Kerry Group plc (KRZ) Earnings Call Transcript & Summary

Good day, and welcome to the Kerry Group Q1 2021 IMS Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to William Lynch, Head of IR. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Kerry's Q1 2021 Results Update Call. I'm joined in the call by our CEO, Edmond Scanlon; and our CFO, Marguerite Larkin. Edmond and Marguerite will take you through today's presentation. And following this, we will open the line to your questions. Before we begin, please note the usual disclaimer regarding forward-looking statements. I will now hand over to Edmond.

Thanks, William. Good morning, everyone, and thank you for joining our call. A little earlier than usual this morning. So beginning with Slide 4 and the overview of the first quarter. So before I get into the details of the slide, my key takeaway and what I'm most pleased about from the first quarter was the strong business momentum we saw as we progressed through the quarter. The first quarter has seen dynamic market conditions right across the period. We've seen a number of countries with increased mobility, substantial reopening activity and increased consumer confidence, while other countries continue to adapt to changing local conditions. And we've also seen a lot of variability across our end-use markets with some standout performances, beverage being the most notable from my perspective. So looking at the slide here, and as highlighted over the past year, a key dimension when analyzing our performance is through the channel lens, and firstly, the retail channel, which amounts to circa 3 quarters of our Taste & Nutrition revenue, and it had a very strong growth of 5.9% across the first 3 months of the year. This is notable outperformance versus historic levels, and growth here was led by beverage, snacks and meals, which had excellent performances, particularly in the Americas and APMEA. In the foodservice channel, our volumes were about 8% in the first quarter and growth in the channel in APMEA was led by China. We saw increased restrictions in Europe, which had a significant effect on our performance there. While the Americas had a strong recovery back to growth for March. So this means our foodservice channel returned back to overall growth by the end of the period, which we're pleased with. So the combination of this continued strong performance in the retail channel and the improvement in foodservice meant we exited the quarter with very good momentum and strong mid-single-digit volume growth in Taste & Nutrition in March. And this performance was supported by good business development with our customers, where we saw a lot of innovation activity, particularly in the areas of proactive health and immunity, plant protein and supporting our customers right across the sustainable nutrition spectrum. We also made good strategic developments on a number of fronts. We made progress across our new facilities in Rome and Georgia and Durban, South Africa, all of which will be commissioned and operational over the coming quarters. We announced the construction of a new taste manufacturing facility and R&D center in Indonesia. And we also announced our intention to acquire Biosearch Life in Spain, which is expected to finalize in the second quarter. So overall, to summarize, we're pleased with the momentum we saw through the first quarter. And with that, I'll hand you over to Marguerite for the overview of the business performance.

Thank you, Edmond, and good morning, everyone. Starting with Slide 5 in the Q1 financial overview. Firstly, we had overall group volume growth of 1.9% in the period, which I'll give you more detail on in the coming slides. Pricing in the period was 0.5%, which reflected increased input costs. Group trading margins decreased by 50 basis points, which was principally driven by net COVID-related costs and the adverse foreign currency movements. And the overall net debt decreased slightly to EUR 1.9 billion. Turning to Slide 6 and the breakdown of revenue components. Overall, reported revenue reduced by 3.5% in the period, comprising a number of elements. Group volume growth of 1.9%, reflective of 2% volume growth in Taste & Nutrition and 1% volume growth in Consumer Foods. Pricing, as I mentioned, was 0.5% in the period, and we are expecting this to be higher in the full year due to increased input comps. Transaction currency had an adverse impact of 0.2%. Translation currency was adverse 6.7% on revenue in the quarter, driven primarily by currencies in the Americas. Based on the latest exchange rates, we're currently expecting a full year headwind of circa 2% to 3% on revenue and just north of 3% on earnings in 2021. And finally, the acquisitions we completed in 2020, Jining Nature, Bio-K Plus International and TecniSpice contributed 1% revenue growth in the period. Moving now to Slide 7 and the Taste & Nutrition overview. Overall, volume growth of 2% in the first quarter reflected continued momentum with a strong improvement through the period. The main driver of performance in the first quarter was our retail channel, which achieved volume growth of 5.9%. This was led by the beverage end-use markets in the areas of tea, coffee and refreshing beverage, in particular. In snacks, through savory taste systems and healthier snacking and in yields through culinary taste systems and health and wellness meals incorporating Kerry's proactive nutrition portfolio. In the foodservice channel, volumes declined by 8.2%, which represents its continued market outperformance and notably, a return to volume growth in March. And finally, on this slide, developing markets grew by 10.7%, with good overall growth across each of our 3 regions. Turning to Slide 8 and our regional business performance within Taste & Nutrition. Beginning first with the Americas, which had overall growth of 0.4% in the period. The retail channel in North America delivered strong growth driven by beverage, snacks and meals. Foodservice recovered from a slow start to the year, resulting from bad weather across the country and capacity restrictions in place on foodservice operators before returning to growth in March. Within Lat Am, we had strong growth in Brazil, most notably in beverage and ice cream, while Mexico had overall growth in the period, and CACAR remains challenged. In Europe, overall volumes were back 2.4%, as this region continues to be the most impacted by COVID-19. Retail delivered volume growth given strong comparatives in the prior year, while foodservice was significantly impacted by restrictions throughout the region. In APMEA, we had volume growth of 11.7%, which was driven by performances in China, the Middle East and Australia, while Southeast Asia continues to be impacted by ongoing restrictions. The retail channel in APMEA delivered strong growth in the beverage, snacks and bakery end-use markets, in particular, and growth in the foodservice channel was led by beverage and meals end-use markets, supported by increased limited time offer activity and new launches across the period. And finally, turning to our Consumer Foods division. Overall, volume growth for the division in the period was 1%. This performance represents a strong underlying volume growth, given a stocking benefit of circa 3% in the previous quarter. Meat snacking delivered very strong growth through the Fridge Raiders range, while Kerry's award-winning meat-free offerings continue to grow very strongly, supported by range extensions and the number of new innovations. And overall, trading margins improved by 20 basis points, primarily through enhanced product mix. So in summary, I'm pleased to say our performance overall reflected a strong improvement in momentum through the quarter. And with that, I'll hand you back to Edmond for the outlook and future prospects.

Thanks, Marguerite. So now turning to Slide 10 and the outlook. And within Taste & Nutrition, we continued strong growth prospects in the retail channel, underpinned by a very good innovation pipeline and strong customer engagement. We've outlined the good progress we've made in food service, and while there continues to be a lot of variability in the channel across regions at least, we expect further recovery and a market outperformance in the channel, given the strength of our offering and the nature of our business model. Within Consumer Foods, we see a good growth outlook supported by continued innovation and our strong brand. So overall, the good business momentum we've seen and the improvement in conditions in a number of our markets means that we are providing guidance today for the full year, where we're expecting to achieve strong volume growth and are guiding adjusted earnings growth of 11% to 15% on a constant currency basis. So with that, I'll turn it back to the operator for your questions. Thank you.

[Operator Instructions] We can now take our first question from James Targett from Berenberg.

Great start to the year. Just really a question on your guidance, particularly on the -- on the volume side. Could you maybe sort of quantify where you see volumes landing for the full year right now as things look? And maybe talk about some of the things that are creating -- we still think a -- some limited visibility. Is it really down to the reopening in the foodservice recovery? Are there particular countries, which are particular markets where you think there's particular uncertainty in terms of the outlook, in terms of understanding something there? And then maybe we could just talk also about the shape of margin for the full year. Obviously, down as expected in the first quarter. I know the guidance was more back-end weighting, but how do you expect margins to progress over the next few quarters would be helpful. And then finally, just in terms of the obviously very strong retail channel volume growth in Taste & Nutrition, could you just sort of talk on a regional basis, were there some sort of markets really kind of lifting that? Or we could talk about double-digit growth in China or something which is really mixing that? And just how broad-based is that growth?

James, I'll take the growth-orientated questions, and Marguerite will take the margin question. Maybe just picking up on the last part of your question first on retail. So what was particularly pleasing about our retail performance, I would say, in Q1, albeit, we must recognize that we had, let's say, somewhat challenging Q1 in 2020 in the retail channel is that we achieved around a 6% growth each of the 3 months in the first quarter. So that was particularly pleasing. And while we don't expect that to continue in retail over the coming quarters, I think it is fair to say that our growth in retail will be at a higher level than what we've seen historically. So historically, we've seen growth maybe in the 3% zone. We do expect growth in the retail channel to be in somewhere around the 4% zone going forward. But particularly pleased with the consistency of growth for the first 3 months, albeit off a slightly softer comparatives for Q1 2020. Maybe then just looking a little bit at the foodservice channel. As what like we said at the full year results, it is the channel that we are, let's say, concerned about in terms of visibility, and there's quite a bit of variability there still. That said, we've had a huge level of business development. I would particularly call out in the beverage area and the plant-based meat alternative area where we've seen a lot of activity. But probably, the area where we've seen most activity on foodservice recently, and this is somewhat of a change since we talked about at the full year, is this concept of reducing complexity at the back of the store for foodservice operators. And how that's manifesting itself for Kerry is that we're engaging with customers around, for example, cooking method flavors and where customers are trying to speed up that back of the house, reduce complexity at the back of the house. So we're talking to customers like about wok-fried flavors, satay flavors. And we're also seeing a reemergence of sou vide as a cooking method. And we are working with customers at developing various taste components that can deliver in that type of environment. So what we're seeing from an activity standpoint, especially North America in foodservice is operational simplicity trumping everything else right now in foodservice. All of that put together, looking out into Q2 and looking out into the full year, I think we have baked the level of variability and volatility into the guidance that we've seen. I would say, from a volume perspective, we're expecting somewhere in the region of strong mid-single-digit growth from a volume perspective in the full year, and that's what we bake into the guidance that we have shared.

And James, I'll take your question on margin in the context of guidance. We expect significant improvements in margins in '21 versus '20. Clearly, there'll be a number of moving parts within margins this year. Firstly, I would call out, we will have good operating leverage and some mix enhancements also. We continue, though, to have net COVID costs and some supply chain costs managed in the short term, just in light of the current environment. And as I said at the full year, we will have some incremental investments in those areas where we are seeing accelerating consumer trends and good growth opportunities. So overall, we expect a significant improvement in margins, although we won't be back to 2019 levels. Obviously, we'll give more color at the half year on the component parts of our margin.

We can now take our next question from Alex Sloane from Barclays.

Two questions from me, if that's all right. Just firstly, on the input cost inflation outlook that you referenced. Can you give a guide at this point on your thinking here for the full year? And just to confirm that you're happy that in Taste & Nutrition, you'll continue to be able to pass that through given your pricing model? And then just secondly, I appreciate you don't give cash flow details with a Q1 IMS, Marguerite. At the full year, you indicated -- you thought that for 2021, you could be in the zone of 80% cash conversion. Just wondering after the performance year-to-date, you're already seeing at this stage what would sort of change your view on that?

Alex, so maybe your last question first. And you're right, we don't update in detail on cash for the quarter, but I would say consistent with what we said at the full year announcement, we are looking at a significant improvement year-on-year with cash conversion, as you mentioned, in the zone of 80% for the full year. And we're on track in relation to that expectation. And then just to take your second question in relation to input cost inflation, it's fair to say, as of today, we're looking at low to mid-single digits inflation on input costs for the full year. And we have seen some more incremental pressure on input costs since the full year results. But again, I would say that this is an area that we have a long track record of managing and we've managed it very well. As we've mentioned, we have a very well-developed partnership pricing model with our customers, and these costs will be managed with our customers via pricing and cost initiatives. That being said, in times of significant inflation, there can be a lag up to a quarter in terms of that pass-through. But nothing that I would call out very much as a short-term timing impact.

We can now take our next question from Charles Eden from UBS.

Two questions for me, please. Just firstly, you mentioned a lot of variability by geography in the foodservice channel. So I'm just wondering if you could give us a little bit more detail of how that 8% decline for the quarter ranged by geography. That would be helpful. And then my second question is just a bit more longer term. You mentioned the plant-based opportunity in your prepared remarks, Edmond. Just can you just give us some color there? How big is that for you today? What are the growth rates you're seeing? Maybe if you could split out the growth between your branded portfolio in Consumer Foods and what you're seeing through your Taste & Nutrition offering in plant-based, that would also be very helpful.

Firstly, on the foodservice and just to put some color on that by region. And we were -- just first and foremost, pleased with the progress in the quarter, ending up at 8.2% versus the market that we have estimated around being back roughly in the 11% to 12% and so on, with quite a bit of variability in -- by region. You should think about Europe, Charles, back in the mid-teens zone. And the Americas were somewhat similar, let's say, to the overall reduction in Taste & Nutrition. And in the APMEA region, foodservice returns to growth in the period in the low to mid-single digit zone. So good momentum. Clearly, there was, let's say, quite a challenging start to the year, and we flagged that at the full year results. But overall, culminating in growth in volumes in the foodservice channel in March. In terms then of plant-based, look, it's a space that we're really, really excited about. There's a huge level of innovation and customer engagement in, I would say, right across the regions, but primarily in Europe and in North America. And we are seeing a relentless drive to take plant-based meat alternatives to where there's no discernible difference between real meat and the meat alternative. And the meat alternatives must be more sustainable and healthier. But that is the goal. And when we're engaging with customers and we have a really differentiated offering for customers, we can help them get there. Now customers are at different levels of, I suppose, achieving that ambition. And some customers, let's say, they're at generation 1. Other customers are at generation 2, 3. But I would say from a Kerry perspective, when we look at our innovation programs, our internal innovation programs, our teams are working on generation 5, 6 and 7 as it relates to plant-based meat. We see a lot of runway here ahead of us. We feel we can really participate really strongly in areas of taste, texture, clean labels, natural preservation. It's, right now, from a size perspective within our T&M business, it's nought to 2%. It's growing rapidly, and it's a space that we're really, really excited about. And in terms of Consumer Foods, the performance of the brands are continuing to perform well. We're continuing to gain market share, and it's a great example of the collaboration between our Taste & Nutrition business where those brands are powered by the technology within our Taste & Nutrition business. So overall, a space that we'd be really excited about in the long term -- for the long term, and it's a space that we're continuing to allocate resources and have a strong innovation pipeline. A strong short-term, medium-term and long-term innovation pipeline around it.

And we can now take our next question from Heidi Vesterinen from BNP Paribas.

I got 3 questions. The first one is, do you have any view on when foodservice will get back to pre-COVID levels across all regions? Or any perspective you can share on that? And then secondly, could you talk about the sustainability of the recovery you're seeing in the emerging markets, please, perhaps by region? And what are you seeing in India if you have exposure there? And then last one, what is your latest thinking on M&A, please? We hear from many others that perhaps, private targets are more willing to engage given valuations are high. Do you see that as well? What's the outlook for you for the coming year?

Maybe taking your last question first on M&A, I would say, first and foremost, that the pipeline is strong. I think it's fair to say that we predicted that we would see a significant level of, let's say, perhaps unsolicited types of opportunities coming on to our desks. We are seeing that. We have seen some of that. What I would also say is that when we look at the pipeline and look at some of the opportunities that are coming across our desk, they have benefited from the, let's say, a COVID bounce, for the lack of a better term. So look, we have a consistent approach to our M&A activities. If you look back over the last several years, it gives a good indication of the types of opportunities that we're looking at and continue to look at. We'd be -- we continue to be busy, I would say, on an M&A pipeline. But as usual, it's hard to predict and even harder to predict these days in terms of executing against particular M&A transactions but a strong pipeline overall. In terms of your first question as it relates to the foodservice, the foodservice channel and when do we expect to see that channel come back to pre-COVID levels, frankly, it's a little bit too early to call that right now. Let's say, looking at China as somewhat of a proxy -- and I'm not suggesting it is a perfect proxy for the rest of the world, we've seen huge acceleration on innovation in the foodservice channel in China. My second call-out would be Australia. As you're aware, Australia is, let's say, back to so-called normal with a significant level of outdoor activity and things like that. So that's another region where we've seen a significant acceleration on the level of innovation back to pre-COVID levels in that country. So again, another somewhat of a proxy for the rest of the world. But I would still be cautious in the short to medium term about actually committing to where I see that panning out. And it's something we'll touch on again, I'm sure, at the half year. In terms of developing markets, let's say, more broadly, I suppose, in some respects, one could say we're back at the 10% level. We're back at double-digit level in developing markets. But there is a huge level of variability there. Clearly, China is the standout performer. But also, we've had good performance in the Middle East, good performance in Russia, good performance in Brazil. So it's more than China, which is positive, and we are seeing growth in those other regions as well. On the other side of it, you mentioned India. Fairly, it is very sad and very concerning what we're seeing coming across the TV across at India. I would say that we actually had a solid start to the year in India. It's somewhat a smaller proportion of our business, as you can appreciate. But we do -- we would expect some challenges in India here in the short term until things, let's say, normalize and the current crisis alleviates. But generally speaking, I would say we would be quite optimistic about developing markets. As you've recently seen, we have just announced another investment in developing markets with a new facility coming on in Indonesia in the wholesale space and others on Durban, South Africa, for instance, will be coming online here sometime in the next few quarters as well. So we continue to be very optimistic with quite a bit of variability. And I'm sure we'll give you some more color at the half year.

We can now take our next question from Cathal Kenny from Davy Research.

Two questions for me. Firstly, on the beverages [ smart acquisition ] in T&M. I know this is a greatly important marker for Kerry around that. And secondly, it's [ thesis ]. But how does the overall pipeline and innovation pipeline inform your view on kind of the full year outlook for volume within T&M?

Cathal, just on the line wasn't great there. But on beverage, I think, first and foremost, I call out 2 key drivers to our performance in beverage. And it's all around this concept of functional beverage. So the first thing we're seeing is drinks that are strictly formulated with specific functions. That might be [ annuity ], digestive health, sleep aids, stress alleviation, et cetera, et cetera, et cetera. So highly strictly formulated, very specific, and we have a very strong pipeline of extracts and science-backed immunity and digestive health portfolio that is fully aligned to what's happened there. So that's kind of, let's say, one end of the spectrum. At the other end of the spectrum then, still within the same, let's say, subcategory is this concept of functional boosts. So -- and we're seeing this particularly in the foodservice channel, whereby just to share an example, we're seeing operators with maybe perhaps simple juice offerings where they may have 2 dispensers of juice offerings. And they're converting one of those juice offerings by simply adding a, let's say, an immunity boost by way of stick pack or some powder addition in at the top of the dispenser, and that's enabling them to have a more premium functional beverage that is fully aligned to what the consumer is looking for. So I would say, there's taste opportunities there for Kerry. There is modulation -- sugar modulation opportunities there and also proactive health opportunities. So it's a very exciting set of developments. And from a customer segmentation standpoint, we're seeing that level of innovation right across all customer segments from an emerging brand on the one end, maybe to global CPGs on the other end of the spectrum. Then in terms, I would say, of the pipeline, we would regard our pipeline as strong. Clearly, we benchmark ourselves versus previous quarters, previous years as we look at our overall pipeline. We would be quite excited about our pipeline. There continues to be some element of variability and volatility in terms of how customers were engaging, in terms of getting products to market and the speed of getting products to market. Clearly, Europe -- Continental Europe, specifically, we are experiencing some delays in the conversion of the pipeline. But as a general comment, I would call out the innovation pipeline, the growth pipeline has been quite strong.

We can now go to our next question from Graham Hunt from Morgan Stanley.

Just 2 for me, please. Just going back to the plant-based division. Just trying to understand how you think about the competitive environment there and where you really see Kerry's edge in terms of winning contracts and growing ahead of the market or whether it's actually sort of a large enough market for all of the players involved from an ingredients perspective. And then the second question just comes back to the strategic review of the dairy-related business. I wondered if there was any update on timing there and whether the announcement around negotiations with your cooperative have been stopped, whether you could add any color to that in terms of whether it affects the strategic review process.

Look, as you can appreciate, it would be inappropriate of me to comment on any specifics around the co-op. But what I would say is the strategic review continues, like we said at the full year results. We saw this progressing through the second half of the year. So I'm sure we'll come back with more details on how that review is going at the half year results. In terms of plant-based, like I said previously, there is a relentless drive and focus to get to a situation where the meat alternatives are effectively indistinguishable or indiscernible to real meat. So what does that mean from a Kerry perspective? And where we participate is on taste components, texture components, clean labels and in preservation. And there is -- from a customer perspective, none of our customers are particularly happy with the products that they have in the market because they haven't yet achieved that goal of no distinguishable difference. So we're seeing many new customers come in to this space. It's a space where we have seen probably the biggest, I would say, influx of new customers into Kerry. And secondly, we're seeing, let's say, more traditional players, traditional lead players, larger traditional lead players, really, I would say, start allocating and reallocating resources to this space. So a huge amount of activity there. And in terms of, I think, our position within the meat space and the meat alternative space, there's no doubt that we have a benefit of having our Consumer Foods business that is focused on plant-based food with us as well. So that has been an advantage in this particular time frame where we have both the front end, let's say, and the back end connected. And we have, effectively, real-time feedback from the market that we can learn from that and continue to both enable our Consumer Foods division but also enable other customers to get to where we -- where they want to get to. So it's a space where we're really excited about. I think it's a space we'll be well positioned to continue to grow right out over the next 10 to 15 years, frankly.

And our next question comes from Jason Molins from Goodbody.

Just firstly, Edmond, I think you mentioned the exit rate being up mid-single digits in most recent quarter. Just wondering how that's split across retail and food tariffs. I'm not sure I picked that detail up. And second question is really around any commentary you can give in terms of performance within your customer set, whether that's the global CPG customers down to more local and regional players. And then my final question, again back to the strategic review of the dairy business, appreciate that's still ongoing. But maybe you can give us a sense of the current relationship with the co-op, bearing in mind that you have newspaper articles talking about the milk supply agreement and whether that contract gets terminated. And obviously, the milk price arbitration process, any commentary on that would be helpful.

Maybe taking your last question first. And pardon for me to say here that, look, we've made our position clear on this many times in the past. We have an ongoing relationship with the co-op with our milk suppliers for the last 50 years. And we discuss milk prices on a monthly basis. And you'll appreciate that it's not appropriate to comment on the specifics of those supplier commercial terms. But in terms of media speculation, while I'm not going to comment on any speculation, our position is that we have paid the leading milk price on a like-for-like basis, and there are no other outstanding payments due. So that has been consistently our position and that continues to be our position. In terms of the -- I suppose the customer segmentation and, let's say, the various performance levels of our customers, I think maybe taking a step back for a second and looking at what's happening from a consumer perspective. And this is happening right across both retail consumers and foodservice consumers. If there is a really strong desire for innovation, and there's a real thirst for innovation and just new products and trying new things. And I think customers are -- or sorry, consumers are agnostic in terms of where that innovation and new product development is coming from. I mentioned at the full year results that we had seen a significant acceleration from the emerging brands, particularly in North America. That is continuing. But we're also seeing a significant level of innovation coming from both regional and global customers, especially as it relates to functional food, both -- I already talked about functional beverage but also on areas like snacking, a significant level of innovation. And maybe just on developing markets, the level of innovation is primarily being driven by local taste experiences. And I think we've seen an acceleration in the local -- more on regional players, I would say, since we last discussed that at the full year. So pretty broad-based in terms of innovation. But I believe that consumers are somewhat agnostic about where that innovation and where the new products are going to come from. In terms of March and how that has performed, look, I'm not going to get into the specifics of every month here. But there has been, I would say, a strong acceleration in -- or a strong recovery, I should say, on foodservice. And like I said, retail has performed consistently across the first 3 months at that 6% zone. What might be useful is just to make a quick comment on Q2, which we expect from a T&M perspective to be in the mid-teens zone from a volume growth perspective.

I'm sorry. I meant in terms of that sort of mid-teens growth, how should we think about, I guess, you sort of alluded to that retail performance? I guess that the delta then is really on the foodservice for us, if we should think like retail in that focus for us?

Well, I'm not going to start splitting out by the panel here for quarter-to-quarter. But I think, look, mid-teen growth, in that zone, Jason, of mid-teen growth for Q2. And like I said previously, the retail performance at the 6%, that's not something we expect to see -- continue to see going forward. We'd probably be more in the 4% zone and then the balance then will be foodservice.

Our next question comes from Faham Baig from Credit Suisse.

I'm going to keep it short. Two from me as well, though. So firstly, we've spoken a lot about innovation and the demand for innovation from your customers as well as Kerry proactively helping food server -- service operators with innovation. Could you maybe give us some quantification in trying to help us understand how big innovation actually is today? Maybe you can discuss what proportion of your sales were launched 5 years ago or 3 years ago? Just to give us a bit of idea how meaningful this is? Or the other way you could maybe help us try and gauge it is as you discussed, strong mid-single-digit volume growth this year. What proportion of it will be coming from mix? And what proportion of it will be coming from volumes? Try and help us understand this innovation dynamic. And then secondly, we're now sort of 12 months into this pandemic. And I just wanted to understand whether, I guess, 2 parts. Firstly, is there anything that has surprised you so far? And secondly, have we seen any down-trading at the customer or consumer level that you might have called out as well?

Thanks, Faham, and I'll try and answer those questions as best I can. Maybe on the second part of your question, I would say we -- and it goes to the fact that it's really hard to draw conclusions on the last 12 months yet because there continues to be a huge level of country-to-country variability and volatility. Obviously, we're in a very different phase and, let's say, even in a 2-month period in North America from where we were in January versus where we were in March. And that's a kind of an 8- to 12-week period. So things are evolving really quickly. I would say, Continental Europe continues to be a challenge for us and it's somewhat challenging. Whereas in the U.K., we would expect, let's say, an acceleration in the U.K. over the coming months on the basis of where the U.K. is from a vaccine perspective and things like that. So it is super difficult, I would say, to draw conclusions at this moment in time due to the level of variability. And our approach is to stay really agile and to stay really nimble. And we are seeing some elements of down-trading. We are seeing, let's say, the real, let's say, lower price point-type products perform quite well in some developing markets. But we're also seeing the premium level also perform really well in other markets. So it's probably at both ends of the spectrum that we're seeing kind of growth opportunities. And for customers that are looking at their specific offerings and trying to pitch at both ends of the spectrum, we are seeing customers being really conscious that they don't go too far in the cost side in terms of removing benefits and removing features from those low-end products. So there's a lot of, let's say, specific formulation going on to a particular price point as opposed to rather just cheapening a product. In terms of innovation metrics, it's not something we want to get into, Faham, in any great detail. I would say that the market is dynamic and every quarter that we have these sessions, there's something slightly different. The big areas of clean label, plant-based meat alternatives, nutritional improvements, localization, all those, let's say, innovation-driven trends are continuing to be there. And what's new maybe this quarter that wasn't there in the past quarter, especially as it relates to foodservice, is opportunities to work with customers to drive less complexity and some simplicity in their back-of-house operations. And that's manifesting itself in taste opportunities, like I said, cooking method flavors and things like that. So that's as far as I'm prepared to go today in terms of, let's say, what's happening from an innovation standpoint, and I'm sure we'll put more color on that at the half year results.

And our final question comes from Lauren Molyneux from Citi.

I guess just a final one around foodservice. So I know you talked about foodservice being back to growth in March. I was just wondering whether you could give us an idea of what it did in March last year, so we can kind of get more color on this comparison and what you're growing off. And then I just wanted to maybe get a bit more color also on if you're seeing any new building or restocking ahead of foodservice operators reopening? And have you seen any of that in Q1 and you're expecting that in Q2? And then finally, kind of still on foodservice, you talked about taking market share. So I was wondering what you see in the actual market, maybe [ keeping within the ] growth rate or how fast the market is growing? And what's driving these market share gains? Do you think is it more both existing customers or kind of are you taking new customers?

Lauren, in terms of the March comparables, I just don't have that to hand right now. But clearly, March 2020 was impacted in certain regions. And I'm sure William can get back to you on that particular answer. In terms of performance, generally speaking, in the foodservice channel in the performance versus the market, when we're -- I suppose we've seen some, let's say, results coming through from some of the larger players in foodservice. And what's been interesting for us to see is that I suppose the divergence of this happened in recent months and quarters between same-store sales growth on the one hand and traffic and guest counts on the other end. So we've seen a much larger divergence there in terms of what would be normally expected. And time will tell if we see a coming together of both those metrics going forward. Our sense of it is that tickets are very high right now and time will tell whether they will continue to stick. And the reason that's important, obviously, is from a tariff perspective, we measure volume growth and, let's say, a real growth. And where we are pitching the market right now, and it's -- this is not a perfect science, as you can appreciate, but where we are pitching the market right now in foodservice is back about 11% to 12% zone versus our own performance in the 8% zone. And I think the reason I believe we are outperforming the market is due to several things. Frankly, there is a realization and recognition amongst our foodservice customers that from a health and wellness standpoint, they must move their products further along that sustainable nutrition spectrum. And we're seeing customers being a lot more, let's say, aggressive around that. And that requires the capability to work with those customers to move them along that spectrum, whether that's taste modulation, whether that's including cleaning up labels, clean-label preservation, improving taste and texture. So all these things are opportunities in the market, consumer-driven opportunities in the market that we feel we're extremely well positioned. And that, in combination with our proactive approach, the foodservice channel is continuing to, let's say, contribute to that outperformance. There continues to be variability. It is part of our business that we'll be continuing to keep a very close eye on in terms of variability and volatility. We would say the European market is still quite, I would say, challenged in terms of that level of innovation. So it's something we keep a close eye on in the coming quarters and bring more color to you at the half year.

Thank you. That concludes today's questions and answers. I would now like to hand the call back to Edmond for any final or closing remarks.

Thanks, everyone, for joining the call this morning, and have a very good remainder of your day. Thank you.

Thank you. That concludes today's conference. Thank you for your participation, ladies and gentlemen. You may now disconnect.