe, Middle East, and North Africa. As well as Patrice Bula, Head of our Strategic Business Units, Marketing, and Sales, and our General Counsel, Leanne Geale . I take the safe harbor statement as read. Now let's start. Mark, you have the floor.
Christoph, thank you for the introduction, and a warm welcome to the press conference this morning, both to all of you here in the room and also anyone who's joining us on the web. We appreciate your interest in the company, and we look forward to answering your questions later. Let me turn straight to the key messages for 2019, and I think in all modesty, what you're seeing here is a picture of success. In particular, the continued strong progress with our value creation model. What are the essential features of that value creation model? It's essentially three things: continued top-line progress, bottom-line progress, and capital efficiency. When all these three things happen at the same time, very good things happen to the company, very good things happen to the shareholders.
I think that is the summary of 2019, and you will see that confirmed by some of the details we're presenting later on. Specifically on organic growth, we achieved 3.5%, strong momentum in the U.S., our largest market, and Purina PetCare globally. This is an acceleration by 50 basis points from 3%, which we achieved in 2018, and another acceleration of 60 basis points over 2017, where we came in at 2.4%. The underlying trading operating profit margin increased by 60 basis points to 17.6%. You may recall in 2017, we set out a midterm underlying trading operating profit margin target for the year 2020. That margin target called for a range of 17.5%-18.5%, which was an increase of 150 basis points to 250 basis points over the 2016 levels, which were known at the time when we gave that target.
We're proud to report that with this result for 2019, we're in that target range one year early, and I think it showed us really making good on one of the key planks of our 2017 midterm targets. Portfolio transformation, I'll get more into that later. Fully on track with more to come. Last year, we returned almost CHF 17 billion to shareholders through the share buybacks and our dividend for the year 2019. And the good news is set to continue. Yesterday, our board agreed to propose a dividend raise by CHF 0.25- CHF 2.70. If adopted by the shareholders in April, this will mark the 25th consecutive annual dividend increase. You may be aware with the term dividend aristocrats, so this is the club of companies that have raised dividends consecutively for 25 years in a row.
We will be joining that club. I think we are commemorating it with a CHF 0.25 increase, which is also very much in line with the percent increase of our underlying earnings per share. So a strong picture of success. This one is not just a gimmick for us. I think this is very important, because it rewards, essentially, sustainable focused, long-term shareholders that want to see long-term success in the company. By the way, it is 25 years when it comes to dividend increases. When you look at either a stable dividend or an increasing dividend, so a dividend never tracking back, then we are talking about 60 years. 60 years of either a stable or rising dividend. I think this is what we mean when we talk about long-term success in the marketplace and long-term success for our shareholders.
It is also important to point out in a day and age when sustainability and diversity inclusion and other ESG targets are getting so important, that we made bold steps last year in that direction. We signed the United Nations pledge, calling for net zero greenhouse gas emissions by the year 2050. We will be outlining a time-bound plan towards that in the near future. We also made significant announcements when it comes to plastics recycling, and we are continuing to detail that longer-term plan towards 2025 with additional initiatives. You may have seen a few weeks ago, we just talked about spending up to CHF 2 billion to foster innovation in packaging and also get the market for food-grade recycled material going.
In addition to that, when it comes to diversity and inclusion, we outlined an ambitious plan last year and also unveiled our new parental leave policy, which calls now for an 18-month leave for primary caregivers. That was unveiled second half of 2019. We are now progressively implementing that plan around the world. This will also underline Nestlé's status as an employer of choice around the world wherever we operate. Here is a summary of the 2019 financial results, and in all modesty, I will not get into all the details on these numbers. The key message is every single one starts at the lower left-hand corner and ends at the upper right-hand corner. Okay, so it is all going in the right direction. This is not just being flippant about it. This whole notion of really being very even-handed in our increases is important.
We have often made the point that if you stress one metric at the expense of another, bad things happen to a company over time. So what you are seeing here is that balanced pursuit of top-line growth, bottom-line growth, and then the metrics that relate to cash and capital efficiency, all of that going up in a very disciplined manner. The result when it comes to underlying EPS, as mentioned before, is a double-digit percent increase for the second year in a row, which I think for a company our size is no small feat. Now, when it comes to the key metric of organic growth, you are also seeing this progress in 2019, and here are some details on how we achieved it, how we supported it. You know that layout of the slide from previous years.
You see the main buckets on how we intend to boost organic growth over time, fixing underperforming businesses, portfolio management, and high-growth categories. I will not get into all of these in detail now. Some of this will be outlined on the following slides. Let me tell you, if I had one regret on these three buckets regarding 2019, it is about portfolio management, the fact that it was a little heavy on disposals and a little light on acquisitions. We made one acquisition here with Persona in our Nestlé Health Science area. Ideally, I would have liked to build the business at an even faster clip. I think 2020 will look better in that regard, and I think we started strong with the announcement that we will acquire Zenpep by Nestlé Health Science.
I think we have some other exciting projects in the pipeline that will help us achieve a better balance between acquiring and divesting in 2020 and beyond. Here is some more detail on the portfolio management, not just for the past year, but over the past three years. You see some of the businesses in the pink shaded area that we got out of, and you see in the green shaded area, businesses that we got into. These are higher growth, higher margin, more on-trend product areas that are very much in demand with today's consumer, very much in line with premium products, very much in line with more sustainable products, very much in line with digitization and also personalization. Hence, all of these are key trends that we are pursuing in the coming years.
All in all, more than 50 transactions closed or announced since 2017, and the whole thing amounts to about 12% of group sales. This is ahead of what we told you in 2017. At the time, we had indicated to you that roughly 10% of group sales would be turned around as part of the portfolio management. We are ahead of that. What we are indicating to you today is that we are expecting a similar level of activity for the next three years to come. This is not stopping now. In line with changing marketplaces and changing consumer preferences, we will continue to transform and develop our portfolio. You also see that this portfolio change had some good contributions already early on when it comes to organic growth. The organic growth contribution coming from portfolio management in 2019 alone was 35 basis points.
The next slide, if the previous slide was about external growth, the next one is about internal growth, which of course, is very near and dear to us. Again, I will not spend too much time on all of these, but let me just highlight a few, where you see that through internal innovation product development, we then brought something exciting to the market that bolsters organic growth going forward. The first one I would like to talk about in coffee is Starbucks. You know that exactly one year ago, we had unveiled to you the Starbucks line of CPG products. That product line, which at the time consisted of 24 SKUs, had been developed in the course of less than six months. You were able to see that and verify that because we had only closed the Starbucks transaction in late August 2018.
Here we were one year ago, less than six months later, unveiling to you these 24 SKUs. Shipping started then in March 2019, and by now we are in more than 40 markets. We had told you in November to expect about CHF 250 million of incremental sales in 2019 alone. As you can see now, the final figure came into more than CHF 300 million. This is a success that still continues to expand. We are also now following up this year with an improved product range. It was very important to us not just to have a one-shot deal, but to follow up with improved products and new product varieties under the Starbucks label. We continue to be very bullish when it comes to Starbucks in 2020 and beyond.
PetCare at the center, I won't describe all the products in detail, but let me just say this category in 2019 was simply flying, very even across geographies and very much along the trends that you're seeing here, premium brands and then veterinary products and supplements, science-based products, where we bring our scientific strength to the table. The last one I wanted to talk about a bit more detail is plant-based food. As you know, through the plant-based burgers, this had gotten a lot of attention in 2019. You saw us out there with a very competitive offering very early on. I think this was one of those trends where we could say we caught it when it was on the up.
We did not invent the no-compromise sector, but when it was really proving to be a real trend with long-term perspective, we were there in a very short amount of time with a very competitive product range, where we really brought our 30 years of experience in plant-based products to the table. We're the only company, to my knowledge, that has plant-based burgers on two technologies, soy and pea. We have exciting products beyond the burger. When you think about ground beef analogs, when you think about chicken, when you think about meatballs. We're now thinking about tuna analog, and you'll see a continued pipeline coming to the market of very exciting products in that range. We clocked about CHF 200 million in annual sales in 2019 already. All of this growing strongly double-digit rates, and in fact, accelerating double-digit rates. That's important.
It's not only good news, it's also improving news. If you're wondering, why does a CHF 90 billion company talk about, in such excited terms, about a CHF 200 million business? Well, it's important to note there is a bigger picture. That bigger picture is success in plant-based will be a once-in-a-generation opportunity for us to redefine, re-energize, rejuvenate, and make more attractive our CHF 12 billion business in prepared dishes and culinary aids. This is the bigger picture here because when you think about a younger, better educated, more affluent consumer, they're demanding these products. They believe in this right for you, right for the planet mantra, where these products offer a healthier nutritional footprint, and yet at the same time, they also offer a lower eco burden. Hence, these products are going to stay on trend for quite a while to come.
It's not about one individual product, it's about a full range, and then having that range permeate into all the various dishes and ingredients that we make, and thus differentiating those product offerings down the road. That bigger picture for us is what counts. As you can see, even from the narrow plant-based food numbers in 2019, there's a very exciting business growing at strong double-digit rates already, and that is also slated to continue. Next, let me talk about business as a force for good. You know that we strongly believe in creating shared value, and I think creating shared value is one way of making sure that in our business practices, everyone that does business with us benefits. This is something that's very strongly embedded in the DNA of the company.
To drive that home in a day and age when more and more people look towards business for solutions to one of society's challenges these days, we started last year with each quarter to give you an update on a key ESG area in our contributions. We talked, for example, about the sustainability contributions of Nespresso as part of Q1. We talked about the COPES cancer care system that Nestlé Health Science supports as part of Q2, and we talked about our deforestation reduction efforts in Q3. What I'd like to use this one on is to give you an update on our plastics recycling efforts and packaging innovation efforts. You may have seen about a month ago, we issued a press release that details the new initiative that's part of our 2025 path to make our packaging fully reusable or recyclable.
One of the challenges, one of the obstacles we encountered was the lack of food-grade recycled material. It was very important for us to highlight to the public that not all recycled material is created the same. There's recycled material that is food-grade, and there's recycled material that isn't. And it's important because as you compare us to other packaged goods companies, it's always important to ask yourself, "Okay, are we talking about food and beverage, or are we talking about personal care or other products that may have to fulfill lesser requirements?" In our case, it's food and beverage, hence, this needs to be food-grade.
As we scanned the market, we saw that there was a lack of food-grade recycled material, especially when it comes to PP and PE, whereas PET, which is the material in most of the bottled water products, was available, albeit at a higher price. We thought about a market-based solution. The market-based solution, in our opinion, is to commit to a large quantity over the next five years. We talked about 2 million metric tons, and to commit to a significant premium per ton that we were willing to pay in order to get that market going.
That should entice people to actually create the capacity, create the collection systems and the recycling technologies, and then over time, as we get the market going, as we use our scale to get that market off the ground, we could all expect, to the benefit of the public, that the premiums for these materials will come down. That is the part that has to do with food-grade recycling. We also saw that there is a need for packaging innovation. While there has been a lot of innovation in food and beverage, I think on the packaging side, the last few years prior to the latest concern over plastic waste have been quite stagnant. This is where we were a bit at the mercy of our suppliers. We counter that last year by starting up our Nestlé Institute of Packaging Sciences.
This is the in-house research part where we want to be sure that we have a seat towards the steering wheel and the driver's seat when it comes to fostering packaging innovation. But we were also fully cognizant that not all innovation happens inside our own four walls. Hence we balance now the Nestlé Institute of Packaging Sciences with another commitment, and that is to create a CHF 250 million venture fund that focuses on investing in startup companies that offer packaging innovation. Together with this in-house and out-of-the-house innovation, we do believe over time that on all three options that you see at the bottom, reuse/refill, recycling, and new materials, that you will see progress, which is much needed in this space. Last, let me turn to our 2020 guidance.
Before taking you through these bullet points in detail, let me again circle back to the mid-term targets that we had outlined to you in 2017. What we had said at the time is that we were going to improve in our underlying trading operating profit margin to this range of 17.5%-18.5%. What we had said to you is that we were aiming for mid-single digit organic growth, hence 4%-6%, both of these by the year 2020. What we are telling you now with this guidance is we are a year early on the underlying trading operating profit margin, so tick and pass on that one. As you can see from the second bullet point, the good news in this area is going to continue.
What we are also telling you is on the organic sales growth, we are committed to the mid-single digit organic growth, but we have to push that back by about a year or so. What we are still seeing is continued increases in organic sales growth. Those are there, and this is something we are strongly committed to, but we will need a year or so more time to get there, and hence we are pushing back that target, which continues to be a highly relevant target. This is the best way to put these first two bullet points in perspective. For 2020, we expect restructuring costs of about CHF 500 million. All of this should then add up to continued progress in underlying EPS in constant currency. Also you will see capital efficiency continue to improve.
All of this, of course, has to be balanced against a near-term concern that we're seeing at the present time. While it's too early to quantify the financial impact, that is the coronavirus outbreak. Here I have to tell you that I very much admire the efforts that our team have put in on the ground during Chinese New Year, very often at the expense of their vacation time, to be sure that we minimize the impact on our company and that we stay a trusted supplier of choice to the Chinese consumer. Our top priority here in this area is, number one, of course, the safety of our employees and associates. Number two, it's very important that we continue as much as possible with the uninterrupted supply of our very important food and beverage products to the Chinese consumer.
Number three, that we also put all measures in place that help to limit the spread of this virus. Again, amazing work on the ground to get everything prepared. We started up a large part of our factories again at the beginning of this week. Like most other companies, we took an extra week last week after the Chinese New Year to get ready. These factories that are open are running at a reduced speed, given that not every employee was able to return from their home province to where the factories are based. Also, transportation capacity at this moment is more limited than usual.
Nonetheless, especially for some of the essential products, when you think about infant nutrition or when you think about medical nutrition, making sure to the largest extent possible that we're able to supply and that we're able to meet Chinese consumers' demands is a key priority for us. We're working very closely with the Chinese government, fully supportive of all the strong measures they're taking to contain this virus. Again, the important thing to note is that at this moment, it is too early to quantify the precise impact. With this thanks and strong support here to our local Chinese team, let me also end on one other important message of thanks, and that is to our wider team Nestlé. Team Nestlé has done, in all modesty, really well in 2019.
Our more than 300,000 associates around the world made all of this good news that you're seeing happen. I tip my hat to all of the efforts, the energy, and the enthusiasm I'm seeing, and very bullish based on all the good things I'm seeing where we're headed for 2020 and beyond. With this, I'll pass it over to François.
Thank you, Mark, and good morning to all. I will start my presentation with a review of our full-year sales growth for 2019. We finished the year with CHF 92.6 billion of sales, an increase of 1.2% on a reported basis. Our organic growth accelerated for the second year in a row to 3.5%, and the main driver of this acceleration has been RIG at 2.9%, which is the highest level over the last six years. As you know, RIG is a combination of volume and mix. RIG was supported by innovation, by the strong development of e-commerce, as well as by portfolio management. Pricing stood at 0.6%, which is slightly higher than what we had the year before. Net M&A had a negative impact of -0.8%, which is largely the consequence of the disposal of Nestlé Skin Health on the 1st of October 2019.
Foreign exchange had also a negative impact on our reported sales as a consequence of the appreciation of the Swiss francs against the euro and against a certain number of emerging market currencies. Nestlé operates in 190 countries around the world, and our largest zone is Zone AMS or the Americas, which accounts for a little bit less than half of our sales, while EMENA and AOA account for a little bit more than one fourth of our total sales. These three zones had a strong momentum last year, all contributing to growth. The highlight is clearly AMS, which saw its growth accelerating to 4%, significant acceleration versus the previous year, largely coming from the U.S. and to a lesser extent from Brazil and Mexico. EMENA had a strong momentum at 2.3% and has been very resilient in the context of a low-growth environment, especially in Western Europe.
AOA was at 3.8% of organic growth, with China slowing down and all the other regions within AOA seeing their growth accelerating. Emerging market is a critical growth driver for Nestlé. Emerging markets account for 42% of our sales, so this is important. We grew by 4.7% in emerging market last year, but the acceleration of our growth actually came more from the developed countries, which grew by 2.6% and mostly from the United States and Western Europe. Nestlé has a well-diversified portfolio of categories, and if you look at our three main categories, powdered and liquid beverages, which includes coffee, nutrition and health science, and pet care, they accounted for more than half of our sales. All our categories had a positive growth last year. Obviously, we were disappointed by water, which was clearly underperforming during the year, and we are working actively on it.
But if we look at our other high-growth categories like pet care, coffee, infant nutrition, and consumer healthcare, they had a very strong momentum during the year 2019. If I look at our key growth platform in terms of geography, category, or distribution network, starting with the geography, the United States, which is by far our largest market, saw its growth accelerating to 4.1%, which is the highest level over the last 10 years. Pet care had a superb year, growing at 7%, largely as a consequence of innovation, the development of e-commerce as well. E-commerce grew last year by 18.5% to reach 8.5% of our sales. Premium products grew 2x faster than the average of the group at 7.4%, and they now account for 26% of our sales, while they were only contributing 11% of our sales in 2012.
We increased our margin by 60 basis-- underlying trading operating profit margin by 60 basis points in 2019 to 17.6%. As Mark said, we reached the guided range that we had indicated for 2020 already one year ahead of time. The main driver of this margin improvement has been the reduction of our structural costs, which have been reducing in absolute value for the third year in a row. By structural cost, I mean fixed industrial cost, fixed distribution cost, and G&A in general. The beauty of the exercise as well is that we have been able to increase significantly our margin last year while investing even more than the previous year, and even as a percentage of sales in marketing to support growth through innovation.
Just to finish, I would just like to mention the strong capital generation that we had last year at CHF 11.9 billion , which is equivalent to 12.9% of sales. We expect in the future to be able to generate on a sustainable basis around 12% of sales as free cash flow. That concludes my presentation, and I will now hand over to Christoph Meier for the Q&A session.
Thank you, François. We will now take questions from the room. Yes, Corinne Gretler, Bloomberg.
I wanted to ask about your guidance. Just if you could give a bit more of specific reason for pushing back the organic sales growth target of mid-single digits. Just what the main reasons are aside from caution?
I think we did a lot of important things that turned out to be the right things for our shareholders in 2019, where we knew full well that they were going to have, on the margin, a dampening effect on OG in 2020. The first one is the disposal of Nestlé Skin Health, which also explains why the fourth quarter was more muted when it comes to organic growth compared to the previous three quarters. Nestlé Skin Health, after the very strong turnaround we put in place, was growing at close to 10% last year organically. So a very strong growth contributor. We benefited from that for the first nine months, and then of course, we disposed of it and the closing was September 30th.
If you just look at it in terms of hitting a target once because we said so, it would have been very tempting to say, "Let's hold on to the good news for another year." But frankly, we were very disciplined on a strategic basis. We said, "This is not a business that is the best fit for us going forward. We want to focus on food and beverage and nutritional products." And hence, we did take that step at the right time, and I think as you saw from the transaction value, this was the right step for us. I also believe it's the right step for Nestlé Skin Health. The second one I can point you to is the pretty massive exit from our direct store delivery system in the U.S.
This was a step whose time had come because clearly on some of these frozen products, it was something that our retail partners increasingly were looking for. A very massive step that had often been underestimated when it comes to how deeply you actually interfere with your operations to make that change. And here again, from the beginning, we said this is going to have a slight negative impact as you migrate from one to another, and the biggest part of that is expected now for 2020. So, I wouldn't focus so much on the fact that we're pushing this back. I would focus on the strong underlying message, the good news on organic growth, and our commitment to make that increase and to make it increase to the 4%-6% range. That is going to continue.
That to me is the key element, and that is something where you see both in our guidance and our explanations today, we point that out very strongly.
Further questions? Yes, Rachel Richterich, Le Temps.
Not as good as expected, or maybe yes, as expected, not good.
The waters business, we acknowledged very openly, has been a source of disappointment for the past two years, and I think in particular for 2019. We took a first step with our announcement from last October that we are migrating this business from a globally managed business to one that is managed by our three geographic zones. This step mirrors what we have done with Nestlé Nutrition two years before and what we have done with Nestlé Professional, our out-of-home business, three years ago. I think in both cases, we saw a stronger geographic focus. We saw better success when it comes to organic growth, in particular after these changes. It is very clear that our geographic zones are the key operating unit when it comes to implementing, executing strategies at Nestlé. I have great faith in that.
At the same time, we said that just the migration alone is not going to be a replacement for a new strategy. We will unveil, very likely in the first half of this year, a new strategy to you that shows you and gives you specific examples of how we will focus on the higher value parts of the waters business. Higher value to us is primarily the premium brands and is primarily the functional waters that have some value added over and above being pure water. Then, of course, we do have some very strong local regional positions in what is a local regional business. Those, of course, we also intend to defend and, if possible, expand. Again, stay tuned. I think step one is taken, and that is the geographic governance.
Step two is going to be the specific strategy which we will unveil later this year.
For those asking a question, may I ask you to press the button on your mic device. Further questions? Yes, [inaudible] .
I would have a question on China. I saw in the press release that Yinlu is still not doing so great. Are you planning to keep the brand, and what are the plans? Another question on acquisitions. You mentioned that you have something in the pipeline. After you strengthened coffee, could you give us kind of a feeling what the next focus will be? Thanks.
Let me start with the second one. Yes, the pipeline is fuller than it was last year at the same time, and that gives me hope, and that gives me optimism here. Again, it's important to us when we talk about portfolio transformation, we're not only talking about divestitures, we're also talking about acquisitions. As a company, we believe in growth, we believe in operating leverage. We want to become larger, not smaller. That's why that ambition needs to shine through, and that's why I wanted to underline it. On Yinlu, I think we acknowledged very openly during the past year that this continued to be a drag, especially in this peanut milk category, where we had seen a stabilization in prior years, but it continues to be a category that is under a lot of pressure.
Here again, we're working very hard on new plans, but I have nothing to announce at the present time.
Next question. Yes, Mr. Weinmann, CH Media.
I have a question, because you have a functioning recycling system with Nespresso, a fairly obvious plastic problem is Dolce Gusto. What are your sustainability plans for Dolce Gusto?
Dolce Gusto, the recycling availability is different by market. In some countries, that counts as recyclable, in others, not. We're working on improved eco footprint there as well, when it comes to the packaging material. And of course, we fully take sustainability and recyclability into account when it comes to future generations of capsule coffee.
Yes, Ms. Tuor, AWP News Agency.
You talked about the change in the DSD system in the U.S. That is closed, I think. But does this continue to have an effect on the business?
Thanks for the question. This is one of the points I was trying to make earlier when we were trying to explain to you why there is some dampening effect here for 2020. Clearly, when you do this migration, yes, the sheer logistics has been done, but the ripple effect when it comes to sales, that is something you are seeing now. And that is unavoidable because as you move from a direct store delivery system to something that depends on third-party warehouses, typically that goes hand in hand with some sort of portfolio rationalization, less SKUs, and maybe less capillarity when it comes to availability of the products in some smaller retail outlets. We knew that from the beginning, and I think we highlighted that when we unveiled the DSD move last May. Again, this is a strongly positive step.
I applaud the U.S. management team for taking this one on. It is a massive step that has lots of operating implications. It has massive benefits for the bottom line. And as we reinvest most of these things, it also will have down the road massive positive effects on the top line. But near term, a step like this that involves more than 4,000 associates and literally hundreds and thousands of trucking routes around the country, you cannot execute that without a temporary slowdown in organic sales growth. That is simply when you look at past experience of companies that have done that, I think there is a similar experience.
Thank you. Is there another question in the room? Yes, please. Mr. Affolter, La Tribune.
Perhaps it is a bit speculative, but on the coronavirus, when you think about the outbreak on the local markets, do you think that food safety discussions could benefit Nestlé this year?
Again, I think this is probably not the best moment to speculate in any direction. I think for now, our focus is fully on mitigating the fallout and doing our part to be sure that the Chinese population, everyone else affected, is safe, and that any impact gets minimized. I think that is what we are focusing on, and I applaud and tip my hat to the strong efforts we are putting in on the ground to make that happen.
For the benefit of the audience on the webcast, do not forget to press the button on your device. Another question? Yes, please. Corinne Gretler, Bloomberg.
When you think about really big acquisitions that Nestlé could do, there are many areas or categories that you would face antitrust issues. One solution would be to target the area of medical nutrition. Is that the way to go for you to really be able to do a really big acquisition?
Very important question. I think when it comes to acquisitions overall, while I would not want to rule out large ones, I think from the beginning, we said very clearly that the more promising route is small to midsize. Typically, the integration challenge is much, much lower. That also translates directly into financial certainty and success certainty. You typically face less of an antitrust issue, because it's more targeted at a certain market that you want to bolster. That continues to be our sweet spot. Again, I don't want to rule out anything, but we're trying to be as targeted as we can. Nestlé Health Science is an area where we said from the beginning, we're very eager to expand.
I think we've made good on that promise when you look back over the past two to three years with the acquisition of Atrium and Persona last year, Zenpep now. I think we continue to build that business in a very disciplined way. Don't forget about the discipline part, because it's very easy to define Nestlé Health Science as consumer health, and then get totally distracted into all sorts of things, from headache pills to toothbrushes, and that's not our cup of tea. What we're interested in is a Nestlé Health Science that focuses mostly on nutritional products and products that have something to do with your metabolism, because that is where we believe our corner is. This is where we bring strength to the table, and it's that disciplined approach in scaling up Nestlé Health Science that ultimately will pay off.
It'll take longer, because if you were just chasing volume and large ticket deals, you could do it so much faster by defining that business in a wider way. But we don't believe in a strategy where the only common denominator would be that all of this gets sold through a pharmacy or drugstore channel. We believe that the common denominator needs to be nutrition and metabolism as the glue that keeps Nestlé Health Science strategy together.
Yes, Mr. Affolter.
But it could well be that you are doing other acquisitions, like the most recent one from pharma companies.
Yes. It depends. We are interested in the target. We are not so much interested who we are buying from, as long as they have an interesting target. But the core thing is, and I think Zenpep is a good example, this is addressing a metabolism disorder. So again, it is in the core area of nutrition and metabolism, and that is why it is a wonderful fit. We also explained that as part of our press release at the time, where we see the connection, and that we have a few other efforts in that same direction in place already.
Yes, Silke Koltrowitz, Reuters.
Yeah. I have a question on plant-based. You just explained that you're seeing very good growth rates there.
Yes.
What about acquisitions in that space? I know you've done some collaborations recently, I think it was in Canada, but could you also buy some of your peers there to accelerate growth?
Fair question. If something obvious does come up, of course, we would take a look because we're committed to growing in this space. Just like you've seen from other areas, Nestlé Health Science being a good example, it's the combination of internal and external growth that makes a category really exciting. If we find something that's a good fit, yes, we would be open to transactions. But it's important for you to take away that we have the key knowhow and the key ingredients to make a successful play in plant-based products in-house now. We've been playing in plant-based products for 30 years. We were mostly targeting a different segment, and that is the vegetarian or vegan segment, and hence, we were basically in a niche, but it gave us a lot of knowhow on plant-based proteins and plant-based products.
What we're doing now, in line with where the market is going, we're going to a broader mainstream segment, and I think the no compromise products are the opening key to that broader mainstream segment. People that want to eat in a plant-based way or want to have a more balanced diet between plant-based and animal-based proteins, but they don't want to compromise when it comes to the taste and the texture of the product. We got the knowhow. Without that, we would not have been able to bring such a successful burger and chicken offering to the market in such a short period of time. Again, based on this know-how and based on the rapid iterations, new versions coming to the market that I'm seeing, I'm very bullish about our success here going forward.
That is, by the way, retail and out-of-home, because some of these products are also very promising out-of-home products. Many people consume a burger out-of-home. They do not consume a burger in-house, especially in the winter season. It is a barbecue product in the summer, but there are few people that go home on a winter's night and basically say, "I cook a burger for myself.
Next question comes from? Yes, Corinne Gretler, Bloomberg.
I had a question on also water. I understand you rolled out the Refill+ system in the U.S. under the Pure Life brand. I was just wondering how that might help boost some of the kind of underperforming mass market water brands you have there. Do you think that might have a positive effect on sales at all? Might it help the image as well?
To put this in perspective, I like very much the Refill+ initiative. I think it has a lot of interesting components here from a sustainability and business model point of view. But this is something that we are testing and test marketing in the year 2020. As you look at the relative sizes here, something that we are test marketing, and then a 2.5 billion+ basic water offering in the United States, you see that it is not a one shot or a silver bullet kind of solution. This is one thing to address sustainability concerns with the population, mostly in places where you are stationary. That could be a cafeteria, it could be a large office, it could be university campus or a hotel lobby.
But it's not an on-the-go solution, and again, size-wise, it's not going to be the sole answer to what we have to do.
Yes, Silke Koltrowitz .
I have another one. I think you said in the press release that in China, infant nutrition. I remember that you said previously that in China, mainstream products are struggling a bit. It's tougher to sell them. The premium products are doing better. I think you said that again now in your press release for infant nutrition, that the S-26 range is not doing so well there. Can you give a bit more of color, like what is behind that trend also particularly in infant nutrition? Is that the local competition really heating up, and what are you doing to address this?
I think the bigger picture is we have superb technology at the top end of the range, especially with our HMO technologies. The Chinese consumer has a strong appreciation for these top-of-the-line technologies. Then in the mainstream segment, you typically have more price competition, including local competition. It's nothing that's counterintuitive or surprising. It should also show you the strength of our technology because you can read this as glass half empty or half full. You could say half empty in the sense you're facing competition in the mainstream. You could say half full by saying, "Look, we continue to be very successful in the top-of-the-line areas.
Yes, Mr. Weinmann, CH Media.
In Switzerland, there's a corporate responsibility initiative on the horizon, which according to early polls, does have a chance of being accepted by the population. What are your thoughts on that, and what if it does get accepted? What does that mean for Nestlé?
Look, I think we made it clear in the past that respecting human rights and respecting legal frameworks around the world is paramount to us and something we strongly believe in. What we don't believe in is that this should be litigated in Swiss courts, and hence that is a key concern we have, and we made that pretty clear. Beyond that, again, I don't want to speculate where this is going.
Further questions? Looks like there are no more questions. As usual, you can send us an email or you can call us. With this, we close the press conference. Thank you very much for attending.
Thanks for joining us.
Thank you.