Good morning. Thanks for joining us today. For those of you who don't know me, I'm Shep Dunlap, Head of Investor Relations. Before I go to the agenda, I need to make a few remarks regarding forward-looking statements. This morning, we sent out our press release and posted the presentation slides for the first presentation, the other ones will come successively, at mondelezinternational.com/investors. Today, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K and Q filings for more details on forward-looking statements. Some of today's prepared remarks include non-GAAP financial measures. You'll find the GAAP and non-GAAP reconciliations on our website. We'll be referencing non-GAAP financial measures unless otherwise noted.
Now let me get to the agenda. We tried to get a few things, based on your feedback, accomplished today. We want to make sure that we gave you significant access to the management team, which we believe we have. In addition to both Dirk and Luca, you'll get a chance to hear from each of our region presidents, Hubert Weber, our Head of Europe, Glen Walter, our Head of North America, Alejandro Lorenzo, our Head of Latin America, and Maurizio Brusadelli, our Head of Asia Pacific, Middle East, Africa, as well as Tim Cofer, our Chief Growth Officer. In addition, we wanted to make sure that there was plenty of time for Q&A, so we're going to have two blocks, one with Tim and the regional presidents, and then one at the end with both Dirk and Luca.
We're going to start with Dirk, who will give you a strategic overview. We'll go into the regional presidents who will double-click on their initiatives and their businesses. We'll take a break for about 20 minutes. I'd encourage you to go out and look at the product displays. There's going to be plenty of Tate's cookies out there for you and the personalized Toblerone. Make sure you pick up the bags at the back. Each of you who registered have one with your name on it out there. We'll come back to a Q&A, like I said, with the regional presidents and Tim, and then Luca will tie it all together in terms of the financial envelope, and then we'll have a closing Q&A session with both Dirk and Luca, and Dirk will close with a few remarks.
Again, thanks for your time. With that, I'll turn it over to Dirk.
Well, good morning, everybody. Thank you for joining us and for your interest in the company. I'm very excited to have the opportunity to share with you our vision for the future of Mondelez International. Over the past nine months, we have conducted a comprehensive review of the market and our business. We developed a new go-forward strategic framework and financial algorithm that will generate strong and sustainable shareholder value in the years to come. Over the last nine months, as a new CEO coming in from the outside, I've spent a lot of my time trying to understand the company, our brands, our people, and our operations. I also connected with consumers, our clients, and our partners. The overarching conclusion is this: we have a history that stretches back many years, but as a company, we are quite young.
We are still trying to shape our purpose and carving our place in the food world. Most importantly, we are positioned well against favorable trends, and we have a strong foundation to convert this potential into profitable growth. In the first five years of our existence, we have been appropriately focused on our costs and the structure of our margins. We were very successful and created a strong foundation for further development. This margin improvement focus has shifted us away from our primary focus and away from something that should be our obsession, which is to delight more consumers with more of our great products every day. The raw material that we are working with is very powerful. We have a global leadership across our snacking categories. We have an unrivaled portfolio of global and local brands.
Snacking as a category will grow billions of USD in the years to come. On top, we have a group of talented colleagues that are engaged, resilient, and believe in what is possible. We do need to pursue a shift in our value creation model, as well as in our strategic focus. We also need to operate and organize our company in a different way to capture the potential that we have. If we do all this and we're successful at it, I firmly believe that the future of Mondelez International as the leading snacking company in the world is very bright. As we were defining our go-forward strategy, we also reflected in quite some depth about our purpose, our reason of being as a company. As consumers around the world and every new generation is inclined to snack more, they have a dilemma, a tension.
They love snacking, but they want to snack the right way. They do not want to choose between eating right and snacking. Helping consumers solve that tension, that is our unique place in food. Particularly since we are the global leader in snacking, it's our purpose to empower people to snack right. As they say, a picture is better than 1,000 words, so let me rather show you a video that explains that purpose that we have.
Thank you for all the times we've cracked, crunched, twisted, munched, dunked, and nommed together.
Thank you for all the years you've shown us the love. Returning that love is what inspires us every day.
We know the way you live is changing the way you eat. Snacking is important. You don't want to have to choose between snacking and eating right.
Right for real everyday life. Right for when all you want is a yummy bite. Right for that feel-good moment.
Oh, my.
For your well-being.
Tears me apart.
Right for our communities as well as the planet.
Did you ever find anyone? That's why at Mondelez International, we want to empower people to snack right by offering wholesome goodness, great-tasting, high-quality snacks. All around the world, our team of makers and bakers are passionate about bringing you the right snack at the right moment, made the right way. Oh, I.
Snacking made right. This is who we are. This is our future.
Mondelez International, snacking made right.
Snacking is being seen more and more as the way of eating, especially by millennials and Generation Z. All this points to snacking as a behavior that will keep on growing. Our growth opportunity is to provide consumers all around the world with the right snack at the right moment, made the right way. We do that by offering a broad range of delicious, high-quality snacks that nourish life's moments. Today, we will take you through our long-term vision. We believe Mondelez International is a strong investment with a model and a strategy that will create attractive, sustainable returns. Our plan is to grow our business at a faster rate, it's driven by three key strategies. First, we need to become more consumer-centric than ever before. This is a time of big change in consumers' eating habits.
What they eat, how they buy, why they buy, and where they buy, we need to be on top of this and follow where the consumer is leading us. Second, cost pressures are everywhere. Inflation, currency devaluations, competitive pressures. In today's world, it's imperative to run an ever more efficient business that operates at the lowest cost possible. We have made major progress in the last five years, we are not planning to take our foot off the pedal. Third, it's our people around the world who will drive our consumer focus and our operational excellence. In today's world, speed and agility are key, we need to empower our people to make things happen fast. Therefore, in a major shift in how we run the company, we are shifting decision-making closer to the markets, and we are simplifying the ways we work.
This will allow us to combine our global benefits of scale with local commercial strength. These strategies will lead to an attractive financial algorithm. 3%+ organic net revenue growth, high single-digit EPS growth, a dividend that grows faster than our EPS, and a free cash flow of $3 billion+ a year. This is the agenda for today. First, I'd like to take a quick look about snacking as a category and why we believe it's an attractive place to be. Snacking is a large and growing behavior around the world. There's about $1.2 trillion spent on snacking products every year, which is split between packaged snacks and non-packaged snacks like fresh fruit. The categories Mondelēz plays in are well-positioned. They represent about 45% of total packaged snacks, and our leadership in our categories also makes us a leader in total packaged snacks.
Important to note is that the growth of snacking is highly correlated to GDP. As GDP rises, so does per capita consumption of snacks. As such, today, snacking outpaces other food categories. In our category, the exposure to private label is limited to about 9% globally as consumers prefer trusted snacks. From a consumption standpoint, we are encouraged to see that our snacking categories are accelerating their growth. They grew over 2% in 2016 and 2017, they are now over 3% in the first half of 2018. We expect that over the long term, our categories will continue to grow approximately 3%. With our global market share of 21%, we are well positioned to lead the future of these categories. Today, over 85% of our portfolio is in snacks, mainly in biscuits and chocolate.
You can expect us to keep on increasing the overall percentage of snacks in our portfolio. While we believe the snacking space is appealing and offers a lot of potential, we also recognize that the CPG space has changed dramatically and will continue to change. Power shifts are happening across all facets of the market, you know them well, but to name just a few, the emergence of e-commerce and the shift towards non-grocery channels are changing our route to market models. Consumers everywhere in the world are increasingly going digital. This changes the way they communicate, but also how they buy and even eat. The availability of third-party production and social media has taken away barriers to entry and opened up the space for insurgent brands. The meaning of healthy eating and wellbeing is more complex than ever before.
Finally, consumers' taste and likes are increasingly diverging, reinforcing our need to be close to our consumers. To meet these needs, we are adjusting and change our ways of working. For example, we are re-energizing our local brands. We are moving towards sustainable sourcing of ingredients through our Harmony Wheat and Cocoa Life sustainability initiatives, and approximately 40% of our media is now spent in digital. The second area that I would like to highlight is that we have a strong competitive advantage that positions us to win as leaders in our space. Since we have grown through big regional and local acquisitions, we have an amazing collection of global and local brands.
Whether it's Oreo, Milka, Cadbury, Ritz, and there's of course, my personal favorite available in the room outside, Côte d'Or, I invite you to try it. We have leading brands that consumers really love. You know our billion-dollar plus global brands. We've talked a lot about the opportunity to continue to grow them. We also have a very strong lineup of local heritage brands. These brands are part of the local culture and have a very strong emotional connection to consumers. We believe there's an opportunity to unleash them, contemporize them, and as such, generate stronger overall growth for the company. The breadth of our brand portfolio also enables us to play within a large spectrum of consumer needs, from pure indulgence with our chocolate brands to wholesomeness with brands like belVita or Triscuit.
That's exactly what we mean by our new tagline, "Snacking, made right." Our brands are right for the realities of everyday life, right for a feel-good moment of indulgence, up to a boost of energy in the morning. We are a truly global company. More than three-quarters of our revenue is outside of North America, and 37% of our business is in faster-growing emerging markets. While per capita consumption in emerging markets is relatively low, the growth is accelerating. For example, in the first half, we grew double digits both in India and in Eastern Europe. We also saw solid mid-single digit to high single-digit growth in many of our emerging markets, for example, China, Southeast Asia, Mexico. Another key benefit that we have going for us is our cost capabilities.
We have built those capabilities through our cost transformation, and they are now embedded in the company as part of our DNA. Over the past 5 years, we have totally offset and improved our adjusted operating income by 550 basis points, led by our cost savings initiatives in supply chain reinvention, zero-based budgeting, and shared services. We are proud of what we have accomplished in our supply chain. We reduced our number of plants by 30%, while we've added 60 lines of the future. These lines of the future are more flexible and more efficient, which positions us well to drive future volume-led growth. We also created a more efficient organization through our zero-based budgeting approach and a move towards a shared services model. Going forward, we believe that this mindset and those capabilities will deliver future opportunities to reduce our costs.
Putting all this together, we believe we have a solid platform on which we can build, providing us the firepower to capitalize on growth opportunities. A more competitive margin structure means that top-line growth will have a stronger bottom-line effect. By being in a higher growth snacking space, we can benefit from volume-driven growth, to drive our top line, which will create extra leverage on top of the current margin. We also have the financial discipline and operational know-how to keep on taking costs out of the business. Our balance sheet is strong, allowing us to capitalize on external growth or capital investment opportunities. We have several options in our portfolio to generate even more firepower. In short, this foundation provides us the fuel to drive further top-line growth and strong, sustainable returns. We are in the right space, and I think we have the necessary foundation.
What is the recipe to create more growth and strong, sustainable returns? First, I would like to highlight that we are entering in a new phase in the development of our company. In the last five years, we have been successful in delivering increased margin, now we will shift our focus to growing our top line while still delivering solid shareholder returns. The next five years will be defined by a better balance between both top-line and bottom-line dollar growth. This new era builds on the work from the past five years, it does require some significant changes to how we operate as a company. As I mentioned before, our new approach to growth will be supported by three strategic priorities: accelerate consumer-centric growth, drive operational excellence, and build a winning growth culture. Let's dive a little deeper into the first strategy.
Consumer-centric growth is about changing our marketing playbook and approach, better leveraging our great brands, and entering into new channels and new geographies. Let me start with how our marketing methodologies is about to change. We have a wide range of brands. Fine-tuning the role these brands play in our portfolio offers major opportunity. At the same time, the consumer snacking behavior is complex and changing. We need to be fully attuned to where consumers are, where they shop, what they buy, when they buy, and why they snack. We have developed a proprietary methodology based on so far interviewing 170,000 consumers. This methodology takes a more holistic view on how consumers snack across different emotional or functional needs and occasions.
As an example, if I would ask you here in the room if you would like a snack, you would imagine how many different answers I would get depending on where you are physically, emotionally, how you feel, and so on. That's what we're trying to understand better. With this new methodology, we are able to segment snacking needs based on all possible drivers like state of hunger, time of the day, location, emotional need, demographics, and so on. All this allows us to sharpen our brand positioning, improve our communication, ensure our portfolio remains incremental, and avoid overlap. It also identifies innovation and renovation opportunities. All of this is leading to a better consumer connection with increased sales and higher returns on our marketing and innovation investments. We are bringing more changes to our marketing approach.
A critical element is to reinvent our marketing playbook consistent with today's digitally empowered consumers. For instance, this means that we build dynamic plans with real-time feedback loops. As a result of this investment in digital and analytics capability, things like social intelligence and media personalization at scale, we are seeing a meaningful increase in our ROI, averaging 8% improvement per year. This higher ROI gives us the confidence to increase our A&C investment in the coming years. Another important change is that our brands will play a more expansive role. As I mentioned before, we have a rich table of global power brands, but we also own many iconic local heritage brands. Our previous strategy focused mainly on global power brands. It starved the local heritage brands of investments, leading to a polarized growth picture.
Going forward, we will strike a better balance in our brand investments, combining the momentum of our global brands with investment, innovation, and renovation on our local brands. A more balanced approach will lead to higher growth. Case in point is our Opavia brand in the Czech Republic. It is the leader in the biscuit market with a strong heritage, a very emotional connection with local consumers, and a very broad portfolio. We recently reinvested in the brand, differentiated it more from competition, and we improved its in-store visibility. As a result, Opavia went from mid-single digit declines to low single digit growth. We have many Opavia-like situations around the world, and we see growing evidence that this strategy will accelerate our overall sales. We will also evolve our innovation approach to be more responsive to local consumer needs via agile test and learns and rapid scale after validation.
Our innovation will not only focus on enhancing our leadership in our core categories, but also on extending into new segments and adjacencies. Let me give you three examples of this. choco-bakery. This is the sweet spot between our leading chocolate brands and our biscuit baking capabilities. It is now a great success. It's more than a $500 million business in Europe, and we are expanding it into other markets such as Australia and Brazil. Second example is Ritz Crackers. We are also building that brand into a global savory snacks platform. Our recent launch of Ritz Crisp & Thins in North America has been wildly successful and highly incremental as it sources from savory snacks, given its excellent taste and it's baked, not fried, lower fat credentials.
Finally, we are extending our iconic Oreo brand, the world's favorite cookie, into new forms such as bites and [rolls] and thins, but also in categories like chocolate, ice cream, yogurt, and brownies. As a result, this $2.6 billion global biscuit brand continues to show strong growth in the first half of the year. To reflect the changing shopping preferences of our consumers, we need to invest in growing and underdeveloped channels across our markets. Of course, e-commerce remains an important growth opportunity, and we are reiterating our goal to generate $1 billion in net revenue by 2020 from e-commerce. Also non-grocery channels are developing fast. Our regional presidents will give you more concrete examples, but we see significant opportunity for expansion, for example, in the discount channel across Europe. Boosting our presence in these channels will be another driver for our growth.
The growth of snacking is concentrated in a few key markets. We will distort our investments towards those geographies which will have the highest impact across global snacking. We have 15 markets that represent 70% of our revenue, and while we already have a great presence in most of these markets, it is usually in one or at best two of our categories. This means we have a tremendous opportunity to use our local strength in one category to boost our growth in the others. As an example, we see key growth opportunities in biscuits, for instance, in India and Australia, and in chocolate, in Mexico and Southeast Asia. We will also empower our local teams to move faster, launch more relevant local innovations, and hold them accountable for accelerated growth.
While the previously mentioned growth drivers also apply to gum, I thought I would take a minute to discuss our gum business, since the category and our business are underperforming. Gum is important to us. If we want to lead the future of snacking, gum constitutes a key part of that universe. Today, gum represents 8% of our total business and has above average margins. In recent months, we have seen a stabilization and even some growth in the gum market. While gum as a segment is challenging, the consumer's need for refreshment is very important. I would say that instead of a gum problem, we believe we have a refreshment opportunity. Going forward, we will look at our gum and mints business as one and extend our mint brands like Halls in gum and our gum brands like Stride and Hollywood in mints.
By doing so, we will capture a bigger share of the refreshment segment. In several of our emerging markets like Mexico, Brazil, and China, gum provides critical mass. It is one of our bigger categories and growing. We will invest in these markets to keep the growth momentum. In the rest of the markets, we will manage the business with selective investment, innovation, and renovation while driving our overall refreshment strategy. By doing all this, we expect to see a stabilization of our gum business. I've taken you through our consumer-centric growth approach, we see an additional driver of growth in M&A. M&A will look to expand our scale in high growth geographies. As an example of how we see this working, I would refer to the Kinh Do snack business in Vietnam, which we acquired in 2015.
On top of further development of the Kinh Do line of products, it also has allowed us for faster development of our global brands and a stronger presence in Southeast Asia. The second priority in M&A is to obtain access to higher growth snacking adjacencies. An example is the recent acquisitions of Tate's Bake Shop, which made us enter the fast-growing premium cookie segment. We also continue to see opportunities to add new business capabilities in our core snacking categories, like for instance, Enjoy Life, which gives us a whole range of allergen-free snacks. In order to fund future acquisitions, we will continue to evaluate our portfolio so we are deploying capital in the most effective way possible. This means we may divest certain non-core assets, we are in no hurry. If we do something, we will do it in a way that makes financial and strategic sense.
Moving on to the second pillar of our strategic plan, which is aimed at giving us the firepower to invest. Operating excellence covers four classical areas. First, we will continue, of course, the three levers of productivity that have boosted our margins in the last five years: supply chain optimization, zero-based budgeting, and shared services. While we have made huge progress, we believe there are still some opportunities. You'll hear Luca talk more about our next wave of productivity. The second area is to improve our sales execution in order to get better returns and drive out costs. An example would be Ritz Crisp & Thins. As I said, the product has been highly successful because it's a new taste experience within the Ritz brand. We have been so successful in driving consumption that we've had many shortages, which have led to missed sales and margin.
We have more examples like this, giving us the opportunity to drive sales and profit by improving everyday execution. The third area is marketing excellence. This is about achieving best-in-class marketing and making disciplined investments to increase our ROI. Finally, we continue to strive for a world-class supply chain. This means focusing on continuous improvement. In a company of our size, not everything functions as planned, and we can still take out a lot of waste and cost leakage. We are looking for daily improvement in execution in every plant, every store, and every office. The newer area of operational improvement is digitalization. It includes, of course, optimization of our supply chain operations, achieving omni-channel excellence, or delivering consumer-centric digital marketing.
For example, on the consumer-facing side, we are increasing our use of new technology, such as social listening and advanced analytics, to better understand the consumer's needs and react faster on emerging needs. As an example, in our supply chains operations side, we will boost the use of advanced automation, artificial intelligence, and 3D printing to reduce our time to market, reduce our cost, or personalize our products. Moving on to our final strategic priority, creating a winning growth culture. Our consumer-centric growth and our operational excellence can only work if we implement it successfully around the world. This might sound obvious, but over the past several years, due to the margin agenda, we were focused on productivity and cost versus top-line growth. In order to make our growth-driven strategy a success, we are fundamentally changing our way of working to provoke a shift in mindset and behaviors.
In order to react faster to the marketplace, we will give our local country teams more autonomy to drive their commercial and innovation agenda, and as they are closer to the needs and desires of our consumers. To truly put the local consumer at the center of our decisions, we'll go from a centrally led to a locally driven company. This means that our central capabilities need to be in service of our local markets. Also, to make sure that our local teams can be fast and responsive, we will reduce complexity and overlap in our organization by eliminating non-value-added and legacy processes. Okay, Siri, let me explain it again. We are also changing our innovation approach, switching to fast test and learn, and then scale fast versus an immediate big launch. This will lead to more projects coming to market faster.
We also, of course, have to invest in the development of new skills and capabilities of our teams. To be successful in activating this growth potential, we must give all our talented employees the right incentives. We are creating a reward structure that is fully aligned on our company growth objectives. As a summary, we expect that our new strategy, underpinned by those three key priorities, will accelerate revenue growth to 3%+ per year. That will enable high single-digit adjusted EPS growth. This is clearly a shift in our value creation model. For the past five years, our cost focus has lifted the company to the next level. We can now build on this and drive a more sustainable, higher-quality earnings growth approach.
Let me turn the stage now over to our regional presidents, starting with Hubert Weber from our European region, who will provide details on how these plans will be implemented at the regional level. After the four regional presidents present, we will take a quick break, as Shep indicated, and when we come back, we will hold our first Q&A session. The regional presidents will be joined by Tim Cofer, our Chief Growth Officer, who has been instrumental in developing our growth strategies. Last but not least, our CFO, Luca, will outline how these new strategies translate into a new financial algorithm. Of course, we will close off today with a lengthy Q&A session with me and Luca. Over to you, Hubert.
Break glass.
Thank you very much for the introduction, Dirk, and good morning. I'm excited to be here and to talk about our great European business today. In 30 years at what is today Mondelez International, I have had the opportunity to work all over Europe and in North America. In that time, I have held various marketing, sales, and general management positions, and for the past more than five years, I've had the privilege to lead our passionate European team. Let's start with an overview of today's business. Europe is a powerhouse of Mondelez International. We are the number one in snacking, and we have market-leading positions in both chocolate and biscuits. We've got scale in the major markets, and we have a sizable presence both in developed and emerging markets like Russia and Central Europe. Overall, we sell in more than 50 countries. Our success is built on strong foundations.
We've got talented people, a portfolio of iconic brands, and a very effective value chain. Let's look more closely at the portfolio, which I'm so proud of. We have some of the strongest brands in the market. What's important here is the combination of powerful global brands and our iconic local brands. This mix really enforces our market position. Brands like LU or Côte d'Or each have over 100 years of heritage and a strong emotional bond to local consumers in their respective countries. As highlighted by Dirk, our portfolio gives us unique opportunities. First of all, our local biscuit brands have a clear right to win in wellbeing. The brands come from a tradition of bakeries. They carry the promise of an inherently natural and authentic product.
We have built on this by offering more gluten-free, reduced saturated fat, and sugar-free options in our local biscuit ranges, which you can try outside. We're also dialing up sustainability. Our Harmony Wheat sustainability program, for instance, began in France with LU and is now being scaled across our portfolio. You can see more evidence of the power of our local brands with chocolate. Brands like Marabou and Freia in Sweden and Norway or Côte d'Or in the Benelux countries represent the taste of the nation, just like Milka in markets like Germany and Austria and Cadbury in the U.K. and Ireland. Consumers grew up with these brands, and they trust them. This allows us to enter new occasions with a taste we know they'll love. Great examples of this are adult gifting and pralines or choco-bakery, where we've leveraged the taste of chocolate brands across entirely different categories.
Speaking of choco-bakery, this is a good proof point of how we are living the test, learn, scale model in Europe that Dirk referenced. We are developing ideas in one market and then rapidly deploying them elsewhere. For instance, with our range of Milka and Cadbury soft cakes and biscuits. They have been phenomenally successful across many European markets, and they continue to grow. We've built the business to over half a billion dollars in revenue in just 5 years. Turning to our financials, let me first give you a little context. Over the past few years, Mondelēz Europe has undergone significant transformation. In 2015, we merged our coffee business with D.E Master Blenders to create JDE, and in 2016, we sold our French candy portfolio. In total, we have divested over 16 factories. We've also restructured our sales divisions and implemented the Global Business Services model.
It's fair to say this heavy agenda distracted us at times from focusing on top-line growth, but it yielded a significant improvement in our margins to industry-leading levels. That allowed us to reinvest behind our brands, which you see reflected in the top-line growth we have achieved. I'm pleased to say this growth is volume-driven. We've also built capabilities. We've invested $75 million in our chocolate factory in Bournville, U.K., and a further $200 million to build Europe's biggest biscuit factory in Opava, Czech Republic. We've got further potential to expand at a greenfield site in Russia. Let's look forward now and consider the market trends. Here we can see that snacking in Europe has tremendous potential for further growth. Mondelez International is well-positioned in two ways. In our core categories of chocolate and biscuits and candy, we expect robust growth in absolute dollar terms over this time horizon.
We can capture growth in adjacent categories through our licensing business, where we work with strong external partners to leverage iconic brands in categories like ice cream and yogurt. While the European region is very diverse, there are some common themes. Growth looks healthy across Europe's economies, particularly in certain Eastern European and Central European countries. With household incomes rising, consumers are exploring new premium experiences, such as gifting, and they're looking for more authentic and artisanal products that meet their expectations for wellbeing. In retail, the evolution continues to be rapid. Online consumers increasingly expect an always-on shopping experience, we see that proximity and quick delivery models are becoming more the norm. Finally, in terms of buying patterns, European consumers continue to look for value while also pursuing more premium experiences. This bifurcation will be very relevant in the future.
To give you a better understanding of what to expect, let's turn now to our growth plans. We've got a great model in place in Europe, which gives us a strong platform for future growth. In both emerging and developed markets, we are operating at scale. This gives us huge opportunities to expand both our offering and our distribution in order to grow further. Because of our supply chain extensive brand portfolio, we are able to leverage brands across categories and to leverage platforms across multiple geographies with relative ease. To showcase the potential, I want to cover three markets in particular, Russia, Germany, and the United Kingdom. Russia is a sizable market for Mondelez International. We are the number one in chocolate and in biscuits, thanks to a combination of local brands like Jubilee and Alpen Gold, together with Milka, Barni, and Oreo.
We have a very competitive local network with strong positions in discounters, modern trade, and traditional trade. We are well-positioned to capitalize on the double-digit revenue growth, share, and profit growth we have achieved. Let me show you how. One pillar of growth is innovation. We'll benefit in Russia from innovations already tested and launched in other markets, like Milka Darkmilk as well as choco-bakery. Growth is also well-supported by our core portfolio. On the retail side, discounters are growing very strongly, we are well-represented in this space and growing strongly with them. Finally, it's obvious, Russia is a large country, and there is plenty of terrain still to explore. Mid-sized cities, east of the Urals offer wide space for us to further exploit. What's the takeaway? Russia is a great opportunity for us.
It's growing at double-digit rates, we have a clear path towards increasing our leadership in snacking. Let me turn to Germany. This is a great business. Germany is Europe's leading chocolate market, second only to the U.S. globally. We are number one in biscuits and chocolate tablets, with an ambition to grow in other parts of the chocolate and biscuit categories. We've performed very well here in recent years. We've grown top line and restaged our profitability, giving us the space to invest even more. Germany is a great example of how we've transformed our portfolio. Let me show you how. Looking back, our portfolio was effectively Milka tablets plus Jacobs Coffee. Fast-forward to today, we have a much broader base. At the heart of everything is Milka. Cookies, brownies, and break bars are all thriving.
We've grown our biscuit business from zero to market leadership in 10 years, and we've made significant inroads in seasonals. As a result, Milka Germany revenues have grown mid-single digits in the 2015 to 2017 period. We are responding to consumer demand for the brand to be truly sustainable. We are dialing up the brand's Alpine milk credentials, and we are going to source Milka's cocoa needs through our sustainable Cocoa Life program, which already supplies a large part of our chocolate portfolio. All of this has been achieved at a substantial margin. I'm so proud of this result. The fuel we are creating will be invested behind our brands to help us accelerate growth and expand our share of snacking. We have exciting plans on innovation. In biscuits, we want to reinforce our leadership position with innovation.
We are looking at the sweet treat space with Joyfills, for example, and savory munching with TUC Baked Bites. In chocolate, we'll expand into the dark segment, relevant as the population ages, as well as in parents to kids and adult gifting. In terms of channel expansion, we are well-placed. We've got a lot of capabilities with hard discounters in Germany, which will serve us well as this channel continues to grow in the future. In summary, Germany is an exciting market. Our strong brand portfolio gives us further potential to expand into new segments. Finally, let's look at the U.K., the home of Cadbury. We lead the sizable snacking market, and we've got the best possible brands. We have done a great job in recent years to maximize our potential. This is a profitable, cash-generating market and is run efficiently for growth.
We have the best sales and marketing capabilities in the industry. An area I'm particularly proud of is our success in U.K. biscuits. We've built a strong pillar here to complement our position of strength in chocolate. A big driver was the reacquisition of the Cadbury's biscuit license in the U.K. from the Burton's Biscuit Company in 2016. Since then, we have continued to expand our offering, both in regular biscuit formats, but also in Cadbury-branded choco-bakery offerings. Our results have been impressive. We've significantly grown the business in less than five years from around $170 million in 2013 to an estimated $300 million in net revenues by the end of this year.
We see potential to further expand our number one position in snacking with more offerings in choco-bakery, treat, and parents to kids, as well as by adding more well-being options like lower sugar versions of our popular brands. To win in the U.K., we'll continue to differentiate in how we show up with our brands in store. In a crowded and mature market, we know we need to drive physical and mental availability in order to continue to win. We're doubling down on in-store and digital activations that entice consumers. Our Easter account was very successful, as has been our Premier League soccer partnership and activation. We're also seeking ways to grow our categories with our retail partners. In the discount channel, for instance, we are increasing our offering of low price options, while away from home, we are looking to position our products more towards the convenience shopper.
Finally, in e-commerce, we are seeing great results from our direct-to-consumer gifting channel. Overall, we feel great about the U.K. and the leadership positions we have in chocolate and increasingly in biscuits. Our powerful activation plan and best-in-class execution give us a lot of confidence for the future. In summary, we believe Europe has significant growth potential. This is driven by our proven portfolio of global and local iconic brands and platforms. It builds off our market's leading positions in chocolate and biscuits in key geographies. We'll focus on those opportunities with the highest absolute dollar growth potential. We'll leverage the scale and distribution opportunities across our geographies, and we'll use our business model to continue to drive efficiency and profitability.
Given the tremendous opportunities we see and the diversity of our region, we are well-positioned to grow high single digits in emerging markets and low single digits in developed markets. We are excited about the potential to further grow our business and our market share in the years to come, powered by our superior brands and our passionate European team. Thank you very much, and over to you, Glen.
Well, thank you, Hubert, and good morning. I'm Glen Walter, and I'm proud to be the newest member of the Mondelez team. I spent the last 20 years working across The Coca-Cola Company and InBev and their organizations across the U.S., Canada, and most recently, China. I'm very pleased to be with you today to share our plans for the overall North American business. This vision is simple. We have a goal of sustainable, profitable growth ahead of the overall snacking category. We'll accomplish this by focusing our business on the 3 pillars you heard earlier from Dirk. Consumer-centric growth, operational excellence in all that we do, and building a winning culture.
I'll lay out what we've learned through the strategic process and in my first nine months, then we'll talk in detail about how this informs the plans we're not only moving out on today, but into the future. As you can see, the vast majority of our North American business is concentrated in the biscuit category in the U.S. This is not only a strength you'll hear me build on, but it's obviously an opportunity as we look to the future. As you look at our historical performance, despite a challenging environment, we realized positive margin expansion of 450 basis points since 2013. This has been enabled by our disciplined productivity capability. As we look to the future, our strategy leverages ongoing progress in this area, but combined more so with strength and top-line growth.
As I mentioned, I've been with Mondelez for nine months, and during this time, I've spent a great deal of effort digging into the business, and I'd like to share with you some of those insights. These not only inform the actions we're taking today, but they're deeply embedded in the strategic plan I'll outline this morning. In North America, we have several important competitive advantages. First is our incredible portfolio of brands. These are the best brands in their categories. They're iconic, and they're loved by our consumers. In the biscuit category, we have a 44% market share and have the number 1 position with brands that have become synonymous with snacking, like Oreo, Ritz, Triscuit, and Chips Ahoy! Simply put, across North America, in the Mondelez biscuit category, nearly 90% of households have a Mondelez biscuit.
While we're incredibly proud of this accomplishment, we remain constructively discontent, building upon these strengths as we renovate and innovate our portfolio to meet the current and future snacking needs of our consumers. Secondly, the future success of our brands is closely tied to the strength of our distribution network and the relationships we have with our customers. We see opportunity for both vertical and horizontal growth across traditional food and mass customers, as well as smaller format retailers and e-commerce platforms where we're underrepresented today. Admittedly, we have work to do here. We have to be better at accelerating growth in newer channels through expanded price pack architecture and improved in-outlet execution. I'll get into more detail on these in a moment, but this is something we're actively pursuing today.
As I further evaluate the business, our U.S. supply chain and customer service levels represent our greatest area of opportunity. Over the past five years, we've made meaningful investments in our supply chain infrastructure. As an example, our bakery in Salinas, Mexico is the most modern and efficient in the world. However, it does not exemplify or represent the balance of our U.S. supply chain. In many cases, we're operating with aged assets that are not properly enabled with technology. When you combine this with the growth we're realizing today on brands like Oreo, Ritz, and Triscuit, it places a great deal of pressure on our ability to manufacture and distribute at the levels we and our customers expect. World-class customer service and supply chain Dirk spoke of, and we'll do this at an advantage cost.
Today, despite that urgency, this is a process, and it will take time. Third, the consumer environment is going through dramatic change. Our consumers have high expectations of the brands they buy from. They want products without artificial ingredients. They want their products to be available wherever they choose to shop, and they want a wide variety of options, whether it's an incredible value, an indulgent experience, or new brands that speak directly to their specific needs in the right packages, in the right place. Finally, how they engage with their preferred brands is becoming increasingly enabled by technology. Candidly, in the past, we've not done enough to take advantage of this shift, and it's challenged our top-line growth. I believe that today we are taking the necessary steps to capitalize on these changes in consumer behavior.
After nine months with the organization, I see a business with some very strong assets and marketing capability, combined with some very challenging legacy operational issues that we will address. Consequently, we've had difficulty delivering consistent results over time. I'm confident that the plans we're executing today will not only address this at their core but will allow a more stable environment going forward. With this backdrop, let me take you through how we're going to drive sustainable, profitable growth in North America. At the heart of our consumer-centric growth pillar are three key areas of focus, building strong brands through our demand spaces capability, winning where consumers are buying, utilizing our advantage route to market and DSD system, and accelerating our digital marketing capability.
We anchor this with operational excellence in all that we do, addressing the near-term challenges I've mentioned across the U.S. supply chain, as well as positioning the business for profitable growth in the future. Lastly, we sustain and repeat this success through a local-first, growth-oriented winning culture. Our iconic brands are the growth engine of the company, and we have clear strategies in place to improve their relevance, to differentiate them from our competition, and to invest in the highest growth opportunities. To do this, we'll focus each brand on clearly defined demand spaces that take a more holistic view of how consumers snack and what drives their purchase decisions. As part of this brand work, we're modernizing our marketing playbook. We're increasing the investments in our brands, and we're building next-generation marketing capabilities in order to reach our more digitally enabled consumers.
We've got some great examples of this work. I'll start with the Oreo brand. Oreo remains incredibly relevant across key demographics and is one of the most favored brands among young consumers. Even as a market leader, Oreo is finding new ways to connect and new consumers to connect with. Our new marketing campaigns generate excitement by creating memorable experiences and shareable moments. For example, on August 13th, which was National Left-Handers Day, we launched a campaign with special left-handed Oreo packs that open from right to left, which is fantastic for you lefties. These packs were on sale at lefthandedoreo.com, generating 70 million impressions and 1.6 million video views. More importantly, we built relevant, playful, emotional connections with our consumers that translate into profitable growth back on the base brand.
We've also successfully stretched the brand across new consumer need states, creating the delicious fudge-covered Oreo Thins Bites, perfect for indulgent munching, snacking, and sharing. The only challenge we're currently facing is delivering on the sharing part. Go and see for yourself. You can pick it up on the display outside, open it up, and see how many you share. Because we understand what our consumers want, when they want it, and how they want to purchase, innovations like these, along with our highly successful licensing partnerships, are some of the key drivers behind the profitable growth we're experiencing today. We're also seeing similar success in the iconic Ritz brand. We're expanding our price pack architecture across channels and snacking occasions, as well as stretching the brand into Ritz Crisp & Thins, delivering on a delicious savory snack with half the fat of traditional chips.
As you heard from Dirk, this product has been very successful, far exceeding our initial projections, satisfying existing Ritz consumers and attracting new households, resulting in both revenue and market share growth. With Sour Patch Kids, we're focused on the fastest-growing demographics. For instance, Sour Patch over-indexes with Hispanic and Gen Z consumers. We started shifting our product mix and where we sell our products to capture these consumers more effectively. A great example of this is our Sour Patch Kids program with 7-Eleven, where we created a limited edition Sour Patch Watermelon Slurpee. This innovation was very successful for 7-Eleven and Sour Patch Kids, driving profitable sales for both of our businesses. In some cases, to expand into profitable adjacencies, we'll accelerate our M&A activity where we can exploit growth.
Tate's Bake Shop, as you saw outside, is a great example of this, providing entry into the fast-growing premium cookie segment with an authentic brand that consumers love. I think we'd all agree, these are delicious cookies. Today, while we operate Tate's separately, we're accelerating areas of collaboration between our two teams where we can add value. Examples of this are leveraging our DSD system, as we're now testing and learning to expand distribution and accelerate growth on the core brand, as well as leveraging additional capabilities across our marketing and procurement teams. Finally, we're really excited at the wide range of possibilities within the Tate's Bake Shop platform to drive a creative innovation in the future. In similar fashion, we've seen strong growth as we build the Enjoy Life brand.
With an increasing number of consumers participating in specialty diets, the Enjoy Life brand provides products that are free from gluten, free from allergens, and manufactured with all-natural non-GMO ingredients without compromising on taste or experience. Year on year, we're realizing double-digit consumption growth across retail, e-commerce, as well as our direct-to-consumer platform. Building on this, we know that healthful ingredients, ethical sourcing, and the sustainable manufacturing of our products is crucial to ensuring that our brands remain trusted with our consumers. A good example of this is the work we've been doing on Triscuit. This 100-plus-year-old brand has recently been in decline.
Earlier this year, we revamped our consumer communication to focus on the three simple truths behind Triscuit, a brand with three simple ingredients, wheat, oil, and salt, along with the three Michigan families that grow that wheat, delivering a delicious, wholesome snack that consumers can enjoy with their favorite toppings or toppingless, as we say in our current media campaign. Early results have been very encouraging. We're only just beginning. Our work on belVita is another great example of building strong, relevant brands that meet the needs of our consumers today. A wide range of consumers enjoy the four-hour-plus energy delivery from belVita across a diverse range of products. Whether it's traditional biscuits, sandwiches, munching bites, or now the test-and-learn innovation we're doing with energy bars, belVita continues to connect and deliver for consumers. This emphasis on well-being extends to our core brands as we renovate the portfolio.
We've made progress on brands like Oreo using real cocoa, as well as renovating brands like Wheat Thins and Good Thins, and we'll continue to drive free from high-fructose corn syrup and artificial colors and additives across our brands. Let's dive into the gum business. This is clearly an area where we've had challenges. While some of this is reflected within the category, our issues have been more amplified. What have been our learnings? Over the years, we've had inconsistent marketing communication. We've been late to move on price pack architecture opportunities, and we've not delivered on what you heard from Dirk, strong refreshment innovation. Over the past nine months, we've gone back to basics with a clear understanding of the consumer needs, invigorating the equity we've got within Trident and Dentyne, and we've developed a clear plan to stabilize the gum business.
We know delivering on refreshment and bold flavor innovation matters to consumers. Informed by this, we've launched an effective consumer communication campaign across bold refreshment and flavor innovation with Trident Vibes. This product's only been in the market for a few months, but the early results are promising. Our stabilization plan invests in the packaging formats consumers want across both bottles and vials, and it explores stretching our core brands into refreshing mints. We've got a long way to go, prudently investing in the core with consistent, relevant consumer communication and supporting innovation will bring this business back to stability, and the early signs are moving in this direction. As I mentioned earlier, our distribution model is an advantage for our business, and we're dedicated to winning, no matter where our consumers choose to shop.
Consumers expect us to provide them with the products they want when they want them with exceptional support and excellent in-store execution. Our route to market and DSD system are focused across three key areas. First is expanding our channels of distribution. Specifically, we have a small format strategy that we're currently implementing across convenience, value, club, and drugstore channels to serve these retailers and consumers in a way that drive impulse sales through small format displays, occasion-appropriate price pack architecture, and flawless in-outlet execution. We activated this opportunity earlier this year, we're already seeing early stages of success. Secondly, we'll continue to innovate and evolve our route-to-market capabilities. Whether this is a warehouse model, a partner model, or DSD, we will always scrutinize the optimal routes to market for our products. Investing in our DSD execution capabilities will be important to improving this route-to-market strategy.
When I talk about DSD execution, it's really five key activities when you break down the value chain. First, you start with order generation, servicing and merchandising, logistics, warehousing, and finally, what we think is the most strategic, account development. We're disrupting ourselves across these five areas driving an advantage DSD system as we expand the reach of our brands into new channels and consumer snacking occasions. Examples as to how we're doing this today include the better utilization of technology to generate orders. This creates more time to focus on account development, in some cases, allows us to redeploy resources into emerging channels. We're testing and learning with partnerships like sharing economy platforms that match qualified people with specific jobs across merchandising and warehouse functions.
Engaging in partnerships like this allow us to continue to be attractive to an ever-changing labor market model while we drive improved levels of service to our customers at a competitive cost. Third, we're exploiting our advantage DSD execution capability across the entire North American portfolio. As we speak, we're leveraging our DSD system to increase distribution with Plentils, another fantastic savory snack on display. I really encourage you to try that. It's a lentil-based chip from our Enjoy Life family. This fall, our DSD team will help drive additional displays and speed to market with Halls as we execute the cough and cold season. Simply put, our DSD capability has clearly created separation between us and our main competitors across the key growth metrics of consumption, market share, distribution, and display execution.
Our DSD capability is a key ingredient behind the growth we're realizing on brands like Oreo, Ritz, and Triscuit. Nothing beats the powerful combination when your air war and ground war are firing on all cylinders. This is exactly what we're doing today, and we will build upon in the future. Today, consumer shopping behavior transcends the physical and digital world along their snacking path to purchase. We'll continue to improve the way we market by linking our digital, our traditional, and our in-store marketing to ensure that we're in reach and a click away from their snacking desires. While we have a long way to go, today on Amazon, Oreo, Trident, and Halls are the number 1 brands in their respective categories across cookies, gum, and cough drops. One example of our integrated marketing capabilities that I absolutely love was our Olympic partnership.
We created can't-miss moments across TV, social media, and in-store displays throughout the Winter Olympics. We did so across three of our strongest brands, Oreo, Ritz, and Chips Ahoy! The results from this integrated campaign drove strong sales and market share growth as we increased household penetration and purchase frequency on the brands. All of this growth work requires us to drive operational excellence in everything we do. This goes beyond just cost and productivity improvements to include a focus on sales execution and best-in-class marketing securely anchored in a disciplined portfolio investment strategy. As I mentioned earlier, I can clearly see competitive advantages across our biscuit portfolio, within our marketing capabilities, and across our DSD system. In order to deliver sustainable results over time, we must and will address the operational issues we face today in our U.S. supply chain.
We must accelerate the reach of our brands into smaller format channels, and we've got to stabilize our gum business, and this is our focus. The evolution of our winning culture ensures we can sustain and repeat our success. The changes we're making to our organization ensure we're aligned with the common goal of accelerating top-line growth executed through a more nimble, locally empowered team. In closing, while we have much work to do, I'm really excited about the opportunities ahead. We have a clear goal to return North America to sustainable, profitable growth, and we're already seeing some of the early progress on the journey. I'm confident that we have the structural advantages combined with the clear strategies that position us to win and outperform our competition. This is a great time to be in the snacking business in North America. Thank you for the time this morning.
With that, I'll turn things over to Alejandro.
Thank you, Glen. Good morning. Or should I say [Foreign language]. If you can't tell already, I am proudly representing Latin America region here today. After having a number of roles in the company for over the past 15 years, from running our Brazilian business to our global category biscuits team, I'm leading this region for the past 20 months, and it's truly a long-term dream of mine. Why? Because of the potential Latin America has to drive profitable growth for this company. For the past year and a half, we built a strong foundation with a significant step up in adjusted operating income margin. Today, we are poised to invest in growth with a consumer-centric mindset at the heart of everything we do.
Let me start with an external view. I will share some perspective on our current business and close with the most important part, our plans to solidify Latin America as a growth engine for this company. Let's start with the big picture. Latin America represents 14% of the company's net revenue. We are a premier leader in snacking with a balanced portfolio across all categories. We have a phenomenal stable of brands to deliver on the promise of snacking made right. We proudly craft brands that people love. Oreo, Milka, Tang, Trident, and Philadelphia, and local jewels such as Club Social biscuits and chocolate with Lacta, just to name a few. Great brands that hold number 1 or 2 positions in most markets, which in turn translate into an average market share of 30%. Our business spans 22 countries and 15,000 employees.
Brazil is a powerhouse that represents almost half of our revenue. Markets like Mexico, Colombia, and Peru offer sound fundamentals, positive consumer sentiment, and bullish outlooks, all with significant growth potential. Consider this: Mexico has the 10th largest population in the world and a thriving snacks market. Colombia's and Argentina's populations are larger than Spain and Canada, which certainly represents an opportunity for sizable growth for us. Additionally, we've proven that we can consistently win in some of the most challenging economic and political environments. The recent example is a transportation strike in Brazil, which we overcame in a matter of weeks. We will continue to manage and adapt to an ever-changing environment. Now coming to our performance. As Dirk mentioned, snacks consumption is highly correlated with GDP. Latin America is no exception.
As we saw some of our largest economies, such as Brazil or Argentina, slow down over the past few years, we had to transform our business to come out of this economic cycle strong. We did it. As you can see, we added 480 basis points to our adjusted operating income margin, achieving top tier in our peer group. One of the primary drivers was the restructuring of our manufacturing footprint by reducing the number of plants by half and amassing formidable scale, now in state-of-the-art facilities. Tight cost management and low overheads are now an inherent part of our DNA. This is giving us the ability to invest behind our brands as economic growth accelerates in the next few years.
This margin work and our track record of operational excellence, combined with the strengthening of our economies, put us in a good position as we pivot to a better balance between top and bottom-line growth. Growth, like everything, starts with the consumer. As you heard from my colleagues, consumers are demanding more from us. Let's look at what this means for Latin America. We see four trends. I briefly touch on two of them. First, given the macro backdrop, consumers are seeking value and remain highly sensitive to price due to limited purchasing power. Price points, pack sizes, and emotional connection to brands matter today more than ever. Next, consumers are changing the way they shop. Cash and carry and discounters flourished amid the recession, and now they are growing faster than supermarkets. Non-grocery channels like pharmacies are driving significant growth in snacks.
Understanding, and most importantly, acting on this trend is key to driving our consumer-centric agenda going forward. Let's see how these trends translate into growth opportunities for us. Snacks are the place to be in Latin America. A $70 billion market. Our categories are growing mid-single digits, driven primarily by pricing. The expected acceleration of GDP across most markets will, in turn, enable category growth to continue at 4%-5%, but with a higher contribution of volume growth to the mix. In fact, we project snacking to grow $13 billion over the next four years, with roughly half coming from our categories. Not all growth is created equal. We are making absolute growth our obsession. If a category has high % growth but absolute growth is not compelling, it is not a priority for us.
Absolute growth drives shareholder value, we are aligning our employee incentives to drive this culture in our people. Let's now discuss our five-point plan to grow share and top line. First, as you heard from Dirk, we are building a local-first culture that unleashes the power of both global and local brands with a strong value equation that balances pricing and innovation. A good example is Club Social Crostini, a brand developed by our Brazilian team featuring a thinner, crispy texture and locally relevant ingredients like parsley, sun-dried tomato, and fine herbs. Second, channel expansion. We have a commanding presence in traditional trade and supermarkets, covering more than 2.4 million stores across the region. We will use our new packaging flexibility built during our supply chain transformation to expand into under-penetrated channels.
For example, cash and carry is growing three to four times faster than other channels, and pharmacies mean 70,000 new point of sale for us in Brazil and 40,000 in Mexico. Third, geographic white spaces. Did you know there is a $40 billion snacks market in Latin America outside Brazil? Let me repeat it, $40 billion. That certainly equates to growth potential for us. We will aggressively invest in growth in places like Mexico, Argentina, and Colombia. Let's talk about our latest white space move in a moment. Fourth, innovation. Innovation will play an important role as we expand our brands into adjacent segments, which we will cover as we discuss our key markets.
Last but not least, we will use our price pack architecture to deliver a wider range of price points for multiple snacking occasions and also to address the needs of those seeking lower price points. Those are the strategies for the region. This, coupled with further empowerment to the markets to drive operational excellence, will fuel share growth. Let's take a closer look at a couple of our key markets, Brazil and Mexico. Let me start with Brazil, a market that still represents significant opportunity for us. This is our largest emerging market across the company. It lays claim to some of the most iconic brands with a unique combination of global franchises and precious local jewels. For many years, this powerhouse was the main driver of expansion in the region, and despite the challenges that the economy presents, it continues to hold great potential.
Let me tell you, we are ready to seize the moment when it comes. Let's take a look at our growth playbook for Brazil. First, we will revitalize our top four brands, two local brands, Lacta and Club Social, and two global brands, Trident and Tang. We'll do so through sharper positioning and advertising, a strong innovation and marketing activation, all based on demand spaces. Increased A&C will be a testament to our confidence in this area. Second, we will use price pack architecture to deliver a wider range of price points to better suit different budgets. Third, we will drive penetration of brands in infancy stages, like Oreo and 5 Star, both introduced just three to four years ago.
Four, as part of our innovation pipeline, we will develop belVita as our wellbeing snacking platform and tap into adjacent segments like choco-bakery and Mints with some of our most iconic brands. Importantly, you will see us doing more testing and learning going forward. Fifth, we will respond to the channel shift through a go-to-market expansion and a built-for-purpose portfolio. As said, value channels such as cash and carry and non-grocery formats like pharmacies are our priority. Finally and importantly, we will manage non-core brands for absolute profit growth and to leverage installed capacity in our plants. There is no doubt that Brazil is still in recovery, but we have a strong foundation, a phenomenal portfolio, a leading route to market, a competitive supply chain, and overall strong margins and cash flow.
All this, paired with our consumer-centric playbook, gives me the confidence that we have all it takes to win in Brazil. Let's take a look at one more market, Mexico, which is key to our growth in Latin America. While currently small business for Mondelez with net revenues of roughly $500 million, Mexico represents an exciting opportunity for this company. Mexico is one of the largest snacks markets in the world. This $15 billion market should grow mid-single digits over the next few years, with Mondelez categories contributing over 40% to that growth. We are currently subscale in Mexico, this means opportunity for us. We have plenty of runway for expansion, building on 13 quarters of consecutive mid-single digit growth. We are the market leader in gum, candy, and flavored beverages, but we are small in biscuits with circa 3% share.
Expanding Mexico starts by leveraging our strengths. We have a robust manufacturing network with largest gum and candy plants globally in Puebla and the largest in biscuits with Salinas, Monterrey. We have a strong route to market with almost 300,000 stores served directly, we have leadership in the hot zone, which is a competitive edge with one-third share of this coveted real estate. Our plans to win in Mexico includes the following. First, we will drive growth in biscuits and chocolates, harnessing the power of Oreo and our strength in the hot zone. Second, we will strengthen our gum offering with investments in quality, marketing, and price pack architecture. Third, we will drive the recently launched Sour Patch Kids brand and take Trident and Clorets into adjacent segments like mints, expanding our refreshment repertoire.
Fourth, we will focus on mom-and-pop and convenience stores with an expanding in-push portfolio, as well as on non-grocery channels like pharmacies. Our most exciting news is the latest white space expansion. Hot off the presses, we are launching Oreo chocolate in Mexico. For the first time, we will play in this attractive $1 billion market that is expected to grow over 15% annually in the coming years. Just a few weeks ago at Confitexpo, the premier trade event in Mexico, we launched Oreo chocolate in four formats. This whole move was applauded by our customers and by the media, it's delicious. I encourage you to try them outside. This week, we are launching Oreo chocolate in Colombia and Costa Rica. Two additional examples of our expansion plans in action.
With a solid foundation, a track record of growth, and robust plans in place, I am confident that Mexico will become an even bigger contributor to Latin America and to Mondelez International. To wrap up, we are well-positioned for accelerated growth. Gaining market share in snacks is our priority. We have a very solid starting point. Top-tier margins, a robust portfolio, a strong route to market, and a much leaner and efficient supply chain. We are building an agile, local-first culture to unleash our portfolio with an absolute profit growth mindset, strong innovation, and solid commercial execution. While Brazil remains a key market, it is not our only growth opportunity. As you saw with the chocolate example for Mexico. I said leveraging our packaging flexibility will play a critical role as we unlock white space opportunities in categories and channels.
In sum, I am confident we have everything it takes to grow mid-single digits and to become a powerful consumer-centric growth engine for Mondelez International. I hope that after hearing more about our vision, you feel the same. Now, I pass it to Maurizio. Gracias.
Thank you, Alejandro. Good morning, all. It is a real pleasure to talk to you today about our Asia-Pacific, Middle East, and Africa business. A very diverse region that we call AMIA. Before starting, let me introduce myself. As you might tell, I'm originally from Italy, but have lived and worked in many countries around the world in multiple roles across marketing, sales, general management, in all our categories, in developed and in emerging countries. I'm leading the AMIA region since 2016. I'm very passionate about our business, and I'm certain that by the end of this presentation, you will see the potential in front of us. Let me start by giving you a quick overview of AMIA today. My region represents 22% of the company's net revenue, or $5.7 billion. It is home to two-thirds of the world population, and we serve over 70 countries.
AMIA is very diverse, with many emerging markets, including two of the four BRIC countries, India and China, but also developed markets like Australia, New Zealand, and Japan. We are a leading snacking company in the region with leadership presence in many geographies. We are well-positioned to capture opportunities in growing economies and in the expanding snacking markets. On top, we have plenty of white spaces opportunities like biscuits in India or chocolate in Southeast Asia and Africa. White spaces that we could cover in both organic and inorganic ways. In summary, a region with tremendous potential. Let's look now at how the region is performing. Over the past years, we had solid performance despite market volatility and re-announced growth in the past few quarters. Yes, we have had our fair share of emerging market volatility, including macro challenges, currency devaluations, and country-specific factors like India demonetization.
We worked to improve our margin, to establish the right capabilities, and to set solid fundamentals to accelerate growth. We optimized our manufacturing footprint, created a more agile organization, redeployed and expanded our route to market in China, India, Southeast Asia, and Africa to better serve growing channels. In short, we have a solid base, good business momentum, and the right margin structure to invest further and to accelerate top-line growth. Let's look now to the expected snacking market and GDP growth in AMIA. We are well-positioned to capitalize on the strong emerging market dynamics, where GDP growth projections are the highest. Our footprint and leadership position are in markets like India, China, Southeast Asia, and Africa.
If you take a look at the snacking market by category on the right, you can see that we expect about $12 billion of growth in AMEA over the next four years. An opportunity which would become even bigger if we consider the packaged snacks framework. I'd like to discuss now how consumers and the world around us are rapidly changing. You heard us saying in every presentation that we are putting the consumers at the heart of everything we do, and AMEA is no exception. We are seeing fast-growing emerging market demographics driven by population increases and by the fact that our consumers will become more and more affluent. Consumers are shopping more online and in small formats, but traditional trade still remains important.
For example, in China, more than 15% of snacking purchases are made online. We continue to grow faster than the market as we developed special partnership programs with retailers. Another example is the growth we are seeing in both premium and value snacking in emerging markets. You will see us innovate at both ends of the spectrum, reaching many consumers with low unit price products and capturing more sophisticated consumers with premium offers. Let's move on now to the growth priorities. Let me explain what we are doing to capture the tremendous potential we have in my region. We will focus on igniting our brands. We will activate both global and local brands, leveraging demand-based methodology and our local innovation strength.
You will see us expand into fast-growing segments and in adjacencies across snacking like choco-bakery, cakes, and salty snacks to capture some of the potential of segments which we aren't playing in today. E-commerce is a big opportunity. We will continue to focus on driving impulse and growing our presence online across the region, building on our know-how and experience in countries like China. Finally, we will focus on expanding our footprint into markets that have high GDP growth and where we expect robust snacking growth. This includes continued route-to-market expansion in markets like China, India, and Southeast Asia, but also Africa, focusing not just on what is growing today, but looking ahead to see where growth will be tomorrow. I'd like to share one example to help you visualize our plans to accelerate growth through route-to-market expansion.
We aim to expand our coverage by 1.3 million points of sales, mainly in traditional trade across India, China, and Southeast Asia. This is roughly a 25% increase versus where we are today. While expanding our footprint, we will continue to drive costs down in our structure to help fund our investments and to fuel growth. Now, let's take a closer look at some of the key markets in AMEA, starting with India. India is one of our powerhouses, with close to $900 million in net revenue. We have an enviable position in chocolate with a 67% share growing. We have a solid position in beverages, with potential in biscuits white space, offering a significant runway of opportunities in the $20 billion packaged snacks market. We have strong momentum with double-digit growth at the top and bottom line, volume driven. We expand margins. We gain shares.
In summary, we are one of the best performing FMCG companies. We have invested in state-of-the-art manufacturing facilities, in multi-category capabilities, and expanded our market coverage in both urban and rural. From a macroeconomic perspective, the environment is stable and features high growth rates, given the increasing middle class and affluent population. We can capitalize on this tremendous growth potential by leveraging our strong brands, scale, and local expertise. With this snapshot in our minds, let's take a look at how we are building on our strong leadership position. We have clear programs to further accelerate India. Let me explain what you see here on the left. Within our brands, we will continue to invest in both the lower as well the upper part of the consumer pyramid, with multiple price points covering the entire population with our powerful portfolio of brands. Let me show you this.
This is an INR 5 piece of chocolate, or $0.07. This is an INR 10 piece of chocolate. These two represent more than half of the volume of chocolate that we sell in India. We offer this one, INR 150 or almost $2, more premium to the more sophisticated consumers. This is what we want to do and continue to build more across the categories. We are the preferred taste of the nation in chocolate, and with demand-based studies, we will expand in snacking. We have a proven track record on innovation, and we will continue to win with it. Lickables, for example, the spoonable chocolate for kids, is a big success. In less than two years, we have reached one-fourth of the kid segment, and we are now launching it across the region. It is also heat-resistant.
We will focus on winning where consumers are buying, investing to increase our coverage in urban and rural India. One illustration is our Visi-Cooler expansion. Small fridges to keep our chocolate fresh and visible to the consumer in traditional trade outlets. You can see one of them on the right of the slide, and those are now present in 100,000s of stores in India. Overall, we feel good about India growth prospects. We have a strong track record, and we still see opportunity to grow. Turning to China. In AMEA, China is our biggest emerging market, with approximately $1 billion in net revenue. The Chinese packaged snacks market is worth around $85 billion, a huge opportunity, and we are well-placed to win, being the market leader in biscuits and a solid number 2 in gum, only a few years after our market entry.
We recently launched into chocolate, a $2.5 billion market, despite low per capita consumption compared to developed markets. We have all the means to leverage our capabilities as a global chocolate leader. The consumer landscape in China is very interesting and dynamic, with continuous changes on how and where consumers eat. Guess what? We are on top of those changes. For example, the new generation of consumers are playing a more active role and are developing new habits. This new generation is led by sensitive, spend more for premium products, and buy more online. Well-being and local taste preferences are key consumer drivers. We will offer more Chinese option for different consumers across our portfolio. We are also growing our e-commerce business, given the digitally-serving nature of consumers. In fact, in the first half, our China e-commerce business far outpaced the market, with net revenue up 90%.
I'd like now to elaborate on how we are establishing a stronger multi-category position in China. First, we are more local, anticipating trends, innovating with speed, and with local taste preferences in mind. A great example is the recent launch of Oreo Wasabi and Oreo Spicy Chicken. On our first release online, we sold out in nine hours, and the concept has gone viral, as you probably heard and read here in U.S. as well. Another example is in wellbeing with a strong local brand, Pacific Biscuit, the brand that nationwide awareness and the right credential, simple, tasty, and made with real ingredients to be the leading brand in that space with strong and innovative programs to stay on trend and remain relevant with Chinese consumers. Our third component is to innovating packaged snacking. One example is the launch of LU in premium gifting.
Channel and route to market expansion. As digitalization is changing shopper behaviors, we want to be on the leading edge in leveraging data and accelerating online growth. We'll continue to partner with Alibaba and JD.com to grow ahead of our category by increasing our presence in online festival like Singles' Day and also investing in equity campaigns and innovation like our Oreo Music Box. Another example is our heavy investment in eB2B to expand our coverage in smaller cities and smaller stores to follow their rapid growth. Think of eB2B as something between a digital wholesaler and a distributor. In summary, China is a very attractive market for us, and we are clear on what we need to grow. Let's travel to Southeast Asia. Southeast Asia is core and strategic for us.
It is a sizable and profitable business established in a class cluster of countries of 600 million young consumers, growing in number and income, especially in Indonesia, Vietnam, and the Philippines. Think that Indonesia alone will have a population equivalent in size to the U.S. in the next years. The macroeconomics are strong, and the middle and affluent segments are driving the snacking market growth. We have scale, leading position in our categories, in key geographies, and we see tremendous growth potential in terms of both geographic and category-wide space, like chocolate, for example. We want to be the biggest snacking player, also leveraging inorganic opportunities like our Kinh Do acquisition in Vietnam in 2015. We are well-positioned for growth in Southeast Asia. Let me explain our plans to capture this rapidly growing market. First, invest across our brands, both global and local.
In Indonesia, for example, as we grow our traditional trade coverage, we will be investing in low unit price offerings that leverage our Oreo and local brand biscuit equities. You will see also us growing our Cosy, Jacob's, and AFC biscuits, great local favorites. We will continue to innovate locally, both in value and in premium. For example, in Vietnam, after the successful acquisition of Kinh Do. Our innovation team found a great opportunity to marry our 100-plus-year-old Oreo brand with a century-old mooncake tradition. The end result is our Oreo mooncake, a limited edition item for Vietnam's Mid-Autumn Festival. An innovation exported around the globe, including to China and the U.S. You will see continued route-to-market expansion in traditional trade and more formats. We also want to lead in the emerging e-commerce space, leveraging our experiences in other markets in AMEA.
In summary, another exciting and potential source of growth in my region. In conclusion, my goal was to give you the opportunity to feel what we live in AMEA. A very diverse region with solid fundamentals, profitable, and already accelerating growth. We have clear and focused programs to exploit the tremendous potential we have in this part of the world and to accelerate our growth to mid-single digit, with emerging markets growing faster than developed. We are well-placed for faster growth and success. Thank you for your attention. Now to Shep.
Let's go ahead and take a 20-minute break and come back at 10 after the hour. Again, I'd encourage you to go out and get a feel for the product portfolio and international flavor we've got out there right now. Again, 10 after the hour. All right. Let's go ahead and get started. We've got about half an hour here with Tim and the regional presidents to field Q&A. We'll have people run a mic, so just raise your hand. I'll call on you. If you could keep your hand up when I call on you, we'll get the mics to you as quickly as we can just so everybody can hear it, including those on the webcast.
One thing I would ask, we are going to have Luca up later to go through the financial overview, your detailed finance questions might be best placed in the second session. With that, let's go ahead and get started. Jason?
Thank you. Hello, gentlemen. Thank you all for your presentations earlier, kind of looking at each of your markets, this is a question for all the regional presidents. Alejandro gave his expectation of what he thought his business could perform in his region over medium term. Would it be possible for the other regional presidents to also give their expectations?
Yeah.
Sales growth, what do you think medium term is realistic?
Yeah. As I said that in the end, maybe my accent was strange. Mid-single digits for the region with the developing countries growing faster than developed for my region.
I mean, that's the overall algorithm.
Yeah.
Developed markets at low single digits and emerging markets at mid-single digits.
Okay. Glen, for you in North America, we also heard some frustration in terms of the state of the current supply chain. I know that's been an impediment for you getting to sort of what you think your aspirational or realistic long-term growth is. How long should we expect that headwind to persist? To those comments, are they effectively sort of signaling that you're probably not going to be all the way to bright for the next year or two?
Thanks for that, Jason. I would say there's a couple things. The supply chain, as I mentioned, in the U.S. specifically, is a bit of a mixed story. We've got areas where in the past we've made some investments in our advantage assets, and those things we're seeing positive results from. We've got other areas across the overall end-to-end supply chain, where whether it's around people, process, or technology, we have episodes where we're not at our best, and those are elements we're addressing today. We brought in individuals to help us do that, not only from global capabilities but from outside. In some cases, we see early progress. Other areas, it will take a bit of time. I'm not trying to shy away from sort of what's the actual pinpoint. We're moving with speed.
It's something that does sort of preclude us from that sort of linear, predictable progression we all want to see in the business. I would tell you that we're moving on it very quickly, and it's just going to take a bit of time.
Brian?
Thank you. Maybe, Glen, just to follow up to that. You talked about aged assets across the supply chain, I guess. Can you talk about where there's still investments that need to be made in hard assets and whether that's in manufacturing lines, packaging lines, IT systems? Just trying to get a sense of how big of a project it is to sort of get that house renovated.
Sure. It's a little bit of both. Remember, when you think about being good stewards of capital, there are investments we're making within our network, and then we've got strategic partnerships with external manufacturers. There are some areas where we've already invested, you heard from a couple of the other regions, invested in lines of the future where we're seeing, even in the U.S. network today, highly efficient, effective lines there. As you know, when you look at a baking line, there are also elements where we're working with some of our suppliers on renovating a portion of the line, more efficient utilization of capital that gives us better packaging diversity.
When you think about how do I take a great Ritz Crisp & Thins and put that in a recruitment pack that I can then go take to a convenience store customer, we're making those investments as it is today with our partners. Then as we look at our external manufacturers and think about how we form more strategic relationships with them, we're able to sort of leverage their deployment of capital to help us think about our overall capacity as well as the diversity in the portfolio. It's a bit of a mix across those. I talked about automation, within our warehouse and logistics system, we've got a project that we've embarked upon now where we're looking at better automation that lets us deploy inventory in a more efficient and effective manner, not only helping with working capital, but quality.
All of those elements, when I think of my past in either InBev or Coke, would be sort of along that natural trajectory of where we see things in the business.
How long do you think it'll take to-
It's rolling. I mean, this is not years and years, but it's something that we've embarked upon last year, and I would say that throughout this year, certainly, it's a pronounced focus.
Andrew, right here in the middle segment. Perfect.
Thanks. Glen, you had mentioned, I think in your discussion around DSD, trying to better leverage that system perhaps across some other areas. I think you mentioned something like Halls during a seasonal period of time and some other things. It evokes memories of a number of years ago of something that was like wall-to-wall, which has ended up sort of diluting the DSD system from the focus around the core, cookies and crackers and whatnot, to some other areas of the store that didn't work out. I'm sure that's not actually what you're talking about here.
I want to make sure the learnings from that are being applied.
Yes
to what you're talking about. Maybe a little more specificity there would be helpful.
Sure. Thank you for that, Andrew. Absolutely, we do have deep learnings, and that's why I wanted to highlight in my comments, if you deconstruct the value chain of DSD, where is the value being created? We absolutely do not want to distract our team from what they're doing every day on a scaled biscuit business with nearly 50% of the biscuit category. If we get very clear on where they can influence the path to purchase and create a much more profitable outcome, whether that is helping to execute a display program or enhancing and plussing up a merchandising program with part of our confection portfolio and incorporating it in a consumer-centric way into our biscuits, we want to leverage that. It is not wall-to-wall where you're stocking individual items and things with obviously an asset we want to drive a strong ROI on.
We are definitely incorporating those learnings.
Michael.
Thank you. Can you touch on how you think about SKU rationalization and if there's any need to optimize your portfolio that way, or if that's already well set from what's happened in the past, and how should we just think about the outlook for that?
Yeah. When we look, for example, at the European business, given that we have quite a strong history of consolidating the industry, many acquisitions, we have worked over the last couple of years on SKU rationalization. We reduced the SKU count in Europe more than 30%, and platformed our products across different brands so that we get to a much more efficient supply chain. You've seen this in the results on our profitability that that has created. That creates, on the other hand, also the space to consciously invest in certain additional SKUs when you think about gifting, seasonal gifting, et cetera, where packaging solutions, great packaging, are playing a role.
We went to kind of a ZBB on SKUs as well and got to the required minimum that we think we need to operate the business. Now selectively we are adding, but in line with our supply chain capability.
Steve.
Hi. Good morning. Two-part question for Tim and for Glen. On the DSD business, since I've obviously been a part, industry's been making decisions as to whether to keep DSD or to move away from DSD, can you talk about with a fresh set of eyes what are some of the pros and cons in terms of your evaluation? Clearly, you decided that it's a strategic advantage. What were the retailers' feedback on some of the moves that have been made in the marketplace more recently that may have shaped your decision? Thank you.
Yeah, I would say, I mentioned earlier in my career in CPG, I've worked very closely with DSD across developed and developing markets. I think it's important to remember, without sort of commenting on any specific competitor or customer, we've got tremendous scale with our biscuit business in the U.S. with nearly a 50% share. DSD is an advantage, and as I speak and I connect with our customers, it's certainly a valued asset when you think about the relationship we've got. Speed to market, labor in stores, in-stock condition, the ability to bring new innovation very quickly, and then to create, as you're looking out in the hallways, an incredible experience for consumers. When you translate those things into like, all right, how do you know it's delivering?
Consumption growth, market share growth, display growth overall, points of distribution growth would be the natural things that we look at. Again, we will continue to scrutinize what's the fastest, most efficient, highest quality way to get our products to market to the consumer. Right now, as we're driving DSD across that scale business, it's very much a part of the growth story.
Alexia.
Hi there. Two quick questions on the regional side. Firstly, the timing of the chocolate rollout in the U.S., I guess a couple of years ago, was somewhat unfortunate because of the cyber attack, was probably just as it was intending to ramp up. What are the plans for the chocolate category here in the U.S. from here on out? Secondly, on Europe, there seems to be a bit of a U.K. sugar backlash going on right now. At least I read a lot about that in the press over there. Regulations seem to be being scrutinized over there again. How can you give us the confidence that that's not going to undermine the progress that's being made in the U.K.? Thank you.
Great. Want me to go first?
Yeah, sure. Yeah, as you've seen, we have a strong focus on the health and wellbeing in our plan going forward, but also as we speak we have done significant work on the health and wellbeing agenda, which covers reformulation, to enable lowest possible calorie count and better nutrient profile while delivering the same level of taste experience as well as portion control. When you reflect on the U.K. in particular, we've introduced belVita with 40% reduced sugar levels. We just announced one and a half months ago the launch of Cadbury Dairy Milk with 30% less sugar. We have also Cadbury versions out there with zero added sugar. We provide consumers with the choice that they can select between the nutritional profile as well as the taste experience they want to have.
The most exciting is Cadbury Dairy Milk with 30% less sugar, where we are applying a unique new technology that delivers a comparable taste to the classic Cadbury Dairy Milk portfolio. These are very active contributions to help consumers manage in a better way their calorie intake and their nutritional profile and their diet.
Good. Just really quick on the Oreo chocolate, we've had great learnings on this launch and in my nine months. When we launched this product, we've got very strong trial, very strong repeat. Consumers love the taste of the product. It's informed us of the strength of the Oreo brand. You heard in several of the presentations, the ability to really stretch this brand using demand spaces into different occasions. As you actually look at, for example, Halloween this year, you'll see us innovating our price pack architecture with sort of treat individual consumption sizes. Later this year, we'll be innovating and launching cookies and cream, which Oreo owns, as no one else with that equity.
I think the learnings on how do we as a biscuit leader with very strong equity in the Oreo brand, enter the chocolate category that is differentiated and can play to our competitive advantage. I would say that the learnings and the actions we're taking are along that path.
Maybe a couple of comments just to build on both their answers, from a lens of how we leverage our global scale for these two local initiatives. I think in the case of sugar reduction, we've invested quite a bit from an R&D standpoint around redeveloping variants within our portfolio that offer that 30%, 40%, 50% less sugar. Hubert gave you examples on chocolate, on biscuit. We're also doing the same on our candy, our gummies, jellies, and chews around the world.
The work that we've done that you'll see launch on Cadbury Dairy Milk, is a bit of a backbone kind of R&D structure, the ability for us, and I would say the intent of that to apply that to the taste of the nation chocolate brands, which we tend to own around the world, that you would know well from Milka to Côte d'Or to Lacta, et cetera, can be a nice source of competitive advantage and allow us to lead in that space as consumers are looking for those choices. Importantly, we've learned a lot of lessons in wellbeing. We're not going to change classic Cadbury Dairy Milk or Lacta. Do we need to offer that variant for that consumer? Absolutely.
Then in the case of your Oreo question for the U.S., I'd just remind everyone that this platform of Oreo chocolate, taking us out of our biscuit heritage and extending into chocolate, is a wildly successful platform around the world. Circa $400 million from Hubert's patch across Australia into China with Milka Oreo. You heard Alejandro, he's now extending it into Mexico. We have Oreo variants in Brazil. This is quite a proven platform, and I think, again, shows the power of Oreo and the ability for that brand to represent more than a biscuit, but a true sweet snacking icon.
David?
John? Yeah, there it is. David Driscoll from Citi. Just two quick questions. A small one here on U.K. and e-commerce. It's been one of the more affected markets by food penetration of e-commerce. Can you just talk to us what that's meant to your snack business, lack of trips to the store and the lack of maybe some impulse purchases? How do you see that playing out? Then my bigger question, kind of to the panel, maybe to Tim, is a lot of you have talked about just focusing on profit growth, and I think this is to allow more room for the local brands that you have rather than the global brands to see some growth in future periods. I'm questioning, though, is do you produce these on the lines of the future assets?
If you get a point of volume growth from local brands, is it worth the same as a point of volume growth from the global power brands that are produced on the lines of the future?
On the e-commerce side, both U.K. and France were early bird markets on e-commerce in food. When you look at food penetration, e-commerce penetration in food, they are amongst the leading countries, and we were early in there. We are very pleased that both in the U.K. as well as in France, our online market share is higher than our offline market share, due to various reasons. When you're early in, when you get with the right digital and social capability in contact with the consumer, consumers and shoppers are more loyal online than offline. That is what we managed to do. On the ongoing portfolio sales as well as with, for example, in the U.K., our direct-to-consumer business, cadburygiftsdirect.com, we are providing also specific gifting offers for consumers. We are quite happy with that offering.
As I said, we have a higher online share than offline share. We'll continue that. To your question on the local brands versus the global brands, that is what I said earlier. We have worked hard to get to a platforming solutions of products that we can scale across different brands. I talked earlier about investing into our plant in Opava, the Greenfield plant, which is actually the home of Opavia, which is the national leading brand for the Czech Republic, as Dirk alluded to. Both the local as well as the global brand SKUs are running from the same line. We get the same benefits for both local and global brands through smart platforming. That helps us then also to drive the same profitability on both offers.
Maybe a quick build on both questions then. On e-commerce, I would say overall, we're very pleased with our progress on e-commerce. Hubert spoke specifically to the U.K. As you've seen over the last few quarters, we're growing in the 35%-40% range on e-commerce. When you benchmark that versus snacking overall, that's a grow-share position. We're growing share in all of our key positions across the U.S., the U.K., France, China. Those are our four biggest markets. Penetration online and snacking is still underdeveloped versus some of the other, certainly hard lines and so on. In a case of China, it's up at 15%, in the case of France at six, and U.K., U.S. at three. In all positions, as Hubert said, and I just mentioned, we're growing share.
Feel very good, both in terms of single item type and bespoke items where we can actually charge a premium and make quite a nice margin and find that highly incremental to a full basket model, which is largely a replacement behavior of their brick-and-mortar shopping, and we're finding that net in terms of the total P&L at about a margin parity position. Then our DTC efforts. We are beginning to scale up our direct-to-consumer efforts. Hubert mentioned cadburygiftsdirect.com. We're building the same on Milka. I think Glen mentioned on Enjoy Life. Even this personalized Toblerone is an offering that you can get as well in places like online. I'm feeling very good. We're investing more and more in capability and in staffing online. As Dirk mentioned in his presentation, we're well on our way to $1 billion by 2020.
On your second question, I guess I'll just back up one minute to say, we do think that's a meaningful unlock, David, as we think about the next few years versus the last few. That is as we shift from an appropriate, at the time, absolute fixation on % margin to one of volume and gross margin dollars incrementally, that does unlock a number of different growth avenues that heretofore we might have passed or put on the back burner. That might be channel expansion in certain channels. That might be segment participation in certain segments. That might be geographic participation in certain categories, where on the opening day, you look at it might be a gross margin % dilution, but in absolute volume and profit dollars, and the ability for us to amortize the capacity that we have, that's an accretive proposition for us.
That's one of the things that we're quite excited about, I think one of the unlocks going forward. Finally, I'd reinforce what Hubert said. Many of these local brands, we do have from a backroom standpoint, platformed. Yes, it's a one-off Opavia in Czech, but guess what? We have Fontaneda in Spain, we have LiGA in Netherlands, we have LU in France, we have Oro in Italy. The way he produces those five brands, while they're very local and very special to that culture, it's actually platformed in the backroom, that gives us that scale efficiency.
Yeah. Great. Chris?
Thank you. Just a quick follow-up, perhaps for you, for Tim, on David's question. If you think about, even we think out, say, three years or five years, with an increasing focus on local brands, if you think about top-line growth only, is it the local brands accelerate in their growth and power brands, if I think about the old power brand definition, that slows? Do those grow at the same rate? With this focus on local brands, should those accelerate over and above your 3% top-line growth rate? I guess my ultimate question.
We have fantastic momentum on our global power brands, and we've talked a lot to you folks over the last few years on that, and that continues this year. The Oreos, the Milkas, the Cadburys, they're growing very nicely, well ahead of total Mondelez. The difference here is actually these, as Dirk said in his comments, these local brands, if we're a bit critical on our own position, were a bit neglected in that. In the world of trade-offs and in a world of the last few years, an overwhelming focus on margin and percent margin agenda, they were put a bit on the back burner.
What we're discovering, particularly in today's world, and you would know this as I think an overwhelmingly U.S. audience in terms of small brands and insurgent brands, is that a little bit of love and quite a bit of marketing through a digital social channel, which actually is not all that expensive, can make a big difference. That was the example that Dirk gave, that Hubert's team certainly drove in the Opavia biscuit example, Opavia. We have many of those around the world. What we're finding is when you give a bit of attention to these brands and activate them locally, usually through grassroots or through digital, social, mobile
You can see a nice bump as we demonstrated there. You've got your global power brands, which of course garner a big chunk of our total advertising media innovation investment. That mild shift can make a disproportionate return on the top line.
What we see in Europe is those brands, they come from a strong, authentic bakery position. They are well-positioned, have the credentials with the consumer to compete with new startups and insurgent brands. We are well-served to put more focus again and balance our portfolio efforts.
And you hit-
Can I just quick follow if I could on the EU, which would be that as you focus on local brands, you've had great margin improvement in the EU. My question would be, the focus on the local brands alongside, you talked about discount channels, price pack architecture. Are all those things supportive of the margin where they are, or is there some kind of investment level required to boost the top-line growth in the realm of a higher top-line growth rate for the company overall?
No, we are definitely committed to the margin levels where we currently are that you have seen. Our plans will really continue to make use of the platforming I've talked about, our advantage assets that we have now, and grow more significantly the absolute margin dollars.
Rob.
Hi, thank you. Glen, I hate to come right back to DSD and supply chain again, but I'd like to know, I thought the plan with the lines of the future was to not just open up Salinas, but also provide state-of-the-art lines within some of your older facilities in the U.S. Can you give us a little bit of background, like what's happened over the past five years at those older facilities? How many lines of the future got put into those? Were there any obstacles to building them out as much as what the company wanted to do?
How far along are you, and are you behind maybe your global peers in that regard?
Secondly, just back to DSD and sales. You must have done a lot of asking a lot of questions internally, working with your DSD network. Did they feed back to you that their resources had been cut? I thought I had heard that there were some headcount reductions, maybe they had been asked to cover more territory with the same level of quality, which is always a tough trade-off.
What resources did they ask for?
What are you giving them that's different now than before?
Sure. Let me touch a little bit on the supply chain, then Tim, if you want to add any more historical perspective. We certainly, as I mentioned, we have invested in the U.S. network in lines of the future. When you think about, first of all, of the biscuits that consumers in America are purchasing every day, the vast majority of that is sourced from the United States. As we had committed and talked about, we have made those investments. Where we've made those investments, we certainly are seeing advantages in the system. There still is a large portion of the U.S. supply chain network that's not covered by that, and that's the approach that we're talking about across people, and the technology that we'll thoughtfully, whether it's internally or with external partners, look at evolving.
On DSD, this would not be dissimilar from my previous experiences. Again, I don't want to be repetitive, when you break down those elements, in the past, as you think about how do you constantly evolve DSD, we have customers where using technology to generate a demand signal allows you to think about how do I do that work differently? Do I need the same type of capability, or can I fulfill that part of DSD differently and then deploy resource in a different way? In the past, what I've seen in my connecting with our team, I think we've done a good job in identifying how can I use technology to generate a demand signal?
How can I be more efficient and effective with tools of our own to deploy merchandising and service support so we can get the right sort of nexus between cost to serve and high quality in-stock conditions. Then your question around tools, we continue to invest in technology for our frontline leaders so that as a leader in the biscuit category, whether it's using tablets, how can we disseminate those kind of brand strategies into what we want the in-outlet condition to look like. We'll continue to iterate around that space of optimizing DSD and investing where we see growth and value creation.
Okay. Can you give us any numbers on, you said A large proportion is still not covered by lines of the future. Can you give us any % as to what it is today, what it was five years ago, and where you want to be?
Yeah. I won't go into the details. I would say the majority of our assets, I would say we've invested in this advantage network across the North American system. We still have a legacy build and that's what we're working on.
Okay, thanks.
Tim.
I have two questions. One is, how do you go about changing the mindset of managers to shift to the sales growth after five years of margin? It's one of these things that everybody always likes to come out with a strategy and say, "Oh, we're going to change." You actually have people who need to do the changes. Are there human resource changes? What's the incentive packages? How does this change to make people actually do what you guys want them to do? That's my first question.
Yeah, maybe I'll start. Look, I've had the privilege to look after three of these regions, and during the time where we were on this five-year journey around margin build.
The overwhelming focus, not just on back-room functions, but commercial functions, marketing, sales, general management, was on that need. Guess what? We did it very well, Dirk showed it to you, and you know the numbers in the hundreds of basis points of expansion that we've done. For that time, it was right. I think all four would join me in saying, you can't emphasize enough what that took in terms of standing up and making work global business services, doing the supply chain reinvention, embarking on an aggressive and now successful zero-based budgeting campaign across all of our cost packages. This was quite a bit of internal-focused work that we needed to do to get the company truly fit to win and the margin structure at a competitive level where we now feel like we can make those investments.
The liberation then to say we're comfortable with that, we've built quite a bit of muscle in that area and discipline that will not go away. If the focus now, and quite honestly, the time, the mindset time to shift towards an external focus, to focus, as Dirk said, on consumers, on customers, on brands, marketing and sales excellence, that's actually a shift that, and I know these four guys would agree, that our teams are absolutely excited about and very hungry for. Now have, I think, the time to do that. That coupled with, as Dirk said, a commitment for us to step up investment in a few areas and the other key shifts that you heard, better balance of global and local brands, a more agile innovation model, a reinvented marketing playbook.
Those all together give us the confidence that it will be different from a growth standpoint. Last thing I'd say, just a proof point for you, front half 2018, as we sit here today from a market share standpoint, a good barometer of that competitive position. Three of our four regions are in a hold grow share position, which is a little different than we've had in prior years. As you make that shift, I think we're ready, and I think our teams are quite hungry.
Yeah. As Tim said, thinking about growth is much more exciting. If you think to the commercial team, sales and marketing, what is happening in India, which is double digits top and bottom line, is fantastic. It is a team sport. Everyone is working to making sure that we do better than our competitors and is working very well on engagement, especially, as I said, on the commercial area. Marketeers, they think every day what they have to do to gain, to grow, and do better than others. If I look at China, an example in the commerce area where we are outpacing the market and growing share, there we have to be even faster.
I think you have a point, but it is much more easier to unleash people and make sure that they really dream big and go faster rather than control everything everywhere and say, "Don't do this, don't do that, prioritize this." I think it is already happening inside and will be even more in the future.
Yeah, I can only echo that. It is very liberating to the organization. The shift is easier than the shift that we've done a couple of years ago.
Probably, my view would be, as you were saying, incentives drive behavior. We are changing that. That will help us make the change that we need.
My second question is, you talked about a lot of investments. Can you rank them or give some sort of level of investment or focus of investment by some sort of ranking of what is preventing 2019 operating profit or EPS growth from being as high as maybe one would have thought? If you could just say, "Hey, is it capacity utilization rates? Is it just marketing? Is it regional brands?" Somehow just rank them so we can just understand the investment levels. That'd be great. Thanks.
I'll certainly defer to Luca to get into any more granular specifics. I'm not going to talk numbers here. This is a plan that's contemplated on increased levels of investment, and certainly, that means media investment, brand-building investment. I think where you're going to see that is in one place, the local brands, back to where I mentioned earlier, feeling fairly good about our support levels on global brands, but think that a little bit of additional investment local will help. You're seeing a different innovation model. We have a number of big innovations that the four guys took you through here that we think can benefit from it overall. I think there's some geographic white spaces that are very interesting. Alejandro gave you one, and you know a few others that we've recently entered.
There's some adjacency plays that Dirk highlighted in his commentary from choco-bakery to salty snacks and others that will be important for us. Yes, I would say there's some capability investment. One of my roles is obviously the opportunity to look after marketing for our company, and we're stepping up significantly reinventing our marketing. In the last year, I can tell you, we made a number of new hires from a talent standpoint. We've got a new CMO. We've got a new head of media and global digital. I have a new head of analytics. I have a new head of consumer insights, two new e-commerce leaders in the region. Big step up in talent levels and in internal capability investment.
Stood up what we call a Mondelez Digital Academy, and you're seeing a significant investment in people, upskilling people and the skills to compete today. Finally, you'll see some CapEx investment, both in terms of growth and in terms of ensuring that our assets are delivering the efficiency that they need. For any further numbers, I'll certainly defer to our CFO.
I may be building to Tim's point, route to market. As I said, in my region, we will increase 25% the coverage of point of sales. In developing world, your coverage has to be at the best-in-class level. We will invest a lot in improving our coverage for both local, regional, and global brands in key developing countries like India, as we are doing Southeast Asia, China, and Africa.
Perfect. We've run past our allotted time. Appreciate the questions there. Appreciate your time, gentlemen. We'll now transition to Luca Zaramella, our CFO, to give a financial overview.
Thanks. Perfect. Thanks, Shep, good morning, everyone. Today, I'll spend my time taking a closer look at the foundation that we have built over the past several years. Why I believe growth of the strong P&L and cash conversion cycle that we have today, coupled with the next wave of cost efficiencies, will result in a compelling long-term algorithm. I will also touch on our cash flow goals, our capital allocation priorities, as well as the flexibility that we have within our balance sheet. How that flexibility can further enhance what is, in our opinion, an already compelling value creation model for our shareholders. As Dirk said, I will go into more detail, we are going to run the business in a fundamentally different way, which will unlock value through operating leverage and the continuous improvement mindset.
We are starting from a stronger base. We are now pivoting to a more growth-oriented model. Rest assured, though, that we'll retain the cost discipline to provide funds for growth and continue to expand profits. This new algorithm will deliver high quality, 3% plus top line growth, high single-digit adjusted EPS, and $3+ billion of free cash flow. Let me take you through some more specific elements of the plan, starting with the strong base we will be building upon. We are building out a strong track record of margin performance. We made significant improvement to our cost structure over the past five years while raising the competitiveness of our margin levels. In 2013, amid an overall economic slowdown, we recognized margin improvement as a critical priority to create shareholder value.
Over the last five years, we delivered approximately 600 basis points of margin expansion. We also delivered average EPS growth of 18% per annum. We believe this margin and earning performance was especially strong given the challenging operating environment. Now we are seeing growth returning to our categories. We are making the necessary investment to ensure we earn our fair share moving forward. We deliver margin improvement that is best in class. We dramatically also change our P&L structure, which now has better gross margins and lower overheads. This was accomplished through unprecedented transformation, starting with the spin, continuing with ZBB, moving through supply chain reinvention, Mondelez Business Services, our coffee transactions, while overcoming weaker macro and volume dynamics than we originally anticipated. Our transformation as an organization was not just a pure cost exercise.
It was about building an infrastructure and a unique set of capabilities that would enable us to scale up efficiently and generate better leverage with our future growth. We created or improved capabilities across several areas, including procurement, manufacturing, overheads. This required dramatic changes in our talent, culture, and processes. In supply chain, we simplified and modernized much of our footprint. This included closing or selling approximately 50 plants, reducing our supplier base from 100,000 to less than 30,000, and reducing our SKU count by 70%. We now have nearly 60% of our most important brands on advantage assets. As one measure of this transformation, our volume per employee is up by 15%. We also created a much more cost-disciplined culture, achieved top quartile performance across most of our cost packages, and streamlined multiple processes.
ZBB is now an integral part of our budgeting process and the way we prioritize expenses and investments within the company. Our Mondelez Business Services provide a global and harmonized platform to efficiently address the company's processes. Let me now spend a moment on working capital efficiency, which is another of the competitive advantages that we have built over time. Working capital is an area that we have been very focused on over the past several years, delivering strong results. We have made improvements across all aspects of our cash conversion cycle, having removed approximately 50 days, which puts us at best-in-class levels. Having achieved a high level of efficiency in our working capital, the impact on free cash flow will be amplified as we grow our business faster. While a lot has been accomplished, there are still opportunities across our business to drive further improvement.
Earlier, I mentioned our large supply chain reinvention initiative, which drove a significant portion of our margin expansion and improved our capabilities and flexibility. Although it was necessary to drive improved margins and position us for the future operating leverage, it resulted in elevated level of CapEx. Moving forward, we will continue to make ongoing improvements to our supply chain to drive productivity. However, these improvements will be done at a more normalized level of CapEx, which we expect to run in the mid 3% range over the next several years. Let me talk for a moment about capital return. Over the past 5 years, we delivered substantial value to our shareholders through our return of capital. Since 2013, we returned $20 billion in cash, or more than 30% of our market capitalization. This included reducing our share count by more than 20%.
With respect to dividends, we increased our payout by more than 50% over the last 3 years, including the most recent increase of 18% that we announced in July. Overall, this compares quite well relative to our peer group. We continue to target dividend growth greater than earnings and consider return of capital as a priority. Shifting gear, let's take a look at our long-term growth model. As we outlined, we have three pillars to our strategy. We are clearly focused on accelerating growth, which is the linchpin of our plan. As we look at recent trends, we believe there is early evidence that supports our transition to a more growth-oriented algorithm. We have demonstrated solid, broad-based momentum across most of our regions over the past several quarters, with the right balance of volume growth and pricing.
The second element of our strategy is about executing with excellence and improving efficiencies. We are not done with our work to improve profitability, and we will continue to drive cost saving, leverage ZBB, and operate with a continuous productivity mindset. We plan to reinvest a portion of these savings back into the business, which we believe will deliver a more balanced and sustainable mix of earnings growth into the future. The third element of our strategy is about unlocking the potential of our organization by adopting a local-first commercial approach while preserving the advantage of our global scale. Our strategy will lead to compelling returns for our shareholders. As a volume-driven revenue growth, we're translating to profit growth, continued margin expansion, and high single-digit EPS supported by share repurchases.
We will target more than $3 billion per annum in free cash flow as growth gets amplified by our improved margins, negative cash conversion cycle, lower CapEx level, and better conversion of net income. We are targeting dividends to grow more than earnings. In aggregate, we believe all these factors should deliver an attractive return, with sustainable and profitable growth translating into sustainable cash generation. We have confidence in our growth algorithm as we see favorable trends in terms of GDP expectations, but also as we have seen a rebound in the health of our core snacking categories that are now growing at approximately 3%. In addition, we are seeing improvement for Mondelez in the emerging market, where several key countries, like Russia and India, just to mention a couple are delivering strong volume-driven growth, share gains, and are positioned well for the future.
We are also seeing good trends in developed markets, as Europe continues to deliver both base volume-driven growth, and North America is showing some improvements in its anchor brands. When we talk about growth, there are several components that you have heard today that will enable us to move to a 3%-plus long-term model. These components include a more balanced investment posture, touching both our global and local brands, coupled with a significant increase in A&C spending, leveraging higher growth geographies where the total profit dollar opportunity is attractive. Enhanced channel expansion enabled by our investment in sales, improved supply chain, and expanding our routes to market. Having a total snacking focus will allow us to get into snacking adjacencies rather than our more narrow traditional view of our core categories.
In aggregate, we believe there is a substantial opportunity to expand growth that is volume-driven over the next several years. There are several factors that reinforce our confidence in delivering high-quality, sustainable earnings growth. Our new strategic plan is focused on sustainably growing profit dollars and volume, which will generate leverage benefits in our plans and deliver revenue without significant incremental overheads. However, we will do this in a responsible way. This is not about pursuing growth at any cost that will significantly dilute margins. We will continue to take a disciplined approach to incremental growth opportunities in terms of ROI, while not impacting the margin of our base business, and are confident that this overall framework will result in better returns. Our ongoing focus on supply chain productivity and cost savings will produce incremental gross profit.
Some of this will drop to the bottom line, while we plan to reinvest a significant amount into A&C and route to market to reinforce our competitive advantage. A new growth culture will underpin our model as we become faster with increased focus on local consumers and as we align our incentives to drive both higher profit dollars and cash flow. Let me spend more time talking about the next wave of cost opportunities that are twofold. First, we are moving from the past several years of massive transformation to a period of ongoing productivity as a discipline. With that mindset embedded in our day-to-day processes, cost savings will always be a focus of this company. Additionally, we have another set of opportunities, which paired with operating leverage, will enable us to continue to grow margin while making the necessary investment to fund our growth agenda.
This second element of our cost agenda will require some level of restructuring funding, though certainly lower than in the past. In general, there are a few key areas that will drive the majority of these savings. First, we are focused on building the next-generation procurement capabilities. This means we will become more sophisticated and efficient as we leverage partnerships and digital technology to improve our bidding processes. The second area of focus is in what we call factory of the future. This means there are opportunities with our factory design that will enable increased efficiency and higher output. We also have significant opportunities to further leverage integrated Lean Six Sigma and digital technologies to reduce downtime and waste. Third, we have additional network optimization opportunities. Fourth is logistics. We are targeting best-in-class operational efficiency rates.
This should improve our fill rate, enhance service, and reduce transportation penalty costs while reducing the impact of inflation. Lastly, we still have meaningful G&A savings opportunities. This is about removing complexity and increasing speed as much as it is about reducing our cost. Additionally, we will continue to harmonize processes, expand the use of digital tools, and consolidate IT applications. These cost buckets are all critical in driving ongoing efficiencies and funding growth investment. We are confident that these are the right opportunities and that they are very achievable, high-return projects that will position our business more favorably over the long term. Now turning to cash flow. Over the past several years, to improve our margin, we invested in CapEx and restructuring to reshape the company. That took a toll on our cash flow.
We are now much better positioned to see strong improvements in our reported free cash flow beginning this year. There are four big drivers that underpin better results in this area. First, we expect cash earnings to grow mid-single digits during our plan period. Second, our CapEx is expected to be in the mid 3% range versus the circa 4.5% over the last few years. Third, we will have a more modest level of restructuring, approximately $1.3 billion, over the next four years to fund high return projects that I just mentioned. Finally, working capital performance is expected to improve. We are confident in our commitments to improve free cash flow and expect free cash flow to grow along with net income over time as we target 90% income conversion. Turning to capital allocation, we will continue to invest in a disciplined way to generate greatest return for our shareholders.
Our first priority is to continue to invest in the business to drive growth. This includes a step up in A&C and route to market, as well as investing in high return restructuring and capital projects. We'll increase our focus on acquisitions opportunities to improve our participation in high growth markets or adjacencies, while also gaining new capabilities. We will continue to return capital to shareholders in the form of share buybacks and dividends. Finally, we will use cash to reduce debt and preserve balance sheet flexibility. We are comfortable with today's leverage and intend to continue to have access to Tier 2 commercial paper. Now, let's take a look at our coffee investments and the financial flexibility they provide. As a refresher, back in 2016, we combined our coffee business with JAB D.E Master Blenders to create JDE, a leading global pure play coffee company.
As part of the transaction, we received $5 billion in cash, including $1 billion in timely Forex hedge gains. The book value of this investment at formation was about $5 billion. In March 2016, we converted $2 billion of our investment in JDE to partner with JAB and other investors to take Keurig Green Mountain private and diversify into the single-serve coffee business here in the U.S. As you know, Keurig recently merged with Dr Pepper Snapple to create a broader beverage platform, KDP. JDE and Keurig have both been great investments and have performed very well, with strong earnings growth and rapid deleveraging. In fact, besides providing earnings to us, their value has increased meaningfully since the original JV was formed. We have a strong partnership and working relationship with both businesses, in addition to board representation.
We believe both businesses have compelling strategies and competitive advantages that will drive more value going forward. What we also like about these financial investments is that they provide further optionality and flexibility. While on capital allocation, let me elaborate on our strategy and thought process around M&A. In recent years, we made very few acquisitions. As we move to a more growth-oriented plan, we expect acquisitions to play a larger role. There are several areas where we believe acquisitions can drive further growth in line with our strategic priorities. One area we will consider is adding scale in priority geographies. We also expect to pursue acquisition and partnerships in higher growth snacking adjacencies that are beyond our traditional categories, again, as we see growth opportunities. Tate's would be an example of this strategy.
As a third priority, we will look at ways to acquire new capabilities in areas that have broad applications like e-commerce or well-being. We will also continue to look at opportunities to divest non-core assets that no longer fit well within our broader portfolio. This, together with our coffee JV optionality, will provide further flexibility. We are excited about our M&A agenda as a potential growth lever, and I'd remind you that the impact of any acquisitions should be additive to our goal of 3% plus growth. Rest assured that we will always apply a rigorous financial return approach to our M&A activities. Now let's talk about capital return. Given our expectations in terms of free cash flow, our balance sheet flexibility, our coffee optionality, we remain committed to returning meaningful capital to shareholders, both in terms of dividends and share repurchases.
We just announced an 18% increase. We believe we can continue to provide attractive dividend as we target increases in excess of earnings. We also expect that share repurchases will continue to be an important component of capital return. Our repurchase program also allows further flexibility. If we have periods where we are heavier with M&A, we have the ability to pull back on share repurchases. On the other hand, if we enter a period of fewer acquisition opportunities or see significant dislocation in current value, we can be more aggressive. We expect the strategic growth initiatives that you have heard about to yield top-line growth of 3%+. We also expect this growth to be more volume-driven than in the past, as we put more emphasis on profit dollars than margin percentages.
We also expect that our ongoing work on productivity and cost savings, coupled with volume leverage, will result in high single-digit earnings per share growth. Free cash flow, which is one of my top priorities, is expected to exceed $3 billion beginning in 2020, with a gradual step-up over the planning period. Cash flow generation, coupled with the flexibility we have within our balance sheet, will allow to sustain good capital return to our shareholders. Together, we believe all these elements are attractive from a total return perspective and are sustainable and grounded in realistic set of plans. I would like to talk about our outlook for 2019. As I've mentioned, next year will require some stepped-up investment as we reinforce a volume-driven growth cycle.
These investments include a significant increase in A&C spending, as well as sales and marketing, will help us to accelerate and build on the momentum that we are seeing in majority of our core countries. This outlook factors in our expectations of a step-up in growth from an already increased 2018, as well as an increase in earnings despite these additional investments. We are very excited about the path ahead. We are starting from a strong base. We have much more competitive margins, far better capabilities around cost, and the ability to generate operating leverage when you plug higher growth into our business. We are now pivoting to a more growth-oriented model, which is underpinned by increased level of investments, funded by the next wave of savings, as well as a broader set of opportunities given our focus on profit dollars.
We are also very focused on driving improved free cash flow generation. Our long-term model calls for free cash flow of more than $3 billion, driven by high net income, lower CapEx levels, and reduced restructuring. All of these will result in a new Mondelez that will deliver high quality, 3%+ growth, and high single-digit adjusted EPS growth. Thanks for your time. I'll invite Dirk up on stage for some Q&A.
Let's start here with Michael.
Thank you. Just looking to clarify the cash flow build slide, you talked about the mid-single-digit earnings growth. Was that EBIT or net income? Obviously then the bridge to EBIT would at least I mean, the EPS would at least be the buybacks. How should we think about how to reconcile those together?
I can think about mid-single digit pretty much for both. In general, I think you should think about EBIT margin expansion over time, and EPS as well, and net income as well. I think you might have seen there is a component of interest cost increase over time. I think, when you put all things together, JVs, I would tell you the KDP numbers that we have baked into this financial algorithm and outlook, they are consistent with the guidance they provided. I think when you think about the total components between EBIT that is growing and net income, which is growing pretty much at the same pace, then that will translate into accelerated EPS versus the net income number.
Just one follow-up on the dividend payout. You talked about that growing faster than EPS. Do you have a target ratio? How long would that go on for? What's the timeframe for that?
I don't want to put a target out there yet, I think we have a track record. I think I gave you enough elements around our capital allocation structure, where I think you understand that we have the foundation of the margins today, the conversion of net income into free cash flow. I said pretty much explicitly that we're happy with the leverage ratio we have. We have portfolio and balance sheet flexibility. I think when you couple all of these things together with the foundation that is a cash flow that, as of 2020, will grow in excess of $3 billion, and from there will steadily grow over time. I think you have enough elements to understand, I believe that, as we said, return of capital is a priority now.
I think as you think about what we have said, we want to have a little bit of flexibility as well. I'll leave it at that.
Sir, right.
Good morning. Vincent Ryan here from Berenberg. Just three questions from me, please. Firstly, in terms of the midterm targets for above 3% Organic sales growth. Surely that does imply just growth in line with the categories. Do you see further upside to market shares, or are there areas where you think you might be likely to underperform going forward? Also in terms of that growth algorithm, can you give us a sense in terms of what you think in terms of volume versus pricing? Obviously, you do say that you'd like to see an improvement in volumes, should we expect to see pricing under pressure in developed markets, for example, or will pricing be more limited in emerging markets?
Finally, in terms of the growth ambition for the non-snacking areas of the portfolio, do you see positive growth there, or are you just going to run those particular business areas for cash or absolute EBIT? Thank you.
Thank you. Well, maybe I'll deal with the first one, then you can do the financial algorithm. In fact, the answer of the first is related to your third question. When we talk about 3% plus growth, that is for our whole business, that includes the meals and grocery business. As we look at our snacking portfolio, we obviously have to grow a little bit more, which would imply market share gain to offset the slower growth that we see in the meals business. Over the time period of the plan, we see the meals business growing not really that much, rather flattish performance. We are not exactly running it for cash, but we're also not going to do major investments in it.
I'll take the volume pricing question. I think as you look over the last few quarters, I think we are fairly pleased with the balance of volume and pricing. We will always try to get to the right balance. There might be times where one is above the other, but in general, think as the right balance between volume and pricing. Also think about, you mentioned inflationary pressure and maybe some forex pressure. In general, we are not hand to mouth in terms of forex or commodity coverage. What you have seen in this outlook is actually reflective of the most recent dynamics in terms of inflation, forex, and commodities. We will always try that right balance. I think the mindset of having focus on margin dollars rather than margin percentages is the exact one this time.
As you think about inflation, we will price away inflation over time, and in general, think about our pricing plus productivity exceeding inflation and commodities cost pressures. Over time, we have the flexibility of our coverage strategies that, as I said, are quite good for next year. Then we will always try the best balance between volume and pricing to deliver the best output in terms of income, cash flow, and DPS.
Thank you.
Rob?
Thank you. Robert Dickerson, Deutsche Bank. Just in terms of M&A, there was a lot said with respect to capital allocation, dividend, buyback, flexibility on coffee potential, divesting of non-core, but no rush. I'm just wondering, Dirk, since you've been at Mondelez, and you look at the portfolio, and you've set forth this strategy going forward, do you view, as I think Luca said, M&A being a bigger piece? I mean, obviously have the firepower from a lot of different ways and sources of capital. Do you believe over the next three years that Mondelez may look for much larger acquisitions, as you said, in core markets? That's the first question.
Well, yes. I wouldn't immediately say larger acquisition, we like our strategy. As we explained, we see opportunities for us to expand in high growth geographies. We see opportunities for us to expand into adjacencies. I would call it more a bolt-on type of acquisition strategy than larger acquisitions. We believe that is the right strategy for us, and that's really where our mindset is at the moment.
Okay, great. Just quickly, in free cash flow with the restructuring, the $1.3, I think the slide said inclusive in that is the $0.7 on incremental CapEx, which leaves call it $600 over the next four years. Is there cadence on that? Should we expect that to be a bit more 2019 heavy, 2020 heavy for that, limit some of the free cash flow growth, or is that even over time?
Yeah. Maybe let me correct that a bit because the $1.3 is operating or it is expenses. It is not operating. It is expenses related to the restructuring program. The $700 is in addition to the $1.3, but it is baked into the 3.5% CapEx guidance we have given. Think about restructuring as two components, $1.3 expenses and the $700 million of CapEx included in the 3.5%. In terms of phasing, I think it is pretty much fairly spread throughout the five-year horizon, so from 2019 to 2022. There might be years where we spend a little bit more, and as I said many times, I think as we look back at the restructuring program we have implemented, there is continuity of that into what we are about to do with the new phase.
Reality is we are going to go for high return projects, and I think they will have the returns that we expect to generate, and we will invest some of that money back into the business.
David?
Great. Thank you. I think the net takeaway to 2018, you're going to go from 13%-14% EPS growth to 2019, you're going to go to 4% growth. I think what you said was that there is significant investments that you're making in A&C, and I think you said in your script that there's some investments in selling capabilities. Are those the factors that drive the big reduction? I didn't hear anything about inflation or pricing or if there's other pressures that are affecting the business, but it's a big change. If you could just spend a minute to talk about how earnings growth changes so much into 2019, and then the question, Dirk, maybe you could build on at the end of this, is that why not lengthen out the period of time in which you make these investments? Why put them all in 2019?
Why not put them in 2019, 2020, 2021, have better earnings growth in any one of those years than a 4% growth in 2019?
Look, in general, you asked several questions here. One is about inflationary pressure, and as I said, we see, we acknowledge that there is some inflationary pressure, and the most recent dynamics have been baked into the financial outlook. Having said that, bear in mind that we have a comprehensive risk management strategy in terms of managing Forex and commodity exposures. I would mention cocoa as one example. For us, it is not a big headwind next year. As it hit lower numbers as of recent, we expanded quite a bit coverage into next year. There is investment in the plan. The investment is, as I said, not only about A&C, it is about go-to-market. I think you heard us talking about quality around our products, reformulations, and renovation of our core bundles.
I think in simple terms, think about EBIT still growing, for next year, low single digits. I think you have to think about, I would say, pretty much margins in line with 2018. Below the line, as I said, JVs plan in line with what the guidance was for KDP. On the others, I wouldn't elaborate much. There was another element that we put on the table today, which is interest cost pressure. I think we are very pleased with the work that we have done in the interest cost line over the last few years. I happen to be the treasurer, so I'm very happy with that. Really, when you look at the total interest cost, we have one of the lowest in the industry compared to our credit rating.
Having said that, we build flexibility over time in our debt structure in terms of commercial paper, and that exposes us to the fact that interest cost is on the rise. Next year, we will have to refinance some debt that is literally at zero cost these days. We will take that opportunity to extend maturities and put a little bit of longer debt structure, and that will impact a little bit the interest cost line. In terms of taxes to finish it off, I think in line pretty much with this year. I think when you do the math, all of that will lead to the EPS guidance we have given. Look, fundamentally, I believe when you look at the margin structure in the P&L and what happens above and below the line, structurally, all the elements are there.
The differential point for 2019 is that you heard Maurizio talking about India, China. You heard Alejandro talking about some of the opportunities we have in developing markets. Obviously, you heard Europe, great momentum as well. We want to capitalize on those opportunities, and we see momentum. We want to step up investment and really get this volume-driven cycle going because in the end, I think that is what drives shareholders' value, given that it gives us the operating leverage that we have missed over the last five years, and it is now a great addition to the algorithm.
Alexis?
The last five years have been about margin expansion. You're moving into a growth phase. How is the incentive compensation system for the company changing to encourage that? Thank you.
The change that we've already implemented this year was to bring down the incentives to a local country level. Before, most people would be incentivized on regional performance. We are pushing down in line with the accountability that we're pushing down in the organization. We've already done that. Going forward, we are clearly focused on a number of growth views that we have. Like we talked about, sort of a balance between volume and price type of a mixed type of driven growth, focus on gross profit dollars, operating profit dollars. Before, our incentives would be more on the percentages. They will now be on the dollars type of incentives.
Brian?
All right. Thanks. Just a couple of questions to follow up. First, I think on the slide for 2019, you talked about, I think, a $0.07 EPS headwind from foreign exchange, but I didn't see any change to what your expectations are for 2018. I guess first question, just is there any change, that affect any more negative for the 2018 base?
Look, we kept that purposely out of the chart because we're going to talk about Q3 in a few weeks. We'll give you specificity around Forex there. I would simply say that what we gave you in terms of the Q2 impact on both revenue and EPS, despite some puts and takes, I think it is pretty much there. I think you saw the first half of the year with positive Forex impact. That's reversing out in the second part and having pretty much a carryover impact into next year.
Okay. You gave us what you're spending on extending the restructuring program, I don't think you gave us what the savings are. Can you give us a sense of kind of what the payback is, how much savings you expect to generate?
Look, I think we purposely didn't put it out there. As I said, rest assured that we will have always a disciplined approach to returns and payback. In general, I think as you think about these, it is two components. It is supply chain, which has an ongoing set of productivity programs, plus some restructuring. All of that will put us at best-in-class productivity delivery in our industry, I believe. I think as we said, there is inflationary pressure, we will more than offset those inflationary pressures, obviously, making sure there is return, an incremental return, that we will drop partly to the bottom line, and partly we will reinvest. On G&A, I think as I said, the way to think about the program, it is really twofold.
It is clearly about going after further opportunities in terms of G&A, it is also shifting a little bit the commercial model and being able to invest more in some of the local big markets and creating that mentality that is agile, closer to consumers, whereby I believe we will be better served in the long term. As you think about G&A, it is not only a cost return element there. There is also this effectiveness that is quite critical.
Okay, just the last one on the interest expense. It steps up next year. Will it step up in years beyond that? Is there more maturities coming due that might be more expensive, or just how should we think about the evolution of the interest expense line?
Look, in general, I think as I said, think about us keeping the leverage that we have. By the virtue of the fact that we will grow EBITDA, most likely we will keep or we will increase the absolute level of debt. There are other maturities that are coming up. Now, don't think we haven't thought about that. It is, again, in the financial outlook, and most importantly, as you might have read or as you will read some of our official reports, you will see that we have locked in interest costs for the upcoming years for what is coming due now. I think as we think about the flexibility we have in the balance sheet, I think maybe that might change over time as well.
Thank you.
Let's go to Andrew.
Just a quick one on gross margin in 2019. If you've got, call it 3% organic sales growth or 2%-3%, and call it 3% EBIT growth, you're stepping up the marketing spend and go-to-market spending. Does that suggest that gross margin still expands year-over-year? If so, I just want to get a sense of how that jives with the sort of the dollar growth focus starting to kick in versus just the margin percentage focus.
Okay. Look, in general, as you have understood, we are trying to move away from percentage margin guidance. I think in the past that has a little bit narrowed the frame of where we could have operated, both in terms of percentages versus dollars, but also giving guidance on specific P&L lines. I think in general, as you think about that, we are really trying to drive a cultural change within the company where we want to drive absolute dollars and better return on investment in general. Having said that, we will keep on having absolute cost discipline. I think you heard Dirk talking about it. You certainly heard me talking about it. The simple way to think about that is that over time, there will be EBIT expansion that is ahead of revenue, and as such, there is EBIT margin expansion.
On gross margin, really, I wouldn't like to comment. I think we made clear commitments for this year. I think I appreciate what you said about us and our gross margin expansion in Q2. As we move into the new year, I think about us really driving better dollars, better EPS, better return on invested capital.
Rob.
Hi, thanks. Look, one of my perceptions about the overhead reductions over the past few years is that there was an expansion of Mondelez Global Business Services, or MBS, I guess, and that had centralized a lot of back-office activity and centers of excellence. Where are you now in that journey, and does this new strategy to give the local regions more capabilities, does that kind of put an end to some of those activities, or does it reverse any of them? Is there more you can do to centralize?
The straight answer is absolutely not. It doesn't reverse it. I mean, think about, as I said, MBS as a critical platform. It is not only by putting more into it that will drive better savings and better opportunities going forward. Think about the digital transformation we are having these days, and think about having consolidated in one platform all your back-office processes and how quickly you can scale up opportunities and attain productivities. Think also about the fact that in some of these services, we are fully outsourced.
We have a strict partnership with a few key players in the world. Those are leading-edge partners. They are doing business with us and with others. We can fast apply what they see in other industries that are maybe more leading edge than us and scale up benefit. We're not going to undo any of that. I think there are incremental opportunities in terms of putting more into MBS, but it won't be at the scale of what we have done over the last five years. I want to give you the message that we will keep as Mondelez leveraging our global scale. It is not only about MBS, for instance, it is about procurement. I think I'm very excited with what Liza had in terms of procurement capabilities and how we can use that to deliver more savings and better earnings to the company.
Can I ask a follow-up for Dirk? You started your presentation by talking about surveys of interviews with 170,000 different consumers around the globe and how they snack, also that people are snacking six times a day. When you go to the back room, you see all the products back there. What % of these products do you think people really do snack multiple times during the day? Most of it is very indulgent. When you did your strategic review, did you think that one of the concerns might be is that, hey, our portfolio is overly indulgent. People feel very guilty. I know I did. Still feeling it. What % is maybe either lighter snacking or products like our belVita that people could use for meal replacement? Did you think of it that way?
Yes. First of all, quickly to link in with what Luca was saying, when we say we will drive more local decision-making, we're largely talking about the commercial side of the business. As it relates to the supply chain side or the shared services side, we will keep on using all the global scale benefits that we have. We're not undoing any of those. The way it works is that the same consumer during the same day can have different needs. Even in the same consumption moment or the same, what we call demand space, there are different types of snacks that you could use. You could foresee that somebody in the afternoon could have an Oreo, but the biggest competitor there could be gummy bears, for instance, very strangely. That's usually a family setting.
The conclusions of this, that there is different moments during a day that a consumer will want maybe the same consumer could want different snacks. Those will go from very wholesome to sometimes very indulgent. Do we feel that at the moment in our current range, we are fulfilling enough of the wholesome or health and wellness part? No, we don't. We know that we have to increase our offering in that area. The gap might not be as big as you perceive, where every consumer wants a healthy snack all day long. That is certainly not the case.
Thank you.
Yeah. Will?
I have two questions. One is for Dirk, I think. More of a global question. The CEO of PepsiCo some months ago talked about the huge disruption in the consumer product companies. I think a change from maybe a stronger manufacturer like Mondelez going more to the consumer who's more demanding and discerning, and also the retailers with Amazon private label. How does Mondelez grope with these changes? Does that really imply that M&A should be larger so you can compete on a bigger basis with the Amazons of the world and offer more to your customers? That's the first question. The second question was, we're talking about the change to e-commerce. I think one question that wasn't answered is, as you go to e-commerce, the gentleman said there's less trips to the store, and so there's less impulse buy.
Does that net decrease your sales, even though maybe your internet sales are going up so much? Thank you.
Okay. I would say, yes, I talked about it. There is big change in the CPG model occurring, and I would concur with what the PepsiCo CEO has said. Does that mean that we need to do M&A at a larger scale to compete as a bigger company with Amazon? I don't necessarily think so. I think more of it as our need to offer a bigger and a better range of products to our consumers. As I was just giving the example that we have to beef up our health and wellness offering. I think there is other areas, premium, gifting, that are also interesting development areas for us. We will see more at our M&A strategy as trying to fill in the gaps that we have in our portfolio, but we're not necessarily trying to achieve double the scale of what we have today.
We just want to make sure that we have the right products for the right time. As it relates to e-commerce and less impulse, first of all, on e-commerce, there's also impulse you can create. It's different. As you would shop in a supermarket, we can create the same impulse moments in a way that as you go through your shopping list that you think If you buy milk, we might suggest that you buy an Oreo with that, and that's the typical impulse. We're trying to recreate on e-commerce a little bit the same conditions as we would have in the store. There will be less trips to the store, but on the other side, I would say the consumer is shifting into other channels, more convenience, more out-of-home eating.
Impulse there will still be there, and that is certainly a segment that is growing for us.
Maybe just to complement on e-commerce, also think about the opportunity that e-commerce unlocks for us in terms of premium personalization, and most likely those propositions command higher margins. Again, that is incremental revenue and incremental margin that is accretive in terms of top and bottom to today's world or today's reality as that moves and increases.
Pablo?
Thank you. Dirk, can you talk about the competitive environment in emerging markets between biscuits and chocolate? It seems to me that in the case of biscuits, it's mostly local, very fragmented. In the case of chocolate, it's more consolidated, larger global players, and what that means for innovation and growth strategies. The second question which is related to that, over the years, we've heard many companies talk about white space opportunities and growing through adjacencies. Now you're moving decisions to a local level. On the commercial side, how are you going to control what's going to be the discipline tools in place to prioritize what those opportunities are? An example I always give is Cadbury back in the day, Todd Stitzer, saw a dominant position in chocolate in the U.K. and decided to enter gum. That did not work. Obviously, Wrigley is very strong there.
What are the metrics or tools that you're looking at to say, "Okay, chocolate in Mexico makes sense, and it doesn't make sense somewhere else"? Thanks.
First of all, on the emerging markets, you're right. The competition is exactly as you said. It is more local players in biscuits, and it is more global players in chocolate. What it means for the competitive environment for us is that, as it relates to biscuits, usually we are at a higher price point than the local competition, and it means that we need to work hard on our value chain and on the range of products that we're offering, playing with more premium or more value type of offerings. Make sure that the quality of our products is at a higher level than that of the competition. As it relates to chocolate, while we don't have necessarily huge global chocolate brands, we are in a position that we have usually the local strong chocolate brand.
I think we're in a good position there, playing onto the heritage, the culture, sort of the taste of the nation that we talked about, and compete in that way, being very innovative and doing new things at a faster pace than our global competition does. They tend to stick with the same product and try to sell it around the world. I think we have much more flexibility to provide much more locally adapted products in our range. As it relates to control and how to make decisions, the reality is that we're going to about 15 of those business units that we are talking about, and that still is a manageable type of markets.
We will be able as a leadership team jointly, and our regional presidents play a big role in there, to stay close enough to see where the priorities are set, and how we decide to compete in certain markets. We also talked about the test and learn. The idea here is to, instead of taking big launches and big risks right away, to test a little bit of waters, see if a gum would work on a smaller scale in the country. If we feel that there is traction, then we scale up. If there is not, we will do something somewhere else. We've got already a big number of test and learn initiatives going on around the world, exactly trying to figure out where do we feel we can be successful. I think we have time for one more. Maybe just go to Steve.
Dirk, I have a question for you. First, thank you for making Tate's more widely distributed. To follow up on an earlier question that I think in the first session, how do we think about Mondelez's growth into chocolate in two of the largest markets in the world, China and the U.S.? What were your early-stage learnings? What resources, either from a supply standpoint or marketing, do you really need to move the needle in each of those respective markets?
They're clearly very big chocolate markets. We haven't really played in that market for a long time. Recently we decided to enter each market. I would say that is more trying to be a player where we can be a player, but that is not a play to be a 15%, 20% participant in that market. I think the markets are big. There's heavy competition. It would be very tough for us to really go. That would be one of those cases where I would say, let's be clever about this. Let's carve out the area that we can play, that we can be successful, make that a success. Maybe build from there, but let's not bet the farm on this. This is probably not the battle that we want to fight at this moment. Okay.
Dirk, I'll hand it over to you to make some closing remarks.
We told you that it would go on until 1:00. I think you owe us one hour. We're happy that we had a very packed morning. I hope you were able to learn from the regional presidents, from Luca, and myself, that we are very excited about the future of Mondelez. In fact, representing the entire organization of the company here, I think the whole organization is very energized by our new strategic plan. As we told you, we have strong leadership in our key categories. We have an, I think, unparalleled portfolio of global and local brands, and we have a solid footprint in fast-growing markets. We believe we are uniquely positioned to lead the future of snacking.
We showed you that we are entering a new phase in the development of our company. The next five years will be defined by a better balance between top and bottom-line growth. We are confident that we have a very strong strategic plan that will accelerate our growth and that will drive attractive total returns. We told you about our three strategic priorities that we have. It is a departure from the past. Things will be different. As we said, the first big step we're taking is go back to what consumer goods companies are really all about. That is about being consumer-centric. This will be characterized by a much broader snacking approach, a reinvented marketing approach, and an increased A&C investment. We told you that we will support both our global and our local brands.
We will accelerate our expansion into the underdeveloped channels and in the high-growth markets. M&A will play a bigger role in becoming a dedicated snacking company. Don't get it wrong. We will continue to reduce costs by focusing on operational excellence and a continuous improvement of our operations. Last, but certainly not the least, we will achieve this new growth ambition by changing the way we run the company. We are switching to this local first commercial mindset. We are planning to move with more speed, agility, and simplicity. All this will be underpinned by new growth-related KPIs and incentives. As well as driving that famous profit and gross margin dollar, this strategy leads to an attractive financial algorithm, where volume and stronger net revenue growth will generate a higher quality, high single-digit EPS growth.
I do hope you share the same enthusiasm for the future of the company. Thanks again for joining us this morning. Thanks again for your interest in the company.