At the conclusion of this morning's short remarks, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow-up if you would like to ask a question. It is now my pleasure to introduce today's first presenter, Mr. Paul Alexander. Please go ahead, sir.
Thank you, and good morning, everyone. Welcome to Kimberly Clark's 1st earnings conference call. I'm joined today with Mike Hsu, our Chairman and Chief Executive Officer and Maria Henry, our CFO. Earlier this morning, we issued our earnings news release and we also published prepared management remarks from Mike and Maria that summarized our Q1 results and full year outlook. Both documents are available in the Investors section of our website.
In just a moment, Mike will share a few opening comments and then we'll take your questions. During this call, we may make forward looking statements. Please see the Risk Factors section of our latest annual report on Form 10 ks for further discussion of forward looking statements. We may also refer to adjusted results and outlook, both exclude certain items described in this morning's news release. That release has further information about these adjustments and reconciliations to comparable GAAP financial measures.
I'll turn it over to Mike.
Okay. Thank you, Paul. Good morning, everyone. I'd like to start the call today with a few brief remarks. Our first quarter results and outlook have been impacted by supply chain disruption, faster than expected consumer tissue destocking and a sharp rise in input costs.
While I'm not pleased with the results in our outlook, we're taking decisive actions to manage through the short term challenges we face. We're continuing to invest in our brands and commercial capability to ensure we're able to grow both in the near term and in the long term. We gained market share in 2020 and our shares are off to a good start this year with strong gains in many key markets. At the same time, we're moving rapidly especially with selling price increases to offset commodity headwinds. We've done this successfully in past I remain confident in the underlying health of our brands and in our growth strategies.
We're operating in a very dynamic environment. We know how to manage through this. I'm confident our team will execute with excellence and we'll continue to build a stronger company for long term success and value creation. Now with that, we'd be happy to take your questions.
Thank you. Ladies and gentlemen, at this time, the floor is open for your questions. First question comes from Dara Mohsenian with Morgan Stanley.
Hey, Dara. Good morning, guys. So a couple of questions. First, Mike, you mentioned in the prepared remarks that were published Price increases in many other businesses besides what you already announced in late March. Can you just put a little more meat on the bone there in terms of Additional product categories in the U.
S. Where you might take pricing, maybe some international countries where pricing is more likely. I know you want to be a bit vague at this point, but any type of commentary on potential timing, magnitude of increases as you think about it across the portfolio?
Okay. Yes. Thank you, Dara. Yes, our teams have moved very rapidly and made decisive actions to realize additional price this year obviously. We announced Many price moves back in toward the end of March and those will take effect over the next couple of quarters.
In North America pricing is typically going to be in the mid to high single digit range across both our consumer tissue business and our personal care It will cover about 60% of our overall portfolio. We are taking pricing in multiple other markets including in Europe, Latin America and parts of Asia. We expect pricing and additional productivity to offset most of the raw material inflation incremental raw material inflation this year. And again, we're off to execution. We have generally announced most of our moves thus far.
Okay. That's helpful. And the other 40% in North America, do you think that comes eventually? Is it uncertain at this point? Is it more just timing and you're waiting for the right timing and then
Yes, I would say the phase effects and obviously, Dara, you might recognize we do some actions in list and some in count. And so we had plans for count, that we're rolling out the wall card a little bit later.
Okay. And then looking at the full year top line guidance, it implies a pretty robust recovery relative to some of the softness that we saw in Q1. So Just give us a sense for what's driving the confidence there. Is it more a category recovery As you look going forward, are there other factors? And then also, can you just comment on what you've assumed on North American market Share in both personal care and consumer tissue in the balance of the year.
I'm wondering what the assumptions are there, particularly in light of some of the price increases that you mentioned. Thanks.
Yes. Okay. Just on the outlook, again, I think one of the things around the maybe the quarterly phasing is just recognizing We had unusually high demand in the first half of last year and that started in the back toward the end of March in the first So that will that's really driving a difference in our outlook. One of the big reasons for our adjustment in the reduced outlook Organically was what we are seeing as a faster destock in consumer tissue, particularly in fat I think you can see that in the scanner results as well. I do think, it is a faster, destock and that Looks like it's related to maybe a faster vaccination and faster pace of mobility that's changing.
Interesting, we track mobility data. It looked like January, February, Dara, in the U. S. Mobility was down about 30% in January February and it climbed to being down 15% by the time we got to March. So again, I think it does a lot of it is the demand that tracks with kind of what we're seeing happening in tissue.
Yes. And the other areas we had the effect And that's mostly a Q1 event. And then as Mike said, The comps get easier in the second half versus the first half. And if you look at kind of our underlying Business and market shares, the underlying business is performing well. And if you look at our KCP business with our expectations around mobility, we would expect KCP To pick up
also. Okay. And just one clarification. Go ahead. Sorry.
No. Go ahead.
I was
just going to ask, is the Q1 volume loss, do you recover any of that going forward? Or is that more of that loss volume Sort of applies to the full year or is there a recovery at some
point? Well, we're hoping to recover some of it, but there was a pretty big impact to the quarter that we think will stick for the year. Let me just touch on the winter storm a little bit just to give you a little more texture. Our estimate would be conservatively on Q1 would have been worth about $0.15 a share And two points overall of organic, which would be about 5 points of growth organic growth for North America. Important to note, this will also and this goes back to the It's also going to constrain our Q2 volume in North America, particularly in personal care, and it's also going to affect our shares in the Q2.
So the back story is and I think you may understand, but the February storm hit in the Southern U. S. And really significantly impacted our supply network. It shut down large personal care and consumer tissue facilities that we have based in Texas, Oklahoma and Arkansas for up to 10 days. And so sales were impacted due to it did flow through the sales for us, Dara.
Typically, I would say, hey, a week or two down should not affect the business that much, but because of COVID last year, we were already running in a tight situation and so that's why it has rolled through and affected our sales. It's also going to continue to impact our raw material supply. Polymer producers have been More than us, I would say. And so, we're having some spot outages of some materials. And so Again, overall in North America, underlying brand performance has been very healthy, but we Do expect because of supply issues our shares to soften a bit in the Q2.
Yes. And it's tough because we were in fixed consumption categories. And so if people use our products on a daily basis, so when you go to buy them, if we're not on the shelf, Then they'll find it elsewhere outside of Kimberly Clark. And so typically in the Q1, When there's challenges, we would look to recover. It's a little tougher given the outages.
Again, that's fixed consumption. So that impact is definitely factored into our full year Reduction in our top line outlook.
That makes sense. Thanks guys.
Okay. Thank you, Dara.
Thank you. Our next question comes from Lauren Lieberman with Barclays.
Good morning, Lauren.
Good morning. I was hoping you could talk a little bit about spending levels. So just thinking about the balance here, I think you commented that Investment kind of steps up in 2Q versus 1Q. But one of the questions I've gotten from people a couple of times this morning was just the degree to which You're going to tap into G and A spending, for the balance of the year to kind of to deal with some of the, with the unforeseen cost headwinds. And then also just related to that and just following up on Dara's question as a point of clarification.
When you talked about pricing and productivity offsetting most of the inflation, is that on a calendar year basis or is that an overtime comment?
Yes. Let me take the last one first and then I'll come back to between the lines. So one way to think about The run up in inflation that we have for the year is that within year, we'll cover about half of that With pricing and then when you add in the additional cost savings both in terms of our increased outlook on the force program as well as Additional tightening of the belt around discretionary items, You would get to cover a good portion of the inflation. And then If you look at the reduction in our EPS outlook, you could look at it and say after all of that, it comes down to The decline in volumes, which are affected by all the reasons that Mike just talked about. So Within year, Paul, I think we're saying about half is recovered on pricing.
And then over time, we would expect to fully recover the commodity increases as we always do through a combination of price increases And cost savings. That's helpful.
Definitely.
Okay.
And then on between the lines. Yes. And then on between the lines, the way I think about that for the year is, 1st and foremost, We will continue to invest behind our KC 2020 strategy, which means we will Continue to support our brand investments. We'll continue to invest in innovation and capability development As all of those things have been paying off for us. So I look at that as protected investment and Then on discretionary costs, we'll certainly look to tighten our belt and prioritize Any spending that we have this year given the more challenging conditions and in addition, we are continuing to push Try to pull in productivity programs into this year as well as find new opportunities given the overall pressure there.
And I'll add, Lauren, it's important for us to protect that investment in our brands because we feel like it's working very well And our brands are responding well to the investment and performing very well, despite what I would say are some challenging conditions. Definitely, we believe our better execution and our investments in our quality innovation advertising are really working. Market shares are broadly up globally in almost All key markets around the world. I'll just rattle off some shares just you may be able to see these, but North America and diapers were up about a point and a half in share. In China almost 3 share points, Korea, Australia, Peru were all over 4 share points.
India, Argentina, We're up over 2 points. And so again, we feel like we have great products in the marketplace, great marketing, especially through digital and great from our teams and so we want to continue to support that.
Okay. And just to double check my math, which I can follow-up offline with Paul if it's super wrong, It sounds like North America Personal Care was on track to be up like low single digits this quarter if the storms hadn't created supply chain issues. Is that fair?
That's a reasonable assumption, Lauren.
Okay. All right. Thanks. I'll pass it on.
Thank you. Our next question comes from Kevin Grundy with Jefferies.
Good morning, Kevin. Great. Thanks. Good morning, guys. Quick question on KC Professional.
Did you see a pickup in the month of March? I guess like Looking back to last year, there should be somewhat of a natural hedge. Mike, there was a comment in the prepared remarks about Potentially seeing some early effects of social mobility picking up, which had an unfavorable impact on the consumer side of the business. I wanted to tie that In two ways. Number 1, did you see that pickup in the month of March because it wasn't necessarily evident in the quarter.
But again, March could be looking better relative to January February. And then 2, was the demand in that business in line with your expectations. It looks like you took some pricing with an obvious effect on volumes, But the business did come in quite a bit lower than the Street had modeled. So just hedging implications from some weakness on the consumer side and then comments The demand elasticity would be helpful.
Yes. Great questions, Kevin. I guess the short answer is Regarding pickup, not yet. And organic was down about 13% with continued improvement in North America, but I would say that improvement was more on the Wipers and Safety business than on the core washroom business. The washroom business was down about 35%, so about where it's been.
I did say mobility is improving. So again, just to refresh your memory, I think January, February was down about 30% And then in March, it had improved to being down 15%. It isn't flowing through to our washroom business yet and our business tends to be concentrated In travel and lodging, offices and high traffic locations like sporting events. So we may see some of that Start to pick up as we go forward, but I do think that has been lagging and these sectors that we tend to play harder in Tend to lag the overall mobility a little bit. Okay.
I would point out wiper safety were up strong double digits in the quarter. We feel great about the momentum of that business. And regarding your pricing, Kevin, there has been some significant pricing on the glove side in our safety business that's driven a lot of the pricing. So I wouldn't say it's a the elasticity is probably coming in as we planned. It's just that there has been some unusual pricing, unusually high pricing on the safety side.
Got it. Very helpful.
If I could just squeeze in one more, this will be Mike for you and Maria as well. Just on I think it's building on some of Lauren's question, the decision to maintain advertising and marketing levels, which I think there are some questions among the investment community whether the company would decide Do that given increased commodity costs. Mike, of course, this has been a big focus of yours since taking over. Can you talk about how internally those discussions went just given the significant commodity Cost pressure, the balance maybe considering pulling back a little bit, your visibility on ROI in what's unarguably a really Volatile environment and maybe some of the ROI models sort of less reliable given that context. Maybe just a little bit there in terms of what When into decision making and the visibility you feel like you have on maintaining these levels and then I'll pass it off.
Thank you.
Yes. Kevin, I think you're all over the issues as we discuss them. One point is, we feel like we have strong brand momentum as I just rattled off a bunch of share And growth in what I would say are still fairly choppy waters in the categories, but we feel great about the share momentum of our business globally. And really we can tie it back to the investments we're making in product quality, innovation and marketing and team execution, which is excellent. So we feel good about that.
There has been some discussion around that. I will say we will make some adjustments, but in a small manner overall we want to maintain our investment levels. But For example, in North America, where we have supply constraints, it may not be the highest ROI decision in the short term to be driving, let's say promotions in that business when you don't have supply. So we will make some tactical adjustments. But overall, I think your point on ROI is also important, which is, it is going to vary.
We don't have the latest data for ROIs on the quarter, but generally our marketing ROIs, especially digital, has been very strong. And so it may not be the lever that we traditional think of when cost conditions get a little tough because It's hard to see how cutting advertising, if it's working that effectively for us, actually helps the P and L.
But as you can imagine, we had Pretty extensive discussions at the market by market level to review The advertising plans for 2021 given the environment where We believe we've got strong ROIs. It makes sense to continue to spend the dollars because we're getting the payback on those dollars. But we did have some pretty deep internal discussions around that. And While it varies by market and by product line, the decisions, what I'd say is in our current outlook, We're expecting advertising spending to be relatively similar to 2020 levels on a dollar basis and On a percentage of sales basis, that it will be in line with our original plan coming into the year. All of that said, the mix of it and where it is and on what it is, is different than we would have expected 3 months ago.
But In total, that's kind of how we're thinking about it.
Okay. Thank you both very much. Have a great weekend. Okay. Thank you, Kevin.
Thank you. Our next question is from Steve Powers with Deutsche Bank.
Good morning. Thanks. I guess maybe just to round out what we've talked about so far, can you just talk about the context of the Cadence of your EPS guidance over the balance of the year because obviously 1Q was a tough start. It sounds like 2Q is going to be directionally tough as well, at least from an EPS perspective. So when you talk about meaningful EPS growth in the back half, I guess, is there a way to better frame what that looks like and how confident You are in the drivers.
I guess because it sounds like there's going to be back half loaded savings and I'm assuming you have good visibility there. But I just think What I'm hearing this morning, just a lot of investors are concerned about market share movements in the back half, elasticity in the Back half and the actual efficacy of pricing rolling through just given lost sales that you've highlighted in the first half and then Differences in the way that you've announced price increases this year versus what we heard from P and G earlier in the week. So just any thoughts you have around that would be very helpful.
Sure. I'll give some broad commentary and then Mike can talk more specifically about pricing. But When we look at the second half, we are expecting a stronger second half and That is for a few reasons. The biggest reason being that our pricing actions and the benefits of that We'll be coming through the P and L in the second half. In terms of Input cost inflation that is ramping in the Q1 and the second quarter, We expect that it will peak and then moderate and in some cases come down a bit in the second half.
Additionally, we've got our savings Program ramping, as you can tell from the forced cost savings of $65,000,000 in the Q1 and the outlook of 3.40 to 380 for the full year. So those will be ramping as is typical in a typical year. And then we also have some elevated costs in the first half of the year, which will come down some in the second half of the year. So we have good visibility into it. When I look at the factors driving that, the one area that has some, What's the word I would use?
Some dynamicism around it would be pricing. So I'll let Mike talk a little bit more about How we see that come to fruition?
Yes. So Steve, so we did make assumptions in our pricing around The elasticity impact, we do have volume coming out of the plan as it relates to pricing. I would say we have good experience from it from just a couple of years ago. And in general, our calls regarding elasticity generally were in the ballpark What our original plans were, and so we feel good about kind of our ability to call it. But the one difference I would say in this market would be, What exactly happens due to the COVID environment and some of the volatility related to that?
And then we did have some regarding competitive price points, which we still need to learn, how that's going to be executed.
Yes. One other comment that I'll make just in terms of phasing to put a point on it is, You know our performance in the Q1. When I look at the second quarter while we don't provide detailed quarterly guidance, we do expect that second quarter conditions will remain challenging And that will show up in the numbers. And if you think through some of those factors, there'll be more cost inflation that's coming in ahead of most of our new selling price increases. So we'll have escalated costs before the pricing is really getting into the market.
We'll be working through the tail end of the supply chain disruptions in North America, that Mike already commented on. And then the category dynamics in Consumer Tissue and KC Professional are more volatile than normal. And then As we said in the prepared remarks, we do expect that the between the lines spending will pick up from a relatively low level in the Q1 and that includes more investment spending. And then in addition to all of that, It's worth noting that we had all time record earnings in the Q2 of 2020 behind very strong volume growth in consumer And last year, we also had commodity tailwinds. And in the Q2, we had very strong force cost savings.
So All of that is shaping up to have challenging conditions for the Q2 with our performance picking up in the second half of the year.
Okay. That's helpful. And I guess if I could just to like how are you thinking about this setback In terms of the lower outlook for 2021, in terms of the lasting impacts here, because I guess when I think about it in the context of KC Strategy 22, we've been talking about the mid single digit EPS CAGR For a while ever since that strategy was unveiled and I think we've all been doing that in our conversations at least with kind of like a 5 CAGR in mind and quite frankly you seem very much on track and even ahead in terms of your strategic investments coming into the year. So in that context, is this are you putting this kind of setback in early 2021 as a speed bump on that path? Or is this likely to have more enduring impacts into 2022?
And I'm not asking for 2022 guidance. I'm just Understand how you're how impactful this is as you think about it in the context of that broader strategy?
Yes. I'll check and see if I understand the question, but I think we view it as a temporary impact, that should not affect our long term strategy. That's why we are We continue to invest in our brands. I think as I said before, I think our investments are working. We feel great about where the brands are going.
And but I don't really want Take apart what we're doing in China because we had a plant that came down for a week in Texas. And so that's kind of how we're thinking about it. And We recognize what our medium term guidance has been. We plan to hit that over the long term. We also recognize that we want to accelerate organic growth beyond what our medium term guidance was in and what we are making progress on that, but Recognize that we operate environment like COVID affected by COVID and also now this, I think once in a lifetime, at least Living here in Texas once in a lifetime storm that we always prepare for, but you never really think The teams are doing a great job responding to the challenge and doing the best with what they can and our suppliers are doing a great job partnering with us.
So again, I think it's a I feel like it's a temporary effect. Maria?
Yes, I would agree. And we've Been encouraging people to take a 2 year look on our business given the meaningful effects That the COVID related dynamics have had on primarily the tissue category, both on the consumer side and the professional side. So when you look at our performance last year, Especially in the first half where we had the incredible shift in demand and some stock up dynamics, We didn't expect that to change our long term outlook for the business. And when you look at This year with the consumer destocking around consumer tissue, This year, we expected that consumer destocking would happen. We didn't expect that it would happen as quickly as it appears to be happening.
So if you look at the business over a 2 year period where we had Net benefits from COVID last year, we've got some net Headwinds on the consumer tissue side this year, the performance over the 2 years is Yes, actually looks good and relative to our medium term guidance and does not affect The long term outlook for our business, it's just we have this 2 year period of Big impacts from COVID related items.
Great. Thank you very much. Very generous in your answers. Appreciate it.
Okay. Thanks, Steve.
Thank you. Our next question comes from Jason English with Goldman Sachs.
Good morning, Jason.
Hey, good morning. Good morning, guys. Thank you very much for slotting me in. I was hoping you could provide a little more context on cadence of your expected price realization, particularly relative to the promotional environment. One thing that really stood out this quarter was the deterioration of The pricing environment in North America tissue, I mean, last quarter, you reported, I think, 11% price growth in North America on lower promotions.
With price mix plus 8, We're back to neutral already. It looks like promotions are coming back certainly faster than I expected. Is that indeed what you're seeing? And how much of
Yes. Before Mike jumps in. I would call out that we had an unusually high price show up in the Q4 of last year that had to do with the timing on accruals Where we had an accrual true up in the Q4 that caused that to be unusually high. It was not indicative necessarily of the market environment. So I wouldn't so much compare to the Q4.
I'd point you more to the full year average from last year or at least the last three quarters of last year. But, Mike, I'll have you comment.
Yes. So overall, Jason, that's why knowing that we had some different items in that statement, I would say Overall, we still view the North American market across Personal Care and Tissue to be constructive. I think promotional volume in personal care returned to I recall, I think our team calls normalized levels a few quarters ago. So it's proceeded along that path. And I would say it's that's kind of where personal care is.
In tissue, I would say promotional levels for us, At least our perception is and our planning is a little still lower than where it had been and primarily because we still have been in tight supply. Obviously, given kind of where demand is going, that supply situation is getting reversed a little bit now. But Again, we don't have significant plans in the first half to promote aggressively. And frankly, as you've heard me say before, we remain committed to our journey on the high road and we really believe we want to grow our brands by investing in products and innovation and advertising. And so over promoting categories for us in a fixed consumption category does not feel like a healthy way for the business.
So again, I would say overall, The market appears to us constructive.
No, that's good context. I appreciate that. I guess I didn't realize there were EPS headwind in the Q4. Is that right? And given that your guidance is still back half weighted, How are you going to overcome such a big hurdle?
Yes. Our guidance balances a lot of different moving factors as I described earlier. And I won't repeat myself in going through those six points. If you look at the pricing On consumer tissue from last year and you look at the trends, it's about 1% in the first half, flat In the Q3 and then the net benefit of 6% in the 4th quarter. And so I'd as I said, I'd encourage you to look at the full year and trust that we've taken on the Various factors in our second half outlook commentary.
Yes. And Jason, you've been in our chair, so I think you'd recognize kind of we have a lot of we're paid to manage through things. And so these things come up every year. So, I mentioned in my prepared remarks, we know how to manage with these situations and we will.
Yes. No, I understand. Thank you guys so much for your time. I really appreciate
it. Thanks, Jason.
Thank Our next question comes from Andrea Teixeira with JPMorgan.
Good morning, Andrea. Thank you.
Good morning. So I have Three parted questions, please. I'm sorry for that. The first one, if you can comment on the competitive environment in personal care outside North America. I think you called out some market share gains, which are encouraging.
But first on China, we heard comments from one of your competitors that the market share The market has been more competitive as of late in diapers. What have you seen in your share dynamics there? That's the first part. And then the second one Is on the call out for the price increases you've taken in Europe and LatAm. And obviously, you have some competitors that are local and reporting different currencies.
So have you There's a local and reporting different currencies. So have you seen any results of I mean, I know you had amazing results in Brazil in the Q1, But have you taken prices there already? And with the government incentives fading, how do you expect that to be the balance of the year? And sorry, the 3rd part is, is what is embedded in the KCP guidance? Your comments about Washrooms coming in a little bit more, obviously, travel related, a bit more back loaded.
What are you expecting for that business at the balance of the year? Thank you.
Okay. All right. I'll try to I'll start with the Competitive environment, overall, again, I think we've been competing as I mentioned Andrea, kind of in this high road approach, which would be Again, build the brands through quality innovation, marketing and local execution that's very, very good. And so that It feels like to us has been working very effectively, China especially. We were up double digits in China across both fem care and diapers.
So we feel great about their business. Organic was up over 20% in China in the quarter and Huggies was up double digits and that was driven by volume and what I would say the premiumizing mix. And so our share is up, as I mentioned, Almost three points. And we feel like we have the best product in the marketplace. And the teams are very good in both Baby and in fem care around digital marketing agility.
And so they're very good at building that digital relationship And so I think that's been a key component of driving our business. And so yes, I think the market maybe getting a little bit more competitive, but we still feel like the Chinese consumer Just looking for high quality products and right now they view us our products being the best in the marketplace.
That's helpful. And on the price increase in Europe and LatAm, if you can comment on those?
Yes, I would say overall we have announced pricing in Europe and we have been announcing pricing Fairly continuously in Latin America. So in general, I would say we have seen Competitors move pricing in Europe, and then local and then locally in Latin America has been mixed. And so we have seen pricing moves Some of the large competitors and then there have been 1 or 2 loans that have not moved. And so that's just a dynamic that's been going on For a year or so now and our teams have been able to operate with them.
And on KCP, sorry for the 3 part of question.
Okay. Yes. The KCP, I think the guide is, yes, we do see we are planning for sequential improvement throughout the course of the year. And again, As Maria mentioned earlier, we're seeing mobility pick up faster, but in the KCB business, it hasn't flown through The washroom segments that we typically play stronger in. And so we will we do expect to see that occur as more people get back to work.
I do think it's related to At least in North America, what would be a faster vaccine rollout that we initially saw as we were ending last year.
That's great. Thank you so much. I'll pass it on.
Thank you. Our next question comes from Chris Carey with Wells Fargo Securities.
Good morning, Chris.
Hey, good morning, everyone. So just one follow-up and then another question. So just on the follow-up to a prior question, I know that you're planning to keep promotional levels steady or at least below pre pandemic levels. Can you just comment on maybe how much control you would have over that situation, say, if overall category promotions Were to start to take off, right? So from a competitive standpoint, would you follow those promotions?
Or do you have levers that you can deploy to keep market share if competitive activity reflected higher probability takeoff? And then my question is just around, there's been a lot of focus on 2021, I think appropriately so. There's also this broader narrative around unemployment rates, impact on birth rates, certainly developed markets coming back a bit faster than emerging markets. But can you just talk about what you would expect from a category growth rate your standpoint, say, over the next 6 to 12 months and maybe even a bit longer term as well?
Yes. Okay. I'll try to address, Chris. On the overall promotion, I would say, Our approach is to kind of grow the brands through investing in the quality of the products and in advertising. And then with digital, that's quite an effective tool for us.
I mean, not only is digital tends to be higher ROI than any of our other spends, including retail promotions. It's also you get faster feedback on its performance, right. So again, I think we have plenty of levers. We did shift to this approach a couple of years ago and I think it's working Very effectively for us. So if you ask kind of do we have the levers in our control, I would say yes.
And what we feel good about is we have programs developed that are robust in that sense. And as I just rattled off a bunch of these shares, we feel like those are working very effectively. That said, We want to be competitive on price or promotions, but I don't think promotions in a fixed consumption category Are the right long term way to grow the category because it's different than, let's say, an impulse category like cookies, where you can drive incremental consumption through promotion. Our categories, you generally don't drive incremental consumption. You can drive share, But I'd rather earn our share rather than rent our share for the short term.
And it's a very expensive way to rent share, right? So again, we do have the levers. And by the way, we are making significant investment in our revenue growth management capability. We have the tools and even when we were to invest more in promotion, I think we'd be very selective in terms of how we spent it and we would want to make that efficient as well. I don't know how to address your question on that part.
Yes, that's helpful. And then just on the Maybe divide your comments between developed and developing markets, where maybe birth rates come down, but you have a more of a GDP per cap upside type driver. So anyways, just the broader question there is just around near and medium term expectation for growth rates and whether you're starting to see some slowing there. Thanks.
Yes. Great question, Chris. And we are seeing a little slowing in the birth rate overall, both in developed And developing markets, for instance, in the U. S, where the data typically lags, we were down about a point. The first great one on 2019, the latest data although it's not officially published, I think Paul, but would say roughly down 3 last year.
And so that was a slowdown. And we're seeing some of that too. You may have read in China, the birth rate has come down significantly as well. I think the balancing factor is a couple of different components. One is our core strategy is to elevate our categories by creating More value added products and premiumizing our mix over time and that's really taken hold.
And as I mentioned, we're up almost 3 share points in China. That's all through a premium mix of products. And for instance, this year, we have the best product feel like in what we call our Tier 6, which is our premium tier, we are launching a Tier 7 product that brings a lot of the features that we have in our current premium products and escalate some further and we're launching Tier 7 at a 50% premium to Tier 6. And so I do think in some markets Like China, where the consumer certainly is willing to pay for what they what are better products. In the near term, we'll continue to drive our business that way.
That said, we also have many other developing markets like Indonesia and India that are continuing to grow and where the birth rates are not as impacted yet or still maintaining their birth rates And also we still have category penetration growth. So again, I think we feel good about our overall strategy. We do recognize That the environment likely because of COVID has affected growth rates to some extent, but we feel like our strategies both in developed markets, which is to elevate our business and our categories and then continue to expand in D and E are the right ones for us.
Thank you for both of us. Appreciate it.
Okay. Thank you, Chris.
Thank you. At this time, speakers, we have no further questioners in the queue.
Okay. I want to thank you all for joining us today. Our revised outlook really reflects some significant change in our environment. And I want to assure you that our teams are taking decisive action and we remain very confident in our high rate approach to growing our brands. So thank you.
Thank you very much.
Thank you. Ladies and gentlemen, that concludes today's presentation. You may disconnect your phone lines and thank you for joining us this morning.