Bunzl plc (BNZL) Earnings Call Transcript & Summary

Sustainability becomes increasingly important for society, and business will have to play a key role in this. What does that mean for Bunzl? Will this new -- will this be a new area of competitive advantage? Will it be supportive to our growth? How important is packaging within our overall portfolio? Are there some hard data available? What is happening with the Bunzl value proposition? Is Bunzl's competitive position improving further over time? Bunzl delivered some excellent growth over the last decades. What is management's view on the transition out of the COVID period? But more importantly, what are the views longer term for the future? And what are our expectations around acquisitions? Is there still sufficient runway for growth by acquisition? These are some of the questions that we plan to answer this afternoon. My name is Frank van Zanten. I'm Chief Executive of Bunzl, and I'd like to welcome you to this Capital Markets Day in this beautiful location, The Science Museum. And I'm very glad that you were able to join us here live in the room, and also welcome to the people who are joining us online. We put together a really exciting program for this afternoon. Halfway around 3 50, we planned a 10-minute coffee break. And then at the end, we will finish with Q&A, and we're hoping to be finished about 5:00. And those who've joined us here in person, we hope you will join us for drinks in our Future Planet Exhibition downstairs, and we'll guide you there. And our teams will be available to answer your individual questions. We do also have an exciting product display over there, like a mini exhibition. So we will bring to life all the kind of things we will be talking about this afternoon. Those who've joined us online, you can submit your questions, but you also will be able to view the products online, just like we're doing here in the rooms. So let us make a start. I'd just like to start with reminding you of the scale of Bunzl. We are a GBP 10 billion business in 31 countries, operating out of 150 operating companies with more than 700,000 customers around the world. And these have many more delivery addresses. You think about the Compasses, the Sodexos, the [ ISS ]. We supply essential products and solutions to our customers on a just-in-time basis. They are essential for the process for the people to run their businesses. We are effectively the warehouse of our customers. And we're not only a distributor, we are a highly value-added distributor with a lot of expertise, more than 6,000 external and internal salespeople helping our customers every day with their bespoke demands. And we are mostly organized by customer sector. So people working on our health care division are talking the language of the doctors and the nurses, and the same applies for the people in hotel and the catering divisions. We do understand what our customers are looking for. So whatever the customer wants, we offer tailored solution. [Presentation]

Wow, that's an exciting video, isn't it? On the presentation today, our day is split roughly in 2 parts. The first part is all about our value-added business model. How do we improve our offer constantly, and sustainability is a key part of this topic. Then we have our 15-minute break, and then we focus to the second part, which is our exciting compounding growth strategy. And we will be touching on expectations for the group going forward as well. Today, you will be meeting a number of our senior executives. And the group is split roughly in 2 parts. We have a group of people who are slightly joined recently. The group, which is Richard Howes, our Chief Financial Officer; Diana Breeze, next to him, our HR Director; and James Pitcher, our Sustainability Director, in the center. They all have about 2 to 3 years with Bunzl, which was interesting, obviously, so a large part within -- in the COVID period. Alberto Grau, who is running our Continental Europe business, is with Bunzl about 15 years; and the rest of the team, all more than 20 years of service. Andrew Mooney is responsible for our Corporate Development team, making all these acquisitions over time. Jim McCool is running our North America business. Andrew Tedbury is responsible for the U.K. and Ireland. And Helen Cockerham is heading up our Food and Nonfood Retail and Health Care Division in the U.K. A high-quality team. There's a lot of expert knowledge within that team and altogether, more than 150 years of Bunzl experience and about 150 acquisitions as well. So starting now with our value-added business model. Firstly, I'd like to talk to you about our local customer-focused business model. Local with all the central scale benefits from our global scale, very important. And what's also very important is our entrepreneurial spirit. You can best compare Bunzl with a large family business. Culture is really around improving things every day and acting local, being very responsive. We've seen that during COVID as well, but with these great global benefits, and these support the great results that we have made and we'll be making going forward. Bunzl is absolutely not one size, fits all. It is all about offering bespoke solutions to mainly medium- and larger-scale customers. We offer broad ranges of essential products in our programs. And we tend to have 10,000, 20,000 different items in an operating company. And we supply our customers on the base of very high on time in full. So if the customer expects it to be there at 6:30 in the morning on a Friday, we will be there delivering all these products in one go. We are effectively the warehouse of our customers. We have about 6,000 expert -- sales expert in our business. I just touched on -- we are working in a hotel in the external and the internal sales team. They know the language. They talk the language of our customers, and the same within health care or in construction or industry, very important. These businesses tend to be very focused on certain sectors. And most of our competitors are also organized on that basis. So expertise is important. And this also is very relevant in terms of what we now see in terms of fast developments in sustainability. We are ideally suited to deal with these requests and offering solutions. Competitive prices are also important. And again, this is good for Bunzl because we are the largest customer of our largest suppliers, people like ST, Kimberly-Clark, Ecolab, Diversey. We are the largest customer in the world. But on top of that, we have our own sourcing functionality, sourcing office in Shanghai, which is unique. And we'll touch on that. My colleagues will talk more about that as well. The Shanghai operation is very important. And we've seen that during COVID also, it's effectively an unmatched ethical proposition we have. We make sure, by auditing more than 98% of what we buy in Asia, that we can offer us security around the way the supply chain works, no child labor or other zero-tolerance items. And again, you heard me talk about IT and digital a lot, very important in the context of Bunzl. This is a way to make our businesses more efficient, but also to make the relationship with the customers become even more sticky and build it even more on the longer term and to create a silent smooth process with our customers and makes it very hard for them to move away from Bunzl. Our markets are local, very important to realize. We are by far the largest in our fields, but our markets are local. Our competitors are local and our customers are local. So even if you look at some of the global customers, we serve like Sodexo, ISS or Compass, they still have their country organizations with local budgets and P&Ls. And we need to serve them if it's in Denmark or in France or in Spain in their own language, often specific product ranges. Our products don't travel very well. So they are bulky, low value. So suppliers can differ, product ranges can differ, and we [ held ] them on a local basis. And we also compete with local competitors. So people who are in the Netherlands or in the U.K. or in France, Spain or in Australia are completely different competitors. And by the way, these competitors are also the targets for us to buy going forward. Andrew Mooney will be talking about the opportunities we see in that area as well. So our scale offers benefits, and these benefits contribute to the local competitive advantage of our businesses around the world. And you can think of sourcing with branded suppliers. You can think of our import benefits from our business in Shanghai, our ability to build own brand ranges. And Alberto will be talking about Verive as well, the sustainability range. Our ethical supply chain is something that nobody else has and can offer within our industry. And obviously, the way we scale up our technology platforms and make that available for more than 1 business around the world is also very important. And then last but not least, something we'll focus on today also, how do we use sustainability and our sustainability experts, concepts and reporting and data to create another added value and competitive advantage. As you all know, the pandemic was a challenging period, but [ Donso ] has done extremely well. Our local approach and responsiveness has been very important, and that came through this decentralized organization. And we delivered exceptional results during 2020. Our businesses all had a critical supplier status. We were supplying health care organizations, governments, but everybody who needed mass sanitizers and gloves with these products. And they were in high demand. You may remember situations in March and April on television every night about how do we get gloves? How do we get masks? And we were very well-positioned to deal with that kind of situation. And that was mainly for 2 reasons. The first reason was that government got involved in this, large health care organization, but also governments said, "Listen, we need to step in." If we want to make sure that our health care sector continues to go, we need to make sure that we are sourcing masks and gloves and other products. And so we're going to step in here. Now the problem you have is where these products are all being manufactured in Asia. And the Asia suppliers were simply asking large prepayments. So we've seen orders of GBP 1 million, GBP 10 million, sometimes GBP 25 million, very large orders in that, from government and other people. And it makes a big difference. If you are a Bunzl, a [ FUCI 100 ] business with a very strong balance sheet, it makes a big difference to make a prepayment of GBP 10 million, GBP 15 million, yes? Very big difference towards giving large amounts of money to somebody at the corner of the street that you don't really know. So that was one big benefit. The second benefit, and we've all seen the stories in the newspapers about large quantities of PPE sourced by new people that basically had to be thrown away. I know in the U.K., in the Netherlands, hundreds of millions of pounds have been -- had to be destroyed because the quality was not good. Now Bunzl, with its own supply chain in China, our own office in Bunzl Shanghai, was able to send our own people to the factories who were producing the masks and the gloves. And they were actually standing next to the machines, checking the quantities and the qualities. Before, in the beginning, it went into planes because it had to come very quickly. So we were able to secure that not only the money was safe, the prepayments, but also people are confident that when they were ordering, let's say, GBP 10 million, GBP 20 million of products, that the quality was also in good order. So I think we made a great impression with a lot of our customers, and some of them were new. But the people, the people in our business make the difference, and our local approach and the very agile reactions are key also because they have to respond to what is out there. Just to remind you again, we are a specialist added value organization. And I've been talking to you about this for many times, very close to my heart, the whole area of the digital acceleration, now sustainability but also innovation. And our team will share with you some concrete examples this afternoon of the really great progress we've made. So please welcome Alberto Grau, who heads up our Continental Europe division.

In Bunzl, our typical customers are medium and large companies. Normally, they have complex programming processors. They have multi users. And historically, a key pain point in the customer journey has been the ordering and reordering process. So we have been focusing on digitizing this process, right? And today, more than 2/3 of all the orders that we receive are placed digitally without manual intervention. However, what makes our customers really stickier is the value, additional value-added services that we provide and beyond streamlining the ordering process. And I'm going to give you some color with a couple of examples. We use product selectors to help our customers to find the right product for the specific application. This is very relevant in the safety space where the products are a bit more technical. In the Netherlands, our Safety business has developed a shoe finder. So we guide our end users towards the right protective shoe through a series of questions regarding working environment, weather conditions or level of risk and propose the right product for the right need. By doing that, we have been able to reduce the number of returns to increase the customer experience and to collect very valuable data. We also developed what we call dynamic dashboards. They are business intelligent models where the customer can customize their queries, extract information for them to make better decisions. So last year, a key retailer here in the U.K. was able to save GBP 0.25 million just by optimizing this -- the level of spend across similar sites in different geographies. And we are currently testing recommendation tools. These are applications that, based on historical data and artificial intelligence, we can anticipate the consumption of our customers. So we can tell a quick-service restaurant here in London what is going to be the consumption next week in the outlet in [indiscernible]. So we are -- by doing this, what we are doing is we are having a step up. We are helping our customers to predict the future, in addition to help them to explain the past. So by developing this kind of value-added services through technology, we are able to enhance our competitive advantage and to increase customer retention. So Helen, over to you.

Thank you, Alberto. Hello, everybody. It's our ability to be able to work with our customers and our suppliers to offer product innovation, that's when Bunzl will add significant value. We work really hard to make sure we understand our customer needs and their challenges. And then we work with our partner suppliers to make sure we're absolutely delivering them products that they can make consistently and cost effectively. And it's an iterative process. We will look at a number of suppliers, products, options and samples, first in our technical labs and then we'll move those through into a retail test environments. We have dedicated and scheduled innovation sessions with all our large customers. And that's about talking to lots of customer stakeholders, not our usual contacts and procurements, but definitely, those people on the shop floors, the retail operations, the bakers, the cleaners, the people making the pizzas. But also the sustainability teams, the compliance teams, the loss prevention teams, the brand and marketing managers. We're looking to create and develop products that meet all of their needs. We've got lots of great examples of product innovation. We've recently worked with the co-op. For the co-op, we're using lots and lots of plastic stretch film, which we're wrapping around their cages when they were distributing their food from the distribution centers into their shops. And we work with them to look for a more sustainable option, one which absolutely made sure that the food got there in one piece and not damaged, and that their operatives could use, but also something that could be reused. And so we developed a reusable click on cage cover, which is made from sustainable materials, and it's now in trial in all the co-op supply chains. Over the last 12 months, we've worked with one of our partner factories in Vietnam. They make bread film for us, the stuff that wraps around our fresh products when we go and sit and bake in our grocery stores. And we worked with them to develop a film that has 30% pre-consumer recycled content, and we managed to do it at the same price that they were paying for virgin material. The other big thing about that is if we can get a high content of recycled content, then it helps our retailers to mitigate the oncoming plastic tax. There's an example as well on the slide in front of you. So one about other grocers, sell hot chickens through their rotisserie counters. And we used to supply them with the chicken dough. We try the black plastic base and a clear lid. It was a very bulky product, quite difficult actually to carry the product home and not very clever when it came to being able to transport that effectively. So we worked with them to make sure that we developed the chicken bag. That did the trick in terms of preserving the heat, making sure it didn't leak. We even made a handle so that the customers could carry that home. But more importantly, it was more easy to recycle, and it was much less bulky to transport. So a lower carbon footprint. So more bags in the box, more boxes on the pallet, less trucks, therefore, required to be able to deliver that product to our customer. And that's in stores today. And we're actually working with them now again to try and add some recycled content so that when the plastic tax comes into force, we'll be able to help our customers to mitigate that cost. When I talk to my customers in my retail environment, the one thing that they say to me is our ability to be able to collaborate and listen to them and translate that into something that suppliers can supply. And it's something that they really like and one of the reasons that they choose to work with Bunzl. I'm going to pass over to Jim now who is going to share some more ideas and things that we've done to innovate.

Thank you, Helen. And while it's certainly natural that we focus on the value that we bring through our products, the value that we bring our customers goes well beyond the products. We provide a broad range of services for our customers. We help support them with training for their teams. We help audit their operations. We provide actionable insights through our data. We update them on trends and legislation in the market, which is particularly important now with sustainability. So in short, we provide a broad range of services, which complement our broad range of products. A great example of that is a product that we have in our Canadian cleaning and hygiene business, WandaNEXT. Wanda is a digital platform that ensures cleaning and hygiene protocols and compliance, allows for reduced consumption, increased labor efficiency and an overall better experience for our customers and their cleaning systems. So on the right-hand side, you see our ConfidentClean system, which is a protocol that we use in working with our customers. Our sales professionals will go out. They'll work with our customers to assess their needs in a particular location. They'll help design and implement the range of service and products that are necessary to meet their needs. And then they'll continue to monitor it to allow for optimization and validation of the assumptions. Now before Wanda, that was all done very manually, and it was done really looking in arrears. The assumptions for the cleaning people were that the historical usage would be tomorrow's usage, and that's how they were able to manage their systems. What Wanda does is it comes in and it overlays this system and allows for real-time, predictive analytics and digital insights to allow for this enhanced system. So let me give you an example. You're in a large airport, maybe there's 100 restrooms. Each of those need to be serviced on a regular basis to ensure that you have the proper levels of inventory as well as it's up to appropriate cleaning standards. Typically, in the past, the cleaners would be deployed on this rotation. Wanda brings predictive analytics in, right? It has tools that allow for account as people come in and use the restroom. So if there's higher demand than normal, the cleaner will be notified on their app, on their phone that we have an increased demand. That allows them to get ahead of it before there's an outage. If there is a situation, if there is an issue in the restroom, the customers have the ability, via a digital touch screen or by using their phone with a QR code, to send a notice of a need for service to that cleaner and allow -- again, to allow the cleaning team to be able to react more quickly and to get ahead of it so that the customer has a better experience. This is a system that was developed in Canada, but it's now being trialed in the U.K., in Belgium and in Australia. So it's a great example of how an investment that's made in Bunzl, in a very decentralized way, can be shared across the business to add value for all of our customers. So again, Wanda is a great example of how we use technology to deliver value over and above our products and can include it as part of a bundled service. Andrew is going to come up and share with you how we add value via sustainability.

I wanted to talk about a new customer that's being secured by Bunzl clean and hygiene supplies in the U.K. That's a customer called Andron. They're a large facilities management company. And I wanted to just talk about some of the key factors that allow Bunzl to secure that business away from its incumbent. One of the key factors was our branch network. We have a large selection of branches around the U.K. that offers a fast and reliable and accurate delivery service to over 1,000 customers' sites. Our uniformed delivery drivers provide a service -- a personalized service, which wasn't available through the incumbent use carriers, our ability to be able to locate the product, for instance, on the cleaning shelves of the cover that the cleaner uses. The Bunzl Cleaning Hygiene & Supplies business also undertakes quarterly innovation days. And these are days where we showcase products for cost and labor and sustainable alternatives. And this was really important to Andron because they could use that information to discuss that with their customers in terms of their credentials going forward and secure more business for their business. Our digital offering, not only the usual budgetary controls that allow you to control spend either by user or by site, but more importantly, we were able to tweak and tailor the range that was secured on the web. For instance, this cleaning company, this [indiscernible] company provides services to hospitals and it cleans offices. They're completely different product ranges. So we worked with Andron to make sure that they procure the right products for the right site, very important for them in maintaining standards and controlling costs. And then lastly, our digital offer provides documentation in the way of cost data sheets, which allows their cleaner to download that information on the product so that they're safe and compliant when they use it. We also work with Andron on a carbon optimization plan. What does that mean? That means we use their data and we use our data to analyze what they were buying. And as a result of that, we were able to increase our drop size and reduce the frequency in which we deliver, both of which reduce the carbon emissions for both us and the customer, something very important in them reaching their carbon credentials. And finally, we worked on a closed-loop solution. So the customer was buying a 5-liter cleaning solution that was delivered to their sites. And when it was used and empty, our branch network, our delivery drivers collected that used 5-liter container, returned it to the branch network and then it was collected by the manufacturer, taken back to the manufacturing plant. Cleaned, washed and then reused for other customers, helping that closed-loop solution. So I think all in all, bundled together this very quick response to a single customer, quite unique and something I think that is growing, this sustainable proposition that we can add value to our customers going forward. Thank you. Frank?

Thank you, team. Well done for sharing some great examples of the unique Bunzl offering. And our value-added approach has driven great successes that you just heard. Increasing this added value will further improve our competitive advantage. And one of the rapidly increasing Bunzl competitive advantages is around our sustainability solutions and approach. So let me talk you through this, which is something that I'm very passionate about. Focus on sustainability is not new for Bunzl. I remember in 1994, in our family-owned business, we had a cup care system where we effectively collected used plastic cups and had them recycled. And ultimately, they ended to become a garden chair outside. Making a contribution to a better world is very close to my heart. And it's not only about our own business, but we are also in a unique position to help our customers to achieve their goals. And that requires expertise, data and information and obviously, new product ranges, ranges that we'd like to develop within our own brands. Bunzl is a unique trusted partner, and we are completely material agnostic. We are not a manufacturer, so we can generally advise our customers the best solution for what they want to achieve. And that is why sustainability is so core to how we do business across the group. A couple of years ago, we undertook a materiality assessment process where we spoke to customers, we spoke to suppliers, we spoke to our own people. We also spoke to investors, and we asked them what they believe are the key areas were in the whole sustainability area where we should be focusing on. And it gave some fascinating results. Clearly, there were 4 clear conclusions, clear focus areas for us to work on. The first area is about our responsible supply chain. We touched on our operation in Bunzl in Shanghai, where we have about 50 people working on sourcing but also auditing our suppliers. We have more than 98% of what we buy from Asia is covered to our own internal audit function. The second area is obviously further action on climate change. And we'll talk about that in the rest of the presentation also, what our commitments and ambitions are in that field. Obviously, focus on diversity, ethnicity and talent, very important part within our business. We are a people business. And last but not least, it is all about providing the sustainable alternatives for our customers, identifying what they should be transitioning. And we should be ready and are ready and becoming increasingly ready in terms of providing them with wide ranges of alternative products that either are recyclable or compostable alternatives. So as I may have mentioned, the sustainability is not new. We opened our Asia sourcing and auditing function about 13 years ago. As already, 7 years ago in the U.K. that we rolled out a wide program of sustainable products under our own brand range. We also reduced our carbon emissions in the last 10 years by 50%. And given our close relationship with our customers, we are in the ideal -- we have the ideal opportunity to help them move towards a better world. It's at the heart of everything we do. And as time progresses, we are going to decarbonize even more aggressively in line with sign-based targets as new technologies become available. We will become ultimately net zero in Scope 1, 2 and 3 by 2050 at the latest. We've expanded our own brand sustainability ranges like Verive, but we also expanded our experts in sustainability around the world to help us support our customers in their sustainability objectives today, tomorrow and beyond. [Presentation]

Bunzl has a very good story to tell in terms of the shift to alternative materials. First, we have very limited exposure to single-use plastic products where the volume is expected to decrease. Second, the transition to alternative materials will have a positive impact in the future, and we have made a good progress so far. And third, we are seeing our customers increasingly interested in engaging with sustainable supply chain partners like Bunzl.

Hello, everyone. The majority of Bunzl's revenue comes from what we have classed as nonpackaging products. Our customers' operations depend on these. They're essential to their everyday options. And quite often, in certain sectors, there is no viable alternative to plastic. We don't, for example, receive many inquiries in the safety sector for a cardboard hard hat. These products don't typically face the same legislation, consumer pressure and aren't coming under the same level of focus from our customers when they set targets to reduce plastic or increase circularity within their operations. So today, we're going to take you through a section where we focus on our packaging and consumable products, the smaller proportion shown on this graph, and show you how we have been leading the transition to alternatives in that category. But before we get into the detail, I wanted to pause and talk a little bit about Bunzl's role in the circular economy. Last year, we conducted a wide materiality assessment across a large number of our stakeholders. We spoke to more than 30 global customers, and we ask them what they expected our role in the circular economy to be. And the 4 bullets in the center of the slide show the feedback that we had from them. So our customers expect us to help them make smart material choices. That is selecting the right materials for the job that is often helping them select the materials with the lowest total environmental impact and also provide them with expert advice when material change is necessary, perhaps enforced by legislation. Secondly, when they are expected to make a change or want to make a change, they need a full range of products available to them that are designed for circularity. Single-use consumable products that are compostable, recyclable or made from a renewable resource and reusable products that are designed to be used more than once. Thirdly, where a certain piece of packaging or a certain material is necessary for the job and needs to be used, they like to work with us to rationalize the usage to help them use whatever material they use really efficiently and consider new innovative solutions like reusable products where they would have used single-use previously. In terms of closed-loop solutions. Our customers were quite clear. They don't expect Bunzl to become a waste management company. They don't expect us to set up closed-loop solutions as part of our broad offering to our customers, but they do expect us to be able to support the closed-loop solutions that they are developing. And a good example is what we've been working on in Eastern Europe with Tesco. Across the Czech Republic, Slovakia and Hungary, we collect film-based plastic from Tesco stores. We take them back, and it is recycled into the reusable carrier bags that are then distributed back to those stores for customers to use. It's a customer-led initiative but it's one that Bunzl supported to make a success. And our customers rely on us to deliver these things for them. They need our data on packaging and products to be able to report effectively and to demonstrate the progress that they're making against their targets. They need our own brand solutions when they want to transition because it allows them to do that in a really cost-efficient way. And lastly, they need our advice in the first place to make the right choices when it comes to their packaging, as some of the examples you've already seen today has shown. So when I talk about packaging and consumable products, that blue section on the pie chart that we've just looked at, I'm talking about these 4 categories. And we've used our judgment to place different products and packaging into these 4 categories, and I'll take some time to explain them before we go into the data itself with Alberto. We offer a huge range of solutions that are tailored to our customers' needs, a mix of branded and own-brand solutions. Like you've seen on the video, some of you will be familiar with and will use every single day. When it comes to these packaging categories, there are 2 things to bear in mind. The first thing is that we've applied these categories in a blanket way. So where we say a consumable product is facing regulation or restriction, we are assuming that the same regulations that we see in the U.K. and Europe apply across the whole Bunzl Group, and we've put all of those packaging products into that 1 category to keep things simple. Secondly, all of the categories shown here contain plastic items. But plastic that is widely recyclable is the plastic that goes into category 4. So for a plastic item to go into our alternative packaging and products category, it has to be widely recyclable and/or made from recycled content. So I'm just going to run through the categories briefly before we go into the detail. Number one, consumable product space and regulation. These are the single-use consumable plastic products than the most commonly being banned or restricted in our markets, a plastic straw, a plastic cutlery, plastic bowls. Category 2 are the consumable products that are facing regulation and not restriction where we are seeing a healthy level of transition to alternative materials and where our ranges of things like reusable carrier bags are helping incentivize customers to move away from the single-use plastic products they would have relied on in the past. The third category is packaging with an important purpose. This is packaging where plastic may well be the best material for the job, where an alternative material is not yet available in terms of the amounts or has the same properties that the plastic would have applied before or, where transitioning a single-use plastic product to an alternative product, would cause significant unintended consequences like higher food waste. And the alternative category is any piece of packaging or single-use product that we sell that is recyclable in accordance with national regulations, compostable, reusable or made from a renewable material like sugarcane or paper.

The following slide shows data from 2019 because the last 18 months have been disrupted by the pandemic. So the important thing is almost 2/3 of the total revenue comes from nonpackaging products. And of the remaining 36%, half of that, has already been transitioned to alternative materials. So we are living with 18%. And out of this 18%, 1/3 comes from what James has mentioned, products with an important part. And only [ 0.2 billion out of the 9.3 billion ] we had in 2019 corresponds to products facing regulation. So I think we are leading this transition, and we are very well-positioned to benefit from this shift. I'm going to dig deeper into the first 2 categories. The first 2 categories represent 12% of our total sales. So products facing regulation and products that are likely to transition in the coming future. We expect the rate of transition will be accelerated as the new regulation changes. In Continental Europe and U.K. and Ireland, so the whole Europe, product sales from products facing regulation, so 63% of these sales have already been transitioned to alternative products, well ahead of the regulation. In the second category, more than 1/5 of our total bags sold in the wall are paper bags. And in the U.K., almost 70% of the current plastic bags are today recyclable, reusable, compostable or made from renewable materials. So this excellent progress has been driven by solution developed by our operating companies in the sectors of food service, grocery and retail. And with 3 main axes. The first one is we have developed 1 alternative, at least 1 alternative for any of the products in these 2 categories. So when we go to a customer, we always offer at least 1 alternative product, 1 sustainable alternative product. The second is we are launching and enhancing our own brands to encourage transition in a profitable way for our businesses. And we support that with investment in marketing. And the third, we are developing our own tools to manage the packaging data of our customers and to show them the impact that new regulation has in their own portfolios. And it's a very good selling tool as well to promote alternative products. So we have the right capabilities in place to lead this transition and to make it a source of competitive advantage and a driver for organic growth. So we have a unique position in the supply chain. We don't have -- we are in the middle of the supply chain. We don't have any production capacity to fill in. We can change supplier from 1 day to the next, basically. So this flexibility, along with our scale, put us in a privileged position to provide our customers with, one, objective advice in complex sustainability issues; and two, a wide range of products that meet their specific needs. So in Continental Europe, in the years 2018 and '19, products facing regulation came down the sales of plastic [ came ] down by 13%, and alternatives went up by 31%. The total sales went up by 3% and the cash margin was increased. So our higher prices of sustainable products, in addition to the increase in market share, more than offset the reduction in volume. And we expect this trend to continue. So over the last 3 years, in Continental Europe, we have built a strong team of sustainability experts. We have a central team in Amsterdam, and we have what we call ambassador, sustainability ambassadors. We have 25 sustainability ambassadors to engage locally with our customers and along with our sales teams. Sustainability is fascinating because sustainability has allowed us to engage with our customers in a completely different way. So we are moving from talking about pricing with purchasing people to talking about solution with the Head of Sustainability, who by the way, today, has a very important role in the strategy of the company. So this year, we have increased significantly the engagement with our customers, thanks to an initiative we have called Single-use Plastic Academy. So we are sharing our knowledge, our expertise with our customers. We train them around the single-use plastic directive and the impact this directive has over their specific product portfolio. So not only has been very well-received, but our first initial assessment tell us that we have increased significantly the transition towards sustainable products and has brought additional business. When someone asked me, what do you sell in Bunzl? He said you sell a lot of things. And I always reply, we sell essential products for our customers to operate. It's as simple as that. So we are -- we have normally supply low-cost, high-impact products. So products, without them, our customers cannot operate. So a car manufacturing plant cannot operate without a protective block. Starbucks cannot open this -- the store without a coffee cup. So these are very -- and our customers rely on us to manage these products and help them to focus on their core business. But this trust is very important when they need to make a change. And this is what is happening now with the sustainability, right? So back in 2015, when the plastic bag directive was put in place, all the state members in the European Union, was mandatory for all the members to introduce measures and incentives to reduce the number of plastic carrier bags. So grocery has been always living from the front when it comes to setting ambitious sustainability targets. But all the brand -- different brands have different approach. So we don't have one fit -- doesn't fit all in this case, right? So we need to -- since we are not wedded to any materials, we are very flexible to tailor solutions to each specific customers. And we can provide with products that are aligned with the way they want to individually communicate to their customers, their strategy and their progress. So sales in sustainable carrier bags during this period, '15, '19, increased by almost 50%. And we were reversing the mix from plastic to alternative 60-40 to 40-60, in favor of alternatives. And our total sales increased by 2%.

So nearly 1/4 of Bunzl's revenue in 2019 came from these 2 categories, packaging with an important purpose and packaging and products made from alternative materials. That's 68% of all the packaging and products we sold. As part of leading the transition to alternative materials, we're working to improve everything that we distribute, whether it's made of plastic or not. We're working to increase recycled content. We're reducing the amount of material that's used. We're increasing the recyclability of the packaging and products that we sell, and we're introducing new innovative materials that help people compost products at home and products made from interesting materials like seaweed and algae. And despite a lot of the packaging that's in the orange category on the left, serving that important purpose, we're still working across the business to transition as much as possible to alternative materials that are more suited to a secular economy. So 51% of the packets and wrappers, an example of that would be the chicken bag that Helen showed you earlier, have already been transitioned to materials that are recyclable, compostable, made from renewable sources or are reusable. Now I've got a couple of slides now where I just wanted to touch on some of the decisions our customers make every day when working with us and how we provide them with the advice that they need. Containment, preservation, protection, material availability, effective marketing, convenience of use and budget are all key considerations for our customers when they're choosing a piece of packaging. And that's before you get on to sustainability. And there are trade-offs with all forms of packaging, and it's not as simple as saying plastic is bad and everything else is good. If we look at fresh food packaging, fresh food packaging retains quality and reduces waste. It preserves the cold chain, keeps things on the shelves for longer and it keeps food fresher for longer in our homes. Food waste, if it was a country, would have the third highest carbon emissions of any country in the world. So packaging plays a really important role. But that's not to say that, that packaging can't be improved. The example on the left-hand side showing different options for fresh food packaging is one that we'll finish on the next slide, and it's a live example of something we worked on with the customer. If you look at the material that's being replaced, expanded polystyrene, it's lightweight. It prevents bacterial growth. It's cheap. But it's notoriously hard to recycle. So let's look at some of the alternatives. Let's look at rPET, and I'll tell you what that stands for when we've had a glass in wine later. rPET contains recycled content. It is widely recyclable. It has excellent display properties and availability, but it has a nonsustainable appearance. It looks like plastic. It is plastic. So let's look at bagasse and cardboard. They look sustainable, they're compostable, they can be recyclable, but they're very costly. And increasingly, they use chemical coatings that plastic packaging doesn't need that they're now starting to be restricted or banned in markets because of health concerns. So when a customer comes to make a change, these are the type of discussions that we get in with them. And it's that independent advice that makes us stickier with customers and brings our business commercial benefits when they decide to make a switch. And I mentioned briefly earlier how we're helping customers rationalize the materials that they use. And pallet wrap is something that's used by a number of our customers to protect goods in transport and prevent waste. We're working with a customer in Australia to introduce new technology, new efficient wrapping methods and actually just talking to them about the amounts of materials that they're using to wrap a pallet of goods. And in doing so, we've achieved a 70% reduction in the amounts of material that they used on an annual basis. Moving on to food containers. Food containers represent half of the packaging that we supply in Bunzl. And in North America, we've made fantastic progress with transitioning takeaway food containers and fresh food packaging containers to alternative materials, such that nearly 3/4 of all the food containers we sell are recyclable, compostable, renewable or reusable. But a crucial material in achieving that is widely recyclable plastic, and nearly 75% of all the products that are in the blue category shown in that graph are PET or rPET. And the key point there is that widely recyclable plastics are going to play a really important role in helping every customer and all the brands who are setting targets achieve the industry-leading ambitions that they have and achieve the packed targets that they're commonly signing up to. An example on the right follows the previous slide, where our customer in Belgium wanted to look at an alternative for expanded polystyrene. And after a full review of all the alternatives that were shown on the previous slide, we transitioned 39 million expanded polystyrene trays to a recyclable solution made from nearly 100% recycled content. The customers' decisions were made on the fact that they were assured about the product's food contact safety. And due to the quantities that they needed, the material could be produced and was available at the level they required. So we like to help our customers transition and make those decisions based on science. We don't knee-jerk. And we hope by doing that, we avoid any unintended consequences when moving from 1 material to another.

We have seen that our own brands help us accelerate the transition, and they are normally associated with increasing cash margin and increase in sales. So a good example of that is our brand sustain and revive. They are U.K. brands that have been adopted by our Australian business. And last year, our Australian team was able to convert 13.6 million of single-use plastic of a key customers into a sustainable alternatives of these brands. And by doing this rationalization of the products, they were able to [ graph ] additional business worth $0.6 million. So what is important here is having these own brands help us as well to increase the share of wallet. They estimate that the following 5 years, they will double the sales of these own brands. Our agnostic position in terms of maturing the supply chain allow us to be flexible, as I said before. In the Netherlands, we engaged 3 years ago with a key supermarket. They wanted to remove all the carrier bags, single-use plastic carrier bags and we offer different alternatives. Finally, we come up with 2 options. One option was a reusable nylon bag that would be charged to the customers and then a single-use plastic made for -- by sugarcane that would be for free. They adopted these 2 solution. And successfully, they were able to remove 14.4 million of single-use carried bags in the last 3 years. And our turnover increased by 90%. And finally, transition customers is not just about products. So in the middle of this year, we have developed in Continental Europe a new own brand, which is called Verive. Verive comes from Veritas, tools in Latin, and has 3 main values. It is transparency, education and innovation. It's the first time that we are consolidating 1 single brand across a diverse area as Continental Europe with 15 countries. So we are now working on expanding the range. You will see downstream some examples of this range and roll it out across all the countries. We expect to do that in the coming year, coming 1.5 years to complete the full rollout. But we haven't only launched this range. We also have developed a specific website to provide knowledge to our cost, to share our knowledge with our customers to provide the expertise, right? And in addition to that, we have also developed a dedicated web shop, an additional online channel to approach smaller customers that really care about sustainability. So own brands allow us to accelerate transition, allow us to increase sales and allow us to increase cash margins. Expert advice is normally key when customers want to sign up to leading industry commitments like Ellen MacArthur's. So in the United States, we engaged 9 years ago with a top food processor. And we help them to develop clam shells made 80% of recycling material. So by doing that, this customer was the first food processor in the states to sign up the Ellen MacArthur commitment. And we recently have developed an in-house printing department, where we print washable and recyclable labels for the 300 million clam shells they sell every year. So providing data and analytics to our customers that they need to really understand their position against packaging requirements, against packaging commitments, has become a competitive advantage. So we developed what we call material footprint analysis. This is a tool that has mainly 2 outcomes. The first one is we show the customer what is the impact of the legislation in the current portfolio. So it's a kind of heat map where they can see visually where they are, so what is the problem basically? And that's fantastic because we show them the problem, but also we show them the solutions. It's a very good selling, too. And the second outcome is the level of recyclability the product portfolio has. And some of them, they have targets in terms of recyclability. So we can monitor, we can help them to report this data. So the key thing here is our customers rely on us to report the progress in sustainability. So by using these tools and having this expertise, we help our customers to meet their targets and their requirements to the new legislation.

We've spoken a lot about how we're working with our customers. So we thought it would be quite good to actually hear from one. [Presentation]

So hopefully, we've shown how we've been leading the transition to alternative materials for a number of years now. We're going to continue to report against the data and the categories we shared with you today. And whilst we expect there to be an absolute revenue decline in plastic consumables, hopefully, you've seen that our exposure is quite low. But we also expect there to be a significant increase in the amount of alternative materials that we're selling to our customers in the future, which is going to drive good growth. Any remaining plastic revenue will be where the material is the best for the job or where there are significant challenges to substitution. Our independent advice, our own brand solutions will drive a faster rate of transition. We're attracting new business. And again, that will drive good growth for our business. It's crucial that our ambitions and our solutions are tailored to individual customer needs. Sustainability has become a really important part of any brands marketing. It's increasingly becoming a competitive landscape for who can do the latest great thing with materials or move to an interesting new product. And they're using the subject to stand apart from their competition. And we have a fantastic opportunity to support positive changes in all of our customers' businesses by having that flexibility to deliver them the right solution for them and align to the targets that they are setting. I'm now going to hand over to Andrew and Diana, who are going to take you through a couple of our other sustainable key themes.

Okay. Great. Now it's time to look at the next 3 key themes in our sustainability journey that we're making as a business. Firstly, responsible sourcing; investing in people; and finally, climate change. Let's start with the first of those, responsible sourcing, and here is a short film from our Shanghai team about how they add value to Bunzl and to Bunzl's customers. [Presentation]

Great. We've always had a very close relationship with the Shanghai team based on trust over many years, working with Paul and the Shanghai base. But during the pandemic, we had an increased focus clearly around quality of product, but also intensively, quantity. That team were able to secure volume for us during the pandemic, and that was really important for our businesses to have that security. And at the same time, they were able to continue to innovate in terms of products, products around social distance, for instance, during that period. I remember being on daily teams calls with the teams around the world, certainly in Shanghai with the purchasing directors in the U.K., making sure that we were collaborating and using the best of our resources. Frank mentioned earlier that we put Bunzl representatives into the factories. Not only to make sure that the product was available, but to secure that product for us, vet it, audit it and often do pre-shipment inspections on the product. It's this confidence and reassurance that, that Shanghai team gives our businesses and our customers to help channel the purchasing to the right suppliers, but also make sure we're highlighting the [ poor ] suppliers and helping them to improve in the future. So you heard from Paul in that video about our good track record for audits in Asia. In fact, we had an independent review on those audits, the quality of them, the checklist that we use, and they were verified [ as later ] equivalent. So what are we going to do in the future? We're going to expand that auditing process to include all high-risk regions globally by 2025. It's this proactive management of suppliers that's key to our performance and improvement. Diana?

Thanks, Andrew. So of course, every business will tell you that people are their greatest asset. But at Bunzl, building the right skills and capabilities that we need to drive that future growth is a key business priority. And we will only do that if we focus on building a truly inclusive culture and broadening out the talent pool as much as we can. Now it's fair to say, we're starting off quite a strong base. The results that you see behind me on the screen are the results of an employee pulse survey that we did in November 2020. So between the 2 major waves, first major waves of the pandemic in most parts of the world across all 20,000 of our people. And you can read the results for yourself. It's not just me telling you that these are good results. We're actually able to externally benchmark our engagement survey results, so we know our people generally are really engaged. Our people also feel safe. Now that might sound a very basic and obvious thing to say. But actually, in the same survey, 90% of our people told us that they would have no concerns about reporting any issues they had with their health and safety at work. And that's so important in a pandemic. Our people feel invested in. We have really increased our spend and investment in management training, right through from first-line manager train delivered locally up to our new global leadership program, where the first cohort of 20 people represented -- representing every region in the group, have just completed their first program. Those of you who are active on social media and in particular, on LinkedIn, have probably seen our new We Believe employment brand. And that is starting to get real traction. This is our effort to really try and encapsulate our values, our beliefs and what a great place Bunzl is to work. And it's getting traction both externally and also internally. So for example, the piece that we put out recently on International Women's Day attracted well over 30,000 hits. And diversity is becoming an increasingly important business priority for us, and we're making really good progress. So spearheaded by the fantastic women's network that we have in the U.K., which Andrew and Helen have led very strongly, we're now rolling out that model across the world. And as you saw earlier in the video, we are already achieving our objectives in the number of females at senior levels in the organization. We're now really turning our attention to improving our ethnic diversity. I wanted also to say a few words about the pandemic because I think it gave us a really powerful lens on the engagement of our people. One of the key indicators about engagement that people often look at is employee turnover. And when I look back at our employee turnover at a group level, actually between July 2020 and July 2021, it didn't really change. It stands at a group level at about 13%. Some of you might think that's quite high. But in fact, for our industry, it's not. So in the distribution industry and other related industries such as retail, that benchmarks very well. So for example, the X on a benchmark in the U.S. for retail distribution colleagues would be at around 23%, 24%. Now obviously, as we move into a tighter labor market as we are now, it's something we're keeping a constant eye on but it's definitely a strong place to start. I've talked already about the pulse survey that we conducted in the pandemic. And what came really clearly through from our employees was that actually, they came to work because of local actions that were taken. And if I give you an example from our Italian business, which is a small business, but in Europe, it was certainly one of the first businesses to be really in the eye of the storm in the pandemic. It was clear from what those colleagues told us that they came to work because of actions taken by the local MD. He was visible, he was supportive, he was upbeat, and he had been their boss and shown them leadership for many years. So when they were really scared and really frightened about everything that was going on around them, it was that local leadership that really kept that operation going. And that was supported by a constant pulse of communications at both a global and the local level. I think it's quite well known that we were one of the first business -- big businesses to be able to pay back government support that we received. But when we were in receipt of that government support, we also took care to make sure that our employees weren't financially dependent on that support for their security. So in most cases, we topped up that support that we received. We also did quite a big program of frontline bonuses to those colleagues who are absolutely in the eye of the storm during the pandemic. And in true Bunzl fashion, that was something that was done locally. We didn't impose one group-wide way of doing it. And what was really striking was it was the nonfinancial shows of support that were really just as impactful as the financial support that we provided. And I will forever have in my mind a very clear image of the entire Bunzl North America leadership team going out to a local site, giving out T-shirts, delivering pizzas, just to keep up the morale of staff at that site. It was really powerful to see. So I wanted to return to the topic of diversity because that's obviously such a key part of this. And I wanted to share with you a conversation I had a few weeks ago with Erica Glanz, who is leading the diversity, equity and inclusion program out in Bunzl North America. So let's hear from Erica. Hi, Erica. Thank you so much for joining me today.

Thank you so much for having me. It's my pleasure.

Now we all know that diversity, equity and inclusion is a complex and multi-stranded topic. At Bunzl, we've chosen to focus on the 2 key areas of gender and ethnicity. So I wondered if to start with, you could tell me about how you're tackling these 2 topics in Bunzl North America.

Absolutely. With regard to gender, the first thing we thought about was creating a women's network. We knew that the U.K. and Ireland had a very successful program in its Inspiring Women in Bunzl. So we reached out to those participants to find out about that program, to learn a little more about it. We use that as a blueprint for our program. The next thing that we did was actually to survey our female employees to find out if they were even interested in having a women's network. And the answer was overwhelmingly, yes, that they were. And what they wanted out of that network was leadership opportunities, leadership training and also networking amongst not just North America but globally. So I'm really excited to hopefully roll this program out here in early 2022 once we get the blueprint all mapped out. With regard to race and ethnicity, we started with actually listening to our employees. We created something called Voices listening sessions. And what those sessions are, is we take a small group of employees, approximately 10 to 12, and we sit down with Jim McCool, the CEO of Bunzl North America and myself. And we just talk about issues of race and ethnicity that are affecting the employees, whether it would be in the workplace or outside of the workplace. We wanted to hear what employees were thinking and what we could do to make the workplace more inclusive. And then the next thing that we did is we created a calendar, a diversity, equity and inclusion calendar. And what we mean by that is we took different holidays and started celebrating them. So we've celebrated and recognized employees during Black History Month, Pride Month, Hispanic Heritage Month, et cetera. They've been really successful, and I'm really excited to continue those going forward.

Well, it certainly sounds like you've got off to a flying start. Could you tell me specifically what's going to happen in the next 6 to 12 months?

In North America, we always say that people are the power of Bunzl. So ultimately, I want every employee to be seen for who they are and for Bunzl to appreciate the unique talent that each employee brings to Bunzl. And this won't be limited to gender, race or ethnicity. We want to look at employees as a whole. We want the environment to be inclusive of everyone. We want employees to have a true sense of belonging and to be happy and proud that they're part of the Bunzl family.

And have you thought about how you're going to measure progress?

We have. And we do think that, that measurement will change over time. Of course, with regarding to gender, what we would like to do is to make sure that all of our high-potential females that are in management roles, that they're assigned a mentor. Of course, the ultimate measure is going to be whether gender diversity actually improve within the organization. But one place we think that we can start is to assign these mentors to ensure that we're retaining our best talent, that our females are not leaving to go elsewhere. We want to make sure that they stay within Bunzl. And with regard to race and ethnicity, again, the ultimate measure is going to be our numbers. But one thing that we are going to do is have an engagement survey. And we'll have the ability to look at the engagement survey results based upon race and ethnicity. So therefore, we'll know if certain groups of people are answering questions differently. So we'll know if certain practices are affecting our employees differently based upon their race and ethnicity.

Well, it's always good to have some specific measures in place. But have you thought about what your personal hopes are for how Bunzl North America will look and feel as you start to make progress against these objectives?

Well, we consider this a journey. We know that it's going to be a long period of time, and we're just beginning it. But I'm really excited about what we've done thus far. What we're looking to do in the next 6 to 12 months is to keep building upon the foundation that we started with this year. We'll continue with our heritage month celebration. Hopefully, we'll keep learning more things about our fellow coworkers during that time. We'll also look at adding an additional networking group. We're working on the women's networking group. The next thing we'll look at is perhaps having a networking group for people of color or another group. We'll also focus on employee and management training. Now this is something that we've talked about from the beginning, and we've been slow to roll this out because we wanted to make sure that we did it correctly. We wanted to make sure that the training actually made a difference and wasn't just checking a box. So that is also part of our plans for the next 6 to 12 months. In the end, everything that we do is with a thought that we want our diversity, equity and inclusion to become part of the business and not a separate business initiative.

Well, what an inspiring way to finish. Thank you very much, Erica, for talking about this to me today. Good luck with the program.

Diana, thank you so much for having me and it's been a pleasure to talk about this.

Okay. So you've heard about what's been happening in the U.S. in the last 6 to 12 months and what their plans are moving forward. But let me give you a group perspective on this. And first of all, why is this something that we need to focus on? Well, I'm very clear. I think there are 3 key reasons why diversity needs to be one of our biggest priorities. Firstly, it's just the right thing to do. It's core to our employment proposition and our employment brand. Secondly, it's becoming a condition of doing business with our customers, our suppliers, our investors and all of our other stakeholders. And thirdly, it's absolutely key that we create a more inclusive culture, make ourselves more attractive as a place to work for whatever people's backgrounds are if we are going to build those skills and capabilities that we need in the future. We need to have a broad talent pool to fish in if we're going to bring in sustainability experts, and you've seen some of them today, digital experts, analysts. So it's fundamental to our talent agenda. So from a group perspective, and Erica talked about a lot of this stuff. What we are doing is focusing on those actions that we know move the dial. So for example, on gender diversity, we know that mentoring, sponsorship, training, networking, all move the dial. In the U.K., where they've been doing this for probably longer than any other part of the group, since these activities started, the number of females in leadership roles has gone up from 13% to 22%. So we know this works. As I mentioned earlier, we're also now really focusing on creating a program around ethnic diversity. And there, the starting point has to be, in my view, to look at our culture. And where we are going to start, as Erica said, is by looking at our engagement survey results, cutting those where we can by ethnic group and making sure that we have parity. And where we don't have parity, really listening to our colleagues to understand what their real or perceived barriers are that are stopping them being their best at work or stopping them thinking about Bunzl as being a great place to develop their careers. And when we've done that, we will have a broader pool to fish in, in order to build the talent of the future. I also think that the pandemic helps us accelerate this process in a funny sort of way. So I think that we've all got used to hybrid ways of working, more flexible ways of working. That will hopefully mean that we need to be less geographically constrained when we go out and look for talent and will also mean that we can probably offer elements of flexible working where we couldn't necessarily do that before. So I'm optimistic that, that will also help us accelerate our agenda. So I think I'm very optimistic about this. I think with the right degree of leadership focus from across all parts of the group and taking the best bits of that really powerful local Bunzl leadership, we can really get traction on this. Thank you. And I'm going to hand back to Andrew to tell us about climate change.

Okay. As you can probably see from the slide and probably know about Bunzl, our one-stop shop solution naturally aggregates suppliers and therefore, reduces carbon footprint. It would be no surprise we're currently supplying 2 of the largest contract caterers in the U.K., and we consolidate for those 2 customers alone 500 suppliers and over 12,000 product lines. We've had 10 years of stable carbon emissions within Bunzl despite considerable business growth. We've cut our carbon. In fact, we are 50% more carbon efficient. And as you can see from the chart behind you, we compare extremely well and favorably with many other logistics companies. So what are we going to do in Bunzl? We're going to be committed to the business ambition for 1.5 degrees campaign. And what that means is we've signed up to the Race to Zero initiative. We're committing to have our new science-based targets accredited by the SBTi. How is this actually working though in a business area? Let's take U.K. and Ireland as an example. We've done a bottom-up approach to looking at our current footprint. We've looked at our vehicles and moving those to low emission vehicles. We're trialing biofuel in our catering business currently. We've moved some of our smaller vans to electric and rolled out company cars to our field sales based team, the field-based team. We're always pretty efficient in our warehouses in terms of operational efficiency, but also rolling out LED lighting and rainwater harvesting in some of our facilities. And in the U.K., we've been buying renewable energy for some considerable time. So what are we aiming to achieve as an organization, a global organization like Bunzl? By 2025, we aim to be 25% more carbon efficient. And by 2030, we're aiming to roll out that renewable energy to all of our businesses around the world. By 2040, 40%; and by 2050, we aim to be net zero at the latest, including Scope 3. Thank you. Frank?

So in summary, we've heard from the team that sustainable solutions has become absolutely essential for our customers. And we are absolutely leading as a proactive leader in helping our customers to transition to this more sustainable future. And we do this summary to our expertise. Our teams around the world who really understand what they're talking about. I can't emphasize enough how important the data are that we are owning in our business. If you are a customer, you're buying 300, 500, 1,000, sometimes 2,000 different items. You just don't know where to start. You don't know of what the products consist of in detail. So you need Bunzl to help you, to advise you in terms of where to move to. And what isn't easier than if we also provide you with the right alternatives, and we are building them more and more into own brands. And that's what I was talking about before also, doing the right thing for society and for the planet can go hand-in-hand with achieving also your commercial objectives. Our in-house Shanghai sourcing and auditing operation is absolutely unique. I don't know of any other business that has that capability in-house and providing this ethical supply chain will be widened even further into other territories outside Asia as well. Our goal is really to be a proactive and responsible business, and we believe we can do this while being commercially successful for our stakeholders as well. Our proactive approach on sustainability is an increasing competitive advantage. We are very committed to accelerate our focus in this area today, tomorrow and beyond. So it's now time for a break. We will start in about 15 minutes again, sharp. We have some drinks in the back. So please enjoy that, take a coffee, and we'll start in 10 to 15 minutes, let's say, sharp 3:30. Thank you. [Break]

Great. Well done, very much on time, so welcome back. And let's now move to the second part of our program, very exciting topic, our compounding growth strategy. And most of you are familiar with the 3 key pillars of our compounding story strategy. The first part is profitable organic growth, which is important using all these 150 companies around the world and making sure that they grow their business. The second part is around our operating model improvement, making sure that we improve the business every day through technology and other things, and we'll hear more about that later. And last but not least, our acquisition growth. We have a lot of potential to grow, and we'll touch on that as well. And when I talk about the compounding strategy, the compounding model of Bunzl, I always like to compare it with a snowball coming off a mountain. It's getting bigger and bigger and bigger every time. So Jim McCool, who runs our North America business, will start to address the first pillar right now, profitable organic growth.

Thank you, Frank. As Frank said, driving profitable organic growth is a strategic pillar within Bunzl. The drivers of organic growth are multifaceted, from how we position ourselves strategically with our customers, to how we execute with those customers on a day in, day out basis. COVID certainly amplified many of the key drivers that we see. Products such as masks, sanitizers and gloves saw spectacular growth in 2020. Many of these products were our own branded products and most were sold to our existing customers. We were also able, as Frank mentioned earlier, to sell these products to new customers, oftentimes governments, who were trying to secure emergency supply at the height of the crisis to ensure that they can protect our communities. Within this, we also found new opportunities to expand our categories. Leveraging the work of our Bunzl Shanghai sourcing team, we found products such as screens and distancing signs to be able to take to both new and existing customers to support opportunities during the last 20 months. During that time, the significant and surging demand and limited supply certainly drove price inflation. We're very comfortable that we priced our products appropriately during that time frame. And in particular, oftentimes, our large orders were sold at lower than normal gross margins. Now operating size is a key driver or order size is a key driver of our profitability. So despite the lower gross margins, they still were beneficial to our operating margins. These COVID sales were very important in offsetting some of the changes we had in other businesses in particular, our foodservice and retail business in the U.K. and Ireland as well as North America. So all in all, strong underlying growth of 4.8% in 2020 certainly demonstrated the resilience of the Bunzl business model during a time of crisis. COVID has certainly had a major shock in the world and Bunzl like all companies has had to deal with a very, very unusual operating environment for the last 18 months. The path to our new normal will be a transition. And as part of that transition, we expect that our COVID-related product sales will continue to decline, though stabilize above 2019 levels. The pace and extent of the business recovery is going to depend on the end market and the geography. In the U.S., for instance, the recovery of our foodservice and retail business has been supported by product price inflation driven by plastics and paper price increases. We expect slower recovery in our safety markets where underlying raw material and labor shortages at our customers are delaying projects. In the health care space, we expect stronger near-term recovery as elective surgeries and procedures are now able to be performed. In our cleaning and hygiene segment, we see a mixed bag. We certainly expect that the enhanced cleaning protocols will remain as we come through the transition, but the lack of foot traffic for return to office or travel will certainly impact our facilities management business in the near term. Our facility management business represents about 13% of Bunzl's overall turnover, but it's important to note that cleaning and hygiene category products are used broadly across our segments, and they represent 20% of our overall turnover. Foodservice is likely to have mixed recovery as well. Certainly, we're all seeing and enjoying restaurants coming back, but the sales of foodservice products into catering and hospitality are very much following similar trends to what we're seeing in facility management and are going to be driven by that return to foot traffic in offices and with travel. One of the aspects of our foodservice business includes our food processing and agricultural business in the U.S., which has performed well throughout COVID and continues to do so. We're cautious about the recovery in nonfood retail. Obviously, there's been an acceleration to online, although that has been offset somewhat by our ability to provide packaging solutions for our customers and their e-commerce businesses. As we move through the transition to our next normal, organic growth will once again be driven by activity in our end markets. Each of the markets have its own secular trends that can drive growth. Several of our markets have been favorably impacted, we believe, by trends that will develop and sustain post-COVID. In our safety business, for instance, where there was already an underlying trend towards an increased focus on workplace safety and employee safety, we see that the infrastructure spend that will come out from many governments post-COVID will trickle down into our businesses and support growth. In health care, we expect a general increase and a focus on preventative health care as well as health care at home, which lends itself well to the products and the solutions that we can provide our customers. And then finally, in cleaning and hygiene, again, we expect that the enhanced cleaning and hygiene protocols will remain as we take care of our employees, we take care of our customers, and we want to present a very hygienic face to each of those. And I think when you combine that with the product range and some of the technologies we talked about, we think we're well positioned for growth in those areas. The grocery and foodservice, we expect moderate growth and we expect an increasing focus on sustainable packaging in those areas. Again, some caution as we think about our nonfood retail business as we do expect the shift to online will provide a bit of a headwind. So I'm going to turn it over to Helen, who's going to speak about those shifts to online in some of our segments and how it impacts us.

Thank you, Jim. So the grocery sector, definitely a shift towards e-commerce and it continues, and it was only accelerated through the COVID pandemic because these, some quite reticent customers decided for the first time that they were going to have a go at home shopping. But actually, what we saw was it was nothing like the extent it would be in nonfood grocery. So in the U.K. market, before the pandemic started for the last 5 months prior to the pandemic, online grocery sales accounted for 5.4% of total sales. The levels peaked in the third lockdown when levels for online home shopping reached 13% of total sales. And that's slowly declined again since and actually in August it was at 10.1%. So still in the U.K., a significant shift from where we started before the pandemic. And that shift will continue. That's what's expected, but it's not anything like the level of nonfood. And when we've looked at why and asked people in our businesses and in stakeholders and our customers why that is, their view is that it's because of the experience and the enhanced offers that they're looking to put into the supermarkets. So the fresh food offers, the food to go offers, the cafes, additional services, dry cleaning, photo. Dry cleaning is a real growth area. And also, there's a big emergence of brands within brands, so shops within shops. And you'll see it more and more, Habitats in Sainsbury's, for example. Our growth and our strategy in our Bunzl retail businesses is to make sure we're developing ranges and category expertise so that we can support this omnichannel customer need. So as demand changes, we shift our revenue streams. However, actually, what we've seen is, in most cases, whether those grocery orders are being picked by ourselves as customers or being picked by pickers in a multiple site operation, either in a dark store or a lot of them are still picked in the actual supermarkets, a lot of the products that we supply them to package them or to make the environment clean and hygienic are still needed regardless. There is some reduction in terms of demand, and that's coming from a reduction in footfall, so less toilet rolls, less till rolls, less cafe consumables, for example. But what we've seen in the U.K. is that we've had an offset. And through the pandemic, the amount and level of products that we were supplying into our retailers for their online shopping was significant. It was the home delivery bags. It was segregating orders. It was labels. It was the delivery crates. It was the picking trolleys, lots of health and safety products and also the uniforms for the drivers and the health and safety products and sanitizing products for the drivers and their vehicles. It's a different story in nonfood. And we've definitely seen this shift in digital adoption. And it's been higher and it's been quicker. And again, it's been accelerated through COVID. So in the U.K. before the first lockdown, online penetration in nonfood retail was about 15.7%. You take the average through the 3 lockdown periods, that rocketed to 40.7%. And then in the period since shops have reopened, we've seen that drop away again. And actually, the average was 23.6% in the last few months. August was 21.6% penetration level in online nonfood. But the products that we're seeing that are supporting this online shift are quite different to those products that we supply into bricks and mortar. We've got a number of different retail operating companies. Some of them are really focused on supplying into shops. Someone like Keenpac, for example, which is all about bags and boxes, supply into customers that are going into shops. We've also got business that are really focused on supplying online and supplying fulfillment facilities, for example, somebody like the Woodway business in the U.K. And what we saw during the pandemic is that actually in the U.K., overall, the amount of packaging sales and margin increased, and that was through the demand of the increase in online packaging. And we see that, that level and trend will continue as those penetration levels increase. And why is that? It's really important from an e-commerce packaging perspective because the packaging is vital to the successful e-commerce offer. It needs to protect the products once it's been picked right the way through to our back doors or front doors. It also needs to deliver as packaging a really strong customer brand experience. So when we open it in our houses, we get that wow factor that would be missing from a store environment. And also, the packaging has to be quite complex, yet quite simple actually in that when we open it at home, we want to be able to open it simply with tear-off strips and different ways to open it. But then that packaging has to be reused because we often need to return products. So in our businesses, we're using a very consultative approach to review those packaging ranges with our customers, looking for sustainability options, but also looking to reduce the ranges and the sizes. So trying to avoid this dreaded situation where you get the tiny product in a huge box with loads of void fill. We don't want to ship fresh air. And we're also focusing on designing packaging, which really makes it quick and easy for their people in the distribution centers to pack because we really need to work with retailers to reduce their labor costs. We're actually seeing this demand and this trend as well in foodservice. So there's real growth in the online home shopping of hot food, meal kits, ingredient kits that we're all getting into. It's creating significant demand actually in terms of sustainable packaging in different ways to innovate to be able to get those products to our homes. And Bunzl see this as a bit of a new growth channel and is independent really of the traditional foodservice offer that you'd expect from Bunzl. So it's some of our customers and restaurant brands that are now looking for the takeaway packaging that can be delivered like via Just Eat or Deliveroo, for example, and they need packaging to be able to facilitate that. And also some of these online platforms themselves, they're starting to look for branded packaging from Bunzl to facilitate their offer. I'm going to show you a film now, which hopefully will bring our e-commerce offer to life. It's from one of our e-commerce customers in the Netherlands explaining why they feel that Bunzl brings value to them. [Presentation]

Hope that help to bring our value proposition in our e-commerce sector to life. But actually, across all of our sectors, a real source of value for Bunzl is our great service, and that's delivered through our operational excellence and our operational expertise. And it's the fundamentals really of sourcing and picking and consolidating, delivering those products cost effectively and efficiently every day just in time to our customers. And that's a key pillar of our strategy, to make sure that we're delivering operating model improvements. We have a relentless focus in our businesses on this. We've got dedicated continuous improvement and project managers making sure we make it happen. We've got annualized plant programs where we really focus on delivering those savings, not only to offset operating cost inflation, but also to enhance our margins and often to pass some savings on to our customers as well. Consolidation of warehousing, for example, is one of the larger operating model improvements that we constantly look to do. And actually across the group, we've consolidated 71 warehouses in the last 5 years. And in my retail businesses in the U.K., we've just consolidated 6 sites into one. You might have seen it on the video earlier. To reduce the cost of implementing lots of things, we've used warehouse management tools and transport management tools, digital systems and made sure that we improved our staff productivity. We've installed state-of-the-art lighting. And actually, it means that we've reduced our electric usage by 70%. And digital is really being the key enabler. It really helps us in all of the businesses to make sure that these small improvements continue. Things like stock management tools, we work really hard to reduce our stock levels and increase our stock turn, reduce our stock loss. Routing software, just constantly reviewing the delivery routes, making sure that we're reducing mileage, driver hours, making sure our drivers are driving efficiently and using fuel properly. In retail, we just recently looked at a digital workforce management tool, and it's increased the activity rate of our warehouse operators significantly. And that was just using data to have a look at how our warehouse was laid out, what peak runs were like and what was stopping our pickers being more efficient. So it's this attention to detail and the small incremental changes as well as some of the bigger ones that are really driving this operational model improvements. So I'm going to pass over to Andrew now to share with you some of the detail of our next pillar of our strategy, which is acquisitions.

Thank you, Helen. Well, Bunzl is very well known for its ability to make acquisitions, and I think it's very fair to say that we have a well-oiled acquisition machine. We've got a terrific track record of transforming the business through scale, reach and sector diversity using our acquisition ability. But unfortunately, in March last year, COVID threw grit into our well-oiled machine. And just like the M&A world at large, things ground to a halt. I'm pleased to say, however, that every deal we were working on pre-COVID, we've now signed. So how do we do this? It's not just me. I have 2 teams, one in the U.S., one in the U.K. dedicated to our M&A activity. And since 2013, between us, we've done 100 acquisitions. That's one a month, all funded through our own cash and providing GBP 2.7 billion of revenue. I'm very pleased to say that we've already exceeded that average this year. Our approach is disciplined and consistent. We have 9 key transaction parameters, and we use that as a lens through which we evaluate every opportunity we have. We overlay those parameters with our ability to measure the management team, how strong is it, how well is it prepared to take the business forward? And one really important factor is cultural fit. And I believe perhaps this is the most important of all. We are looking for teams that are down-to-earth, humble, hard-working, that will fit in with the Bunzl culture. We have a very entrepreneurial environment, a very decentralized business, and we attract owner-managed family organizations. So what do we provide? We acquire these well-run managed businesses. What do we provide? We provide financial and operational support to them. That's obvious. We provide sourcing and own brand expertise, economies of scale, another obvious one, but we also provide assistance with developing and implementing digital tools and management reporting to help them understand their business better. This enables them to continue growing. One other less obvious factor is that we provide collaboration. Imagine these owner-managed businesses, they've been working in a vacuum for most of their lives. They come to Bunzl. They can start talking to like-minded people. And the best example of this is the Safety Forum, where once a year all our leaders, often ex-owner managers, come together and exchange ideas on how the market is moving, what are the new products. This is a very empowering environment for them. I'd like to share with you a short film, features Alberto and Oscar. Oscar is an ex-owner, where we acquired his business back in 2017. And it's great to see things from a seller's perspective. [Presentation]

Acquisitions are in our blood at Bunzl. Many of us actually joined through acquisition. A lot of the opportunities do not come through advisors, do not come through research at the center. They come through our local managers. Our local management builds relationships with business owners. This often takes years to build the trust. And that trust is essential because when it comes time to sell their prized asset, we are the obvious ones to talk to. And this network allows us to keep the pipeline healthy. It also allows us to be selective and allows us to walk away where necessary. We are very disciplined when it comes to valuation. Our focus on bolt-ons up to GBP 100 million in valuation means we can be disciplined enough to hold our multiples at around 6x to 8x. Larger deals, anchor opportunities may drive valuations higher than that, especially where there's private equity interest, but we will never fail to walk away where we think we are overpaying. Our average deal multiple so far this year is 7.5x. I'd like to hand you over to Jim now to talk about our growth in the safety sector.

Thank you, Andrew. As Andrew said, we're going to take a deeper dive into our safety sector and the acquisitions that we've made in this space. Since 2000, we've completed 48 acquisitions in the safety space, many of which businesses are represented on the slide here. And since 2005, we have committed GBP 1.6 billion in spend to the safety space, which represents approximately 40% of our acquisition spend during that time. Now the safety space is a bit different than some of our other sectors. The success of our businesses in the safety space is driven by a strong own brand portfolio, often supported by our global sourcing and continued product innovation that allows us to differentiate within the marketplace. Most of the safety businesses that we've acquired thus far have been focused on the PPE side. We've had strong success diversifying into this sector, both for redistribution and end customers, in end markets as diverse as mining and construction. A great example of the safety investment we've made is the acquisition of MCR Safety in September of 2020. MCR is a leading PPE supplier in the North American market with a focus on hand protection, rainwear and eye protection. This is a great example of relationships at a local level. The MCR relationship was nurtured over 10 years by our local management teams and was critical in being afforded an opportunity to engage exclusively despite significant other strategic and private equity interest in the business. The MCR acquisition was also disrupted from COVID, and that relationship allowed us to continue conversations throughout and successfully close the deal in 2020. Early signs are very successful. MCR has achieved 7% growth year-over-year, which is ahead of the near-term acquisition case. We've certainly benefited from some synergies thus far and look to continue to drive opportunities to leverage what Bunzl and MCR can do together. While there's still plenty of opportunity on the PPE side of safety, recently, we found opportunities in other aspects of safety. We've got 2 examples of new businesses: one, FRSA which was acquired in December of 2019; and the recently announced McCue Safety, which we expect to close in Q4, that are really exciting businesses that will continue to drive growth for us in the safety sector. FRSA is a business in Australia that deals with safety and emergency response supplies. Again, very good early success, 11% growth since the acquisition. We've been able to effectively leverage the Bunzl infrastructure and sourcing to open a greenfield operation in New Zealand, a great example of the power of the Bunzl organization that we can bring to an acquisition. We've been able to leverage what FRSA sells, which was a new product category and bring that to Bunzl businesses, but then also take the Bunzl product categories and take it to FRSA, allowing and fueling some of the growth that you've seen. We've been able to enhance their HR and finance functions and support them with a new ERP, all designed to be able to continue to grow and sustain these levels of growth. McCue Safety is involved in the safety and asset protection, providing solutions to their customers in e-commerce distribution, in retail and in general warehousing. Products such as safety barriers, bollards, column protection, floor railing and bumpers. Again, distribution centers, e-commerce, fulfillment, retail, applications. This is a business that has shown considerable growth over the last 3 years, 20% CAGR, driven by the growth in e-commerce distribution and new product innovation. It's a business that's focused on service and providing innovative solutions. Their solutions are typically customized with their customers, designed to protect their employees and their assets. We expect this business will continue to grow strongly from the continued growth in e-commerce activities, the continued focus, as we talked about earlier, on health and safety in the workplace and protecting employees, but then also protecting the investments that our people are making. The proliferation of investment in automation requires more and more protection in the warehouse environment, and McCue's products are uniquely designed to support that. Also, the opportunity to leverage the Bunzl customer relationships. They play in grocery. We play in grocery. They play in retail. We play in retail. So the ability to leverage our collective relationships for growth as well as to expand the McCue model outside of North America on an international scale. So while there's significant opportunity yet in PPE and in Safety, Andrew is going to talk about the strong runway for continued growth in our existing sectors and geographies.

Identifying, transacting, onboarding, I hope you all agree, they're all key competencies of Bunzl tried and tested over the years. But I'm sure the question a lot of you will be asking is, can we continue to do this? Can we continue to acquire at the same pace or even faster than we have done in the past? The answer to that is a firm yes. We use market penetration, sales as a percentage of GDP. And using the U.K. as a conservative benchmark, we compare our other geographies. Now I say conservative because our market penetration in the U.K. is not the highest. It's third on our list of territories, behind the Netherlands and behind Denmark. So it's a reasonable benchmark to use. If we use that and compare it to Spain, as an example, we heard from the -- Alberto, on the video earlier, how we built Spain up over 10 years to GBP 200 million revenue. If we take the market penetration in Spain to that of the U.K., there's another GBP 400 million to go for. What a great opportunity. And that's just one country. We have the machine. We have the discipline. We have the financial capability. We most certainly have the opportunities. So we can and we will continue our remarkable acquisition story. Now over to Richard.

Thanks, Andrew, and let me start by saying that I've been very impressed by how Andrew and his team have delivered for Bunzl over a very long period of time. We've done 179 deals in 17 years, and Andrew and his current team have done 120 of those. So 2/3 of all the acquisitions we have done have been done by Andrew and his team. Now that is, I think, very important very and very encouraging. I need to recognize that this is a key competitive advantage for Bunzl and one that many companies really struggle to replicate. Now you also heard from Andrew that there are significant opportunities to buy high-quality businesses in our existing sectors and geographies and indeed, outside of those. The question is, do we have the headroom to finance those opportunities? And the answer, of course, is we certainly do. We are a very cash-generative business. We came into the pandemic at the low end of our leverage range, and we've made a lot of cash, performed very well during a very difficult time. And therefore, as we stand today, we are able to allocate over GBP 1 billion in acquisitions in the next 12 months and stay below the 2.5x range that we set to ourselves. As Andrew rightly said, we will, of course, continue to take a disciplined approach in how we allocate that capital. We will pay the right price for the right deal. So let me just turn to the track record of Bunzl and look, it's great for me to be able to stand here and point to a chart which shows -- but going back to 2004 when Bunzl demerged Filtrona to become the pure-play distribution business it is today that we've grown our profits by 10% compound annual growth rate over that extended period of time. I think it's a very, very impressive performance. But it's not just the track record. There is inherent resilience in this business, and this has been demonstrated during the 2 greatest dislocations in modern times, the global financial crisis of 2008, 2009 and the pandemic that we're still living through. In both these events, margins have been resilient. In 2008, our margins only dropped 30 basis points. And in the pandemic in 2020, our margins actually increased by 70 basis points, that's a very strong performance. And the pandemic has shown how important resilience is for everybody, but I think particularly for Bunzl. Our sector and geographic diversification has helped us spread the risk around the world. We are not overly reliant on any one market or indeed geography. And as Andrew Tedbury said, our ability to procure vast quantities of incredibly scarce product through the most uncertain times was the main reasons why we've been so successful during the pandemic, and it's allowed us to invest GBP 900 million in acquisitions and CapEx since the beginning of 2020 and continue our track record -- a very proud track record, of consistent dividend growth over 28 years. In today's increasingly uncertain world, resilience is a very, very valuable asset, and dare I say more valuable now than it has been in the past. Now Bunzl is known for having a very consistent track record of delivering strong shareholder returns, and we've talked about the building blocks of that this afternoon. We've talked about organic growth, operational efficiencies, cash generation and our ability to deploy that in value-accretive M&A. On organic growth, you heard James and Alberto talk about how sustainability will play a much more prominent role in our organic growth in the future. And Jim talked about how the pandemic has enhanced the growth potential in many of our end markets, particularly safety, cleaning & hygiene and health care. And I can tell you that across the group, there is very significant focus on making sure that we deliver organic growth in each of our businesses. On operating efficiencies, Helen talked about how we focus on cost control every day. It's a day-to-day game, a game of inches, consolidating warehouses 71 in 5 years and driving efficiencies to help us offset any operating cost inflation, of which we are seeing more and more at this point in time. And Andrew, I think, was very clear in demonstrating the opportunity we've got in M&A. It's significant, and it will continue. And if you add all of those things up, you can see there's plenty of avenues for growth for Bunzl in the future. And let's not forget that dividend. Now we are very proud of having delivered that unbroken dividend growth. You could absolutely expect us to continue to do that. So I'm very confident that as we stand here today, we will continue to deliver the strong shareholder returns that Bunzl has been known for. Frank?

Great. Thank you, Richard, and very well said. It's great to hear Richard also being very positive about the future. So before we move to Q&A, I would like to summarize what we discussed today. And the first important point to make is Bunzl has always been an added value specialist distribution organization. What is important to realize is becoming more and more of a specialist, we're becoming more and more an integrated partner of our customers, very important. Our people are our biggest asset. It's all about expertise. Once you're in distribution, you don't have any clever machines or patents or whatever is really the people that make the difference. And we did see that very clearly also during the pandemic. So a growing competitive advantage comes from our ethical supply chain. We spoke a lot about China. You saw a great video in terms of how the people were managing and supporting our businesses, but also the customers who buy from our businesses. Expertise is very important. We have the sustainability experts within the business that train our sales force, but also go out and meet our key accounts and national accounts, international accounts and they basically talk the same language when it comes to achieving progress, commitments and targets. And I think what is very, very important and the area that I'm very passionate about is we talk all about data often. And the power of data within sustainability is absolutely huge because when you have a wide range of products of essential products for our customers. And it's very hard for our customers to really understand the material that's in it, is it recyclable? Is it recycled? It's a complicated area where you really need to talk to an expert, and we are material agnostic. And so we are the independent adviser, the trusted party for our customers. And using that data, and turning that data into very clever reporting that Bunzl has done, which basically is able to summarize what customers are buying, and we can allocate it into the green category already transitioned, it's [ robust ], it's recyclable. It's recycled, reusable or it's an amber category that will transition or its [ repped ] because it's under legislation, and it will have to move as part of the European legislation. It's very important. So we make the life of our customers very easy by showing them this is basically what you're buying. Your products are in the different categories. This is really what you should be transitioning to another category. And by the way, we have this wonderful Revive brand, our own brand that can be a very good solution for you going forward. And the customers obviously value that advice. And this hasn't started last month. We've been working on this for a long time, but it's fair to say it did accelerate over the last couple of years. We've spoken about the materiality assessment and setting the priorities and really working through that program as well. I think the other important fact, I think, for today is really around how the shape of our portfolio has changed as a result of acquisitions. We've heard how many successful acquisitions we've done. And a lot of the acquisitions also happened in the safety space. Now probably most of you didn't realize and when you talk about Bunzl, that 2/3 of our products are actually now packaging products anymore. So actually, the packaging within our portfolio is probably smaller than you thought. And if you then really drill into the packaging part of that portfolio, actually the part that will transition is relatively small, but it will transition. And because we offer a one-stop shop solution for our customers and we are a trusted party, we've seen in every occasion, that when things transition, we are the supplier that also offers the alternative products, which is important. So it's happening. Transition is happening. It has happened, and we're in a good place. We are uniquely positioned because we are material agnostic. I touched on that, and we are the independent advisor as well. When we look at the last 18 months, our performance has actually been incredible. How have people responded locally, how we utilized our financial strength, how we used our supply chain in Asia with our own people securing that the health care organizations, the governments, all our customers were able to buy these quality products that it could trust on really made a great impression on our customers, which is key. We delivered a strong track record over a very long period of time. We all know the dividend charge, which basically is a reflection of our earnings per share growth, which is great. But it's not only growth and it's not only historical growth, it's also the resilience. The resilience that Richard touched on in the 2009 period, during the pandemic period. And that resilience is purely a reflection of the diversification of our activities. We're not only diversified by market sector and some of them compensating each other as when people, because of a recession, don't go out for dinner so much or go less into hotels, they go to the supermarket and buy their products. We both deliver. So the one offsets the other. So the diversification by sector is important, but also diversification by geography is very important. We've seen Latin America sometimes a bit weaker. We've seen them swinging and dancing in terms of economy. The same with North America, the same with Continental Europe. So that portfolio and mix effect is very, very important, and that will give us resilient performance going forward as well. But I'm very confident about the organic growth going forward coming out of the COVID crisis, and we have a huge acquisition opportunity as well. So we are very well positioned for the future, and I'm truly excited about Bunzl's future. So before we go to our product exhibition and climate change exhibition downstairs, we have now about 30 minutes for Q&A. So I'm inviting the group to come on stage. And for those of you joined virtually, please submit your questions online, and we have Sunita here who will collect the questions and we'll integrate them into the session. And for those who are in the room, a microphone will come to you, if you have a question, maybe put your hand up if you have a question. I would like to ask you to ask one question by the time. You can ask multiple questions, but please one by the time and then we'll deal with the answer and then we go to the next question. Okay. I see this lady here with a question.

Kate Somerville from UBS. Just wanted to talk about the organic growth that you've done since 2004 was 2% on average. Given everything you've spoken about in terms of the shift to more sustainable products, does that mean that you actually think you should accelerate from that from here?

Yes, it's a good question. I would split, let's say, the future into, let's say, the shorter term, which is slightly more a transitionary period and the longer-term progression. If we look at, let's say, the next 1 or 2 years, we may still face some pressures, for instance, in facility management companies because there's a lot more people working from home and it's really depending on how that sort of comes back. And the same goes for international business travel impacting potentially the occupancy in hotels. And so we still have to sort of unwind a little bit this COVID crisis. Longer term, I'm positive about a couple of things. First of all, the focus on hygiene is going to be wider, and we heard that about 20% of our cleaning & hygiene products -- we have 20% of our total group sales is cleaning & hygiene products, which doesn't necessarily mean they are being sold in the cleaning & hygiene sector. So if you look at, for instance, the hotel sector, which is in foodservice, one of the largest product groups within foodservice is cleaning & hygiene products, toilet paper, towels and cleaning chemicals. So I think focus on cleaning & hygiene will be a positive, but I think sustainability will be a positive also coming from slightly more expensive product substitution. So I think the balance of reduction in plastics and selling other sustainable products will, in our view, more than offset some of the pressures, which is going to be a positive as well. Now how much exactly that will pan out is difficult, but certainly positive about organic growth longer term.

This is Simona Sarli from Bank of America. One question, at the moment, people are talking a lot about supply chain constraints and disruptions. How is that impacting your business? And yes, what you are doing to address that? And also more in terms of supply chain disruptions, what about talent scarcity? So your ability to recruit people and effect on wage inflation?

Yes. Maybe Andrew Tedbury, you want to take the first one, maybe Diana the second one.

Yes. On supply, I mean, I think you've seen on the videos today that we've got global supply in place. So certain areas that is challenging when after multisource products. But overall, generally, we're not seeing the kind of supply chain pressures in terms of availability of product. We are seeing some product inflation, but not necessarily around the availability of product.

Yes, on the people side, yes, we are finding it tougher certainly in the U.S. It's -- labor market is much tighter than it was, and it is in the U.K. We haven't -- if I use the U.K. as an example, we haven't yet seen, I think, the -- as Andrew said, the extreme impact that some other businesses have seen. I think mainly because our proposition for employees, we don't have that many HTB drivers. Our propositions pretty good because generally, people work Monday to Friday. They were set hours. They don't have to go away on long trips. Where we have seen retention issues, we have increased wages in some targeted way in some areas. We're keeping a very close eye on it, as I said in my presentation. But at the moment, the impact seems to be reasonably limited, but it's something that we're watching all the time.

Gentleman here in front. Adrian?

Adrian Cattley, CapeView . I've got 2 questions, but I'll...

One at a time.

You talked quite a lot about being the sort of independent provider of advice to customers, but you also talked about trying to increase the level of own label that you're sourcing. Can you kind of -- how can you square that circle? And maybe can you give a feel, is it in particular areas where I know you're providing it and it isn't up against the [ assets ] of this world from -- how does that balance work?

Alberto, do you want to take that?

Yes. Well, when we talk about -- we are flexible, we talk about -- we don't manufacture plastics. So we can easily change the source, and we can do that. Our own brands in the case of Continental Europe will help us to provide a consistent innovative range. And the fact that we are consolidating one range across the area will give us scale economies, and we will be more competitive to the market.

You're right. It's a bit of a balancing act because [ Azetias ] is one of our key suppliers, a very good partner of Bunzl. So you will want to try to grow with branded suppliers, but at the same time also with the -- with your own brand. But the sustainability range is effectively so interesting because it comes from -- the original product often comes from multiple suppliers, and we turn it into one sort of, call it, green area. Gentlemen here in front.

It's Oscar from JPMorgan. So one question is on just -- sorry, I have multiple on M&A. So you talked about GBP 1 billion of potential capacity. You've done about 40% in the past in safety. Could you give us a sense of which end market you see more opportunities?

Andrew, take it?

Look, I think we're happy with all of our end markets, all 6 of them. I think you can probably see us deploying slightly less capital in retail, albeit I think the e-commerce opportunity you've heard, I think, is very clear, I hope. I think you should assume that we'll do more in safety, cleaning, hygiene and health care. But look, if there's good opportunities in grocery like Joshen was in the early part of 2020, we would certainly consider those. They'd have to be very synergetic and really concrete -- cement our market position. But I think predominantly, we'll spend in safety, cleaning, hygiene and health care.

The lady over there, Annelies?

It's Annelies Vermeulen from Morgan Stanley. I'll start with one as well. I just wanted to ask on all the detail you gave on all the packaging side of the business. I'm assuming that there was an increase in that consumable products facing regulation part as a result of COVID, perhaps an increase from those single-use type items. And you've obviously also talked about some of those COVID product sales staying higher for longer. So I'm just wondering, are there any parts of that packaging side that you identify actually could be permanent hygiene-driven shift because of the pandemic? And when do you think that might return to 2019 levels in terms of that split that you gave? And then also on that related topic, of all those different parts of packaging that you talked about, are there significant margin differences in between those products? Or is it relatively consistent?