Nestlé S.A. (NESN) Earnings Call Transcript & Summary

Good morning, everybody. This is Switzerland, so we're starting on time. It gives me enormous pleasure to welcome you to Nestlé's Capital Markets Day 2024 at our headquarters here in Vevey. Many thanks for traveling to be with us today or for joining us online. I'm going to waste no time in quickly taking you through the agenda. It's a very full agenda. The timings are approximate. You could say they're a form of guidance, and we'll do our best to beat that guidance. The slides are all online, so you'll be able to download them and follow along if you wish. Very shortly, we'll begin with presentations from our CEO and CFO, Laurent and Anna, followed by Q&A. We'll then have our first coffee break. Then we'll be back for a series of category presentations. These will combine a global view on the category, teamed with a local perspective. The category presentations will come in pairs with a Q&A session and a break after each pair. We'll start with Coffee and PetCare before lunch, then Nutrition and Nestlé Health Science, and Food and Confectionery this afternoon. After the categories, we'll hear presentations on Innovation & Marketing. And then finally, Laurent will wrap up this part of the day at around 5:00 p.m. I skipped over some very important parts, the coffee breaks and lunch. These will all take place outside the room here on the sixth floor where you had coffee this morning. This evening, we look forward to welcoming you to dinner with today's speakers and additional senior leaders from across the company. Tomorrow, we're excited to show you some of our innovations at our research and development center. I'll give details on logistics for dinner and for the R&D center visit today at the end of the presentations. Finally, a word on health and safety. There is no evacuation exercise planned today. So in case of an alarm, we must evacuate the building. There are 3 emergency exits in this room, one behind me on the left here or your right, and 2 at the end of the room behind you, where you came in this morning. If there is an alarm, we need to evacuate, please follow instructions from the security staff wearing green jackets. Please don't use the lifts, walk down the stairs and you will be directed to the assembly point outside, unfortunately, in the rain. But hopefully, that's not going to be a problem. So all that remains for me is to say, I hope you enjoy the presentations. I hope you find it an opportunity to interact with our leaders during the course of today and tomorrow. And with that, I will hand over to Laurent to start us off.

Thanks, David. We feel very safe. Good morning, and welcome to Nestlé. How are you doing today? Great. So good start. I'm delighted that so many of you have been able to join us in Vevey. Vevey, which is well known as the center of the world, at least the center of the Nestlé world. The objective of today is to show you how we will accelerate Nestlé. This will be a teamwork. You have seen the agenda. You will see our global leadership team, some of our key market heads and our R&D leaders throughout the sessions, reflecting our bench strength. There is a lot to do, but I'm confident in our business, in our plans and in our teams. With that, you can see here the agenda for my presentation today, which is organized around performance and transformation with the Nestlé Strategic Virtuous Circle as a compass. Now let's dive in. I will not repeat what I shared a few weeks ago on my career at Nestlé, but I can reiterate my deep commitment to Nestlé's culture and values. I want to focus on 3 key lessons that I've learned. First, growth is of the essence. Growth is an output that shows that we are getting things right, delivering for consumers and customers. Growth is also the main lever of value creation. It creates scale and additional fuel for investment driving the Virtuous Circle. And because growth shows that we are doing things right, it is a very powerful motivator for our people. Second lesson, team is everything. There is no achievement which is not the result of great teamwork. Nestlé has the right people and the priority for me, as I came into the role, has been to ensure we have clarity and alignment, so we can work as one team. The final lesson is focus. Doing a few things really well has much more impact by definition than doing too many things that are subscale. Less is more. This is a theme that you will hear repeated today, focusing on our top brands, on our top SKUs, on our big bets and our most impactful investments. These are all embedded in our plans. And the good news is that there is already action in the action plan. In my first 80 days, it's 80 days today, as a CEO, I've already taken steps to fit the organization for the future with better team alignment and a structure that creates more responsibility and more accountability. We have launched new product initiatives that will create the fuel for accelerating our growth and have engaged intensively across our stakeholders inside the company and outside the company. Before I talk about what's going to change at Nestlé, let me remind you of our unique strengths and capabilities. We have a superpower at Nestlé. Our superpower is in being the most global and, at the same time, the most local company. This is a big competitive advantage in an increasingly fragmented world. We have a global footprint in 188 countries, 60% developed markets, 40% emerging markets. Our global scale creates efficiencies and allows us to invest and do things that others just can't do. Around 70% of our sales are in #1 or strong #2 positions, and we have leadership positions globally or locally across a wider range of categories than anyone else. We have an unmatched portfolio of products and brands. We cover all life stages from birth to elderly ages and all price points, and we have 31 billionaire brands more than anyone else in the industry. We are also firmly local. In most countries where we operate, people think of us as a local company. You will see it later today with a few very concrete cases. We have over 95% household penetration in the large majority of our biggest markets. And we know what consumers want in each market because we serve more than 1 billion of them every day. Nestlé has always been a science-led company. It's in our DNA since inception. Last year alone, we filed over 400 patents. It shows the power of our research. Now on the product development part, the focus will be on fewer initiatives, bigger and better. And last but not least, we have incredible people and a great culture of quality and long-term continuous improvement. This is a great foundation for Nestlé. We are and we will continue to be the nutrition, health and wellness company. We have a unique position in our markets. We enhance the quality of people's lives, playing a role in the diets of everyone everywhere at all stages of life. That's a unique position. And it's both a responsibility and a massive opportunity for Nestlé in a world suffering from the double burden of malnutrition with close to 1 billion people suffering from hunger and more than 2 billion suffering from overweight or obesity. And this is an increasing expectation globally to live healthier and longer with an aging population. Over the last 10 years and more, our strengths have underpinned strong performance within the business and for our shareholders, as you know. But as you know as well, in 2024, our business has slowed with the fast normalization of pricing, and our performance in 2024 is below our potential. But that slowdown is not structural. It is not. The fundamentals of our categories are very healthy and supported by existing and emerging trends. We operate in categories which drive 3% to 4% organic growth. This is 100% above the food and beverage industry. The good news is that we are well positioned to capitalize on all these trends, as you will see across the presentations today and tomorrow. So what is our plan? And what should you expect? The starting point is that we are positioned to win, and we will increase our investments to support organic growth. At the same time, as we will raise our game in terms of quality of execution, what does that mean for our shareholders? Over the medium term, Nestlé can and will again deliver strong financial performance. We will drive category growth and improve market shares, which will translate into 4% plus organic sales growth. And on the margin side, since I'm the CEO, I've been very clear about the need to increase our investment to support growth, to support our brands, and equally clear that this cannot come at the expense of profitability in the medium term once we realize the benefits of our efficiencies programs. And finally, on cash generation and return on capital, these are key metrics of value creation, which I will be very focused on. To align the organization, to accelerate Nestlé, we are using internally the Strategic Virtuous Circle. This sets out the framework of achieving efficiencies to generate the fuel for growth. We can then invest in our key brands and in our key growth platforms. This drives category growth and market share gains, leading to sustainable and profitable growth, which in turn brings the benefits of scale and value creation. It's a very simple and very powerful flywheel when put into practice. Now I'm going to talk about how we will put action into that action plan across the company. To accelerate our performance and our transformation, our actions come into 3 key areas of opportunity, and it starts with operational excellence with a focus on the core. We will sharpen our value proposition to our consumers and make sure we achieve a clear-cut preference at every step of the value equation. On innovation, less is more. We launch every year more than 1,000 innovations and renovations globally and locally. We are a big company. But over the medium term, this number will halve. This does not mean investing less on innovation. It means focusing on fewer, bigger and better. The bigger bets that have the greatest potential to bring incrementality. And we will increase our investments fueled by incremental efficiency initiatives. Incremental opportunities require incremental investments. The second big theme is unlocking the full potential of our portfolio. It means expanding the biggest winners and the good news is that we have exciting opportunities through new subcategories and new geographies. In a fast-changing world with fast-changing expectation, we will also build up new growth engines. And we will also address -- it's often a question, we'll also address our underperformance in a systematic way. The third big theme is strengthening our foundational capabilities. It's about motivating and enabling our people and teams, and it's already largely underway. There is a very good energy within the organization, which I hope you will feel across today and tomorrow. We will also accelerate digital to accelerate our business, and we will embed sustainability for greater impact. All of this will drive performance acceleration and transformation to create a better and more capable Nestlé for the long term. Let me now turn to the first priority, which is operational excellence. And this starts with the basics. We want to achieve superiority with all the core elements of our value proposition everywhere and all the time. This begins with taste preference. It continues with having the right price pack architecture, the maximum availability and visibility, and last but not least, achieving a share of mind ahead of our share of market. To win overall, we start by winning there at every step of the value equation. And we will make sure we have got this on our top 4,000 SKUs, which account for roughly 50% of our sales and 50% of our margin. On this, we will achieve 100% superiority. In innovation, the focus, as I said, will be on the impact and on the incrementality with fewer and bigger initiatives. We have leading science and research capabilities. We invest more in R&D than any other company in our industry, and we are determined to spend well and better in a more focused way. And this will ensure we are getting the right innovation, these breakthrough innovations that create a before and after when they hit the market. You will see examples of our big bets throughout the next couple of days. And for 2025, at group level, we have selected 6 initiatives to prioritize. Not all of them will become billionaire brands, billionaire businesses, but each has the potential to achieve at least CHF 100 million in sales. Examples include Sinergity, the next generation of infant formula with a blend of HMOs combined with a specific probiotic working in synergy to provide health benefits. Let me highlight as well the Nescafé Espresso concentrate, launched to capture the growing out-of-home cold coffee trend brought for in-home consumption in a convenient, simple and customizable way. On top of these 6 big bets in 2025, we will add more in '26 and again in 2027. So after 3 years, we will have around 15 to 20 big bets, each with the potential to deliver at least CHF 100 million of incremental sales. Nestlé has reduced investment over the last years in the area of generating demand, which is not the best idea to drive growth and market shares. This is changing. We are stepping up marketing investments back to pre-COVID levels of around 9% of sales by the end of 2025. And you will see a different approach to investment. We will polarize investment to support the bigger brands and the biggest areas of opportunity, making sure that all our initiatives reach a level of sufficiency to make an impact. A good example is the recent partnership making KitKat the chocolate brand of Formula 1. It will bring the KitKat break into the world's fastest sports, reaching a passionate global audience. It's a very nice concept with KitKat heavily featured in the pit lane. It reinforces the idea of owning a break in the Formula 1 context. We want to own the break in every possible context. The next action is productivity and cost efficiency. It is no accident that a Strategic Virtuous Circle starts with achieving efficiencies. It is fundamental to achieving sustainable, profitable growth. It's the make or break in a way of the Virtuous Circle. The good news is that in a business of our size and of our complexity, there are still many opportunities across procurement, commercial investments, and operational efficiencies at large. On procurement, for instance, we are looking first at the low-hanging fruits, how can we achieve fast cash to fuel the growth. And then systematically, we will be reviewing how we buy, where we buy, and what we buy, which specifications we buy basically. In recent years, we have been delivering ongoing savings in the business of around CHF 1 billion a year. We will continue to do this. But on top, by growing broader and deeper, we are committing today to at least CHF 2.5 billion incremental cost savings by the end of 2027. Those savings will go towards reinvesting in the business. Now let me drill down into our portfolio and its potential. Over the last few years, we have talked extensively about our global platforms, Coffee, PetCare and Nutrition. Each and every one of them accounts for around CHF 20 billion in sales. So those are big buckets. And they command a global leadership position. These are a core part of the Nestlé critical growth engines, but we may have focused on these at the expense of the other 40% of our sales that are in our regional and local platforms, many of which are champions in their local markets with clear opportunities for growth acceleration. We'll make the most out of all the portfolio, prioritizing areas of the highest value creation potential. Equally, you will see us do more with our billionaire brands where we have opportunities for category growth and geographic expansion, and we will keep developing the future billionaire brands. A core part of our plan to accelerate Nestlé is to build out our existing winners. Even for our biggest categories and brands, there are still white spaces where we can invest, new geographies, new subcategories, new business models or innovations. Let's start with Coffee, the largest. We are the #1 coffee company globally with 25% of the at-home market and with the 3 best brands in the industry. And out-of-home is a large and fast-growing market opportunity. For Nestlé, it generates CHF 2.5 billion of sales. We see the potential to grow at a double-digit rate with an accretive margin in the years to come. We also see a lot of potential in our ready-to-drink coffee business platform, currently more than CHF 1 billion in sales with potential to grow at double digits over the coming years. And the overall cold coffee space offers exciting opportunities to reach a new consumer segment and new consumption occasions. In PetCare as well, we have multiple opportunities. First, it's by strengthening our geographic footprint. We already have leading market share positions in North America and in Europe. But in AOA and in Brazil, we have clear opportunities to increase market shares from a lower base and accelerate growth. We also see significant opportunity to develop our snack and treats business and the therapeutic diet segment, building upon our R&D capabilities. And beyond Coffee, PetCare and Nutrition that you will see featured today, we also have a lot of room to continue expanding some of our most iconic brands like KitKat and Maggi. These 2 brands together account for well over CHF 5 billion in sales, and we see potential for both to deliver continued double-digit growth. Opportunities to accelerate are also connected to growing channels where we have unique capabilities. E-commerce accounts for 18.5% of our sales and is growing at close to 10% as we speak. On top of expanding existing winners, I see opportunities to set Nestlé up for the future by fueling new areas of growth. We know that consumers' needs are changing and that consumer health is taking center stage. The areas of healthy longevity, women's health, weight management and affordable nutrition offer significant opportunities for the future. We are organizing to accelerate in these areas. And like any company, we have businesses operating below their potential. It's a little bit like with a big family, there is always someone who is not in best shape, and we are a big family. Since I've taken my role, we have reviewed with the Executive Board our largest areas of underperformance. We want to be more systematic in our approach to managing underperformance, diagnosing the issues and swiftly developing and implementing targeted action plans. As it stands today, we expect to fix rather than to sell a majority of these businesses. Some of these fixes will be relatively straightforward. Take U.S. Creamers, for instance, we have been capacity constrained for some time. We have invested in new capacity, which is now coming on stream, and we will make the most of this enhanced supply to meet the demand and to win in the marketplace. On the other hand, some of these areas may require change in approach and time to fix. For example, we know that we are challenged in Western Europe with Nespresso. There are many ways we can and we will address the challenges we face. The development of Vertuo line is an obvious one and the development of the Nespresso authorized brands present in retail like Starbucks or Nescafé Farmers Origin is another one, and they are part of the solution. But beyond, we are looking at all possible alternatives to make the Nespresso ecosystem even more attractive and even more compelling. And we'll cover the other areas later. Another area is Waters. As you will have seen from this morning announcement, we are going to reorganize Waters into a separate global stand-alone unit headquartered in Paris. This will allow us to have the right focus to drive performance in our leading brands. And this includes exploring possible partnerships, as we have done it successfully in other areas in the past, and as we evaluate all options to make the business successful and with the focus on creating long-term shareholder value. Now let me turn to our actions to reinforce our foundational capabilities. We have great people and a great culture in Nestlé, but we can still do better. I have already acted to simplify the organization to ensure that there is clarity, alignment, and ownership in every part of the business. We are also changing our incentive to consistently reward performance against the market and align with our goals. This will help in not only being the biggest, which we are, but also in being the best. We all know about the broad opportunities around digital. And at Nestlé, we have a very strong backbone on which we can build up with globe. My aim is to be digital end-to-end and be a real-time organization data and AI powered. The plan you see on the right-hand side is the one I've developed for Zone Americas and further enhanced for Zone LATAM. It works, and we will deploy it for the group. We will move from siloed initiatives by function into a comprehensive enterprise-wide digital acceleration plan. And in terms of transformation, of course, sustainability is foundational. It reflects our long-term approach and our care for nature and for natural resources. We have made great progress, and we are embedding sustainability in our business, focusing on the long-term positive impact we can have around climate, regenerative agriculture, and more broadly, circularity. To pull all of this together to accelerate performance and transformation, you can see our Strategic Virtuous Circle, which sums up everything I've been talking about so far. Going around the circle, we are going to achieve efficiencies, invest those in growth and market share gains, so that we can achieve sustainable value creation, and in turn, fuel growth further while being consumer-centric. And in all our initiatives, you can see the consumers at the core, at the center, at the heart of the Virtuous Circle. In conclusion and to finish on the key points you should take away with you. Number one, we have a clear plan to accelerate Nestlé. Number two, we will invest to make this plan impactful, stepping up marketing investments to 9% of sales by the end of 2025. We have set a new target to achieve at least CHF 2.5 billion in cost savings by 2027 on top of existing programs. On the portfolio side, Nestlé Waters and premium beverage activities will become a stand-alone business as of January 2025. And in the medium term, you should expect, from Nestlé, organic growth to be 4% plus with an underlying operating profit margin of 17% plus. With that, I'll turn to Anna for the financial framework that goes with our plan. Thank you very much.

Good morning, and thank you, Laurent. So you've heard from Laurent about the actions that we're taking to drive superior, sustainable and profitable growth. And I'm going to give you a bit more color on those actions and the financial outcomes that we're expecting to deliver. So let me start with growth, and that's been a key theme of the presentation that you've just heard. Our objective is to deliver 4% plus growth in organic sales. Now we see the food and beverage category growing at about 2% to 3% per annum, and that's consistent with the views of various third-party research providers. Our superior mix, which is greater exposure to the more structurally attractive categories and weighting to the faster-growing geographies and channels adds around 100 basis points to that, meaning that Nestlé's category growth is about 3% to 4% per annum. We believe we can outperform Nestlé's category growth over the medium term through better focus, rigor and execution. Best-in-class performance requires us to take actions to accelerate our categories and to improve market share. And we're confident that doing this will successfully allow us to deliver 4% plus growth with 2 riders in normal market conditions and in the medium term. So let me explain those. Firstly, in the last few years, we've seen that the staples sector is influenced by the macroeconomic environment. So even though the normal Nestlé category growth is 3% to 4%, there will be variability from year-to-year. So to give you an example, if we see more inflation and category growth at 6%, our objective is to outgrow that. Secondly, we call out in the medium term, as whilst we have a clear action plan to restore best-in-class performance, it won't happen overnight. It's going to take time to fully realize the benefits of our plans as consumer behavior takes 18 to 24 months to change. So while we're confident in our ability to deliver these growth objectives, it's going to take at least 2 years to fully realize them. In 2024, we're expecting to deliver around 2% organic growth, and that's below the normal category growth rate for Nestlé. Now there's 3 factors that explain that gap. Firstly, the category growth has slowed and it's close to the lower end of the range. Secondly, the inventory reductions that we referenced at the 9-month sales release are weighing on growth to the tune of about 30 basis points. And thirdly and most significantly, we have a growth drag of 100 basis points or so associated with the impact of market share losses. So of that growth drag, a bit less than half is due to the impact of consumer hesitancy towards global brands linked to geopolitical tensions. And a little bit more than half is the broader loss of competitiveness. And while we're clearly not happy about this, what's critical is that we're recognizing it and acting on it. Now the majority of the underperformance is concentrated in 15 to 20 of our larger cells. Now by cell, I mean a product in a market, so like pizza in the U.S. For those 15 to 20 cells, we now have a clear diagnosis of the issues and a plan for addressing them. And Laurent called out some of those earlier. So let me explain what gives us confidence in 4% plus in the medium term. And it starts from an understanding of our category growth. The 3% to 4% is an aggregate number at the portfolio level, but it's actually too simplistic to look at it that way. To really understand the growth potential, you need to drill down. This chart is illustrative of that, showing the zone and category view. But just to be clear, the numbers on this slide show the view on the outlook for '25 to '27 market growth in the categories where we operate. Now in reality, it's still at a very high level. In fact, our category growth of 3% to 4% is underpinned by a bottom-up view at the level of multiple hundreds of subcategory and country sales. And it's this depth of understanding that gives us confidence in the 3% to 4%. And more importantly, this granular understanding allows us to manage the business more effectively. It informs resource allocation and performance management. So on resource allocation, we're coming much more specific about where we're investing against those biggest growth opportunities. Going forward, it will no longer be the case that the biggest determinant of investment in a business is the amount we invested in it in the previous year. And it won't be the case that if we achieve efficiencies in one business, they'll automatically get reinvested locally. The granularity of our understanding is informing more polarized resource allocation across subcategories and geographies. We're also tightening our top to bottom performance management. We are not managing for averages. If an area of the business is delivering 5% growth, we want to make sure within that, that we're investing to accelerate those cells that are growing at 6% or 7%, and we understand what we need to do to fix those cells that might be growing at, say, 1% to 2%. This is a sharpening of performance management at all levels of the business, and we're convinced it's one of the actions that will make the most impact on performance. And it's echoed in the category presentations you will see later today. Each presentation will give you an overview of the global category, but will also include a market case study, chosen to illustrate how we're accessing specific areas of growth. So to connect this to the actions Laurent talked about earlier, it means that for the first time, there's going to be Executive Board focus and accountability on the 30 or so most important cells across the group. This includes cells in the expand the winners category, where we're driving further rollout of growth platforms such as PetCare in AOA and our out-of-home coffee business, as well as scaling our big bets. This accountability and follow-up will also apply to the most important underperformers, including those big cells losing share, such as Nespresso Europe or Frozen Foods, North America, which deliver good profitability, but are currently a drag on growth. We're also increasing the precision of the conversation about each cell and the data underpinning the diagnosis and the actions at all levels in the organization. Laurent talked about this earlier, and he talked about using data to evaluate our value proposition and the opportunity here is significant. What surprised me, as we started to execute, is not so much how we score on our 60-40 taste preference metric, but the fact that we've recently tested it in less than 1/3 of our SKUs. This is changing. So to bring it all together, we don't have a portfolio problem. We're confident in Nestlé's category growth of 3% to 4%, and we can do more to drive acceleration of our categories through consumer-led insights and innovation. And we can certainly do a better job of protecting and increasing our market share as a result of better execution for our consumers and customers. The good news here is we have so much opportunity, and we're clear on where to focus and what actions to take, and we're embedding a new level of rigor. It will take time, but it will have an impact. So moving next to margin. We have structurally strong profitability, underpinning a UTOP margin above 17%, and our portfolio positioning supports this. For example, within Coffee, we're more exposed to soluble coffee and portioned coffee, where profitability is much higher than in roast and ground. A second example is pet food, where today, almost half our sales are in super premium products such as Purina Pro Plan with accretive profitability. And it's not just our premium products that are helping us build margin. The margin of our affordable offerings is equally strong. They're designed to deliver at the lower price point. And the same can be said of our e-commerce route to market, where we've engineered our value chains to deliver margins that are at a similar level to the rest of the business. Our structural margin profile is underpinned by the competitive advantages that Laurent talked about, the strength of our brands, breadth and depth of our customer relationships, our leading-edge innovation, and our scale. Taken together, it means that we can deliver consistently for our consumers' needs at the right margin. Over the last 5 years, our management of profitability meant that our operating margin declined by less than our peer set. But we haven't been delivering our margin as a function of leveraging those inherent strengths that I just talked to you through on the last slide. We had as much or more gross margin pressure than others, and that was mitigated by a reduction in marketing investment. So while we saw less impact on operating margin, we underinvested in future growth. If we now look at what to expect going forward, our starting point is guidance of around 17% for 2024. This slide shows the key moving parts from there over the coming few years. In the short term, we have a headwind from input costs, especially in coffee and cocoa, which should be mitigated through a combination of pricing and efficiencies. We've already been very clear that we will step up investment rapidly. And while longer term, this will be funded through efficiencies, there will be a lag. That's why we expect margin to be down in 2025, and to build back from there. In the medium term, we expect to be consistently 17% plus, and I'm going to break down these drivers on the next few slides. First, on input costs and pricing. It's clear these are going to be a challenge in the short term. But as you can see on the chart, big fluctuations in input costs have always been part of our business, and we have a range of strategies open to us to deal with increasing input costs. First, of course, is taking price to cover increases. But sometimes we can't do that without moving out of reach of the consumer. In that case, we innovate to protect gross margin with different pack size or designing for a lower price point. And finally, of course, we look consistently to drive efficiencies to mitigate cost increases. Often, we're helped by the fact that we're better placed than our competitors to navigate some of these challenges. Taking coffee as an example, we have lower exposure to roast and ground and higher exposure to the more value-added portioned and soluble coffee, where green coffee is a much lower part of the overall cost. We're advantaged by our sheer size and deep long-standing supply chain relationships. And our leading extraction technology has allowed us to consistently use more of the coffee bean, reducing costs and the burden on the planet. So we can benefit competitively even when there are headwinds. However, while we implement these strategies in the very short term, the impact on margin will be lumpy, because we can't pull all of the levers at the same pace as the movement in costs, especially given annual price increases. The next important topic is efficiencies. Laurent has been very clear that we need to invest without compromising margin in the medium term, and that comes from driving efficiency. We're approaching this with a high level of ambition, granularity, and rigor. For the past several months, we've been doing a very detailed benchmarking exercise, and that's not just internal benchmarks, that's against peers. And it's given us a very clear view on where we're best-in-class and where there are opportunities. So what's the outcome? Well, I'm sure you know that Nestlé has ongoing initiatives to deliver efficiencies of around CHF 1 billion per annum. That will continue. In addition, we aim now to deliver incremental cost savings of at least CHF 2.5 billion by the end of 2027, providing the fuel for incremental growth investments. To be clear, the CHF 2.5 billion is a gross number. And while savings in procurement and commercial spend will not incur any one-off costs, some of the operational efficiencies will. And I'll give you more detail around all of that at the full year and a breakdown of the efficiency drivers and phasing and the cost to deliver. Importantly, we're very clear about holding ourselves to account to deliver on these savings, and we will report to you on our progress. And finally, it's important to say that our opportunities are not just about reducing cost. They're about running our organization better, removing friction, increasing agility and making Nestlé a better place to work. So turning now to investment. We need to increase the investment behind our brands. On marketing, that means getting back to a rate of 9% of sales by the end of 2025. And this is not about spending a little bit more everywhere. It's about significant targeted investments against our biggest growth opportunities. We will do this as fast as we can, where the limiting factor is business case and execution plan rigor. So to conclude on margin, Nestlé can consistently deliver 17% plus, including a step-up on investment. So I'll turn now to cash flow and balance sheet. Nestlé has historically delivered strong cash generation. However, our cash generation from operations and especially our free cash flow generation has been lower over the last 5 years. Now that's mainly for 2 reasons: the impact of higher working capital investment and the impact of higher CapEx. Going forward, driving cash generation is something that we are very focused on. So let's look at the 2 areas impacting cash flow. As you can see on this slide, CapEx has increased in recent years. And that reflects a step-up in investment to bring on much needed new capacity, particularly in PetCare and Coffee. Having gone through a period of more elevated investment, we would expect CapEx as a percentage of sales to come down now from here. However, CapEx per se is not a bad thing. It's reflective of increased demand. The key point again is that we need to have the right rigor and discipline to ensure we're generating the right level of return on investment. The second factor driving cash conversion in the last few years has been working capital, which has increased as a percentage of sales as we navigated the supply chain disruption. Going forward, we're optimizing our supply chain to a more neutral working capital position. So turning briefly to return on invested capital. I won't dwell on this slide, but I do want to say how important this is to me. You've heard us talk a lot about rigor in respect of investments and ensuring that we're generating the right returns. And that will all ultimately come together in our ROIC. ROIC will obviously be impacted in '24 and '25 by the margin reduction. But then going forward, we'll see this improving as we drive stronger sales growth, margin recovery and greater investment discipline. Turning now to capital allocation. There's nothing here that should come as a surprise. We've been very clear that our priority is investment in organic growth, although we see room for targeted bolt-ons in our growth platforms. On returns to shareholders, the dividend remains our top priority with no change to our practice here. And we'll continue to return excess cash to shareholders via share buyback when we have such excess cash to return. And that brings me on to leverage. Again, no change to our existing policy. We're currently right at the top of our range of 2x to 3x net debt-to-EBITDA. And I've said before, we would like to return to around the middle of the range. So we don't expect to commence a further share buyback when the current one completes around the end of this year. So I'll finish by bringing all of our comments on guidance together in one place. No change to our existing guidance for 2024. For 2025, we will provide formal guidance in February. However, I know this is an area of keen interest. So I want to give you as much help as I'm able to at this stage. On top line, the benefits of all of the actions we have underway will take time to come through. And we don't expect the consumer backdrop improving into 2025, although some of the 2024 headwinds should be behind us, such as inventory reduction overlapping consumer hesitancy towards global brands. On UTOP margin, we've already talked to the fact that this will be down in 2025, as we step up investment for growth faster than we unlock the incremental cost savings. At the 9-month update, we also said that we're not expecting the decline in 2025 to be in the range of 100 to 200 basis points compared to our 2024 guidance of around 17%. This still stands. So turning to the medium term. On organic growth, we aim to accelerate our categories and improve market share. And this will translate into 4% plus organic sales growth in normal market conditions and will support us returning to a UTOP margin of 17% plus in the medium term. So to summarize, driving category growth and improving market share will be key. To fund our growth plans, we aim to deliver incremental cost savings of CHF 2.5 billion by the end of 2027, in addition to our existing efficiency initiatives. We will be more polarized in our resource allocation and rigorously track the return. Improving cash flow generation is an area of focus with significant opportunities to improve our cash conversion. And when it comes to capital allocation, our priorities will continue to be organic growth and dividend returns to our shareholders. And with that, I'll hand over to David for Q&A.

Okay. Thank you. So we'll start the first Q&A session. [Operator Instructions] So let's start with the first hand up very quickly, Warren, over there.

So it's Warren here at Barclays. I've actually only got one question, and it's on the savings. And I appreciate you'll give more color at the full year results, but CHF 2.5 billion is a big number cumulative. Are you able to say at this stage and give us a bit more understanding of what you're doing exactly on procurement and on commercial to give us conviction that this is achievable? And can you also confirm that there will be no reduction in people in headcount? Is this kind of -- are we talking hard savings, soft savings? So yes, that's my question on the granularity around that because obviously, that's the key delta to try and bridge the step-up in investment that you're talking about.

Yes, I can get started and hand over then to Anna for more details. But procurement is a big bucket. It's a big chunk of our profit and loss. And as you can imagine, in an organization of our size, with so many specifications that we buy, and always this question mark regarding what do we buy globally, what do we buy locally, there are always opportunities to improve the way we buy, where we buy, and also what we buy. So we come back to the points of specifications. So if you put all of that together, plus on top, tightening our negotiations, we believe that there is a significant chunk of what has been laid out as the savings should come from that bucket. On commercial spend, there are also many dimensions to it, obviously, end-to-end. And what we expect from there is an uplift in growth, getting more from what we spend, what we invest. So we come back to the focus on organic growth, spending better, investing better. But we believe also that by investing better, we should also be capable to generate some savings fueling the bucket of the CHF 2.5 billion. And then, of course, there are also further efficiencies that we look at across the organization. But on the first 2, those are kind of agnostic of the organization. There might be some tweaks to the organization, but those should not involve significant restructurings.

And maybe just to kind of help with some examples, just so you understand the level at which we've benchmarked all of this. So there are areas where we can halve the number of specs we're working with in some pockets of the organization. We've looked at how we procure above market versus how we procure in market, and there's an opportunity to shift that balance to procure more things standard globally. We've looked at the areas where we've got single suppliers versus multiple and what the opportunities are there. So this has been done at a very granular level, and we're very clear, therefore, how we go after it. And with respect to the operational savings, there will be some one-off costs associated with that as we work through some areas there.

Okay. Next question.

It's Guillaume Delmas from UBS. A couple of questions for me, please. The first one is on the shape of your margin development. So you expect some moderate decline next year. But should we assume a rapid margin recovery from 2026 onwards as the savings come through? And at this stage, I would assume advertising and marketing spend growing in line with sales from 2026 onwards, so staying at around 9%. And also, it was a few months ago, you were still talking about 17.5% to 18.5%. Are you signaling today that 18% plus is simply an unrealistic level for Nestlé given your portfolio today and that you would rather step up investments further rather than give meaningful margin expansion? And my second question is on pricing. On pricing, so you're flagging some short-term input cost headwinds, inability to fully offset them with pricing in the short term. Is the food and bev industry entering a new era where pricing is more difficult to implement? I mean, at the Q3 stage a few weeks ago, you were talking about some delisting, particularly in Europe. So is it more down to companies to find savings to fully offset those headwinds? And does it mean more gross margin volatility going forward?

So I can give it a go, and then Anna will complement. On your assumptions on the development of margins and investments, I think those are realistic, and that also connects to the second comment on the medium-term margin guidance, we want to give a realistic guidance. So keep that word in mind. We believe, on both sides, we are realistic given current circumstances and what we see as future developments. On pricing, it's a very interesting question. We should keep in mind that we are out, and maybe not completely out, from a relatively long period of high inflation. And that if you listen to consumers everywhere, including in Switzerland, you would hardly find any consumer telling you food prices are mild or low. Everyone would tell you, food prices are super high. Why is that? Well, because you got 2 or 3 years of significant increase, high single digit, double digit, and everyone has got that in mind. So in that context, indeed, when on top of that, the consumer wallet is under pressure and the economy is not buoyant, you got that perception from the consumer that, wow, will I pay for more and so on and so forth. So that can explain why it might be a little bit more challenging in that context. And I think this is more conjunctural than structural to pass prices. It doesn't mean it's impossible, if you've got pricing power, and we can use all the levers of strategic revenue management, including price pack architecture, innovations, renovations to generate pricing. But yes, it's a little bit more tense in the current context than it's been in the years before. But that will normalize. So we should not get obsessed with the idea that pricing power is gone. Nobody can increase prices. No, it's not the case.

So just some numeric builds. I'm not going to guide for 2026, as I'm sure you are aware, because there's a lot that will happen between now and then. But I think what you've just heard from Laurent is our intention to get on with the cost savings work is high. With respect to why we're saying 17% plus, it's an area where you've given us a lot of feedback that you've been struggling to work through what's cyclical versus structural in our margin. So what we wanted to do is give you a floor as to what the structural power of our margin is, and that's 17%. Now previously, we've given ranges. We've talked about incremental margin improvement year-on-year. We've stayed away from all of that because what we want to have the freedom to do is invest in the medium-term growth that we see when we see those investment opportunities. And that's how you will see us manage the business for the medium term. And then with respect to pricing, just a tiny build, just to pull the 2 pieces apart. I think there's 2 different things going on here. There's coffee and cocoa, where it's not about a new pricing environment, it's about input cost pressure. And as you heard me say at the third quarter results, the delistings that we'd experienced in Europe was on the back of cocoa price increases. So that is a different thing than the broader environment where, as Laurent says, I completely agree, we're in a bit of a cyclical switch at the moment.

Okay. James?

Thank you, David. Two from me, please. First, why is 9% the right number? And secondly, your previous guidance for sales, obviously, 4% to 6%. You're now saying 4%. What's changed in that? Was the 4% to 6% always unrealistic? Or are there specific issues where you feel it's right to be more prudent?

On the 9%, it's a very good question. What I can say is that it's a good number. It's a big step-up in investment. It's going back to where historically we have been investing. And you need to keep in mind that, by the way, this is not the only area of investment. We, of course, highlight that one, but there are also other dimensions like the digitalization, for instance, or quality, or I mean, so many dimensions in which we invest. But yes, this one is very visible. So it's a good level. Is it the optimal level? Time will tell, but we are determined to put the resources that it takes to win in the marketplace. And the key thing is that beyond the number is the quality of the investment. We will do fewer things with bigger sale -- bigger scale, achieving greater impact. And in that respect, expect also that those 9% will return better than they used to do. On the growth level, we are just realistic with where the category growth stands for our categories and take into account that we want to perform better in that backdrop, in that context, and that leads to the 4% plus.

And just a little build on the 9%. I think what you're hearing from us is we're getting very focused on returns. And so if we see opportunities that are beyond the 9% that are going to deliver those returns, that's something we'll invest in going forward. But we're getting really clear on those returns. And again, just going back to Guillaume's question, why 17% plus? Because if we see further opportunities as we get into this, we will make those investments, but we will be consistent with our guidance.

Celine?

Celine Pannuti from JPMorgan. So my first question, Laurent, is on culture and incentive. I think when such a big company like Nestlé and things do go in the wrong direction, could you please give us your perspective on what you think happened from a culture perspective, and give us a bit more granularity on this incentive change and how it's better maybe linked to top line performance? My second question is on the EPS growth algorithm. You gave us top line margin. Thank you for that. At the same time, you operate in a very strong currency, the Swiss franc, and that always has an impact on the bottom line. How do you think about hard currency EPS growth? And with that, your dividend -- DPS payout, I noticed, was more than 62% last year. What's your comfort zone around that?

On the culture, very good question. I believe this is one of the strengths of Nestlé. There is this culture focused on quality, focused on collaboration, and it is so important in the current context, collaborating internally and externally. At the same time, there is this strive for continuous improvement. So the culture is fundamentally right. It's a good culture and supportive. Where you will see or you would see differences in performance is around alignment. This is a big theme that I'm highlighting always that an organization of our size, of our scale, of our complexity, when people understand what is expected from them, you get a different outcome than when there is less clarity and too many initiatives. So the way I like to describe it and back to we are the most global and the most local. Globally, I want to make sure that the framework in which everyone operates is very, very well defined, very tightly defined, what is the journey, what are the objectives, what are the priorities. Once those are defined and the resources are aligned, then the principle is freedom in the framework, everyone at market level, and you will see key marketers featured today to execute upon those priorities. So I think it's all about having the organization right, being clear on the priorities, and then aligning incentives, which is another good point. And there, we want to tighten also and strengthen the framework and making sure that incentives align and follow the Virtuous Circle around efficiencies, around investments, around growth and market share gains, and sustainable development of the profitability. So that's the way we -- and I will both align the organization with that clarity on the framework and the priorities and aligning incentives to that. And I guess you will see and you should see today and tomorrow that alignment is getting there. I hope you will see that everyone is speaking the same language and that there is not one going in the east, the other one in the north and the third one in the south. The direction is clear. Everyone is getting aligned and undertaking in that framework. So that makes a big difference.

And EPS, and maybe I'll add on a question that I got outside earlier as well, just to kick it off. I was asked why we weren't guiding on constant currency EPS. We've given you growth and margin. I look at EPS as an outcome, because you know where we are on tax and you can calculate the interest. And in terms of EPS -- reported EPS, of course, currency plays a factor here. We're a very global business, and it always will. That said, we do think commercially as we make choices around structuring our business, we do make -- we try and do that in a way that manages currency as best as possible. In terms of the dividend, we're confident in our ability to our commitment to it.

Okay. Let's go to the back, maybe, Jon.

Jon Cox, Kepler Cheuvreux. Great stuff on the free cash flow. Just wondering where you think that can go? Because if you're talking about working capital maybe trending towards 0, that's 2 or 3 percentage points. And also on the CapEx, if that's a point lower, is that how we should be thinking about your free cash flow margin going forward? Second question, just on the growth. Is there a risk we're actually just going to go back to the sort of mid-2010s when Nestlé was growing around 3% or so because of the absence of pricing?

So I'll take the second one, and I will leave the first one to Anna. What we give you as a guidance for the medium term is not 3% to 4%. We see and we look at that both from the bottom-up perspective as well as the top down, and we see our categories growing 3% to 4%. And we believe that increasing our exposure to higher growth space on the one hand and executing better on our core initiative, core brands, big bets, growth platforms, we can achieve market share gains -- drive category growth, achieve market share gains and get to those 4% plus. So that's exactly what we have in mind. And we are organizing ourselves to make that happen, and it starts with, in the spirit of the Virtuous Circle, with a big effort on achieving efficiencies, and we put a big number on the table that we will achieve with a high degree of confidence to be able to fuel the growth. And if we strengthen our value proposition, which is the second level of focus -- or the first level of focus, there is no way we will not win in the marketplace. If you got the right value proposition, right product, taste preference, right price, maximum distribution, maximum visibility, share of mind, with the right investment, there is no way we will not win in the marketplace. We got the brands. We've got everything it takes to win in the marketplace. So we are organizing ourselves to win in the marketplace and to achieve the 4% plus.

And on the cash flow. I'm not going to answer your question specifically, as you know. But I can give you a bit of color around it. With respect to working capital trending towards 0, we've been doing some work to really understand our working capital and are really clear our route to achieve that in that we've done it bottom up as to what's the right level of working capital as opposed to what's the change year-on-year. And then with respect to CapEx, it will trend down from here. The exact phasing, we will give you more guidance on as we come into each year. But I also would say this is an area where I've been very clear not to create ongoing guidance, because there will be times when we see opportunities where we do need to put more capital in because we see the consumer demand there, and we will act to invest when those opportunities occur.

Let's go to Tom.

Tom Sykes from Deutsche Bank. Firstly, just on the step-up in A&P. Many in the industry might argue that you can't measure properly the returns from the A&P you are spending now and you're going to be stepping up quite quickly. So what change in systems are you going to be putting in to make sure that you are measuring the returns from that as well as can be? And then secondly, just on the efficiency gains, it seems like quite a big change from you as a manager not keeping -- from keeping the efficiency gains in your business to then allocating them more at the group level. So sort of how much buy-in have you got from your managers on that ready at the moment? And does that imply the biggest cost savings are not in the highest growth areas, please?

So on A&P, increasingly, we are in a data-rich environment. So not only we can measure returns, but we can also model impact of our investments through marketing mix modeling types of frameworks. So we are embracing those increasingly. They are absolutely embedded in the way we work. We also consolidated our media buying and media planning. So we got more tools and more resources to do that properly. And then we track impact and returns. And you will see will be interesting examples where you see that we can track down to sellout in the most advanced markets. So that tracking we got. On the allocation of the investment, I think it's a good news for everyone in the organization that we will invest more. It's a great news for everyone in the organization that we will invest more behind the bigger bets. And the bigger bets are not only Anna's or mine, they are the ones of the Executive Board and beyond, of the entire organization. So everyone is behind it. There is one team. There is one spirit that we all want to win in the marketplace. And we all understand that by focusing and polarizing efforts behind big bets, and we make them visible to everyone, we will win in the marketplace and make an impact. So the buying is tremendous. And I hope you will see that across the presentation today and interactions with the teams, the buying is very, very strong, as strong as it could be.

And just to maybe help a little bit with those returns. This is not about everybody spending a bit more where it would be impossible to track returns. This is some very clear areas that you heard Laurent lay out. So rolling out RTD faster, out-of-home coffee, pet therapeutic diets. They're very specific. Clear business places in clear geographies, and we can track the execution of those, and we will. We will make them visible at an Executive Board level, because these are the big investments that we're making. So it's quite a different way of management and visibility.

Patrik Schwendimann, ZKB. What is your best guess in terms of RIG in the midterm? That's my first question. And second question, an important building block is winning market shares. Where do you see the biggest potential to win market shares in terms of category, but also in terms of competitors' speed, large competitors, local players or private label?

Yes. So we'll not guide, as you can imagine, on the RIG, but it was a good try. On the market shares, let me take it a little bit differently. Where will be the focus? And the focus is to win in our biggest categories and through our billionaire brands. And we want to win globally, of course, but we'll prioritize our investments. So those are the areas where we will win and we want to win. You will see that there are opportunities across the biggest categories. I know that there were lots of questions. Is it still possible to grow in Coffee? Is it still possible to grow in PetCare? And the answer is yes, absolutely. There are massive opportunities to grow through subcategories or new geographies. For us, for instance, take PetCare, which is such a massive business opportunity. Just look at Asia. AOA, where we stand today, where is the opportunity? Wow, that's massive, and this will be highlighted later today. So I believe we can grow on our core categories. We can grow also through our local champions. Generally, you can grow where you got a good leadership position already. That sounds sometimes counterintuitive where you got 70% share, 80% share. Is it possible to grow? I argue it's easier to grow when you get 70% share than when you got 7% share or 5% share. So I believe that we will grow in the core categories with the core brands. That's the priority, and this is where we will prioritize investments.

My name is Fulvio from Berenberg. Just one for me relating to the share buyback, which you highlighted you have no plans on renewing when the current one finishes. I was just wondering why you didn't come to the decision of perhaps monetizing the L'Oreal stake to continue to fund continued share buybacks, please?

I can do it. So with respect to the L'Oreal stake, I think our position on this one hasn't changed. So I'm going to give you a similar answer that you've had before on this. We look at it as a financial stake. We monitor it rigorously, and it's returned very well for us. And we continue to look at it as a financial stake and manage it that way. In the short term, with respect to share buybacks, we're at the top of our net debt-to-EBITDA leverage range, and it's in that context that we don't have readily cash available organically to fund a further share buyback. But it's an area that we continually monitor.

We'll go to Victoria Next.

Victoria (Vika) Petrova from Bank of America. My first question is around this midterm, Anna, which you mentioned that it will take some time to get to 17-plus percent margin. I'm trying to understand the moving parts around your resetting pricing architecture, cocoa and coffee costs, as well as increase in advertising and promotion and cost savings. What I'm trying to understand the moving part there is where you are in the innovation cycle. You mentioned, obviously, that you are expanding winners and building new growth platforms. My understanding is it's pretty much done through innovation in out-of-home, in pet therapeutics. How long does it take you to bring this breakthrough big, large innovation into the market, so we can see it reflected in organic growth? That's my question number one. And my question number 2 is on the key takeaways around Water. Just to understand, when you talk about partnership, is it something like a JV, something you have already in ice cream, in Frozen Europe? Or is it more around some kind of more in-house organic partnerships?

So let me start with the first one. How long does it take to grow at the big bets and growth platforms? So let me start with the growth platforms. Well, it depends where is the starting point. Are we starting from a position, or do we have to establish the position from scratch? And of course, the answer will be quite different. Let's take pet snacks, for instance, that we highlighted. We don't start from 0, but we believe we can do a lot more and a lot bigger. So that takes a bit of time, of course, but it's much easier than when we establish from day 1, the capabilities and start to develop and implement the innovation. If you look at innovation, everything starts small. You need to list the products, you need to build up awareness, you need to build up the trial, make sure that you get the repeats and so on and so forth. So it takes time. But if you are only building up a decent level of distribution, it takes anything between 6 to 12 months. So it's a buildup. It's an investment. We know that it's an investment for the medium and long term. That's also why we cannot embrace 100 -- there is no way we can embark on a journey with 100 innovations that will require patience, investments, support, follow-up, and so on and so forth. So you can see that we are very, very choiceful at group level. There will be initiatives also regional and local, because those require resources, efforts, constant investments and then will come to fruition. I mean, the most famous examples at Nestlé are Nespresso took, I think, 11 years to get to the first Swiss franc of profit and probably the same to get to CHF 1 billion in sales. Then it accelerated pretty sharply. Or take Dolce Gusto also took its time to develop. So we know that it takes patience. We know that it takes time. We know that it will be dilutive in the short term, but we accept that dilution because we build up for the long term.

And then on Water?

On Waters. So why do we, first of all, organize it, again, globally? Because if you look at the global platforms, there's global brands, San Pellegrino, Perrier, Pana, and we believe that they will be better managed with one unified leadership execution happening, of course, in the marketplace. And if you look at the growth platform, the space of the beverages like Maison Perrier, for instance, or the San Pellegrino franchise, that is also global. Hence, the decision to bring back the business under one roof with one leadership. That offers the possibility to look at partnership. When we think partnership, we look all sorts of partnership, but obviously, external ones are also in the picture. So bear with us, the team has just been appointed. They will have the task to set them up, number one, and then review strategic options and then come back with those options to be discussed and implemented. So there, as well, it will take a little bit of time, but we are creating optionalities for the future.

Jeremy?

Jerry Fialko, HSBC. So a couple of questions from me. The first one is on the kind of underperformance versus the market. So I think you talked about being about 100 basis points below your end markets. But I think on the last conference call, you spoke about how the billionaire brands were broadly holding their market share. So does this mean that there's some sort of pocket of business outside the billionaire brands where you're really quite significantly underperforming the market? And in a sense, how does that match with your aim of focusing a lot of the investments on the bigger brands? Do you have this sort of tail that's dragging you down quite a lot? And then secondly, perhaps you could talk a bit more on gross margins. That's an area where you have seen quite significant pressure over the last few years. You're still many hundreds of basis points below the 2019 levels. And do you think it's realistic getting back to that sort of 2019 gross margin with the sort of initiatives that you've got in place? Or just because of the scale of cost inflation that you've had to go through, there's been some natural dilution and really what you're looking at is more of a kind of a progressive rebuild from where you are at the moment?

So if I just do market share first. So what we gave you at the 9-month call was the number of cells holding or gaining share, both for the billionaire brands, where we said it was high 50s. And then we said for the whole portfolio, it was about half. So that's just the shape of it in terms of number of cells. Maybe just to ground you on the 100 basis points, because in that 100 basis points, a little bit less than half is the implications of consumer hesitancy towards global brands. The rest is loss of competitiveness. And as we've said to you, that's kind of 15 to 20 brand geography combinations that's driving that revenue value gap. So each one of those would be one cell in the broader number of cells calculation. So the number of cells calculation gives you a really good sense of the breadth of our performance. What we're saying is there are a small number of cells where we've got underperformance, Laurent laid out 4 of the big ones earlier, where we're taking specific actions to correct that. And then with respect to gross margin, over the medium term, and maybe over the slightly longer than medium term, there is no reason why we shouldn't get back to our historic levels of gross margin. You've seen us improve considerably over the last 2 years from -- so in '23 and 2024 from the ultimate low that we were at. But it's not going to be a straight line. As we've said to you, there's more headwinds in 2025, as we see more input costs come through. But the fact that you're seeing steady progress, once we go through these periods of input costs, reflects the fundamentals of the business, our ability to take price because of the strength of our brands, our ability to innovate into those price points where we can't take price, and our ability to generate efficiencies. So over time, we will get back to the sorts of level of historical gross margin we were at, but it won't be in any way linear. It will be a consistent recovery. But when we go through periods of significant input cost inflation, it will be lumpy because of that timing difference I explained earlier.

Okay. Can we come to the middle?

This is Feng Zhang from Jefferies. Just have a question around the margins. About the 17% of the guidance, does that include the benefits from the potential Water partnership or disposal? And then why Water first? Is it because it's a smaller business, and then it's a larger drag to margins? Is there any consideration for frozen categories potentially in the future? And also, how we consider the net impact from the cost savings of CHF 2.5 billion on profit?

So let me start with the last part of the question, CHF 2.5 billion. We explained that in the spirit of the Virtuous Circle, that will fuel the investments behind the brands, behind the growth platforms and the core big bets. And through that, we will generate the organic growth -- the market share gain, organic growth that will deliver the profitability. I don't believe in a system where you cut the cost to improve the margins without fueling the growth that is not sustainable. That works for a couple of years, but will not position you to win and grow in the marketplace. So the model is to generate efficiencies and savings to invest in the business and to drive superior performance. On the Waters, because Waters was kind of an obvious one that we could organize it better, and it's a pretty focused business, although we have some local brands as well, but the core is in the global brands. The core is in the global platforms. And the core opportunities around beverages are also common global ideas. So it was kind of obvious to bring it back together and then looking for opportunities. On frozen, you will see that will be covered today in the morning, I think, or early afternoon through the food presentation. You will see the plants or some of the plants. We believe that we can do better, be more relevant. We got interesting pipeline of innovation and renovations, and that's the plan we are implementing as we speak. So there are interventions on both sides, different nature, to position ourselves for success in the long term.

And maybe just to be completely clear about the margin question. The 17% plus is reflecting our portfolio today. And that's because what we've announced today with respect to Waters is a change in how we manage it. So it's just a change in how we report and manage the business.

Any more questions? Do you want to go for one? We'll take this as the last question.

It's Guillaume Delmas from UBS. Two follow-ups, please. A couple of years ago in Barcelona, there was a lot of emphasis on digitalization and sustainability. I think today, we'll hear about both again in great details. But I think at the time, the soft guidance was for digitalization to be a 10 basis points drag per annum on your operating margin and sustainability around 30 basis points. So wondering if you could provide a quantum for both. And if we should expect at least investments in digitalization and sustainability to grow faster than sales? And then my second follow-up, premiumization. Because in the last decade, you increased quite fast the percentage of your turnover derived from premium products. I think it was a low teens in 2012, mid-30s last year. Do you still see scope to accelerate that premiumization trend? Or just based on the level you got to last year, we should expect a slower development of those premium offerings?

So on digital and sustainability, those are 2 very powerful levers of transformation. Digital is transforming everything, the way we work, the way we connect, the way we shop, the way we do business. So there is no doubt that it is and it will remain an area of investment, but also a tremendous area of value creation. So we look at it as an investment that will provide returns, and that is providing returns. That's the better way to look at it. On sustainability, the message also is that we have done the heavy lifting. We are well on our way. And we look at it -- we embed it in the way we do business and increasingly look also at the returns -- at the impact and at the returns. So investments will continue. We believe that to be on our way to our 2030 milestone, we will need to continue to invest probably at a lower pace than in the 2025 leg of the journey, looking at impact and returns as well.

So maybe just to be specific around sustainability, yes, François said 30 basis points drag a year. I think we see that through 2025. But as we embed sustainability further, it probably won't continue at quite that level. And when we look at investments going forward, we're not just looking at the sustainability impact, we're looking at the efficiency impact, all of the other benefits. So it's a much more integrated way of looking at it. And on digital, when we invest, we expect fairly rapid returns. Premiumization...

Premiumization, yes, there will be -- that's a space which is a great space for our brands. There is absolutely no doubt. And actually, most of the growth coming from PetCare or Coffee has been coming from premiumization. So I think that will continue. We want to bring back, in the context that we know and in the context we have described, the point of affordability, because expectation globally, and not only in emerging markets, for affordable nutrition or affordable diets is as high as it's ever been. So we see it as a big opportunity to play at both sides of the ladder. Premiumization, absolutely still ample opportunity to grow in premiumization, but also we want to look more intensely deeper at the affordable nutrition opportunity in an increasingly polarized consumption context.

Okay. Let's bring this first session to a close then. We'll break now for coffee, which is outside where we were earlier this morning. And we'll be back in here at 10:30 to start the next presentations. Thank you. [Break]

Okay. Thank you, everyone. Welcome back. We'll start now with the first pair of category presentations. So with Coffee to start with, and then we'll go to PetCare. And I'd like to invite David and Steve on stage to kick us off on coffee.

Well, good morning, everyone. It's a real pleasure to be with you again. I'm David Rennie. I head up our Nestlé Coffee Brands Group, and I'm joined on stage by Steve Presley, who is the CEO of the Americas. For the next 30 minutes or so, Steve and I are going to share with you the status of our Coffee business. I'll take you through our global coffee business and our key global priorities. And then I'll hand over to Steve, who's going to walk you through our North American business, a business where we are leading and growing in the largest coffee market in the world. Nestlé is the world's largest coffee company. Over the past 3 years, we've been growing at around 8% per year, delivering close to CHF 24 billion worth of revenues and also UTOP margins of around 20%. That makes us Nestlé's largest and #1 business. We lead the category in every one of our geographical zones as well as in portioned and in soluble coffee. And these are highly attractive segments, both in terms of growth and in terms of margin. And we also have the 3 biggest and most iconic coffee brands in the industry. With Nescafé, with Nespresso, and with Starbucks, we have the 3 biggest brands and the only brands that feature in Interbrand's top 100 survey. Now the Coffee category continues to be a very dynamic and growing category. Over the last few years, it's been growing slightly ahead of its historic average of around 5%, and that's largely been driven by COVID and then the post-COVID inflationary bounce that we got. When you see how the value of the category sits, it's very much, as I've shared in the past, roughly 75% of the value of this category sits within out-of-home. But when you look at cup consumption, where the cups are actually drunk, that reverses with 2/3 of all of the cups drunk, drunk in-home. Now looking forward, we see this category growing at between 3% and 5% over the next 3 years or so, as it moderates post-COVID and that hyperinflation period. So where is that growth going to come from? Simply put, it's coming from 3 main drivers: more premiumization, more occasions, and more consumers entering this category. Now we've seen some big shifts in the category in recent years. Coffee shop experiences still really set the tone and the flavor of where you're going to see innovation coming. But also, especially during COVID and post-COVID, young consumers are finding new ways to experiment and create coffees in their own homes, and that gives us unique opportunities to develop solutions for them. Coffee is no longer just hot, drunk in the morning. It's now an all-day-round versatile beverage drunk hot, cold and flavored. That gives us huge opportunity to meet these new consumer needs with premium products. And then origins, terroir, coffee expertise, all of these trends continue to give us opportunities to premiumize this category at scale. All of these changes also lead to more consumption occasions. Now in 2023, for the first time ever, indulgence overtook stimulation as the #1 need state for why people drink coffee. That is a massive opportunity, because that gives us different times of the day for coffee to be drunk. Additional cups in the afternoon, especially cold coffee, is going to fuel growth and at least 1 out of 3 of those cups will be incremental to the category. The last area we look at is where new consumers will be entering the category. I've mentioned this before, there is still half of the world that drinks very little coffee. Even with the boom of coffee shop expansion in China, consumers in China, India and large parts of Africa are only drinking 40 to 50 cups of coffee on average per year. The global average is well over 200 cups a year. This gives us huge potential as these markets, especially young consumers in these markets get to experience coffee to meet their needs and delight them as the category grows. The other thing is young consumers are growing and growing fast as consumers of coffee. There are about 1.2 billion young consumers aged between 16 and 24. 1.2 billion, they already account for 20% of all of the coffee consumption in the market, and that percentage is growing fast. So more premiumization, more occasions, and more consumers. And we are best set to capture this future growth, thanks to our unique strengths across the entire value chain. First, and I've mentioned them, our iconic brands. Nescafé is the world's favorite coffee brands. 1 out of every 7 cups of coffee drunk anywhere, anytime in the world is going to be a Nescafé. Nespresso, the leading premium coffee brand in the world that created a whole new category is a business that already has sales in excess of CHF 6 billion. And then Starbucks, the newest member of our family, a business that we only brought into the family 6 years ago, which defined coffee shop and coffee shop experiences for a whole generation complements perfectly our other 2 brands and completes our iconic portfolio. We actually have a fourth brand, which I don't mention much in my presentation, but Steve will certainly major in his presentation, which is Coffee-mate, our fourth billionaire brand within the coffee family. Coffee-mate is essentially a North American business, and Steve will deep dive into that in his slot. Second, we have unique and proprietary technological advantages in this category. We have been developing fundamental research and innovation in this category for 90 years. And today, we have 800 scientists and coffee experts spread across the company to develop new foundational technology and innovation in the category as well as developing patents to allow us to get technological advantages into products. To give you a number, today, we have 1,200 patents granted or pending on coffee alone. That, combined with our network of 5 R&D centers and 20 global roasteries supplying our coffee around all of our markets, gives us an unparalleled scale in the category. These expertise and capabilities enable us to bring together irresistible product superiority. And I want to give you a stat on where we stand on that. 85% of our entire coffee portfolio has a 60-40 preference with 0 losses. So we invest in making sure that our products are superior and winning in the market. And we're continuously improving our costs driven by constantly improving a key bit of technology we have that's industry defining, which is our ability to extract more green -- more coffee extract from a green coffee bean. That technology allows us to get more yield than any of our competition. Third, our portfolio is built structurally to be more profitable in segments like portioned and in soluble versus the highly commoditized segments of roast and ground. So you put all of this together, combining our scale with our ability to innovate at scale, it gives us an unparalleled portfolio. So since we last met in Barcelona, we've continued to drive strong results, and I'll take you through some of these strong results. But I want to say at this stage, given our leadership position, we are really far from complacent. We acknowledge these are challenging times. They're challenging times for the industry, and we are committed to driving continuous improvements to create category and share growth and the efficiencies that will be necessary for us to fuel the future innovation and growth. So in both our in-home and out-of-home businesses, we've delivered consistent growth. Nescafé has proven extraordinarily resilience over the last 3 years, delivered good mid-single-digit growth across all of our network. And these results have come from developed and developing markets and across all of our formats from soluble and ready-to-drink coffee to our cafe-style mixes. Nespresso continues to be a very strong business for us, especially in North America, where we continue to drive very high growth on the Vertuo system and also in LATAM and in Asia, where we're introducing the Nespresso experience to consumers there. But Laurent called out, in Europe, we are not happy with the results. We're certainly not satisfied with them. And we've got some real focus in Europe on how we're going to make sure that Nespresso there continues to thrive and win. And I'll give you 4 areas that we're focused on. The first is we're going to continue to drive the Vertuo system into Europe. We've been doing that now for the last 5 years. And again, as Laurent says, we know it takes time to establish these new systems, but we're investing in this system. We believe in it. Consumers really enjoy the system. And today, it is the fastest-growing system in the European market. So Vertuo is #1 of how we'll continue to build our Western European business. Second, though, is we're going to have to make sure that our products are more physically available to consumers. And we already have a number of areas where we do this, working with top end department stores, specialist boutique stores, and specialist retailers to allow our physical distribution to go beyond where we are today, giving people the opportunity to pick up Nespresso in more points of physical distribution. At the same time, we're going to enhance our digital capabilities. We have a new app and website rolling out across '25, that will give consumers a much better experience when they come on to our site, allowing us to build loyalty and build sales through an enhanced digital experience. And then the last area is our Nestlé approved brands, Starbucks by Nespresso and Nescafé Farmers Origins. Starbucks by Nespresso already only 6 years after launch is a CHF 600 billion business. And that's going to be key to our ability to appeal more broadly on this system to consumers in Europe and in other parts of the world. And that brings me to our Starbucks performance. Very, very happy with how Starbucks has performed for us. It's only 6 years since we closed the deal, CHF 1.5 billion worth of incremental sales on this business, and it continues to grow very nicely by expanding into new categories like creamers and ready-to-drink and really doubling down on these new habits and practices consumers have in cold coffee and in flavors. Next area we'll talk about is accelerating growth in out-of-home. We've already grown this business double digit since COVID. So it's already growing nicely. It's a CHF 2.5 billion business, and we've seen that double-digit growth continuing through the next 3-year period as we double down on getting the right solutions on our brands that delight our customers in this case to allow them to delight their consumers. You'll hear more about that in a minute. And we faced some strong headwinds. You know the coffee prices. We've talked about the coffee prices a lot. We have had 2 rounds of coffee pricing. We have led that coffee pricing, and we've taken that pricing into the market. All of that, I think, says that we're going to be well placed through '25 and '26 to continue to navigate these tough times. As I've said, we are not immune to the price of coffee far from it. But our portfolio is better balanced and more advantaged given that we have portioned coffee and soluble and are much less dependent on roast and ground. But we have priced and we will price. What will be different this time as we price is we're going to be much more sophisticated in using pack price architecture to land at the right price point for the right brand and the right format in every market. We're also going to continue to innovate as we price to make sure that consumers have a range of options in coffee that allow them to enjoy the category and enjoy our brands. And with that, combined with this technological advantage we have of being able to get even more extraction from the bean, I think we'll be well placed to navigate what will be tough times. Last thing I would say on this slide is, and we've talked sustainability. Sustainability is still super important to us. It's at the core of who we are. We're the world's leading coffee company. You would expect us to continue to invest and develop our sustainability platform. And we are continuing through the Nescafé Plan and the AAA program on Nespresso to lead the industry in sustainable farming agricultural practices. We have a big focus on regenerative agriculture, and you'll hear more about that when you're with us at the [ ANR ] tomorrow. Our innovation will delight consumers and customers, and that's how we're going to grow this category. And it's focused on these 3 key drivers: coffee shop at home experiences, new consumers coming into the category, and expanding our out-of-home penetration. And I'm now going to take you through what those innovations look like. So first, coffee shop at home. You really can't talk about coffee shop at home without talking about Starbucks, the world's favorite coffee shop brand. One of our latest innovations, which was on Starbucks by Nespresso, a range of 2 flavored coffees, 1 product of the year in the French market. And as we expand Starbucks at home, we'll be introducing new creaming varieties, we'll be introducing new flavor varieties, new cold varieties, and continuing to build out our offer on Starbucks to attract all of the new consumers into our franchise. Steve is going to highlight in his section a very exciting piece of work that we've done joint with Starbucks to develop a real end-to-end coffee shop to in-home experience on Starbucks. Nespresso really embodies that European flair in coffee and has led the industry when it comes to looking for innovative ways to bring coffee shop experiences, especially expertise experiences into home. So single origin, a reviving origins work. Maybe the most exciting of the newest opportunities we have is a cross-link with Vital Proteins to bring functional coffee closer to consumers on our flagship Nespresso brand. And then on Nescafé, we have continued to develop a full flavor range, indulgent offers that appeal to this pleasure need state and products tailored to offer the very best cold coffee recipes. I'm now going to introduce you with that as background to our 4 big driving priorities on coffee. Probably the biggest innovation we have in the coffee shop at home over the next 3 to 5 years is going to be the launch of our Nescafé Dolce Gusto Neo System. This is a big bet, and it will deliver CHF 100 million over the next 3 years. It's a breakthrough technology based on home compostable capsules and an eco-designed machine. It delivers a cup that is irresistibly superior not just to Generation 1 Nescafé Dolce Gusto, but to all of our competition. It's a connected machine, and that will allow consumers to link directly with your machine and then directly with us to customize every cup that they have. And because the machines recognize every capsule, we can capture the data from that capsule, allowing us to understand consumer preferences, the consumption levels, and build loyalty and promotion with consumers by enhancing that digital experience. This is truly the first connected machine experience for consumers, and it's a big bet. You will see it in detail tomorrow. Now we have built Nespresso. Laurent said it took us 10 years to turn the first dollar of profit in Nespresso. We have built Nescafé Dolce Gusto. Building a new system takes time and it takes energy and it takes investment, but we are committed to making Neo the next generation of coffee systems for Nescafé Dolce Gusto. And we're going to get to millions of households over the next 3 years. We're in 4 markets already, and we'll be expanding that to over 10 markets over the coming years. Let me now turn to the hottest thing in coffee, which is cold coffee. Out-of-home, 1 out of every 3 cups of coffee drunk globally is now going to be cold, 1 out of every 3. In-home is only 1 out of every 7. So immediately, you can see the massive opportunity we have to bring that out-of-home consumption trend in home. We're expanding cold coffees across formats, geographies and consumer groups, because it's going to be key to recruiting young consumers who are disproportionately drinking cold coffee as their first coffee cup. This whole segment is going to grow double digit year in, year out for at least the next 3 to 5 years. And we've got 4 areas of focus of how we're going to capture that growth. First, freshly dispensed. You will see it in the foyer if you've not already had the chance to experience it. We are developing for our out-of-home customers complete solutions that allow them to prepare the cold beverages that consumers want to have in those out-of-home machines. So it's about flavor choice, giving them the flavors and the range of milks that you need to get an out-of-home coffee you like, plus importantly, having ice on hand to make that ice drink. So freshly dispensed and fully dispensed in out-of-home is a big investment for us to allow our customers to experience that opportunity. Ready-to-drink. This is already $1 billion worth of sales for us -- CHF 1 billion worth of sales for us. And I will go into this in a bit more detail about how we're expanding in ready-to-drink. Ready to prepare at home espresso concentrate and ice roast, 2 fantastic pieces of innovation that allow consumers for the first time to easily create the cold beverages that they have in a coffee shop in their own homes. I'll take you through espresso concentrate in a bit more detail, too. And then lastly, freshly brewed. We have a very big business. As you've seen, 40% of our business is in portioned coffee. These systems are perfect ways for consumers to get that coffee shop experience in home. So fresh flavors, coffee specifically designed to be prepared hot over ice are coming on those platforms. So let me deep dive into ready-to-drink. We're expanding this category at scale, both with Nescafé and with Starbucks in China, Asia, MENA and India. In China alone, our Nestlé Smooth Latte is our single biggest Nescafé SKU with CHF 300 million worth of sales on one SKU alone. We are the clear market leader in China. We're the clear market leader in ASEAN, and we'll expand those brands through MENA and India, as well as beginning to establish a nice position in Latin America as we create a category in that continent where ready-to-drink is very underdeveloped. So we are focused on this. This will be double-digit growth for us as a platform over the next 3 years. The next one is Nescafé Espresso concentrate, a new-to-the-world innovation that we've extensively researched. We've gone to many markets to find the size and the price. We know the marketing that we need to put behind it. And this is a revolutionary product that will allow consumers for the first time, especially young consumers, to adapt to this cold coffee concept at home and create the sort of drinks that they want to create. From a nice latte to a Virgin Mojito to Espresso Martini, you can make any drink you want with this concentrate, and you will get the chance to experience this and create your own drinks when we're together in [ ANR ] tomorrow. And it's combined with our new way of marketing these products. This is a product for young consumers, specifically those between 16 and 30. And when we roll this out, you'll see that the advertising that we use is not traditional advertising, it's going to be very social media heavy and very TikTok heavy to make sure that we connect directly with the consumers that are interested in this product. Let me take a couple of minutes to give you a deep dive into one of the markets that's probably the best example of how we can, over time, build the coffee consumption habit in markets that are not big coffee drinking markets. And this is India, probably our best example. India has consistently developed the coffee category, and the category is growing double digit and has grown double digit consistently since 2014. We see that growth continuing. So this is a country where coffee is definitely growing and is becoming an important part of coffee consumption, again, especially for young people. How have we done that? We have given consumers a full range of Nescafé products to drink from CHF 0.02 or CHF 0.03 all the way up to our most premium products. So we've given them a range of price points and experiences to have their coffee, and we've invested in the category over time. To the extent that if you go back 10 years, you would only have found coffee in 1 out of every 5 households. Now you'll find coffee in 1 out of every 2 households. So this transformation is coming. It takes time, but it's coming, and we're committed to it and you see we are leading the category growth, because in India, we have an over 50% share of the market. So India is one of the markets where we're very confident of our ability to continue to invest and build out this category, and we will, because this is a category for the long term. And long term, we know that we will get inflection points in penetration. Let me finish my section then with the last of our drivers, which is out-of-home. This is a $2.5 billion business for us today, an important business, well spread through all of our zones, and it's a business that we want to grow at 10% plus. We've got a really strong value proposition, probably the strongest we've ever had, because we can offer our customers in this space the ability to have tin and spoon. If they want Nescafé in a large tin for small offices, all the way up to the most sophisticated machines that serve at multiple points of sale for sophisticated customers. So we have the complete range of products and brands to satisfy our customers' needs. We're also digitizing our network in a way that we've never done before, which allows us to sell directly to customers, so they can get better and faster customer service from us. And we're also installing telemetry into our machines, which allows us to know when that machine needs service and when it's running low, to give them just-in-time service in terms of product delivery and machine service. So digitization is going to be a key way that we grow. And then we'll continue to innovate on machines and services for customers. If consumers are looking for cold coffee, they need a machine that delivers cold and flavored coffee, and we've got a great range of innovation in that space. So that's it from me for now. I'm going to hand over to Steve, who will take some of these themes and give you examples of how we're deep diving into those in North America. So Steve, over to you.

Thanks, David. And you have to bear with me, my voice, this is as good as it gets. So I'm going to try to project. For the people that had the misery of having to talk to me last night at the dinner, it's better today than it was yesterday. So I'll try to get through it, but thanks, David. What we want to try to do a little bit is give you an example of how you bring the global strategy to life in North America in terms of what it really means on the ground for us. And you'll see really great alignment. I'm Steve Presley. I run Zone Americas for us in coffee, and creamer is one of our most important category. And when you look at coffee in North America, we've got a very strong leadership position and a really strong track record of performance. It's CHF 7.6 billion with a 3-year average growth rate of 10.7%, so one of our highest growth businesses across North America and a 35% share in in-home coffee. And it's really driven by this collection of great, strong iconic leadership brands across all the segments in the category. If you look at Nescafé, tremendous growth in Nescafé in the U.S., I'll talk about it a little bit, but doing very, very well. Coffee-mate and our total creamer coffee enhancer portfolio, and then obviously, Starbucks and Nespresso, and we're able to serve with leading brands across every single segment across that. And what it allows us to do is really leverage our position across all key formats when you think of how consumers take coffee. And I'll start over to the right instant. Nescafé is one of our fast-growing businesses in the U.S. and doing very, very well. Premium roast and ground is where the value creation is in roast and ground. And with Starbucks, we're the leader in that. Creamers, we're the significant leader in creamers, and in portioned coffee. And you heard David talk about where the exposure to better parts of the category are is where we actually have winning formats and #1 positions in all those formats. And an interesting stat, when you take coffee and creamer, our coffee portfolio and our creamer portfolio in North America, we're actually in 3 out of every 5 cups consumed in North America between those, which is an incredible leadership position. And we take that leadership very seriously. And that business is developed not just in traditional channel, but also in the growing channels. We have 35% e-commerce penetration in North America, which has grown almost 1,000 basis points, 800 basis points since 2021. And it continues to grow very fast in e-commerce, and we have that leadership position. In our out-of-home business, now 31%, I'd love to say that's going to continue as a growth rate for a 3-year average. It's obviously impacted a little bit by COVID recovery. So it's higher than what it is, but we have tremendous growth in our out-of-home capabilities. You heard David talk about some of the machines and some of the other systems we bring to bear, but we continue to accelerate growth in out-of-home with all of our brands across that. And I'll talk a little bit about how we bring that to life with customers. And so when you look at it, North America is the largest coffee market in the world. It's $120 billion. And it's really growing, just like globally around 3 kind of key drivers that are driving the growth: premiumization, consumption occasions and more consumers to the category. And when you think about premiumization, this talks about a love for the category. Like how do you know consumers love the category? Why do you have this belief that long term, this growth is going to continue? 25% of the households in North America have more than 2 brewing devices or 2 different ways they make coffee. That's a love for the category. They don't just make it and go. They truly love the way they make their beverages and they love to experiment. You heard about the indulgent growth in that. A second one is this willingness to pay. So consumers -- 35% of the consumers in the category are continuing to be willing to pay at a premium level, and the trend continues to grow, some almost 200 basis -- 160 basis points of growth in terms of consumers moving to premiumization. And then the last one is in this personalization space. Personalization, the predominant personalization in North America is whitening, right? And we have a huge share, 70% of that is whitening, and that's growing at an incredible fast pace. And if you look across all of the demographic segments and you go to the youngest consumers in terms of coffee consumption, it's almost 90% of their cups are whitened. And as the leadership position -- and it's growing at 500 basis points since 2019. So more and more -- every single cup gets more and more enhanced, and we're the leader in that. So we drive premiumization. The second piece is this idea around consumption occasions. And you heard David talk about indulgence, but the other one is what cold really does is it allows you to play and lead in refreshments. Refreshments is the largest beverage need-state in total across all beverages, not just within coffee. And as you look at refreshment, what cold really does is it unlocks the largest one. And for Gen Z consumers, 50% of their first coffee actually comes cold. That's how they get to know the category. It serves a very specific purpose, and it opened the largest need-state in a massive way for us across coffee, and we're very excited about all the innovation in that. And then the second one is functionality. We have amazing brands to our Nestle Health Science portfolio in many of our other brands, that consumers are already adding functionality of coffee with our brands today. But bringing those together in a platform to help drive the growth is where we see the opportunity. And because of the daily consumption of coffee, we see where functionality actually is a significant growth driver. And 80% of the consumers are interested in that. And then when you move to more consumers, look, we talked about Gen Z a lot. They're entering coffee younger. They're using it in more need-states across and more dayparts and every kind of good consumer trend you'd want, you have it with younger consumers, and they whiten their cups more, all where we lead. And then the second one is the fastest-growing part of the demographics in North America is the Hispanic consumer, and Hispanics have a much higher affinity with coffee and creamers in the category. They actually over-index significantly on that. And so all those create really strong trends in terms of why is this coffee market in North America are going to continue to have robust, and then our abilities to deliver against that. I mean look, you saw David's overall framework in terms of elevating that coffee shop experience, capturing the Gen Z and expanding out-of-home. And for us, in North America, there's no better example than what the Nespresso team has done really around the virtual line. It's been an incredible growth driver for us. Double-digit growth, really nice business in North America, continues to perform very, very well. But it's really about growing households. So it does 2 things. It grows households in the system, and they continue to expand households. And then it opens up the ability to bring our other brands to this platform. You saw the success of Starbucks by Nespresso. Starbucks by Nespresso virtual line for us in North America alone is a $200 million consumption sale item already. And we have an original line in addition to that, growing very, very fast, but it's also an incredible system to bring the functionality in with our brands like Vital Proteins, where we can bring those to the platform to drive growth. The next one is premiumization, right? We talk a lot about premiumization. What does it mean? And when you think about instant -- so Nescafé is our fastest-growing -- one of our fastest-growing business in total in North America and when then coffee is growing very fast. And you look at it, they don't seem obvious. Traditionally, the North American market is not an espresso based market. But today, almost 50% of consumers are experiencing espresso-based beverages on a consistent occasion. So espresso is where the beverages are moving, and as Nescafé Gold is launched doing very, very well. The other one is the Starbucks creamer collection, which is instant powder, where -- that's the fastest-growing preparation method is, no brew. We call that no brew. And both Nescafé Gold and Starbucks creamer actually deliver against that. And for these consumers, Gen Z, when you look at a lot of the growth in many categories, whether it's in VMS or protein or Vital Proteins or on collagen supplements, growth comes in premium or powder and that premiumization is in powder. So they see powder as a very premium form of delivery of that benefit, and that's why we have such strong growth in that part of the business. The second one is the first time really across the Starbucks franchise in North America. Traditionally, Starbucks would roll out innovation in the cafes and then it would come to the in-home portion later, a year or 2 down the road, we would launch. This is the first one where we'll have an omnichannel launch across all channels, in café, in-store, in our out-of-home business, every single channel will have this Sunsera blend, which is really a gap in the portfolio. If you drink a lot of the Starbucks blends in North America, they tend to be very dark roast. And there's an opening where around 1/3 of the consumers in the U.S. like a more mild blend, and the Sunsera actually outperforms the leader in that mild blend space. So it gives us a very specific growth profile that allow us to win. And most importantly, it's this omni launch, where you really leverage the power of Starbucks, not just within Nestle, but the power of the Starbucks brand across Nestle and our partner at Starbucks. And then the last one is just accelerating Starbucks by Nespresso. This has been an incredible success for us. We move it into cold. We move it into a new flavor. We move it into enhanced beverages, continues to grow at an incredible pace. We're very excited about the success we've had on household penetration and growth on the virtual line, and we'll continue to innovate around that, including iced, right? It's really important we get iced to this platform. And then a unique one. This is a very unique one to us in North America. We're the only one that has this capability at scale. We have the leading coffee brands, and we have nearly a 50 share in creamers today and the ability to bring those together. So 60% of the consumers today use this coffee and creamer combination. But really, only 30% are pairing. So if it's -- you're buying our creamer, you might not be buying our coffee or if you're buying our coffee, you might not be buying our creamer. So the idea to actually leverage that and develop products specifically to work best with our coffee products and deliver the most delightful income experience is what we're able to do with this one cup mentality. It's about winning the finished cup with consumers. It's not about a black cup of coffee and an interesting creamer. It's about delivering an exciting beverage occasion for them through one cup, and that ability to do that comes together, where you see it's Nescafé and Coffee-mate, and we're actually advertising them together in the campaign and talking about the value proposition on that segment or on the premiumization where the Starbucks creamers are designed specifically to enhance the Pike's Place Roast, which is the largest roast in that. And then it comes to life in store. When you look at how we bring it to life in store, how do you really get one cup at the moment of truth at the shelf. And it's around this idea of this one cup strategy. So when you look at our platform in North America, on Starbucks, we bring the creamer actually, if you can see in the middle there, that's actually a refrigerated set where you have creamers on display with coffee. So at the moment to drive this merging of the 2 together, and it's working very well. Where we have it in place, we're actually seeing 4x promotional effectiveness where we drive the one cup strategy across coffee and creamers. It's been a really successful growth driver for us. And we can't talk about creamers. Obviously at every break, I get a question on creamers, where are we? And the focus, you heard from Laurent, you hear it from me, it is an absolute focus for us to reignite creamers. We've created this category. We're the significant leader in this category. And capacity is the easy explanation, right? But the implications of limited capacity are really the difficulty. And they're relatively long lasting. So we were capacity constrained, and we narrowed the portfolio. But as the leader in the category, you drive incrementality, you drive category growth through your innovation, through your flavor expiration, through your form exploration, and you can't do that when you're capacity constrained. So you really actually start to reduce your shelf space, you start to reduce your ability to innovate in that. And at the same time, we're in a heavy commodity cycle with significant pricing across the category. We outpriced our competitors slightly in this one around 10% higher than the competitive set. But significantly, what it is, is the behaviors that we've driven historically for the last 25 years to create this category, you're not able to do when you're capacity constrained. That's what's made this a significant mid-single-digit growth category for us for a very long period of time. And now we've invested in this capacity. The new facility is open. If you take Glendale, Arizona, which is Phoenix, Arizona area and our Anderson, Indiana facility, the 2 of those combined are the largest accepted network in the world. And so we have tremendous capacity. We've added almost 50% of capacity to it. We're very excited. It's ramping up. We brought new capabilities. The plant has been designed sustainably from day 1. It's a digital lighthouse, and everything it does. And so we don't have to go back and retrofit. We design it digitally, we design it sustainably, and we design it for future innovation. And so far, so good, good start-up on that. And what it allows us to do is get back to leading the category, drive with pace of innovation, get back to winning our shelf, get our price point and our promo right, really get back to being aggressive in the marketplace. We'll double sales from innovation in 2025. You see we're already regaining shelf space. There's still more to do there. We're not done. We want to actually overindex and share our shelf. There's still 2, but positive. We're increasing the investment in the brand. On creamers alone, 30% increase in media, and we got our price gaps down to where they needed to be to actually allow us to win. And so you heard it from Laurent, you heard it from me, it is an absolute focus. It is one of the cells that we are -- critically must win in. And we've got the tools, we've got the resources, and we'll drive the virtuous circle to bring this back to life. Now if we pivot back to the growth drivers and really this idea of capturing Gen Z and bringing this kind of fourth wave of coffee at home, you go to ice. It's not just about one product and expect the consumer. The consumer wants ice in so many different forms. This Nescafé Ice Roast for us, we've launched in the U.S., it's doing incredibly well. Very, very strong performance. It's an incredible product, simple product to make a delicious iced beverage. When it's mixed with one of our fabulous creamers, it really performs very well. We have a ready-to-drink iced coffee under the Coffee-Mate that's a multiserve product that's doing very well. And then David talked about the Nescafé espresso concentrate, which we're super excited about. We think it will drive a lot of growth as we continue to innovate around iced and cold and giving the consumer many different varieties in terms of ability to deliver what they want. Now that we've unlocked the capacity, it allows us to drive this experimentation. You see pistachio and lavender latte, those are the leading new flavors in café. So it's bringing the in-café to in-home. We weren't able to do that previously in the last few years or what's socially relevant around white lotus. So you're seeing us bring social cues around flavors to bring this high-iced coffee to the marketplace, and those will be out in 2025. And I talked about this refreshment need-state. There's a trend in North America around dirty soda, where they take creamers and it's a TikTok trend. They take creamers, mix it with their soda and everyone, especially many of my European colleagues, think this sounds gross. It's actually quite delicious. And we partnered with Dr Pepper, which is the leading soda on TikTok that this trend consumers were driving, and developed collaboration with them. It sold out immediately on shelf. We co-promoted in the carbonated soft drink and it did incredibly well. We're very excited about, again, tapping into this refreshment need-state. And then we talked about functionality. There is no better brand than Vital Proteins. The Health Science team has done an incredible job driving Vital Proteins, but the ability to bring functionality to coffee on consumer trend. They're already doing it and bringing that link together is what we're talking about. And then this is one -- I had somebody on break that was giving me a bit of a nudge on the -- and we're really excited about Cold Foam. You'll taste it sometime in the agenda this week, but it's incredibly on trend. It's the #1 additive in cafés around Cold Foam. Now what we're really proud about is superior product. So we didn't want to launch until we had a superior product. We wanted superior taste, superior texture and superior nutritionals. We have 25% less sugar, 25% more servings in the can, better taste and better texture. And with that -- so we've got a winning product, we'll have a winning price, and we're going to have a massive campaign to launch this program. So in North America, we'll have a Super Bowl campaign to launch Cold Foam, and we're really, really excited about this as we bring this to life in terms of bringing the innovation and winning these new experimentation and creativity across North America. And then last, I'll close with this. How do we bring out-of-home to life in a customer? What does it really mean to have a portfolio like this to really -- just -- this is an example of a lodging customer, Marriott is the one we use. And we take all of our brands across and we can serve in room, in the little market shop café, in a restaurant, whether it's with Seattle's Best or Coffee-mate or back of the house with the highly efficient Nescafé machines or if it's in the café with our proudly serving either between Blue Bottle, Starbucks or Teavana. And your ability to serve every single beverage occasion across that campus is what we try to do in out-of-home. Whether it's on college and university, health care system or lodging, our unique brands and our unique portfolio of brands between coffee and creamers allows us to do that. In addition to that, as you heard David say, our capabilities and machine to deliver relevant beverages that the consumer wants in a lower-skill environment where operators can't really afford the expense of Barista or whatever it is or they're just not available. And so the ability to deliver those crafted beverages through incredible machines is what we're very excited about. And that kind of intimacy is what drives that growth you saw in out-of-home. And so with that, I'll turn it back to David for some key takeaway.

Thank you, Steve. So look, we're the world's leading coffee company with the world's most iconic brands. We are obsessed with delighting consumers and customers, growing our categories and growing market share, and we've got these 4 big priorities that are all set to give us good growth over the next 3 years. Nescafé Dolce Gusto NEO, ready-to-drink, espresso concentrate and continuing to drive out-of-home. I think we've got this unique ability to lead all of these growth opportunities, not just in established coffee markets but establishing coffee markets. So with that, thank you very much.

Thank you. So transitioning from coffee to PetCare. Good morning, everybody. I'm Guillaume Le Cunff, Nestle's Europe CEO, and together with Nina Leigh, the CEO of Purina North America, we're going to give you a deeper dive on our PetCare business. And I'm going to start with the broader picture, and Nina Leigh will share with you some examples -- a concrete example about this category. So let me start setting the scene with an overview about where we are. Over the last couple of years, the performance has been quite impressive, reaching CHF 19 billion top line revenue. We alluded this morning to the accretivity of the category, 20.7% UTOP margin. It's been a double-digit growth over the last 3 years, right, and reaching 20.7% market share. When we move to the geographical footprint, you see on this chart that this business is largely led by North America and European market. When we go to the subcategory product segment, dry dog and wet cat represents 60% of our top line revenue. This brings us to a very solid #2 position in the world, and it's obviously enabled by the 6 billion of brands that we are very, very happy to have in our portfolio. So when we look at the global category, the global market, this category is worth CHF 120 billion top line revenue. Interestingly, this category is mostly led by premium and super premium offering brand products. We have in the world around 1 billion dogs and cats, a bit more dogs than cats, by the way. And we are returning to what we call historical growth pattern. And we will come back on that, but it's true that we are coming from a cycle of highly turbulent, disruptive years of COVID and inflation. I'm going to come back on that in the next slide. And also to be noticed that it is a very emotional category. 95% of parent pets -- and I'm saying that a parent pet say that their pet is a family member. And this has consequences, and you will see why. So I was talking about turbulences. I was talking about disruption. And I would like to pause here and try to understand what happened, where we are and where -- what were the learnings. So what happened? When the pandemic started, many, many people, if not everybody, wanted to stay home with their pets. So we could see a pet ownership acceleration during these years, a significant acceleration. And by consequence, you put a pressure on pricing and also supply challenges, because we had to build the capacity to serve this supply. But let's admit that it also created tailwinds to deliver the double-digit growth momentum that we've seen. So where are we now? This pet ownership is stabilizing. It's not declining, but it's stabilizing after this high growth rate. We are cycling off this pricing phase. We see this inflation behind us. And as we've been building capacities this last couple of years, we see new capacity coming online right now. So what are the learnings after these turbulent years? One, the category fundamentals are very strong, and they are still very strong. Second, we have a strong portfolio of brands, and that's probably because of this portfolio that we could manage to navigate these turbulences that way, serving our customers, gaining share over the years. And we believe that we are well positioned to continue to grow our shares moving forward. So talking about shares. If we go and start with the left part of this chart, how to describe this market. There are 3 points I would like to make here. First of all, you see a clear core leadership. Two main players leading the category. We are strong #2, as I was telling you, but we are gaining share year-on-year. So we are getting closer to #1 every year. Second point, highly fragmented market, a lot of local players, as you can see on this chart. Third one, a relatively small share of private labels that connects very likely to what I was mentioning at the beginning. It's a highly emotional category. Consumer is not ready to compromise or trade-off for the food of their pets. And you see the result from a private level standpoint. When we go by geographies, #1 is North America. We have a clear leading position, keep gaining share, and I'm sure Nina Leigh will comment on that. We have a strong #2 position in Europe, also gaining shares. We are well positioned on LatAm, but you clearly see -- and Laurent and Anna alluded to that, a clear opportunity moving forward in Asia. So talking about future, looking forward, there are 3 opportunities we see for the business to continue growing. The first one is -- number one is premiumization. Not a new news. We talked a lot about that in the past. But here, we want to say that we see this premiumization trend continue. It's going to last. There is a way to go to premiumize the category. Number two is pet ownership. As I was telling you, not declining, coming back to a kind of normal pattern, but we see this pet ownership on the midterm, continue growing. And the third one relates to calorific coverage, and I'm going to comment on that in the next slide. But calorific coverage in emerging market will increase and has started to increase, but will continue to increase. I will go back on that. So if we start with the first one, premiumization. And it connects very well with the major markets. If you look at all the consumer trends we are on, being advanced nutrition, healthier choice for the pets, science-based food for the pets, if you take personalization, elevated experiences, even sustainability and last but not least, convenience, availability through digitalization, all of these drivers go in the same direction, which is premiumization. So we see this trend here to stay in the years to come. Now pet population is interesting because you have here on the picture, 2019 -- by geography 2019, 2024, where we are now, and where we see the pet ownership going towards 2029. So 5 years before, earlier, 5 years coming. All of the geographies, all of them, obviously, will slow down from a pattern standpoint, but will continue to grow. There will be more and more dogs and cats in the world in the 5 years to come. And this is a fantastic foundation for our business, obviously. It's a foundation combined with the third opportunity, which is calorific coverage. So let's define what we mean by calorific coverage. Calorific coverage is the calorie needs of a pet that are served by commercial pet care propositions. So to the opposite of home prepared food for your pets, right? And here, it's really clear what's going on. So the left part, you see Western Europe and North America, high level of coverage. But the rest of the world is very low, under indexed, the worldwide calorific coverage. This is a unique opportunity for the category. Maybe one comment because we talked already a lot about AOA. You see here 2 different categories to develop and emergence. I would like to clarify, in the developed part, we have Oceania, Australia, we have New Zealand, we have Brazil, but all the rest of AOA look at the level of calorific coverage, very low compared to what we have achieved in North America and Europe. Quite interesting, when you deep dive and you go market by market, you confirm that the calorific coverage is still low, over-indexing North America and Western Europe, but the journey has started. All of these emerging markets have started to increase since 2019, their calorific coverage. This will continue, and this is a unique opportunity for our business. So in that context, as a market, we see 3 competitive advantages for our business moving forward. It starts with deep understanding of our consumers. So some might say we do market research, which is true, more than 500 annual consumer studies, which is the basics. But more interestingly, 300 million digital sessions a year in our ecosystem. 300 million of opportunities to direct connect, to better know our consumers. Direct relationship, it creates a set of data that is unique to understand the diversity of needs, the expectations of our consumers. And if we move to the second pillar in the middle, we have the right portfolio. When I mean right portfolio, we have a comprehensive wide portfolio to serve all these needs, from the mainstream up to the highly sophisticated science-based advanced nutrition like Purina Pro plan. So this combination of deep understanding, combined with the right proposition for the right consumers, is an asset for us. But we don't stop there. As we speak, we have 500 scientists keep pushing the boundaries, exploring science opportunities, innovation to fill the pipe of the years to come. We have right now 2,000 patents in the pipe, and it will continue. So innovation will continue to lead this category. So if I summarize and I combine the market dynamics together with our competitive assets, this is how we see the category moving forward, mid-single-digit growth, and we see 3 -- 4 growth drivers for us. The first one, I alluded to it, calorific coverage, I will give you one example. And Nina Leigh will hand over to talk and share some example about advanced nutrition, expandable consumption, and win with the winners through an omnichannel approach. Eventually, the ambition is what? Is to drive the category and gain the #1 position in the world. So I will start with one example here, before Nina Leigh give you the rest of the presentation. And I would like to invite you to go to Mexico. Mexico is a very good illustration about how driving the calorific coverage can drive our sales growth, our sales momentum. So you look at the almost one-to-one relationship between how much we manage to drive this calorific coverage while doubling the size of the business in Mexico. So you might say what's the secret sauce? There is no secret sauce, but just perfect basic execution. First, our colleagues in Mexico deployed the whole portfolio to cover the whole variety and diversity of needs in Mexico. We had distribution gaps. So while we were rolling out the portfolio, they managed to dramatically increase our presence in our distribution networks. Once you have this portfolio in place on shelf rightly executed, time to activate the calorific coverage and time to perfectly execute at POS level. This is what they have done successfully. You could see the business doubling, and we believe that this recipe for success can be deployed, can be rolled out in many other parties in the world moving forward. So now I hand over to Nina Leigh, who will go through the rest of the drivers.

Thank you, Guillaume. So Guillaume shared the examples of how our playbook and how we're going to drive growth in the underdeveloped and emerging markets. And now I'm going to take us through premiumization and our omnichannel approach. So a great example of Nestle Purina driving category premiumization is through our flagship brand, Pro Plan. The brand's growth has been nothing short of amazing. It has tripled in sales in 6 years. And that's because consumers are increasingly looking for nutrition that performs. One competitive advantage that Pro Plan has is that it plays in 3 different subsegments. It plays in well pet, which is sold in pet retailers and the specialist channels and online. It sells in therapeutics, which is in vet clinics and online, and supplements, which are sold across all channels. One important thing to note, too, and one competitive advantage that we have is that in the U.S., especially, we're growing double digits in every single one of these subcategories. So when we take a look at how is Pro Plan going to continue to be successful, it's going to be continue to be successful because we have innovation across all of the different subsegments. First, when we think about wet pet, we have vital systems in cat, which bundles different functional benefits to help aging cats. In veterinary diets, we have Pro Plan elementals, which is a product that is servicing for dogs with severe food allergies. We have multiple introductions and supplements and in wet cat. So when we think about Purina One, Purina One has the ability to drive premiumization and scale, and that's because it's available in all channels. In the U.S., the big launch is the launch of LiveClear, which brings game-changing innovation to the #1 brand in the market. 39% of non-cat owners site allergies for the reason that they don't own a cat. So this innovation has the ability to bring new cat owners into the category. In Europe, Purina One is the leading science cat brand across all nonvet channels, with strong growth over the last several years. A key asset for the brand is a 3-week challenge, which promotes that treating your cat Purina One for 3 weeks can lead to visible changes in your cats health, clearer eyes, a better coat. These are things that consumers can actually see, and it's extremely compelling and motivating. And finally, Purina One dog and cat is going to expand into other markets as well, including LatAm and AOA. Turning to expandable consumption, and we want to think about what brand is a great example of continuing to premiumize through innovation and Fancy Feast, a global brand that we have is exactly one that can do that. Globally, we see that we -- the cat owners are continually looking for ways to excite and delight their cats, and single serve wet cat answers that call. In 2021, we introduced petites. And last year, in very limited distribution, we launched Fancy Feast gems. We're excited because we have capacity to be able to launch nationally Fancy Feast gems in the U.S. And not only are these new items at premium price points, but these innovations allow us to lead in the portion segment, which is growing 4x faster than the wet cat segment. And this just isn't happening in the U.S. It's a global playbook that we have. Gourmet is an example of our brand in Europe. The individual products and price points may look slightly different, but the same premiumization through innovation story exists. This is also where our global manufacturing network really gives us an advantage. It provides us with the needed flexibility to have a global strategy with local market execution. E-commerce has been a significant part of our growth, nearly tripling in size since 2019. By the end of this year, 1/4 of our business in pet food will be digitally enabled, and that includes all regions growing double digits. E-commerce is a great example of Nestle's go-to-market strategy, where we have global best practices with regional playbooks that allow for us to have local in-market executions. In PetCare, we have invested significantly in e-commerce over the last few years. We're focused on connecting and delivering value to consumers when, where and how they want to shop. We have a broad portfolio of products with outstanding nutrition across a wide price point. So no matter if they want to buy it at Walmart.com or Chewy or Amazon or Zooplus, we can service that. We believe that e-commerce will continue to be a strong pillar for us as we go forward. So I just covered the growth pillars that Guillaume shared with us. But Laurent introduced today, some big bets that we have if we have incremental investment, we'll have step change growth. The first one is we're going to invest in AOA, and I'll take you through this in just a minute. We're going to enhance the treat performance, and we're going to accelerate share growth in vet. So in January, we combined Greater China with AOA, and we'll have a #2 share, but it's a distant #2 share in a very fragmented market. So when we say how are we going to accelerate share growth? We're going to accelerate share growth by leaning on our global brands and our competitive capabilities. We know that when you look at pet population in AOA, it's going to be primarily driven by cats and small dogs. We also know that the single-serve wet category is one of the fastest-growing channels across AOA. We're going to lean on Mon Petit, which is the Fancy Feast in gourmet of AOA, and we're going to do some extensive renovation there. We're also going to put new forms and textures on Felix. We know that the consumer in AOA is looking for that highly palatable product that will meet the discerning taste of their pets and their cats. And we know that our competitive advantage in single-serve wet cat is palatability and its textures. Next, we need to accelerate advanced nutrition. We're going to accelerate that by extending the portfolio and availability, while we're also going to focus on Purina One. I talked to you a minute ago about Purina One's competitive advantage, is that it's available in all channels. So we're going to do a reformulation or renovation on Purina One dry cat, which has to do with microbiomes, which we know is very motivating and compelling. We also know that Purina One is one of the few brands in the space of science-based that offers advanced nutrition at multiple levels of price points. So that's extremely important. We all know that distribution is the gift that keeps on giving. So this is something we're going to double down in AOA. So with incremental investment, we believe we can step change growth in AOA. Next, let's turn to treats. Treats fall under the expandable consumption, and it's a huge opportunity for category growth as well as an opportunity for us to grow share. We've outlined 4 areas that we need to focus on to win. First, we need to lead in meaty. Meaty is 1/3 of the treats market in the U.S., and our top brand Beggin' just took over the #1 position. One of the key growth drivers for Beggin' has been our crowdsourcing campaign, which invites consumers to help create new and exciting meaty flavors. We will continue this consumer engagement to drive interest and to drive innovation. Next, we know oral care is a leading challenge identified for vets -- for pets. And Dentalife tests very well against competitors. It's our patent-pending product that has a unique texture that when combined with chewing action, is an excellent way to clean your dog's teeth. So we're going to continue to expand brand offerings in form and function to accelerate growth in this area. We're also going to bring innovation to the Felix brand in the liquid snack sticks, which delivers on expandable consumption and premiumization. This product gives cat lovers that hands-on treating moment that they're always looking for, and ways to interact with their cat. And finally, we know that 90% of the share in snacks is in the U.S. and Europe. So we need to take the playbook that wins in the U.S. and Europe and translate it to other markets. Veterinarians remained the #1 most trusted source of information for pet owners. We also know that only 22% of in-clinic visits have a conversation around nutrition. We have great brands. We need to get more recommendations. So the opportunity to accelerate and grow faster in vet will be a global priority. Here's how we're going to do it. First, we're going to leverage the Purina Institute, to connect and communicate with veterinarians about the power of nutrition and turn to research as a driver for those in-clinic visit conversations around nutrition. We're expanding our R&D investments in-house and by working with leading veterinary institutions to make new discoveries in the areas like microbiome and renal. This can ultimately impact our product pipeline and keeps us on the forefront of innovation. We need to also make sure that our veterinary diets are available when, where and how. The vets want to give them to the consumers and the consumers want to buy them. So whether that's in a vet clinic, whether it's online through Amazon or Chewy, or whether it's through our vet direct D2C business in the U.S., which ships products from the vet's office directly to consumers because we know it's a pain point, they don't want to have a lot of inventory, so we can take care of that for them. And finally, where it makes sense, like in Europe, we're going to increase our support of veterinarians with such -- with additional vet advisers in the field that can help veterinarians out with the nutritional information that they need. Simply put, the vet channel presents a global opportunity for growth, and we're investing in it for acceleration. Another way that we can help pet owners and their vets is by turning Purina science and to data-driven solutions like our Petivity Litter Smart -- Litter Box Monitor, sorry about that. We launched that last year. It provides real-time data on cat litter box behaviors. It gives the cat a voice. For example, if your cat is visiting the litter box more frequently or if it's weight changes, those are examples potentially of urinary tract or kidney situation. So over the last 18 months, we have monitored -- the monitors recorded over 21 million activities. We've been able to deliver over 4 million messages to consumers, which are either in the form of, hey, you should give the supplement or maybe this type of food or you know what you probably should take your cat into -- to the vet for a visit. The great news, even though it's new out there, is that consumers who are using this product are 50% more likely to feed Purina products. Petivity is just one part of the Purina ecosystem that we're building to provide solutions to consumers along their journey. We know that owning a pet has many benefits, but we also know that it's not always easy to have a pet. And we want to make sure that Nestle Purina is the go-to resource when owners have questions or have other changes in their pet. First, we want to help the pet owners get off to a great start, whether it's helping them find a pet through Petfinder, which is the largest global online database for adoptable pets or whether we're helping puppies trained -- get their puppies trained through the #1 puppy training app in the U.K., zigzag. We also know it's really important to build those direct relationships with our consumers, so we can better understand and serve them as they go along their journey. Tails.com, our D2C business in Europe, offers food that's 100% tailored to your dog's age, breed, lifestyle and more. And finally, we're developing technology to add value to consumers' lives and to drive loyalty. In the U.S., we developed -- we launched the My Purina app, which we launched last year. The app allows consumers to find out what's the best food that I should feed my pet. If I've got questions, we can give them expert advice along the way. And it allows them to earn rewards to purchase more of our core products through samples and couponing. Results are still very early, but we do know that consumers that use the app and like the app have increased their loyalty to Purina over 10%. So at the end of the day, the goal of the ecosystem is to provide value to the consumer and to drive loyal and incremental users to our core products and food treats and litter, while finding new opportunities to connect with veterinarians, to drive nutrition recommendations for our Purina diets and supplements. What we hope -- Guillaume and I hope today is that you've taken away a few insights. The first is that we've successfully navigated a few years of some turbulent times.

Yes. And the category is very attractive with strong fundamentals. We talked about pet population evolution. We talked about calorific coverage evolution. We talked about premiumization. All these drivers going to the positive. That's why we believe this is a very, very attractive category in the future.

Absolutely. And in pet care, the consumer is at the center of everything that we do. And so we've developed a portfolio of leading brands and innovation that answers the wants and needs that those consumers have.

And pet nutrition is on a journey. It's not going to stop. We started years ago successfully, but we see many opportunities from a science standpoint to push the boundaries and keep innovating in this field.

And hopefully, you've taken away that we're well positioned to continue to grow and we'll continue to be an accelerator for Nestle.

And become #1.

And become #1, that's right. Thank you.

Okay. So let's move to the Q&A session for Coffee and for Petcare. Let's start with [ Vicki ] here.

Victoria Petrova from Bank of America. I have one on Coffee. You were -- when you were talking about China, India, Africa and MENA, specifically on China and India, you said that's around 40 -- penetration is around 40 cups per person per year. What makes you think that this market will grow from here given the relatively slow historical adoption? And my second question is on Pet U.S. You shortly elaborated on additional capacity versus slowdown in pet adoption, which is one of the key concerns around U.S. Petcare. Do you think there is any overcapacity currently in the market? And are you one of the players in the subcategories? And how should we think about pricing in Petcare U.S. in this context into 2025, and overall, maybe also within this kind of 3 parameters such as costs, protein grains capacity and demand?

Thank you. So let me start with coffee. You're right, we still have a lot of the world that is drinking on average relative low amounts of coffee. Most of these are tea markets. And the first thing that gives me real confidence is we know the long-term historic trend of tea markets converting, if not entirely through large parts of their consumption in coffee. Just look at Russia, look at Japan, look at the U.K. It's only in the last couple of years with all of the coffee consumption in the U.K. that coffee has overtaken tea. It takes time. So it is a trend that we know happens and it will continue to happen. Specifically in those markets, while the average is 40, what we're also seeing is young consumers cut consumption is much higher already. And in key markets and cities, it's much higher already. So you go to Shanghai, the average is not 40 cups. The average is double that. So I'm really confident that with the explosion in coffee shop culture, with youth culture, with coffee not just being hot but being this real versatile variable drink that we will see consumption grow. And then the last thing I would say is look at India. India, I gave you the example. That market has doubled in the last 10 years. In the next 10 years, it's going to at least grow at that rate, and it could easily grow faster with all of the innovation coming on coffee.

I'll take the Petcare example. So first, I'd like to say that Petcare is stable. So we have -- pet population is stable in the U.S., maybe up slightly. So we haven't seen a downturn. It's not growing as fast as it did during COVID, but it's still very healthy and very strong. Secondly, we're very excited about the capacity that we've gotten because for the last 3 years, we've been extremely capacity constrained, which has really limited our ability to even service the demand that we have at retailers today. So the first thing we're going to do is get demand back at everything back on shelf that we needed to, then we can actually start to promote again. And then finally and most importantly, we get back to being the leader in the category through innovation. And innovation is the way we premiumize the category. And that's how we're going to get the growth rates back.

Celine?

Celine Pannuti, I have 2 questions on coffee. So sorry, David. We already spent a bit of time on this today, but a follow up on that. You said, I think, in Barcelona that Starbucks should be a CHF 5 billion franchise, and I think you expected it to be CHF 3.6 billion by the end of '22. Are we there in terms of the CHF 5 billion? And what's the next step for this franchise? And my second question is on premiumization and pricing in coffee. If I look at RIG, it has been, I think, 1.7% year-to-date despite low pricing, and you certainly need to price again given cost inflation. We also saw that Nespresso in RIG is underperforming. So it feels like -- and I think you -- we see that as well with Starbucks that consumers are more conscious about how expensive coffee is. So how do we solve the rig versus pricing equation going forward?

Thank you. So look, on Starbucks, we're very happy with the progress of Starbucks. We are absolutely in our acquisition case, and we've added over the CHF 1.5 billion incremental that I mentioned in Barcelona. So we continue to be well on track with Starbucks. Look, when it comes to RIG and volume, a couple of things. If you think about volume growth for the category generally given all of the opportunities to get new consumption and new consumers into the category, there will be more cups coming into this category over time. So I'm not concerned about our ability to see cup consumption grow over time. But it's also true that organic growth for the moment, especially in pricing round is where you're going to see more of that potential. Also, when you think about where the growth comes from in big developed markets, cup consumption is going to be mainly trading up. So the same number of cups, but added value, whereas in emerging markets, you're going to see much more incremental cup consumption. So I think that would do the balance, I would say.

Jeremy?

Jeremy Fialko from HSBC. I've just got one additional question on that would probably be useful to have perspective from both coffee and Petcare. So obviously, I guess you had the A&P numbers that were there in kind of 2023 and '24. And now Lawrence come in, he's updated the plan. You're going to be investing much more in 2025 in terms of marketing and sales development. So perhaps both of the business units talk about, okay, you've got this extra money that you're going to invest relative to perhaps what you had thought a few months back. What are some of the initiatives that you're going to be doing to basically spend that money? Where is it going to be going?

Yes, I can start in North America and then certainly, Nina or Le can talk about where the investment is. But on coffee, it's really around investing, buying innovation, focused on returning to leadership behavior in the category. So it starts with, do we have the right product? Do we have the right price and focus investment there? And then how do we drive our share of voice? You heard us talk about that in terms of really expanding our share of voice in terms of a leadership position and accelerating that across all the categories, creamers, coffee, everywhere where we take that incremental investment to actually over-index and share [ buys ]. And that's where we're investing. And the other one that we haven't talked about, but also investing in product. We have 60-40 on the majority of our products today. But there are still opportunities to continue to improve our products and invest there as well. So we continue to look for ways to accelerate our product performance and even move past 60-40 and beyond. And so we'll invest across the entire consumer demand funnel, generating demand funnel across all of coffee and creamers. And it started actually in '24, and it will accelerate into '25. Sorry, Guil?

I'm going to start with a global perspective and maybe Nina can share some examples on U.S. What Laurent presented this morning, we are fully aligned with this framework of this virtuous circle. By the way, we managed to protect our margin over this turbulent time. So -- and the recovery in PFME investment has started. So next year, we'll be back to what we used to have pre-pandemic. So this is a virtuous cycle that we will follow as a guidance every single day. And where the money will go? We have these big bets, again, same framework, big bets are in place. That relates to innovation. When you see this gourmet revelation, for example, that's one of the big bets. But we have also some regional big bets. If I take one in Europe, this campaign on Felix with Robbie Williams is highly successful. We will double down and invest further in this kind of communication platform. So it's both innovation and communication. Maybe Nina, any one example...

The only thing I would add to what Steve and Guillaume said is we're going to start investing substantially behind our billionaire brands. That's a place that we hadn't been able to do during the pandemic. And now that we're getting capacity and we're getting innovation on them, it's going to be our ability to get back to doing that.

Sarah?

Yes, I've got 2 questions. One in Coffee, you talked about the Dolce Gusto machine. Can you just explain to us where that fits versus the Vertuo? Because obviously, that's been the risk presumably is that there could be some cannibalization there. But if you could outline that in a bit more detail. And then in Pet, as a pet owner, this is really a pain to buy because very heavy. So it would seem to be pretty e-commerce friendly. And you said 25% will be e-commerce, but how much of that is direct to consumer where you're actually getting full data on that purchasing and on the habits?

Thank you. Let me handle the Dolce Gusto virtual question first, and then we'll do the Petcare one. They're really differentiated in 2 key ways. When you think of the Nespresso Vertuo system and the Nescafe Dolce Gusto system 2 major areas of differentiation. One is in the product experience and the product delivery. Nescafe Dolce Gusto is a full beverage machine. It's not just a coffee brand. It's a coffee and beverage brand. So what Nescafe Dolce Gusto need what allow consumers to do is have a great cup of coffee, but they can have that cup of coffee white, flavored through the machine, and they can also through the machine that have other beverages like hot chocolate or tea. So that system is a different offer from Vertuo, which is a coffee first and coffee forward offer, so differentiated by product delivery. They're also differentiated fundamentally by channel. Nescafe Dolce Gusto will be sold through mainstream retail grocery channels and of course, Nespresso is in our own ecosystem. So a differentiated consumer proposition and commercial proposition. But both super, super coffees, which you'll get a chance to try.

And on your second question on eCom. Very happy with the progress on this channel. It's, for us, the fastest-growing channel. Now your question on DTC versus retailing, it's led by e-retailing. But we don't want to look at this Amazon and zooplus in isolation of the ecosystem where we have direct-to-consumer platform that are growing well, gaining share but are part of an ecosystem where we capture the whole consumer journey. So eCom is retailing going faster, but we want to build on our DTC platform to enhance our ecosystem as well.

Warren, let's go to you.

It's Warren Ackerman at Barclays. Two as well. The first one is, hopefully, a simple one. Are you able to give us some idea of the COGS inflation you expect in coffee in '25? And then secondly, can you talk about coffee in Europe? It's great to hear about emerging market in U.S. Coffee. But in your home market of Europe in coffee, you seem to be struggling. I was wondering if you can maybe deep dive a little bit into the trends that you're seeing. You called out Nespresso is underperforming in Europe. What are you doing to actually fix that? And what are we seeing on Nescafe and Starbucks in Europe? Just looking at the scanner data, it looks like Nescafe is struggling in quite a few countries in Europe. So just interested in what you're doing to revive coffee generally in Europe.

Thank you. So on the first one, one, you're right, it's a simple question with a relatively simple answer, which is I can't give you the impact of COGS inflation next year. You can now see the price of green coffee. That's published. We know what some of those input costs are. But obviously, as it flows into our P&L, that's going to be a very different picture depending on where and what we buy and what the recipes are that we use. So I can't get into precise details on what the COGS are going to be. In terms of generally of what we're doing in Europe, our European coffee business has been really remarkably resilient, as I said. We've got very clear market shares on soluble. We've got market share wins on soluble. And while over -- back end of '22 and into '23, we did see some share erosion as we led pricing. As you would expect, private label gained some share actually relatively modest share gains given the size of the pricing. And the back end of '23 into '24, we've seen some very good share recovery as pricing normalized. So our Nescafe business in Europe is very robust on our core, and that's why we are so excited and why it's so important that we launch this new range of innovation on top. So as European consumers are going to expect some coffee inflation that they have innovation and the brand support behind the brands to continue to drive them. So Nescafe, I think, has done really remarkably well in Western Europe as well as around the world. And then I did give you some detailed insight into how we're thinking about our Nespresso business in Western Europe. That business is performing actually all in all, okay, but it's disappointing versus the growth rates that we want to see. And I did outline some of those key things that we're doing on Nespresso to reinvest, reinvigorate and drive some incremental opportunities of availability to our consumers to get close to Nespresso.

Okay. We have time for one last question. We'll take Patrik's.

In Petcare, the lack of exposure in AOA is not new. I mean you all have had this in the last couple of years. What has been really the hurdle to not be more successful in AOA? And what or your plans maybe also in terms of M&A there? And second question, overall, e-commerce retailers in pets are getting more important, as I just have mentioned. What about the risk that also private label -- the share of private label could increase?

So I can start with AOA. And what I would say with AOA is that we have spent the last few years really laying a really good foundation in AOA. We've built manufacturing there. Why we believe that we can grow is for the reasons that I just told you, which is we believe that coverage will increase in some of the areas that Guillaume pointed out. We believe that single-serve wet cat is a great way for us to capture the consumers in the fastest-growing segment there. And we believe that Purina One, which is our largest brand that's sold across all channels will provide that advanced nutrition that those consumers are really looking for. So that's why we believe we can. We need to get distribution, which is one of the pillars that Guillaume talked about when we talk about calorific coverage and expanding growth in those areas. So it's -- we've laid a great foundation. We need the incremental investment to get there. And then we believe that we'll start to see over the next 3 to 5 years, that growth that Laurent had laid out that's so important to that area.

And on the eCom and private label risk that you mentioned, I think it's not related eCom as such. It's channel free. And it depends how much value we can create through innovation and premiumization. It's a highly emotional category. So as long as we provide this value to consumers, you saw the private label share that we have today in the category. Premiumization, innovation, research, science bets, advanced nutrition is the best way -- and investment to support the brand is the best way to continue to win as we are winning today in eCom.

And M&A in AOA in Petcare?

M&A. Well, listen, always open to opportunities, but you saw that we have the playbook. I showed you the Mexican example. There are many other examples. We have the product superiority. We have the brand portfolio. We have the innovation pipe in place. We will have the investment to -- the playbook is there. So let's focus on the core and what we can do with our assets today.

To me, if you take AOA, it's really one of the best examples of this prioritization that Laurent talked about. It's -- yes, AOA's always been an opportunity, but putting resources behind it and putting the long-term commitment and actually bringing this idea of fewer, bigger, better to life, right? And AOA is one of those examples. I think it's exactly what he talked about this morning.

Excellent. Thank you. So we're going to wrap up the morning now, move to lunch, which will be behind you again, past where we had coffee this morning, and we'll be back in here at 1:00 for the next sessions. Thank you. [Break]

So good afternoon, and welcome back, everybody. I hope you are well refueled and refreshed for the afternoon session. We're going to move on now to talk about Nutrition and Nestle Health Science, and I'd like to ask Serena and Kais to come up and start things off. Thank you.

Thanks, David. Good afternoon. I am Serena Aboutboul, the Head of the Nutrition Strategic Business Unit, and together with my colleagues, Kais Marzouki, CEO, Nestle Philippines; Anna Mohl, CEO, Nestle Health Science; and Abigail Buckwalter, CEO, Nestle Health Science U.S. Bunch of CEOs in this presentation, not me, though. We will give you an overview of the world of Nutrition at Nestle. This is roughly a CHF 22 billion business, weighted 70% in Nutrition, 30% in Nestle Health Science. But together, both businesses combined gives Nestle a unique footprint as they are highly complementary in terms of channels, brands and range. Nutrition is largely about food and beverage nutritional solutions targeted by life stage with massive retail presence, while Nestle Health Science focus on the health continuum per life stage through medical nutrition and consumer care. But together, we share one common vision, which is providing healthier and happier lives for all through superior nutritional solutions. Now we will deep dive in each part. Anna and Abigail will cover Nestle Health Science and Kais and myself will give you now an overview of our global nutrition strategy and how it unfolds in the Philippines, a key market to Nestle and a lighthouse to the category. As you know, Nutrition is reported externally across several categories, nutrition and health science, milk products and beverages. But today, we will give you how we look at it strategically. This is a business that accounts for 18%. In fact, let's not miss 1% of the sales. 18% of the total Nestle sales being the third largest category after Coffee and Petcare, and we spend with an extensive footprint globally across all zones weighted more in AOA and LatAm. And our portfolio spans across mainly 3 segments: the number one, early childhood nutrition, the largest, which encompasses infant formulas, growing up milks, baby food, pediatric supplements; number two, the second one, kids and all family nutrition with cocoa malt mouth beverages and all family milks; and finally, adult nutrition with nutritionally designed solutions targeting the adult population. We are global leaders in the first 2 segments, and in Adult Nutrition, we are just entering at a global level, but in the markets where we are already present, we are either #1 or #2. A good example is in China where we lead in healthy longevity through our franchise, [ YIYANG. ] Nutrition is the result of a merge, the merge of 2 businesses in Nestle, the former infant nutrition with the dairy business back in 2023. But this merge allowed us and enabled us to increase our consumer centricity create a unique portfolio of trusted global brands that spans across the entire consumer life journey from preconception to healthy aging with one common denominator, which is nutritionally designed solutions per life stage. Nutrition is also the #1 contributor to the part -- the healthier part of the group portfolio with health star rating above 3.5. Now there are 4 macro forces shaping the future of this market and informing our portfolio across the consumer journey. The first one is the headwind, the global trend on declining birth rates. That's indeed a global trend, but it unfolds differently per geography calling for tailored strategies to adapt to each local reality. The second one, the population is aging. And the older aging segments are expected to be the fastest growing by 2030 and at the same time, more and more consumers and health care professionals are aware about the relation and connection between nutrition, health and life expectancy. Number three, health challenges are so persistent, as an example, later pregnancies may create issues in conception, but also malnutrition is very, very prevalent across the world, 1 out of 5 children below 5 years old suffer from stented growth globally. And at the same time, connected to later pregnancies, and I didn't mention, the rise of preterm babies, which is indeed increasing. Number four, polarization of consumers of consumption that has been mentioned before, Laurent mentioned this morning, and we see that premium price segments after the cost of living of 2021, 2023, premium price segments and affordable segments are the fastest growing. This is a $160 billion addressable market across all 3 segments. And when we look into early childhood nutrition, that's the largest one with CHF 66 billion, followed by kids and all family milks and adults. In terms of growth rate, we expect the first 2 segments to grow by low single digits, while Adult Nutrition will accelerate also connected to the macro forces I just referred to. But despite the growth rates, we do see pools of accelerating opportunities above market average in each of the segments. In early childhood nutrition, we see 2 main areas that will outperform the category. First, premiumization. With less babies per household, we expect parents to spend more. The second one is penetration over inappropriate feeding, especially in high birth markets, mostly emerging markets where still babies between 25% roughly of babies between 6 months and 24 months are fed inappropriately. In kids and all family nutrition, there are 2 main drivers: First one is convenience with on-the-go solutions, ready-to-drink, healthy snacks, but also addressing nutritional gaps, especially at school age kids is also a main driver for us. In Adult Nutrition, we are focusing 2 segments: women's health and healthy longevity. The healthy longevity expected to grow by 8% in 2027. Now with this internal setup and the trends we've just seen, Nestle has all it takes to be the global leader from preconception to healthy longevity. And our competitive advantages are mainly focusing in 3 areas. Number one, we are a global powerhouse with deep presence, infrastructure and distribution across all 5 zones, and we are global leaders and strong market leader in the most populated geographies. Number two, our portfolio spends across all price segments from premium to mainstream affordable. Examples of premium, you see here NAN and S-26, our premium infant formula franchises, Nido and Milo core brands in mainstream and a good example of affordable solution is Bear Brand, which is a monument in the Philippines and Kais will talk about it just in a moment. But these give us a unique competitive advantage to capture the opportunity of polarization that you just mentioned before. And finally, we do have unique science and technologies, allowing us to launch breaking through innovation across all the segments. And here, I'm highlighting 3 areas of expertise. You will see more of this for the ones visiting our Nestle research tomorrow. The first one is biotics. We just launched our latest generation of HMOs combined with probiotics in our premium NAN franchise, which helps in boosting the immune system of babies and also bringing our solutions -- our formula solutions, even closer to breast milk, which is the golden standard to feed babies and to nurture babies. Second one, we have proprietary technologies to address high-sensitive ingredients such as sugar by reducing sugars without compromising taste. And finally, when it comes to fortification, here you can see iron with best absorption of iron with our proprietary Feripro and also high-quality proteins through hybrids, which is a mix of dairy proteins and plant-based proteins, as I said, with high quality, great taste for an affordable price and these 2 helps in combating malnutrition. Now let's see how we've been driving the business so far. So we faced some headwinds in the past years. As you see in the first column of the chart, the first one is obviously declining birth rates, which puts pressure in our largest segment, early childhood nutrition, especially in China, that was very sharp. In 10 years, the number of babies dropped from 17 million to 9 million today. Also, the rise of cost in raw materials with high inflation put pressure on margins on more sensitive segments like cocoa malt beverages and all family milks. But despite the headwinds, we've been driving the business with focus in 3 core areas. First, we keep investing in high resilient segments. Our infant formula business keep gaining market share globally, and our affordable portfolio proved to be a volume driver, registering positive RIG. Second, we made portfolio choices by divesting dilutive businesses that were less strategic like liquid milks in AOA and LatAm or our milks and drinks -- ex milks and drinks business in France. But these choices helped us in really resources to focus in more attractive segments where we have ability to win. And finally, driving consumer centricity to seed and scale growing platforms like women's health and healthy longevity. The key principles guiding our strategy are: one, keep expanding the boundaries of the categories beyond the focus and core infant formulas towards maternal health and toddler nutrition; second, value up nutritional solutions and sustained marketing investment behind core brands in kids and all family nutrition; and finally, deploy dedicated platforms to drive consumer centricity in maternal health and healthy longevity. Looking at the future, we are focusing in 3 growth strategic platforms. First, accelerating market share gains in early childhood food. And we'll do this in the following 3 areas: first, keep leading in premium infant formulas through breakthrough science-based innovation like HMOs that I just mentioned; the second one is accelerating the penetration over inappropriate feeding by scaling our affordable and mainstream portfolio; and finally, taking regional growth platforms very attractive, like pediatric supplements and healthy snacks and go for geographical expansion. In Kids and All Family Nutrition, we focus on driving volume growth by investing behind core brands like Milo and Nido, at the same time, accelerating affordable solutions by leveraging proprietary technologies, mostly in AOA and LatAm, and also focusing in boosting our school age segment and that's under the Nido franchise. And finally, the third platform is scaling adult nutrition by expanding geographically our maternal health, already very strong in some regions such as in LatAm and also creating a dedicated platform on healthy longevity. In this slide, you see examples of cutting-edge innovation that will fuel growth behind each of the platforms that I just mentioned. #1, synergity, and I will deep dive more tomorrow on this one and that we referred to. This is the fastest scaling platform we have in nutrition and is a big bet, as mentioned by Laurent in the morning, already reached CHF 100 million sales since launch 9 months ago. Second, in All Family Nutrition, the examples here are Milo high protein in ready-to-drink and powder, targeting teenaging and also our hybrid proteins under the Nido franchise. This example here is Central Western African region. We just launched it. It's really a fantastic product, great taste, high-quality protein for an affordable price. In Adult Nutrition, we are expanding geographically our Materna franchise, which is a full range of products targeting the unmet needs of women between preconception and postpartum. Stefan later today will give you the fantastic science we have behind Materna and also healthy longevity. In China, this is in young, a range of functional powdered milks that is now really accelerating, growing very fast there in China and we will scale up. Now let's see how our nutrition strategy combined with sharp strategic execution at market level proves to be a growth engine to Nestlé and has also a positive impact in society. So with this, I hand over to Kais.

Thank you, Serena. So before I illustrate a little bit the growth platform applied to the Philippines, please allow me to introduce to you, Nestlé Philippines. Nestlé Philippines is the biggest FMCG company in the country and correspondingly, it has the highest trust and reputation in the country. Actually, we calculated back that every Filipino consumes, on average, 1 serving of Nestle product a day. As a result of that, we are almost 1% of the GDP of the country. And as a result of that, we are almost 18% of every sale of every store you might walk in into the Philippines. And this in the context of micronutrient deficiencies, which are prevalent across all ages and especially when it comes to iron, calcium, vitamin B and vitamin C, which really gives us a strong reason and a purpose to play a bigger role in society and in nation-building. And I think that's what we have really mainly done through the fortification of our products. 60% of our range is fortified, of course, mainly vector food dairy. We are also, in the Philippines, a place where birth rates have declined like everywhere else since the pandemic. We went from 1.7 babies born a year to 1.2. We have climbed back now to 1.5. And given that we are the year of the dragon, we expect the trend to continue positively. Our consumers are also very limited in their means. Actually, 90% of our consumers have less than $3 a day of disposable income, which makes them really choose a very tight and narrow repertoire of products. And of course, as Nestlé Philippines, we are very proud that we have free SKUs and free products in this very narrow top 10 repertoire of FMCG products that they have in their households. And although Nutrition is definitely the biggest share of our business, and we have been growing nicely, thanks to Nutrition, we see also ample opportunity to grow forward because Nutrition really in terms of consumption per capita is still relatively low compared to other countries around the world. Now if you look at the different age stages of our consumers, you see a number of brands, and these are all our Nestlé brands in each of these territories. And all of these brands have been able to be positioned in a way that they don't compete with each other so that we can orchestrate their growth interdependently of each other. As a result of that, we are the leading player in each of the segments where our brands play. And we have been driving growth of all these categories over the years. The relative brand equity of each of these brands is at least 40% higher than the next competitor. As a result of that, I think we have the license to also drive the growth going forward. Now let me take you through each one of these stages and to share with you what we have done so far and our focus going forward. Starting with Early Childhood Nutrition. That's a $1 billion category, where we have been really also the main player in -- over the years with 2 main brands, Wyeth and Nestlé. And thanks to the technology that we have applied in different ways across the different price tiers of our brands, we have been able to have a competitive advantage over time, and also for the fact of having clinical local trials have demonstrated the impact on our Filipino children. We also have 1 brand, the leading brand, which is Bona, which is a local brand designed especially for Filipino children, emphasizing the point that Laurent made this morning that we are the most local and the most multinational company in the world. And you can see the corresponding sales CAGR in a category that is growing 4% this year. When it comes to digital ecosystem, we are also leading the way, and we have ParenTeam, which is this big site, which really holds the hand of new parents every year and accompanying them to make the right choices and decisions for their children. And beyond that, I think we have done a great job, when it comes to building our brands, both with consumer and with health care professionals, which play a key role still today in the Philippines in influencing the parents of our consumers and really leading both in terms of recommendation and in terms of share of mind. Going forward, we'll continue to do the same, but I think there are a few platforms I just would like to highlight to you because they really offer very interesting prospects. The first one is more on the bottom of the pyramid because the penetration of infant formula is really quite low in the Philippines because of high prevalence of breastfeeding, which is good, but also because of inappropriate substitutes, which is something we want to address with a range of age-appropriate nutrition that we will roll out at an affordable price in the coming months. On the other side of the spectrum, in the premium side, there is 1 segment, which is catch-up growth, where we have not been playing in, where we have launched, this year, Ascenda and the growth of Ascenda has been really spectacular, to say the least, and we really expect this business to be a big growth driver for us in the coming years. Last but not least, vitamins and supplements is a relatively big category in the Philippines, but the pediatric supplements segment is still not existing. And I think we have also a role we can play also to emphasize and build further our brands in this segment. Moving on to the second category, which is even bigger and twice as big in volume is All Family Milk. And there, we have 2 big brands that have single-handedly really built this category over the years. The first one is Bear Brand, our All Family Milk, which has a very strong value proposition and remain at accessible price points because in this category, we do compete with local players. The second one is Milo, and Milo has a very unique profile and strong proposition linked to sports, which enabled us to really build a lot of grassroot and sampling activities that made Milo, what it is today. Just to iterate the point, both brands have more than 90% household penetration, and both leading SKUs of each brand are in the top 5 most distributed SKUs in the Philippines today. Obviously, we'll continue to unlock the growth here because even if they are so big, the consumption with the core group is still limited to 2, 3 times a week. So we have ample room to grow further. And we will do that with the proprietary technology that Serena detailed before, for example, for [ favorite ] profile Bear Brand. And we will also enter more affordable solutions like hybrid solutions with soy, bringing the power of 2 proteins from milk and from soy into more households. Last but not least, Milo is mainly made out of milk, and therefore, we have a school-friendly logo and we will unlock also the school and university channels. At the same time, we'll capitalize also on the fast-growing ready-to-drink segment, which you have seen also in the coffee presentation. Last but not least, the smallest segment but probably the most promising in terms of growth, because the proportion of adults over the age of 25 will grow in the Philippines from 51% to 58% over the next 5 years. Here, we had extended in the past our Bear Brand into sterilized and RTD and into powder with Adult Plus, creating against this segment, differentiating and premiumizing All Family Milk. We'll continue to do that, expand it further, capitalize on ready-to-drink once again and also develop more functional solutions that are really more targeted towards the age of our consumers. And last but not least, to close the loop and come back to maternal, maternal health is, I think, also an interesting opportunity for us. We will come in with a 2-tier approach with 2 different brands so we can capitalize on each segment. Okay. Having said that, I'll hand over to Serena for closing.

Thank you, Kais. Okay, so we expect you to take a few key messages out of this presentation. #1, Nutrition is core to Nestlé. It's our very foundation and it's a core business for us with attractive growth posted to accelerate, premiumization, affordable solutions, adult nutrition. Second, we are uniquely positioned to lead from preconception to healthy longevity. You've just seen the Philippines as a great example, but this is a global strategy and is being rolled out across all our key markets. And finally, we focus on 3 growth strategic platforms: accelerating market share gains in Early Childhood Nutrition, drive volume growth in Kids and/or Family Nutrition; and finally, scaling our Adult Nutrition, focusing on women's health and healthy longevity. Thank you very much for your attention. With this, I hand over to Anna and Abigail that will cover Nestlé Health Science. Thank you.

Well, a very good afternoon. My name is Anna Mohl, and today, in partnership with Abigail Buckwalter, we will share with you how Nestle Health Science will unlock our potential to be a growth driver for Nestlé while being central to our group's nutrition, health and wellness strategy. We empower healthier lives through nutrition. Our business is rooted in the fact that science-based nutrition can lead to better health for healthy consumers and better health outcomes for sick patients. Nestlé Health Science is a CHF 6.5 billion business, global business, been growing on average 6.4% per year over the last 3 years with a 12% [ UTAP ]. If you look at the bottom of the middle column, you can see that we serve consumers and patients across the health continuum, from medical management and treatment on our Medical Nutrition business -- sorry, from wellness and prevention on our Consumer Care business to medical management and treatment on our Medical Nutrition business. Our business is split to roughly 1/3, 2/3 between Medical Nutrition and Consumer Care with vitamins, minerals and supplements, or VMS, accounting for 80% of our Consumer Care business. You can see that our business is relatively concentrated. About 2/3 of our business is in North America, about 20% in Europe, and fast-growing businesses in China, Latin America with Brazil as our stronghold and AOA. Globally, we hold the #1 position in Consumer Care, which is an aggregate of VMS and Active Nutrition, and we are a strong #2 in medical nutrition. We operate in large, fast-growing categories, where we are building category leadership, and we are aiming to grow faster than our categories. There are several macro trends that are propelling both Medical Nutrition and Consumer Care. You heard Serena talk a bit about the global aging population. I think we're all familiar with rising chronic disease and increased pressure on health care spending and the consequences of all of those. I'd like to highlight 2 other important trends that are really influencing our categories. First, we continue to see an increase in people taking proactive ownership of their health. And this is driven by increased availability of information on the Internet, on digital platforms. And this is also leading to a greater focus on preventative care and holistic well-being. Now with so much information and misinformation available, both health care professionals, or HCPs, and consumers want verification that the products that they're going to recommend or use are supported by science and will work. While these macro trends are propelling the category, we can further unlock growth by increasing nutrition adoption by leveraging 3 levers that operate synergistically. The first is by providing education and selection tools to both HCPs and consumers to help them navigate through all the product choices that are available. The second is offering science-based solutions from trusted brands. With so many products and so many trusted brands available -- so many brands available, it's hard to know what's going to work. Our trusted brands supported by science and, in many cases, endorsed by HCPs, doctors, nurses, dietitians, pharmacists give both other HCPs and consumers confidence in the product quality and efficacy of our products. And the third is around improved product access. By building the category both online and in-store and improving shopper navigation, we can make products more accessible and available, where consumers and caregivers want to buy them. Our competitive advantages that drive our right to win are a combination of consumer and patient centricity across the health care continuum, powerful trusted brands, and differentiated science-based innovation. In alignment with the macro trends, we have identified 3 priority platforms that put the consumer and patient at the center. Our expertise across the health care continuum will allow us to uniquely deliver against healthy longevity, which you heard Serena talk about, women's health and GLP-1 nutritional support. We talked about the importance of trust in the category. We have a unique and power portfolio of brands that hold leading positions, bring credible science-based solutions and are trusted by consumers, patients, and customers. And when I talk about customers, I'm talking about both medical customers, so health care professionals, pharmacists, health institutions as well as retail and e-tail customers. Innovation drives our category. We leverage Nestlé's unparalleled expertise in nutrition science to identify new nutrients and molecules to enhance health and quality of life. And we couple that with advanced proprietary technology to optimize product delivery, taste, texture, and efficacy for consumer and patient enjoyment and to encourage long-term usage. Nestlé Health Science is on an exciting journey. I've been on this business for 15 years, and let me tell you, I am fired up about our future. We have dramatically advanced our business, since we were last together at the CMD in Barcelona 2 years ago. First, we are transforming our VMS business and, quite frankly, Nestlé Health Science. But let's start by putting the fish on the table. We could have done things better with our VMS integration. We underestimated the complexity, the change management and our readiness to execute. We moved too quickly and without enough rigor, and we didn't leverage the full capabilities of Nestlé Group. We have learned from our missteps, and our team is doing an incredible job of getting our business back to growth and preparing for further acceleration. Our VMS supply recovery is on track, achieving the highest customer order fulfillment, since before the supply issue. Our consumer and customer recovery is on track with market share stabilizing and beginning to recover on brands like Nature's Bounty, Osteo Bi-Flex, Solgar, and Garden of Life. We have delivered our financial every quarter this year with double-digit growth in Q3. We have completely reworked our integration plan and management to unlock the capabilities and efficiencies that will drive our margin improvement and that will fuel further acceleration. And our strategy and operational rigor will enable us to accelerate growth, profit and market share as we have started to do this year and we will continue to do into the future. We have been scaling Active Nutrition, growing double digit. Orgain has grown by CHF 130 million since acquisition. Vital Proteins has doubled in sales since acquisition, and we have launched the brand in more than 35 markets internationally. We continue to accelerate Medical Nutrition. Medical Nutrition is the backbone of our business and a critical source of scientific and medical know-how and credibility that we leverage across our business. It has been growing double digit globally, driven by organic growth and geographic expansion on brands like Complete, our plant-based and real food proposition, share growth on Vitaflo, our inborn errors of metabolism portfolio, and share growth in oral nutritional supplements, leveraging proprietary Nestlé technology to deliver the highest protein concentration on the market, which is hugely valuable for patients with malnutrition, where every sip counts. The product is very delicious, and you will have a chance to try it at the R&D showcase tomorrow. So as you can see, we have many reasons to believe in our accretive future across all parts of our business. We are activating 5 strategies to drive our performance and outperform competition. First, we're making clear portfolio choices, where to play, how to win, simplifying our portfolio, and putting our resources behind that. I already mentioned that we are developing 3 consumer and patient-centric platforms and I'll talk more about those on the next slide. We are building powerful differentiated brands that resonate with consumers, patients, and customers. We have 6 Consumer Care brands that we will build globally in a systematic fashion. We have 6 Medical Nutrition brands that are available globally, and we will continue to grow and expand. These are the brands behind which we will focus, and these are the brands behind, which we will put our investment and our resources. Science-based innovative nutrition solutions will continue to be a key growth driver and differentiator for us. Our pipeline leverages Nestlé's unparalleled expertise in science, nutrition and technology. You'll hear a few examples about that today from Abigail and me, and then you'll see more tomorrow at the R&D showcase. We are leveraging Nestlé's global footprint to strategically and systematically drive geographic expansion across both Medical Nutrition and Consumer Care. These 5 strategies, these 5 performance growth drivers are enabled by consistent operational excellence to deliver efficiencies, synergies, and assure excellence in execution. And most importantly, what makes a difference is our incredibly passionate, resilient and talented team and our winning and inclusive culture. That is what is driving our business today, and that is what will allow us to unlock our potential. As I mentioned, we are driving 3 consumer and patient-centric platforms that address macro trends, put the consumer and patient at the center, and leverage our portfolio of brands. We're already playing in these spaces with the brands that you see on the slide, and we're building these platforms in close collaboration with Serena across Nestlé, sharing insights, science, technology. And as you'll see, some of the in-market execution, we're bringing together all of our brands to win as one Nestlé in the marketplace. We've already mentioned that the global population is aging. Beneath this trend, we see a widening gap between lifespan, which is the number of years lived, and health span, the number of years lived in good health. This is leading to a greater emphasis on proactive aging, where people are taking preventative measures as early as in their 30s and 40s right when they see that first little wrinkle appearing by their eye. We can help address consumers' changing nutritional needs as they age to help them achieve their goal of living better longer. Half of the world's population is overweight or obese. The rapid rise of GLP-1 drugs creates a new need and opportunity for nutritional support, and Abigail will share a little bit about how we're starting to activate that in the U.S. As Serena mentioned, it's becoming increasingly recognized that women's health needs are underserved and under-researched. Although women live longer than men, they spend 25% of their life in poor health. Our brands can offer specific solutions for women across the life stages, and I'll share some examples with you on this next slide, and you already saw some of the incredible examples that Serena shared. As I mentioned, women have distinctive nutritional needs at each life stage, some of which are driven by hormonal changes such as menstruation and menopause. And some are driven by life stage, such as managing stress, energy, sleep, gut health, and heart health. We're already leveraging our expertise and our brands in this space to meet women's unique needs from using clinically studied ingredients on our Nature's Bounty Optimal solutions to command a premium price, to selling the #1 probiotic SKU on Amazon, because it works, to collaborating with a leading integrated gynecologist to help design products for women as part of our Pure Encapsulation brand, which is an HCP-endorsed brand, to Medical Nutrition support for women undergoing breast cancer treatment. As you can see across our portfolio, we offer prevention, medical management, and ongoing support. I mentioned that science-based innovation is one of our competitive advantages. And here, you can see 3 technology platforms that enable us to deliver differentiated science-based innovation. Protein is a hot trend, but not all proteins are created equal and let me explain why? We have proprietary technology that enables us to deliver very high protein concentration, that enables us to deliver solutions that decrease pre-meal hunger and promote natural GLP-1 response and in the future, more sustainable proteins. We leverage Nestle's Biotics expertise. You heard Serena talk about this, to launch proprietary pre- and post-biotics with new and specific benefits. And we have developed expertise in VMS formats like gummies that enable us to create differentiation through technologies like encapsulation for slow ingredient release for sustained delivery or multilayered gummies for enhanced delivery of nutrition, taste and experience. And tomorrow, you will experience the first 2 of these at the R&D showcase. With 2/3 of our business in North America today, geographic expansion will be a key growth driver. China is our second largest market and has been growing double digit. We operate with a combination of locally manufactured and registered products and products via cross-border e-commerce. In Medical Nutrition, where we started our business, we are currently #1 in pediatric care, where we are expanding up age from our leading cow's milk protein allergy formula business. The adult category in Medical Nutrition is under pressure in the hospital, driven by shrinking reimbursement. Therefore, we are building our business outside of the hospital, creating a digital ecosystem and providing education in the community. We've already gained low double-digit share here. In Consumer Care, our newest growth pillar in China, Garden of Life is the #3 probiotics and cross-border. Nature's Bounty hair skin and Nails gummy is #1 on TikTok, and we are #1 online in CoQ10. With an underpenetrated market and an aging population, we see great potential in this market. In India, we are building scale and capabilities through a recently formed joint venture with Dr. Reddy's Laboratories, a leading Indian multinational pharmaceutical company. We've created a joint portfolio. We're leveraging our complementary assets, and we're leveraging Dr. Reddy's scale, existing route to market and local capabilities. Our 6 priority global Consumer Care brands are currently available in 50 markets, and we have a phased plan to launch in more markets with a focus on China, the Middle East, Southeast Asia, Mexico, and as I just mentioned, India. Our Medical Nutrition portfolio is currently available in 100 markets, and we see continued opportunity for expansion. As 1 example, we are now building the Real Food plant-based segment, currently available in 14 markets and soon to be available in 20 markets. So I'm now going to turn it over to Abigail, who's leading our U.S. business, who will now share how we're pulling through our global strategy in the U.S. to drive sustainable, profitable growth. Over to you.

Thank you, Anna. Good afternoon. My name is Abigail Buckwalter. I've been with the Nestlé Health Science business since its inception, working across global markets before returning to the U.S. where for the past year, I've served as the CEO. During that time, we have been laser-focused on operational excellence, portfolio management, and getting back to the patient, consumer and customer obsession that we've been talking about all day. We're growing and we're poised for sustainable growth. Now before I get into all the drivers of growth, let me first orient you to the U.S. business. As you know, it's a large, fast-moving and still scaling market. Nestlé Health Science represents 60% of the global turnover and we have 37% household penetration. That's driven by the breadth and depth of our robust brands and our deep understanding of this illustration you see here, which is what Anna spoke about earlier, the health care continuum. We play across Medical Nutrition all the way to everyday Consumer Care, and it's distinct, powerful science-backed brands that differentiate us across that continuum. And we must continue to stay agile, deeply connected to that insight to continue to differentiate, win their trust, and win their wallet. Today, I'll talk about how we're going to do exactly that, starting with the patient and consumer at the core of everything we do, how we'll grow and expand our leadership position in VMS, how we will scale our active nutrition brands like Vital Proteins and Orgain, and how we want to be on the forefront of emerging trends like GLP-1 nutrition, all while staying very rooted in our medical heritage, as Anna spoke about earlier, our science-based products and our credibility. Let's first dig into the VMS segment. Here's a high-level illustration of what that looks like. As you can see, we have a strong position in this marketplace. Now how we go to market is what I want to elaborate on a bit. You see in the benefit category that we do have a variety of broadline brands. We also have hyper-targeted brands like Osteo Bi-Flex, the leader in joint health. Now how those broadline brands show up across the market is very different and distinct. It's like a good, better, best strategy. We have entry-level price points, premium, and super premium. And with that elevation comes distinction in differentiation, sophistication, and increasing science behind. Now we always take an omnichannel sales approach because we want to be everywhere that our patients and consumers shop, but we do have leadership positions in distinct channels like food, drug and mass and club with Nature's Bounty. We're leaders in natural and independence with Garden of Life. And then as Anna mentioned earlier, we are the leader, the #1 recommended health care professional brand with Pure Encapsulations. What ties all this together is the new common denominator, e-commerce, so we must have a robust presence there. It has become the de facto search engine. People are using Amazon to price shop and to educate themselves on benefits, so it's good that we're the #1 category leader in VMS on Amazon. Now that you know a little bit more about the -- where we play, let's talk about how we compete in VMS. Starting with agile innovation. Now because we play across that entire health care continuum, we have unique insights across different channels. In the first example here, we saw early that there was an emerging trend in magnesium in the health care professional channel. It was being recommended more and more and more. So we quickly translated that into a proposition for the masses. We launched magnesium glycinate under the Nature's Bounty brand. And we made science immediately more accessible, and we did it in a very consumer-friendly way. Let's take a look at how this now $50 million SKU came to light. [Presentation]

The next example is transversal science and technology that allows us to innovate efficiently and effectively. Anna mentioned earlier our leadership position in probiotics with Garden of Life. Well, now we're tapping into the 30 years of expertise at Nestlé to drive and bolster that leadership position in pre, pro and postbiotics. This will help us defend, protect, and promote our leadership position, and we're taking all of those insights and applying them to new strands, new benefits that you'll see across other brands at different price points and in different channels. And the last example really brings it all to life. Because of our agility, because of how we play across the health care continuum and our unique insights and our credible science behind, we are a preferred partner for retailers. When they see gaps in the market, they want to partner with us to co-create. Here's a recent example. We knew that 50% of women in the U.S. experience hair loss or hair thinning. There was a gap in the market in mainstream. We quickly brought our R&D expertise. We co-created with a leading retailer to launch a differentiated product that's clinically shown to grow thicker, fuller hair in just 6 weeks with only 1 pill per day compared to the competition that requires 4 pills per day. This is a win-win-win scenario. For the consumer, there's an unmet need, for the retailer and certainly for Nestlé. So now we've talked about VMS, let's transition to Active Nutrition, starting with Vital Proteins. You've heard a lot about it today and I'm pretty excited about that. You're not the only ones, though. We are the undisputed leader in the collagen space. As a matter of fact, Vital Proteins has become synonymous with the collagen category with 46% market share. We'll continue to outpace the category and grow through 3 distinct ways. The first is innovation. Premiumizing through functional benefits, always staying with collagen as our core but adding proven ingredients that do things like address that first wrinkle, Anna mentioned, or reduce fine lines like our skin complex. We're also making collagen more accessible at more approachable price points and on the go. You heard earlier about the coffee category and how people are doing it out of home. Same should be true for collagen. Let's make it more accessible. So you can take your convenient collagen pack with you wherever you go. I brought mine in the plane. You can try 1 on a break to put it in your coffee or preferred beverage of choice. The next category is really getting back to our roots. This brand was born in a social environment. We have to maintain that entrepreneurial spirit that made us so distinct and beloved by our consumers. We'll do that through social media and through influencers. Now we partner with macro and micro ambassadors from elite athletes, who credit Vital Proteins with improving joint flexibility or celebrities like Drew Barrymore, who frequently posts about her morning routine, mixing coffee and collagen together, which leads to the third example. You've heard it several times today and that's because it's a growing trend. 55% of collagen consumers mix it in their coffee, so who better than Nestlé to partner with our powerful brands, our leading brands in coffee and collagen to delight consumers in a way that no one else can. We're bundling offerings with Nespresso. And in the new year, we'll be partnering in-store merchandising with Starbucks. So more to watch in this space. Another Active Nutrition brand that's really on the rise is Orgain. Orgain has all the building blocks to be a billionaire brand, and let me walk you through 4 of them. Starting with the fact that protein just continues to grow as a category. It is being seen as the halo macronutrient. Think about how many applications it has from medical to everyday settings. And Orgain continues to grow, too, nearly 20% in the past 2 years and already achieving 8% household penetration. The next building block here is our credible origin story. Medical doctor and founder, Andrew Abraham, was on a quest as he was trying to survive cancer, looking for a good clean nutrition. He's very healthy today, and he attributes a lot of that to the good clean nutrition in Orgain, which is a very authentic story that has led to this positioning of real nutrition for real life, and that really resonates with the full household, which gives us a broad platform to continue to innovate, and that's in the bones of the Orgain brand. We've always been on the forefront of innovation, taking competitive categories and doing it better. Here's 2 recent examples of how we continue to do that. Anna mentioned earlier the high protein concentrate, it's a definite trend. When we launched a small-volume 20-gram protein, going after that consumer who wants the protein, but doesn't want the calories and doesn't want the volume. It was an online test that sold out in 3 weeks. Now we're entering retail. Another example is here. People on TikTok were going wild for nut butter. Don't ask me why, but it really was a wild trend, and we quickly partnered with the leader Justin's in this category to launch a plant and nut protein powder that people are loving. Surprising and delighting consumers, again, is at the core of this brand. It's the authenticity, it's the broad appeal, it's the innovation that leads us to continue to grow in adjacent categories. We have permission to play there. And the latest one, it's kid's protein drinks, where we have become a very formidable competitor, $85 million in gross sales and you see this SKU alone is growing 50% year-to-date. We're now expanding into new formats and we're pushing distribution. So we've spoken about VMS. We've spoken about active nutrition, the importance of protein. And all of that comes together when we talk about emerging trends like GLP-1 nutrition. And let me first say, nobody was talking about GLP-1, a few years ago. And definitely, nobody was talking about GLP-1 nutrition, and now it's dominating the weight management discussions. It's not going away. At least 18 million U.S. adults are on GLP-1 therapies. And there's a lot of positives with that. We also know that at least 75% of them experienced at least 1 side effect, where nutrition can potentially play a role. Now it's a very early stage space, but we want to be on the forefront of this trend. So we're taking a holistic approach. First, we knew that people were actively looking for more information to understand what to do for their side effects and just generally understanding GLP-1s. So we launched a website that combines education, access to expert key opinion leaders and a marketplace where they can find credible brands that address some of those most common side effects like muscle loss, gastrointestinal discomfort, skin elasticity and dehydration. The next example is how we're also launching targeted solutions. For example, in the foods category, we launched Vital Pursuit. And this is for people on GLP-1 therapies that have a reduction in appetite. It's appropriately portioned, high protein, nutrient-dense delicious and available at a very approachable price point. Anna mentioned this earlier, and I'll elaborate, we're also launching solutions for people, perhaps, transitioning off GLP-1 therapies but want to maintain their weight loss journey. This is a premeal drink that, when consumed 50 to 30 minutes before a meal, is shown to reduce hunger cues, manage blood glucose level and increase, naturally, the GLP-1 response. This is rolling out in retailers now. Speaking of retailers, there is no one-size-fits-all approach to how they're addressing the GLP-1 opportunity. Some are building destinations in store to help their consumers navigate, others are taking a more measured approach online. We're partnering with them all because we want insights to help shape our strategy to be on the forefront of this trend. Last but certainly not least, I'll go back to our roots, which is in Medical Nutrition. In the U.S., it's a big market, it's growing, and we have 35% market share. We accomplished that through a dedicated, credible field force that engages with healthcare professionals every day, and we're amplifying that with a surround sound always-on digital approach that now allows us to engage with more than 400,000 healthcare professionals in the U.S. alone every single year. And that's important. Because as you heard from Serena and you heard from Anna, the population is aging and the incidence of chronic disease is going way up. We have the most comprehensive portfolio in the industry, which allows us to meet those unique dietary needs, which allows us to be a trusted partner and win contracts and at discharge from the institutions because we have it readily available outside of the institutions. We are the leader in growing trends like peptides, and we're on the forefront in accelerating our competitiveness in real foods, plant-based and organic solutions in medical nutrition, and that's very important because as I said in the beginning, the boundaries are blurring in healthcare. There's no longer a linear relationship between doctor and patient. Caregivers are emerging as advocates. They want more transparency. They want more education. They want to know what's in these products, and we're meeting them with that challenge. We're helping build communities. We're educating them about our superior taste and our superior ingredients from farm to tube feed. And we're also meeting them where they're at. E-commerce is the fastest-growing channel for medical nutrition, and we're growing there too, and we have no intention of stopping. So in summary, the U.S. business is back to growth with a lot of opportunity ahead of us because we play in attractive categories that are growing. We will continue to empower healthier lives through nutrition across the entire healthcare continuum, while continuing to grow. Back to you, Anna.

Thank you. We are proud to empower healthier lives through nutrition. We know that science-based nutrition can lead to better health and to better health outcomes. Nestlé Health Science is and will continue to lead in this space. By driving our competitive advantages of consumer patient centricity across the health care continuum, building powerful trusted brands and driving science-based innovation, we will continue accelerating growth, more profit -- and we will continue accelerating growth, profit and market share in the U.S. and harnessing the full power of Nestlé. And by doing so, we will unlock our potential to serve more consumers, patients and customers, be accretive to Nestlé and drive the Group's nutrition, health and wellness strategy. Thank you very much.

Okay. So let's go to the Nutrition and Nestlé Health Science Q&A. Where shall we start? Let's start then with Warren.

A couple of questions for me. The first one is on the margins of Nestlé Health Sciences. I think you said, Anna, they were 12% UTOP margin, which I think is 400, 500 basis points below the group average. Can you maybe explain why the margins and the returns are so low in Nestlé Health Sciences? I remember, Nestlé used to have a target to get the margin up to 18% by 2026. Does that target still stand? That's the first question. And then secondly, it's actually on VMS. How can Nestlé bring real science from your R&D to the category to improve brand loyalty. So for example, Haleon, one of your peers, has been talking about Centrum Silver which is where there's real science on cognitive development for over 60s, and it's been a game changer for that brand in the U.S. pretty quickly. Is there anything from Nestlé's R&D that can be a game changer for big brands like Solgar or Nature's Bounty in terms of improving consumer loyalty?

Yes. Thanks for that. So on the margin question, so we still do have the ambition and the plan to get to parity level with Nestlé in the medium term. So that still is on track for that. In terms of the -- your question on VMS and how we bring real science, I think we talked about a couple of examples. So we talked about the example on Nature's Bounty Optimal Solutions, where we have a clinically studied ingredient that has shown to grow fuller hair for women in 6 weeks -- 4 to 6 weeks, 6 weeks. We have some of the biotics that we talked about launching pre, pro, post symbiotics. Stefan will talk a little bit more about some of the expertise that we have there. And then it's also really understanding kind of what our consumer needs across the life stages and across the health continuum and demand spaces and then working to make sure that we can identify, whether it's specific nutrients or whether it's specific technologies that allow us to deliver that in a better fashion.

Jon?

Just a couple of questions. In terms of the nutrition part of the -- I'm talking about nutrition and dairy, you talked about 2% to 3% growth, and we can understand maybe the IMF market is growing only 2% to 3%. Can you talk about other parts of the market growing 3% or 5%, so I'm just wondering why you think that category overall was only going to grow 2% to 3% when you think it will be higher given you have a lot of emerging market exposure in there. And a bit of an add-on to the GLP-1 question. For the nutrition and dairy business, do you not see a lot of opportunities there for GLP-1s in that part of your business as well?

Okay. So I'll start with the first part of the question. Yes, we shared category growth, and we expect low single-digit growth in the early childhood nutrition part and kids and/or family milks. Where we see acceleration is in adult nutrition. But as I mentioned in the presentation, where we do see growth opportunities is in pools within those segments that will overperform the category. And this is in early childhood nutrition, as I mentioned, premiumization, that's clearly one area. So the premium part of this area is already overperforming the category as a subsegment and also the growth over inappropriate feeding through affordability which is also another area to accelerate growth. And then obviously, moving forward, the most attractive areas from a category standpoint is on adult nutrition. So women's health is growing. We expect to grow until 2027 by 6%; healthy longevity, 8%, which is quite attractive and accretive to the overall nutrition if you take all the life span. So we are identifying the pockets of growth within each segment, the most attractive one, making our choices and investing behind those through supporting core brands, leading brands, but also innovation and breakthrough innovation. In Adult Nutrition, -- in Adult Nutrition, we are more at early stage, but we are accelerating as well by a dedicated platform and consumer centricity. You asked our GLP-1 F&B, sorry. So look, the GLP-1 piece now, we have anyway through food, through the food category, already an initiative in the U.S. We are not looking into GLP-1 specifically within food and beverage now, but this is something that we are working on in collaboration with Nestlé Health Science as we do see potential to increase the range of Vital Pursuit as an example, on other elements like ready-to-drink, et cetera. So we are looking into this as well as it's a growing and attractive segment.

Guillaume?

David, Guillaume Delmas from UBS. Two questions. The first one for Anna. What visibility do you have on the international rollout opportunity of the Nestlé' Health Science portfolio. It was a key focus 2 years ago. I mean do you already have examples you can share of successful rollout? And when we look at your portfolio of brands in Nestlé Health Science, which brands do you think have the greatest international potential? Because often we see brands not traveling that well in particularly VMS. And then my second question for Serena. You mentioned birth rates in China as a headwind. Recently, we've had some good news, not getting carried away, but do you think we are seeing an inflection point? Or at this stage, you just would attribute that to the Year of the Dragon and we could go back to some decline quite soon.

I can go. So on China, it's definitely a headwind, right? So no doubt about it. So you see the sharp drop in terms of birth rates from 17 to 9, we don't expect this to go up like that. So that's a fact. But having said that, our position in China today, we have -- within the early childhood nutrition in the Nestlé part, Nestlé Infant Nutrition China, we are leading and gaining market share because we are focused on a very specialized growing segment with allergies and this is the non-HA franchise where we gain share, and we are leading. On the Wyeth part with Illuma, as we are pioneering our innovation through HMO in China, we do see acceleration via market share gains. And now we are seeing early signs of positive rebound. We do see potential growth in China by strengthening our NAN franchise and also recovering through innovation. HMO is a good example on our Illuma franchise. But this is really the growth pattern within the category dynamics. So we can still grow there. Yes, there is the Year of the Dragon. Things are stabilizing, but we are not expecting the category to boost. We are expecting that we will grow within the dynamics of the category based on what I mentioned.

Yes. So thanks for your question about the international rollout topic, near and dear to my heart. We have 6 consumer care brands, as I mentioned, that we see as having global potential, Vital Proteins, Pure, Solgar, Nature's Bounty, Orgain and Garden of Life. And our consumer care brands are currently available in 50 different markets around the world. I'll use Vital Proteins just as one example that we have rolled out. We've launched the brand in 35 markets. We've really taken the core equity that's been so successful and is so strong in the U.S. and really rolled that out with some local adaptation, but it's really become a very strong brand in the markets. Awareness is growing, very high affinity, high trial usage, and we see kind of the opportunity to expand that brand. So that for us is like a great role model in terms of how we really leverage the equity, great collaboration between the U.S. and the international teams to really kind of drive that out. So I think that gives us a good model. I also mentioned that from an international geographic expansion standpoint, it is going to be a key growth driver. We need to do it in a phased approach. As much as we love to do everything ever all at once, you heard Laurent talking about do fewer things, do them bigger and do them well. And so the first phase of our focus, it doesn't mean that we don't love our other consumer care brands, but the first phase of our focus is Vital Proteins, Solgar and Pure because those are already strong and present in many international markets, right? So it's kind of the notion that Laurent talked about of expanding the winner. So we really want to kind of double down and build awareness, usage, drive distribution of those 3 brands and then we'll look to kind of expand the other brands. Now some of the other brands between Nature's Bounty, Orgain, Garden of Life, fantastic brands. Those also have presence in markets internationally. We will continue to drive those markets where they are. We'll be -- those will be kind of more of, I'll call it, a Phase 2 in terms of the geographic expansion as we really want to focus and double down and make those brands strong. I mean Solgar, as you know, really has its center of gravity internationally, very strong brand for us, kind of the gold standard, highly appreciated regarded by pharmacists. So expanding with the winners is our first priority.

Okay. Thank you very much. Then we'll move to the next break. We will be back in here at 2:35, so 20-minute break and then back in here at 2:35. Thank you. . [Break]

Okay. Welcome back. We are moving now to the last pair of category presentations where we will start with food and then move on to confectionery. So to kick us off, I'd like to ask Nikhil and Remy to come and take food forward. Thank you.

Very good afternoon to all of you. My name is Nikhil Chand. I'm the Head of the Food SBU. Along with me, Remy Ejel, the EVP and CEO of Zone AOA. We are delighted to talk about food to you. Food really is a vibrant and dynamic category. We sell about CHF 12 billion worth of food every year with an accretive margin and a growth of around 5% in the last 3 years. We are proud of our leadership. Maggi is the world's #1 food brand going to over 800 million households every year. Geographically, we have a balanced split between emerging and developed markets with over 95% of our operating sales having a #1 or #2 position. Before we go deeper into our business, let's take a step back and look at how our consumers engage with food across meal moments. These meal moments start with snacking. This is all about excitement, about pleasure, about taste and enjoyment. The everyday routine meals, your morning breakfast, your lunch or dinner that has satiety and a bit of taste built into it. And then the special meals, which have not only satiety, but an emotional connection. This could be around festivals, for example, Christmas, Ramadan, Easter. This could be a change of season, for example, barbecue season. This could also be within a week, how you change your meal habits, a Taco Tuesday or a Sunday family branch. All these meal moments are then served by fresh ingredients, by staples and CHF 600 billion worth of Food Solutions. These value-add Food Solutions straddle firstly, cooking solutions, simply put products that help a homemaker to cook and put food on the table with convenience and taste. Prepared meals that have convenience built in by design are known for comfort and nutrition on the table. And then small meals, which have all the excitement of snacking, but also the satiety of a meal. This large category offers a modest growth outlook. And for Nestlé's, it is imperative, firstly, we start regaining market share and then look at growth platforms to accelerate growth. So how do we identify those growth platforms? We looked at the 4 biggest trends that are defining how the world eats and cooks. In the 15th and 16th centuries, crops crossed continents. Today, cuisines are crossing continents. And this has got amplified with out-of-home and digital. Our convenience, equation and exploration is changing for the consumers, driven by change in household structure. On one hand, more multigenerational families, on the other hand, smaller singular households, fueling with rapid urbanization, a much more fluid eating lifestyle. There is a value maximization in our consumers' homes and kitchens. Our consumers are really smart and they look for the best budget choices that influence meal preparation. And we've identified that there is a correlation between how much you spend as your household budget on food compared to your total income in how you prepare food. So for example, a key country for us, Nigeria, where over 50% of the household budget goes behind food, cooking from scratch is preferred. In developed countries, this number comes down significantly and convenient meals are much more valorized. While taste and convenience at the heart of the category, we do recognize, as Laurent put in the beginning, there are some segments that are looking for more conscious choices. So based on these 4 mega trends, we've identified 5 growth platforms for us to look at opportunities to refuel our engine. Modern cooking. This brings the joy of cooking with simplicity, ease and excitement, sometimes enabled with an appliance like an air fryer. World cuisine that feeds the need for this bolder, fresher taste across all tables. Affordable nutrition, the ability to bring taste and nutrition in an affordable manner across millions of meals every day. Wholesome bowls, the area of snackification but served through a hot, fresh, wholesome noodle, pasta or grain. And then plant-based, how we can bring more taste to plants and legumes. At Nestlé, we believe we are well placed to capture these opportunities. Firstly, because of our leading portfolio of brands. I'd never get tired of saying this. Maggi is the world's #1 food brand going to over 800 million households. It is also the leading brand for Nestlé's in terms of household penetration. Stouffer's is the #1 frozen meal in the U.S. Carnation is the #1 dairy culinary brand globally. Garden Gourmet is the #1 plant-based brand in Europe. Totole is the #1 bouillon in China. And all these #1s I mentioned, what do they signify? They signify the trust, the value and the relevance our consumers place on our brands every single day across all means. And this relevance is super important for us in the food category because food at the end is about what matters to our consumers in their table, in their kitchen, in their family, in their homes every single day. To unlock this local relevance, we go back and insight and mine how the world eats through our chef network, through our culinary specialists and through our proprietary research tools that help us really understand the local nuances. We combine this local nuance and local relevance with the global expertise and scale of Nestlé, with an R&D that's very close and the operation that's really close to our markets. And that gives us then an unmatched portfolio in both width and depth of answering consumer needs across cooking solutions, across prepared meals, across small meals. And within that, you see the ability of us to have a specific solution for a specific need in a specific market. But we don't want to win just in the consumers' homes and kitchen. We also want to win in their phones. And our digital journey for the food business started quite early. And this early initiative and pioneering initiative has given us the ability to have today, the #1 branded food ecosystem between Maggi and Recetas Nestlé that serves over 320 million consumers every single year, answering a very simple question, what do I cook today? What food do I serve my family today? What do I eat today? And this simple question empowers our consumers and enables them to not just put food on the table, but also make informed healthier choices. We have, for example, proprietary tools like MyMenu IQ. This gives you the healthfulness of a recipe and also suggests complementary dishes that may enable you to make a choice that is extremely complementary to your desire. So in this context, our business priorities are super clear and super focused. We have to grow our Cooking Solutions business and capture the growth platforms of modern cooking, affordable nutrition and world cuisine. We need to accelerate our small meals business to take as much share as we can from snackification. And we do recognize we have to continue to fix our prepared meals frozen business. We will enable this business prioritization by a very disciplined execution across more meal moments and across more value per meal. Let me, in the next slide, bring some texture to the strategy in action, stuff that's already happened and something that is more to come. On our Cooking Solutions business, our first step is to ensure that we are at the forefront of the trend of appliance-based cooking. Over 30%, I repeat, over 30% of the world's households already has an air fryer. And this trend of cooking with an air fryer is here to stay, growing at double digit over the last 3 years. How do we best capture that across our ambient and our frozen portfolio with our power brands, Maggi, Totole and Stouffer's, offering crunchy textures, marination and leveraging our patented baking seasoning sheet technology that you will experience tomorrow at the Nestlé Research and Development Center. This product is also backed with a service platform to ensure that if you do not want to try a new product, but use your existing favorites in air fryer, we can guide you. We also recognize that plant-based is a much broader opportunity. Today, flexitarians are looking for broader options to bring taste to their tables. And therefore, the launch of this new recipe solution in Germany allows consumers to bring variety, taste and texture through plant-based. And then taking the learnings we have in plant-based into an affordable nutrition format with the launch of the Maggi Soya Chunks in CWAR. We also believe affordable nutrition through our Cooking Solutions business is a great vector for micronutrient fortification. Under the Maggi brand, we serve over 100 billion serves of micronutrient fortification every single year. I spoke about accelerating our small meals business. This really is being consumer-centric and shopper-centric. We need to go where the shopper would like to have a convenient hot, fresh wholesome bowl at their arm's length and therefore, an omnichannel approach. This is about expanding into new geographies. And next year, in the U.S., we are launching the Maggi noodle franchise. It is also we're exploring new segments. So for example, the iconic Stouffer's Mac & Cheese, could we take that to the ambiente? While we look at more meal moments, we also would like to look at more value per meal in the small meal segment. We are launching in Europe under the Garden Gourmet brand, a ready-to-eat plant-based salad. We have launched in India this year, for the first time, a breakthrough innovation of a high-protein chickpea noodle. I spoke about world cuisine. This is a big bet for Europe next year across both cooking solutions and noodles, and we pioneered the launch globally on a mainstream brand like Maggi with the Korean noodle in India. I spoke about fixing the prepared meals business. And here, we have to, first and foremost, address the fundamental price value equation on our business. But beyond that, we have to also recognize that we need to innovate stronger, faster and sharper. And therefore, the market has identified certain areas of opportunity for sustainable growth. Following the modern cooking lens, but in an American way with the approach of approach of Stouffer's air fryer meals, but also getting into new segments like sides and sandwiches to complement the fluid lifestyle, weight management with our classic Clean Cuisine brand, but also with Vital Pursuit to understand how we can complement the GLP-1 journey much better. And World Cuisine through our Meals and Pizza division with the launch of Tapatio for the Hispanic audience for the Mings brand for the Asian cuisine as well as the out-of-home Italian-inspired pizza with DiGiorno. As you can see, there's a lot we'd like to talk about. But for today's focus, we'd like to zoom in on one of our jewels, our emerging countries. And for that, I invite Remy to take the slides from here.

Thank you, Nikhil. It's a pleasure for me to be with all of you. Emerging market is over half of our global business in the food category, leading on growth and profit margin and with a strong headroom for further growth. In these markets, the portfolio is led by cooking solution and small meals with very much loved brand like Lechera , Carnation, Totole and Maggie. I would like to share with you a flavor, I would say, of our powerhouse, Maggie in Zone AOA in a short video. [Presentation] Of course, the only thing that we cannot translate to you is actually the flavor, the smell, the taste, And I hope in our different session, you will be able to experience that. So Zone AOA is not just the largest Maggi business within emerging market, but it's also the largest ambient food business for Nestlé globally, reaching almost 300 million households. Maggi is rooted in local food culture and enjoys unmatched brand equity with iconic status across our key markets. This locally rooted approach is enabled by 4 R&D; in Ivory Coast, India, China and Singapore and a network of factory in 25 of our key locations. Maggi is our fastest billionaire brand that is growing in AOA with a constant currency CAGR of 12.9%, supported by a RIG of 5.8%. This solid growth foundation with clearly defined strategic choices is critical for what we have been able to deliver and what we will deliver in the fast and large food landscape of [ 100N ] billion in Zone AOA. Cooking solution is our first critical growth pillar, contributing to 60% of our Maggi business. With over half the meal cooked at home, combined with our locally relevant understanding of in-home cooking, we're very well placed to further grow by increasing participation in local dishes and capturing higher share of modern cooking. At the same time, we see an acceleration of snackification, snackification of meals and an interest to replicate out-of-home dining experiences in home with World Cuisine. These trends define the growth plan of our second pillar, small meal, which today contribute to almost 40% of our Maggi business in Zone AOA. Growth across these 2 pillars is enabled by disciplined, organized, strong daily execution to drive more meal moment and more value per meal. Let me first focus on how we're growing Cooking Solutions. First, we're capturing more meal moment, with our core portfolio, which has a winning taste, a winning own, I would say, taste advantage versus the competition. And in addition, is fortified to deliver affordable nutrition, which is a key competitive advantage in emerging market. By driving higher participation in traditional top dishes and the versatility of usage in modern cooking dishes, through our digital platform, and you had a chance to see in the video the impact that it has in reality. That's one platform for all our market. And today, with more than 22 million active users, we have made strong gain in household penetration, and we decided to share 2 of our geographies with you; Philippines, where we have gained penetration by 700 basis points and Vietnam by 500 basis points in the last 3 years. And this is very much supported by price pack architecture to win in the differentiated channel that exists in our market. More meal moment is one, but more value per meal is another area that is an amazing opportunity for us. And we will continue to leverage global trend tailored to our local consumer needs. For example, we have launched the first ever air fryer range of cooking solution in Australia with plan to expand in ASEAN because we see that trend, and that's an opportunity to have more value per meal. We have also launched plant-based cooking solution for the increasing number of flexitarian consumer. Of course, the idea, and I think Laurent was talking in the morning about global, local, how does it fit? What's that competitive advantage? How does it happen? How the magic happened? And I have taken the example of CWAR to share with you. So of course, Central West Africa is a market, a key market for AOA. And there, Maggi is one of the most loved iconic brand in this region with brand equity score leading at 1.4 versus the nearest competitor. We have market share leadership across Nigeria, Ivory Coast, Mali, Senegal, Guinea, Burkina. I mean it's 25 countries, so I will not go into all of them. But I think what is important to highlight, it has and the reason of the success is related to the fact that Maggi has a distinct winning taste and is fortified with micronutrient fortification like iron, Iodine and is at an affordable price, reaching over 80 billion fortified serving anyway. The brand is supported by a strong route to market, tailored for deep penetration across the different countries. For open market, where we have an amazing business, 2 grocery stores, supermarket and the e-commerce channel. And what works for us is actually this pack portfolio that range from a single cube to a multipack. This local connect is further boosted with our Mummy program in the region, which engages more than 300,000 women. So just to give you an idea for you to imagine if you didn't have a chance to go to Central West Africa, but actually, I have to say in some of Asian countries, the open market is a little bit like this room, and you have tables where there are some vegetables and some other ingredients. And on those tables and behind every table, there is a Mamie. Those 300,000 Mamies have actually -- and some of them are third generation of Mamies that have been working with Maggie, with Nestle. They are our brands ambassador. They are the ones that are supporting the business and driving it through. And of course, it's very important for me to highlight, of course, the competitiveness in operation. And the local relevance in cooking for our consumers is definitely enabled by research and development center. And I mentioned 4 of them. Let me try to bring it alive. I was very lucky 10 years ago to be based in Central West Africa. And 10 years ago with Stefan, who is leading us in the R&D, we were dreaming of the cube line. At that time, 10 years ago, we used to produce 800 cube per minute. And then we dreamed, then we said, can we do 1,000, Stefan and the team. And then we worked on it. and we delivered that, 1,000. And then after this, we said, okay, but can we go further? Can we go to 1,200, and we did. And then after that, I say, okay, let's go incremental. Can we do 1,400 and we did. I'm very proud to share with you that in reality from moving incrementally. Then we said, you know what, forget about incrementals. Can we grow exponentially? Can we move from 1,400 unit cube per minute to 3,000. It was done. It was delivered. Last year, we started to install those new lines from 1,400 cube per minute to 3,000. Now why is it important? Where is the competitive advantage? Every day, every morning, we produce 200 million cubes of Maggi in Central West Africa that we sell. And of course, that major opportunity allow us to remain competitive and to be able to grow and to deliver profitable growth. Of course, I shared with you the example that is related to [indiscernible]. I could say the same about Philippines or I could say the same about India, but that's one example that we thought would be interesting to share. If I focus on accelerating the small meals. Again, it's all about taste. By strengthening our unbeatable taste, by expanding with new pack format for new consumption [indiscernible], we are able to leverage on the strengths that we have. We are leveraging on our out-of-home in home. And there is a relationship that is between both. And in that case, we are able to leverage on the out-of-home to drive the omnichannel presence of the brand across the market through franchisee and through partnership with large restaurants and in our menus that are there. Again, the same thing. We're growing by gaining a stronger momentum and delivering more household penetration. And here, I have 2 examples to share with you with India where we have grown it in the last 3 years by 500 basis points and in Malaysia by 400 basis points. While we continue to build on the gain of our existing markets, we are also geographically expanding to new markets, and that's the goal of our strategy. More value per meal is the other pillar in reality of our growth. And this is based on trends, good for you variant, like our nutritionist range of noodle, which has added veggie fiber and is fortified with iron and another example is our Happy Bowl range that has been launched this year for kids. With different texture and global flavor using our culinary expertise, we have launched our world cuisine range. The first tool that we can share with you that are of the block is our Korean noodle that has been launched last year in India and Tom Yam in Malaysia that we are, in reality, also now expanding and developing and moving forward. If there is one key takeaway that I would like to share with you before I hand over to Nikhil, it is to say that Maggi is one of the jewels in the Nestle Crown. Thank you.

Thank you, Remy. I hope that together, we've been able to bring this category back to your attention. Food is the biggest category Nestle operates in, offering growth headroom and a lot of opportunities. We have the winning recipe, brand power, combining this global expertise with local relevance, an unparalleled portfolio and industry-leading penetration that give us a chance to win in this category. As you saw in the emerging countries, we have reach, we have scale, we have strong foundations, and we have the model for a profitable growth. Remy spoke about Maggi. I joined Nestle because of the Maggi brand and we are proud that Maggi is not just the world's #1 food brand, but is a growth powerhouse. Thank you for your attention.

So good afternoon, and welcome in the world of confectionery. I am Corinne Gabler, the Head of the Global Strategic Business Unit for Confectionery. And I will present to you today some highlights of our global strategy. And my colleague, Marcelo Melchior, the market head of Nestle Brazil will show to you our biggest market is bringing the strategy to life successfully. So the Nestle confectionery is an 8 billion business. It has been growing 8.6% over the past 3 years and 5.8% year-to-date since the beginning of 2024. We are #3 in our footprint with 9.5% market share. Globally, we are #5 because we exited most of our U.S. business since 2018. We are #1 in Latin America and in Canada, and KitKat is the #1 chocolate bar outside of the U.S. We play in a large, resilient and growing category. Confectionery is expected to grow between 4% and 5% in the upcoming years. It is a category which has a modest down-trading and that people consume occasionally to treat themselves. We have 3 key growth drivers for the future years. Consumers are snacking more and more. Consumers are looking for more variety and especially Gen Z is looking for new experiences, new flavors, textures and I will show you later on how several of our innovations are following this trend, and I hope you could try some of them earlier today. We have this well emerging market growing more strongly and becoming, for Nestle, a growth opportunity as we are very well positioned there. When we look at our competitive position, we have a clear strength, combining global and local, as Laurent mentioned earlier. KitKat is our global iconic brands, and we've been owning the break with have a break, have the KitKat for the past 66 years. We have in R&D, a clear superiority in the wafer baking, which is helping our competitive advantage. And on top of this KitKat global brands, we are complementing it very well with local jewels. So we have loved brands, which are very close to the heart of consumers, and that enabled us to be close to the consumer trends. And we have application groups locally that can develop quickly some innovations. But we have as well some transversal technologies that we can deploy across several local brands. And you will see tomorrow some of them at the Nestle Research Center. When we look at this both KitKat and the local brands, they are both supported by our leading approach in terms of sustainability. We have the Income Accelerator program, which for instance, is helping our cocoa farming family to increase their income by 38%. Also in terms of responsible consumption, we are at the forefront. We've been operating with no marketing to kids for the past 16 years. And now we have very clear commitments in terms of calorie for kids products below 110 and front of our guidance for all our multipack products. Over the last 2 years, focus has been really our biggest priority. We used to manage a very big complexity with more than 200 brands, fragmented investments and too many small innovations. So really, we've been focusing on making clear brand choices, choosing where we want to invest, then focusing paid media behind these brands and working on fewer bigger innovation. But it's a journey, but we see already very positive outcomes. So when it comes to growth, we are growing twice faster with KitKat and our chosen local brands than with the rest of the portfolio. We have come now to 90% of media effectiveness. And also, we have identified several whole platform of innovation that can deliver more than 100 million turnover. And especially our business in Europe went through this transformation and the clear focus on the brand where we want to invest in Europe, we've also divested more than 15 brands in our portfolio Confectionery Europe, and we have built production hub in order to have more sales behind the platform we want to invest behind. And we have similar results with KitKat and the chosen brand growing twice faster than the rest of our portfolio in Europe. When it comes to external impact, we've been operating in high inflation context. And also, as you know, very well, unprecedented cocoa prices. But we took an approach of moderate pricing, and it has been successful because we had a positive rig in our 9 months results and also positive and good organic growth. Obviously, the high cocoa prices will continue in 2025. The good thing is thanks to the strength and the size of Nestle, and thanks to our ability to focus on the midterm, we have a competitive advantage compared to small players in times of being shortage and high cocoa prices. But nevertheless, we want to stay competitive. So it is really critical for us to find the sweet spot in terms of pricing. What we call balanced pricing as much as makes sense, but still looking at the impact on volume and finding this sweet spot. We are playing a lot with strategic revenue management. So finding the right pricing in terms of promotion, the write-back architecture, looking also at entry points and especially for emerging markets, looking at the absolute amounts that consumer can afford. We are playing the mix, be it in terms of portfolio, customer and channel but also in terms of innovation. So we are valuing up. But we also were looking at innovations with lower cocoa content. And sometimes, as you saw with Chocobakery products, we can even do both at the same time. We keep on working on efficiencies and we will benefit from those -- from the groups that Laurent mentioned earlier, but we are also looking at our own efficiencies in confectionery as we have to generate money we want to invest. So in 2024, we will have a moderate impact on our profits, but it has been already taken into account in the guidance at group level. So we want to keep investing behind our brands. So next year, we'll keep pricing and working on efficiencies to make sure that we protect our margins. And the equation is not an easy one, but we have shown so far that we can manage it, and we are confident that we can manage it further next year. So our strategy is focused on 4 key growth drivers: further accelerate KitKat; win with regional local jewels; pursue our value up journey and accelerate emerging markets. And now, I will give you more details on each of those 4 pillars. When it comes to KitKat, we want to keep growing KitKat as iconic brand owning the break. So we've been growing double digit in the past, and we want to pursue this growth in the future, while keeping winning market shares. We've been growing in both developed and developing markets, and we believe we can continue to do so, but we want as well to accelerate geographies like India, Latin America, Turkey. And this will be done by investing even more. So we have already recovered the level of marketing investment that we had before COVID, but we want to go even further. We want to accelerate and to go to what we call excessive share of voice, even if it's actually within classical media, but also on digital, but we want really to overinvest to reach the full potential of KitKat. We have now increased manufacturing capacity, which will enable to support this growth ambition. So how do we want to do that? So we want really to leverage more the power of global -- on this global brand. So we studied a lot about consumer and the break because we thought that consumer are not taking enough breaks. And actually, we saw that it's not the case. Consumers are taking breaks, but the quality of their brake is compromised because they're always doing something else. And I think you are experiencing it yourself probably, we are in the break, which we are on our phone. We are answering to an e-mail. We are doing 10 things at the time. So the quality of the break is becoming critical. And KitKat is supporting consumer to do so in a new campaign. It's a global one that will have a global framework and then some local execution, as you could see on the Queen when you enter the room. We will leverage the song of Queen, I want to break free, and we will have only top-quality assets. And you can see now our global campaign in the markets where we tested, 90% of our copies are in the top quartile of asset quality. We're also moving from local partnership to global ones. So this year, we partnered out with Candy Crush. It was a partnership that enables us to activate the game in store, but also we were the first chocolate bar within the game of Candy Crush. And this has been done in 40 markets globally. And then we move to the next level, that is the partnership with Formula One. So we've just signed the deal to be the chocolate bar of the Formula One for 3 years. And it's a sport which has a growing base of fun, 700 million globally, and this will enable us to accelerate both the growth and the brand equity of Kitkats in the future. We want as well to expand the brand into new occasions. So first, within chocolate. But in other mid-states. So if you look at KitKat, which is consumed more for having a break by individuals, now we are moving into sharing need state with the tablets, and we are delivering this multipicture and this experience, I was mentioning earlier and that you will be able to try tomorrow. So this is great because it's a 100 million platform and it's really incremental business for the brand. We're also expanding beyond chocolate. So in ice cream, for instance, with a very successful KitKat ice cream, but also in hot beverages. Now when we look at how to win with the local jewels. We've been going through a very fact-based analysis of which all these tools. And we've chosen brands which have very high awareness, which are loved by consumer, have high repeat purchase, thanks to the great quality, have a high CMC-enabling investment and also ability to grow. And these are the brands behind which we want to invest now. And we want to have 95% of our paid media behind KitKat and these chosen brands. When it comes to our value up journey, we are very happy to have a base of mainstream brands, which are loved by consumers because this base is very solid and very appreciated in times of economic rises. But we want to value up and we are bringing added value to consumer that they are ready to pay for. We are going under the platform of Chocobakery under Nestle in Latin America and the MILO as well in ASEAN with huge potential of growth for these platforms. We're also going even stronger into seasonal, which is a very nice opportunity where consumers are more emotionally linked to the product and are ready to pay more for this type of product. And the ultimate premiumization is the boutique and Marcelo will come to it in a minute on what we are doing in LatAm. When it comes to accelerating emerging markets, it's a key priority for us. Nestle is very well positioned in emerging markets, but we still have room to grow. And we want to do so with KitKat obviously, but also with the local chosen brands like Damak in Turkey, like Munch in India, [indiscernible] in China, Milo in ASEAN and we will win because of increased investment, but also increased distribution because we still have a lot of potential in gaining further numeric distribution. We will have also tailored offer for specific channels, which are growing very fast, like the specialty snacking channel in China or some boutiques in LatAm. So now that you have seen the overall approach, Marcelo will show to you how they are deploying it very successfully in Brazil.

Thank you, Corinne. So I'll give you more flavor on how we do it and how we implement it in the local market, what it is this global strategy in contract? So we are going to talk about KitKat. The local jewels in the case of Brazil, is Nestle and Garoto and how we pursue the value app journey with the chocobakery but also with the chocolate boutiques that is very, very specific for Brazil. So first, as case did also, I'm going to explain a little bit what is Nestle Brazil. So we have a flavor, what is Nestle in Brazil. First, nobody knows it's a Swiss company. We have been there for 103 years. So nobody was born when Nestle first established in the country. So we have 99% of in-home penetration. Virtually every single home in Brazil has a Nestle product. We are top of mind in many categories. We lead in 15 of the categories that where we play, and we have 22 million consumers in our digital base that we interact with them. But then how we do the implementation there? Our implementation is absolutely data-driven. We have, as we speak now, we have the data of the sellout of last week. This is an absolute competitive advantage. But the best competitive advantage is not only this is that we can project the next 12 weeks. We have the numbers of us, not the competitors, but it's enough for us to know that in a week in the future, 52 or the third week of the next year, we have a challenge, so we can act as a leading indicator and not just crying because we had a bad week or something like this. So this is absolutely a competitive advantage. So we act as a small, very agile company being a big Nestle company there. But then we have a sales force that acts absolutely as One Nestle, and we win where the sales force must win. For example, in the pharmacy channel, the people that manage the total Nestle portfolio is Nestle Nutrition because we have a better ability to win. We are not going to visit the pharmacy with 5 different sales representatives. So we simplify towards the outside, and we don't bring our complexity to the outside world. This is also very important. And we are -- of course, we achieve 600,000 point of sales every month. And we have been chosen as the best supplier of our customers in the Advantage Group. So we are very proud of that. This is really thinking on how to win outside. And of course, our executions, I mean, our merchandisers are not merchandisers. They are engineers, architects, aviators. They do fantastic things at the point of sale, that it's absolutely unmatched. But let's go back to KitKat. KitKat has a history in Brazil that now we see all the glories, but we tried 3 times. The first 2 times, we wanted to cut some corners, do the things the way we did. The second time you have an idea, we were importing from Russia, the product. And of course, you have to give your salary to buy a KitKat. So it was something very challenging. And when we decided to do it the right way, so we invested we committed, and then we started to have a fantastic success. Today, we have 4 big lines of KitKat. We are according to the Brazilian #1, but according to the Brits #2 in terms of KitKat capacity worldwide, manufacturing capacity. And we have been very close to our consumers. We have been recruiting Gen Z from day 1. We are very close to all the festivals, Rock in Rio, the town. We are very close to our consumers. And we -- of course, you can see again our execution on the point of sales are absolutely astounding. And when we talk local jewels, we realized that we had a great ability to win from Rio to the north, the yellow part is Garoto territory. So let's focus on Garoto there. And from Sao Paulo downwards is Nestle territory, and we focus on Nestle. But this does not mean that we don't work together. The innovations are in the same platforms of technology. We simply implement [indiscernible] you can see here on the bottom to the right. When we have the Choco Trio, the biscuits there, we bring this in the north and the Garoto in the South under Nestle. And this makes us absolutely execution powerhouse. And of course, in terms of communications, Nestle is much more on the big brother and all this kind of sponsorship and Garoto is much more into the regional, very important festivals in the North or Northeast of the country, and the results are also astounding. And when we talk to our value app strategy, you saw on the -- in the outside, the ChocoTrio has been also a fantastic success. But here, also, we failed at the beginning because the normal idea is let's put the biscuit together in the tablet. And suddenly, the tablet looked like a canoe because the different densities of the products make that you could not have enough. Instead of giving up, said, okay, let's put some cream in between and this solves the problem. And this made even a bigger competitive advantage against the competition. It's not so easy to do it. So we are there, and it's working very, very well. So these choco biscuits or chocobakery journey is to bring the best of biscuits into with all that we have in the chocolate part and how we can work together on this and make a success. Also, it helps to have a bigger size impression, but also better heat resistant in the product. So these are the things that we are bringing all the time, and now we are the manufacturing hub for all LatAm in these technologies. Corinne mentioned boutiques. Last year, we acquired a brand called Copenhagen. That is 100 years old, 97 years old, exists in the market, and it's the symbol of chocolate boutique in Brazil of premiumization, but it's not as a small boutique chain. We are talking about 1,300 boutiques throughout the country. Only this year, we opened 212 new boutiques. So it's a booming segment with a lot of potential even to grow and to have a better success. And we also were very interested because 62% of all the tickets in the boutiques, they come with a coffee. So the coffee is the reason why you go every day to this boutique to have a coffee after lunch, with a small chocolate and all that. So like this, you have your dessert and you feel good. And this allows us to have a possibility to sell extra products. And these products are 5x with -- 5x more expensive than a normal chocolate in the retail environment. So it's really a creation of value that is working very well. So -- and of course, we also have an ecosystem of a loyalty program and it's really developing very much. The last thing I wanted to share with you is that you all know that we, in LatAm, we have been implementing the Nestle virtual circle for a long time. And this is a reality. And the good thing about the virtual circle, it sounds -- it doesn't sound sexy because it's too simple. But this is the genius of it because you can explain to everyone and everyone is on board. From the simplest person in the factory or in the point of sales to the Head of Market and we understand everybody how we do it. And then you bring the virtual circle together, alive by some very precise meetings during the week, the day, the week, and the month, looks bureaucratic, but it gives the company a great sense of urgency and speed. You remove every day, every week and every month, all the blocks on the way, and you can accelerate and implement the next challenge. Since this is a wheel, you will always have challenges because you never finish. You just do it and you keep improving. So just to give you an example, we have reduced 34% of our SKUs in confectionery, only in confectionery. Our factories are best-in-class. Our factories is really you think you are in one of those Sci-Fi movies because you have a lot of robots working around the lawn and all these kind of things. We have an automation of 82% in our confectionery factories. We have an 87% of capacity utilization and 88%, what we call asset intensity, then we can explain afterwards what it means. We have prioritized our PFME investments in 3 brands: KitKat, Nestle and Garoto. Like this, we are also very focused. We have other brands in confectionery, but we only focus on these 3, and we out invest -- we invest more than any competitor in the market. And the market share. The market share is a story of success in confectionery in Brazil that we used to be 15% bigger than our main competitor in Brazil. Now we are 40% bigger than -- and it's -- we are navigating always to improve this level. And the competitor is a good competitor, which is good for us to have someone that keep us on our toes, so we cannot feel complacent. And we have been accretive in terms of growth and accretive in terms of profitability in the confectionery award for Nestle. So the -- I wanted to share with you because this virtuous circle is not PowerPoint. This virtual circle, you can -- you are all invited to come and we are going to show you how it works in reality. What are the goods, the bad, and the ugly that we are every day working in order to improve. So with that, Corinne?

For the good. Thank you. So to summarize, we showed to you that we are playing in a very attractive category. We are #3 in our footprint and KitKat is the #1 chocolate bar globally. We are leveraging the strength of Nestle, which is made of global and local. We are focusing on 4 growth drivers in a sustainable and responsible way. And these are further accelerated KitKat or iconic global brands making choices and focusing investments behind our chosen local jewels, pursuing our value of journey and accelerating emerging market, like you saw the case brilliantly explained by Brazil. Now it's time for questions for us and our food colleagues, and I hope you have many. Thank you.

So it sounded they like Marcelo was making a pitch for the next Capital Markets Day to be in Brazil. So I think we'll have to talk about that one.

It was another problem.

Good. So let's take questions. Patrick, why don't we start with you?

Patrik Schwendimann, ZKB. Maggi wants to go into new markets, where do you see the biggest potential in terms of new markets? And what is the potential for Maggi in the U.S.?

Thank you for the question. I think we want to go into new markets. But first, we definitely have headroom in our existing markets. And as Remy showed in 4 key markets in airway, we still had gained up to 500 bps of penetration. When we look at new markets, I think it's a choice between portfolio, for example, in Europe. We're looking at our noodles portfolio to expand into current geographies, but also into new countries where Maggi is a relatively new brand there, and we see a great potential to look at that as a pan-European platform beyond countries. U.S. is the first step. I would be cautious to call out more than that. It's the first step. It's a big market there, but we do want to make the Maggi brand present. I'm really confident of the range the team has developed. It's got the best of world cuisine across Indian, Korean and the Chinese platform, and this helps us then to accelerate growth globally. Maybe Remy will comment more within the context of airway.

So obviously, what you have seen was just a snapshot that is related to it. And we talked about cooking solutions and small meals. So the opportunity is in reality to have the 2 pillars when we're talking about that. And Philippines is another great example where we have an amazing business in Cooking Solutions, small meal is an opportunity. That's 1 example that I can share with you. So those are the areas. That's a category that has been growing and we believe that we can further continue to grow on that.

Vika?

Victoria Petrova, Bank of America. My first question is on Frozen. It's around 4% of Nestle sales in the very U.S. focused my understanding, and if I'm wrong, please correct me, it probably was a very negative category recently. You mentioned pushing the limits of categories through innovation air-fryer driven proposition. And then you mentioned that you will fix pizza. Does it involve pricing? Has it been done? Is there any change in pricing architecture going forward? That's my question to the food team. And then on the KitKat and confectionery. Obviously, when we look at recent results, there was some pushback from European retailers. Do you see it as a one-off, just business as usual because, obviously, we know that there is always a pushback on price increases. Is there something new happening there? And in the same context, but more broadly, we heard that there is some inventory management in LatAm. Does it involve confectionery or is it coming from other -- if it's coming from other divisions, then I don't expect any comment from you. It's two questions.

Thank you for the question. I'll go first, maybe and answer the pizza question. Yes, we've taken price pack architecture changes, both through promotion and through pricing, also looked at the entire portfolio of brands between [indiscernible] to see what's the best way for us to compete. I'm happy to share that, that has started giving us early signs of green shoots that the unit share starts to come back already showing that some of the pricing actions at least on volume is showing the returns we wanted.

Steve, do you want to build on that or?

No. I mean I'd tell you, many of you, we've chatted about it, but it's ultimately getting the price point back down to the right price point where we price more aggressively. That's done, and you see it in the marketplace today. You see it as the comment will be positive volume share probably on a 52-week basis also at the end of the year. So it's really lifting volume across the category. And one of the important factors is segmentation of the role the brands need to play across the different price points, and being very clear how that works across that -- across our portfolio.

When it comes to KitKat and confectionary discussions in Europe, I mean nothing new, is the usual healthy and positive and constructive discussions with our customer friends, leading sometimes to some short moment of not delivering. But I mean half of this has already been solved and the rest is ongoing. And I mean our competitor has the same in the last quarter. It's just a different phasing of these discussions.

And in the terms of inventories of our customers in LatAm is more like they are trying to reduce their days on hand. So because of interest rates, they are trying to reduce their -- so we are working in optimizing the level of inventory adequate in order not to affect their own shelf availability and distribution of our products. But there is no overstock, nothing like this.

Yes, I wondered if we could have a bit of an update on how a vital pursuit has landed because there hasn't really been much comment on that. And just generally, we're kind of hearing about eating more healthily but at the same time, there's launching noodles into the U.S., which obviously are ultra processed. And with the new Health Secretary appointment in the U.S., I'm just wondering how your strategy is going to evolve in respect of kind of the less healthy part of the food portfolio.

Thank you for the question. There are a couple of questions in that. So let me try and unpack the different threads of those questions. I think firstly, on Vital pursuits. We've just launched it in the U.S. It just hit the shelves, early talk about the performance, but we are quite encouraged by the repeats we're getting there. I think what we like to call out is and complement the team who saw the opportunity of looking for a GLP-1 companion in the area of meals and went quickly with the proposition fit for purpose with the right calories, the right portion size, the right macro and micronutrients. And that shows the power of innovation and speed at Nestle. So I think that's what we'd like to say on Vital Pursuit. Noodles, I think -- and the larger topic of ultra-processed that you're bringing through, I think I'm really glad you bring the question up because this topic needs a lot of clarification sometimes in a very open and transparent conversation because, as you know, there is no commonly agreed scientific terminology for ultra-processed. In fact, all the techniques and ways that we prepare food, whether it's fermentation, picking, freezing, baking, drying, steaming, these are all techniques to basically preserve the quality of food, make sure the nutritions are there, make sure taste is there, make sure affordability is there, and sometimes, most importantly, food safety is there and noodles plays extremely well to those characteristics. The technologies we have in noodles actually complement the culinary science of how Ramen used to be made by hand years ago, and that's what we bring to life in a very affordable and a very wholesome manner to the consumers' tables. And therefore, in that context, we are launching that in the U.S. As far as the last question on how we see the Health Secretary and his outlook. Again, I think it's very early to comment about what threats that would take on. And I would be cautious to comment more than that at this stage.

Two follow-up on confectionery. The first one on -- you mentioned that you had pricing already this year. What kind of pricing are we talking for next year? Are we talking double-digit pricing? And what kind of elasticity are you seeing? So are we expecting, I think, historically, elasticity has been 50% in the category. It's been less post-COVID but what kind of elasticity do you expect if you were to put this kind of pricing? And my second question is on the growth rate, 4% to 5% for the category. It sounds a lot. So I don't know whether there's pricing benefit there. But if you think that growth rate 4% to 5%, I think, is the second fastest category after Nestle Health Science. So in terms of capital allocation, how do you think -- I mean, confectionery never really run very highly, I think, in the strategic priority at Nestle. So I just wanted to understand whether if that category growth is real, there is a change in the way you want to manage that category.

So on the first part, you can imagine that I cannot give you some key elements on pricing as it is really sensitive commercially. But we really go for this moderate pricing and balanced pricing, pricing as much as makes sense while still having an eye on volume. Historically, you mentioned 50% on elasticity, I think what we've seen is a moderate down trading. And it's a category, especially chocolate, which has only 5% of private label globally. In Europe, it's a bit more, but in the rest of the world, it's a category where private label are very low and where the down trading is pretty modest. But even if you would have some, we are lucky to have in our portfolio, biscuits and also part of sugar in our portfolio, which can also complement pretty well the evolution on chocolate. Anything you want to add on?

Yes. What we can do, we cannot just simply do a cost-plus. So what we are trying to do is to work on the right packaging, right channel, protect a little bit the entry level of these and premiumize. So these are the things that we are working every day in order to make sure that we don't -- we do pricing without losing market share. And this is very sensitive and very delicate the way we implement it.

And when it comes to your second question, yes, we are planning -- when we say 4% to 5%, we plan more or less 2% to 3% rig and 2% to 3% pricing. And yes, it's a category which is growing and which has been growing in the past. Now when it comes to the priority within Nestle, I mean, first, we are driving our own virtuous circle and we will free means to invest more behind our own brands. So we believe there is still a lot of potential in really focusing more media investments, putting more behind winning brands and to generating our own funds to accelerate our growth. And then you saw this morning also in the platform of Laurent, one of them is Choco Bakery. So definitely, the group sees potential in confectionery. Of course, I'm not the best advocate to be neutral in that sense because I think it's an amazing category. But definitely, the group, you see is still leading in other category. We are more the good surprise that will surprise all of you in the future.

It's just a question on premium within chocolate. I think premium is about 20% of the global chocolate market but growing rapidly, especially in emerging markets where premium is a very small percentage of the total market. You've obviously got a KitKat brand where you premiumized it in markets like Japan. But how much can you premiumize that brand, KitKat or are you able to use other brands that you have Kaye, for example, to try and globalize in premium? Or do you actually need to acquire in premium. We've seen, for example, Mars buying Hotel chocolate. I was interested to understand from your perspective, how big a priority is premium? Do you have the portfolio to attack the opportunity?

Now as you said very well, premium is only 20% of the total market, still growing 10%. We look more at the valuing of opportunities. So KitKat, but also in the -- as we presented on Choco Bakery, for us, it's more on valuing up, bringing additional benefit, additional experience to consumers that they are ready to pay for. And when we look then at channels, specifically, you saw in Brazil, the experience of Copenhagen, how you can also deliver a premium experience and ask, therefore, for a premium price. Maybe you want to comment on Copenhagen or...

No. I mean I already spoke about Copenhagen. If you want to know a little more, I can go.

Okay. We probably have time for one more. Tom, do you want to take it?

Great. We hear quite a bit about the bifurcation of the U.S. consumer between sort of higher income, maybe asset-heavy lower income asset-light consumers and lower income consumers being in a little tougher situation. I wondered what you could say about incrementally the sort of demand in your categories and maybe broadening that out a little bit more to the U.S. overall? And is that leading to more value engineering on your side to try and make cheaper products more at a better margin for you?

Do you want to frame that overall, and then we can take the categories.

Yes. I'll lean this way, just so I stay on the mic. But yes, the bifurcation of consumer is a clear trend that's been going on for a while. And you see that bifurcation across the categories where premium continues to grow and the bottom part of the pyramid in the category actually continues to grow. Now for us, the reason in many of our categories where we have multiple brand strategy to actually sell against all of the stratas within the category, so we can deliver products at the opening price point, be competitive for those households and work the journey all the way up to premiumization ladder. All the way, if you take coffee, for instance, we can start at Nescafe, Seattle's Best Coffee, can move to Starbucks and then move to Nespresso. And so you work them through that premiumization journey as they go. And the same thing and you have competitive products with margins -- good margins at the entry price points as well. So it's really this idea to have the right products at the right levels for the entire category because we want to be able to serve across all the price stratas. We don't see that trend -- I mean stopping. I mean, we see this bifurcation of high-income consumers doing very, very well in the marketplace and low-income consumers until inflation normalizes a little more. We don't see any deflation and their wages are going to have to catch up, and then you'll see the lower-income households start to actually come back in terms of their ability to manage around the inflation.

And then just to build on that for me in context because that's where a lot of the mainstream and the affordable consumers come in. I think our approach has been threefold. One, like we mentioned, choice of different brands to address different segments. Secondly, for the people who cannot sometimes afford to go out of home, how can we bring those out-of-home experiences in a simple way at in-home. So the Asian-inspired Mings that I spoke about, Mexican-inspired Tapatio but also we launched, for example, experiences. So the #1 program on Amazon Prime, Yellowstone, the Meals division did an activation to have 4 SKUs, which are inspired from the TV series. In fact, that has got initially great reaction to be the #1 new product in Walmart in that category. So how can we bring those experiences that are out of reach in reach for the consumers. And thirdly, of course, making sure through price pack architecture, we are smart in addressing all the segments and all the channels. That's how the Meal division is. Engineering of products would be in fact the last priority or not the priority because we want to put more food back in food. And what we've been doing over the last several years, whether it's tofus, whether it is pizza to actually put back what the consumer values more into the products to improve our quality and to improve the overall value offering.

Great. Thank you, everybody. So we will take our last break now before coming back for the innovation and marketing session. Let's start that at 5 past 4 sharp. So please enjoy the final coffee break and see you in here at 5 past 4. [Break]

Okay, ladies and gentlemen, welcome to the last session of today. During the session, we will explain to you how we will accelerate growth through focused high-quality innovation and excellence in marketing. I'm Stefan Palzer. I'm the Chief Technology Officer and Head of R&D of Nestle. And I will share the stage with my colleague, Bernard Meunier, Head of Strategic Business Units, Marketing and Sales. And later, we will be joined by our Chief Marketing Officer, Aude Gandon. So what will we cover today? Well, we will talk about our unique assets and our approach to innovation. Then we will also explain to you what we concretely do differently to increase the financial returns from innovation. And finally, we will highlight what we want to achieve through those improvements. Let me first talk about our assets, and you heard already today a lot about them. There's first, our unique company, heritage, only Nestle's spirit of consumer-centric innovation, which is still today at the core of this company. Next, we have our 31 global and local billionaire brands, a real powerhouse of brands, which are loved by consumers around the world. We also have, and you will see that also tomorrow, industry-leading science and technology capabilities. And we will share with you our technology platforms and how we leverage those across our business. So economies of scale in R&D, if you wish. We have also access to a huge number of households with 1 billion products which we sell every day. And let's not forget also our teams in the 188 markets, which allow us to maintain close proximity with our consumers. Now where are we with innovation at Nestle. Well, over the last few years, we have continuously improved our innovation process, which starts with strengths and opportunities, then we move to an exploration phase. We develop the value proposition, and then we launch, we deploy. And finally, we have the post-launch phase. So what have we done? First of all, we have simplified our project management approach and we introduced digital tools along the innovation value chain. That allowed us to reduce the average time to market from 32 to only 12 months. I believe there's hardly any company in our industry, which is achieving that. Secondly, we reinforced our technology platforms and specifically the ones with the highest strategic relevance. Today, 80% to 90% of our patents, which we file each year -- last year, it was 440 and the area of those technology platforms. Overall, we talk about the patent portfolio of 22,000 active patents amongst them all to the country extensions. Finally, we also strengthened our innovation pipeline for our billionaire brands. And that's already leading to some improvement. For instance, if we compare the cumulative value of all the innovations which we launched this year with all the innovations which we launched in 2022, we see a 40% increase in the expected value of those launches, year 4 value of those launches. But is that enough? No. We have to go much, much further. We have to extract more value from our launches, and we have identified areas of further improvement. Here, you see our innovation funnel, how it used to look like. First, you see that very easily, it isn't selective enough. And as a result, we have many small projects which are going through this funnel, which are not filtered by this funnel. As our CEO said, less is more. So we have now here a clear mandate to reduce the number of projects, and we will do this. Second, we have rolled out our top innovations often to slow, and that was also a comment received here from this community and not to all the relevant markets, so we are extracting not the full value of our top innovations. Third, we haven't ensured that our key launches are always adequately supported commercially. So if you launch and consumers are not aware about the innovation, well, it's not effective. So that we have to change as well. Finally, we don't always deploy our best practices across the entire portfolio, across the entire company. We have these pockets of excellence, and you saw a lot of them today, but we have to roll them out more consistently. In consequence, it always had been difficult to extract the full value from each launch and to maximize the returns from our investment in R&D, but also from our investment in marketing. As a result of this diagnosis, we concluded that speed to market is a precondition, but it's not sufficient. We have to move to speed to impact. And now we define the new framework how to achieve that.

Thank you, Stefan. And indeed, we need a new framework in order to change the way we extract value from our innovation engine. We need to significantly increase the value we extract from all our efforts. And this new approach as what was introduced earlier today is the fewer, bigger, better framework. Now how does the new funnel look like? You see the difference with the previous one. Of course, it still starts by identifying those mega trends and consumer insights that will then lead to the generation of many new ideas for products and concepts. But where traditionally, we would then translate all of these big -- sorry, all of these ideas into new product developments, clogging the funnel with hundreds of development projects. Now we want to ruthlessly focus rapidly down the funnel on fewer, bigger bets and a handful of strategic seeds that are selected for the highest potential. So that is the new prioritization that we're introducing. We've never had, frankly, such a prioritization at Nestle at a global level. This is the fewer the #1. Now we want to make them bigger, which means ensuring the superiority of these big bets and seeds across the consumer equation on all of these parameters, we want to roll them out at scale and speed across more geographies. And we also want to give them the commercial and marketing support that they deserve. And finally, we want to execute better. Better is about execution excellence, enhanced by the highest consumer and customer centricity. So that is the funnel we want to have going forward. It will deliver much more value from our innovation efforts. Now as I said, it all starts with identifying those key consumer trends, and you've seen them earlier on the chart on one of the slides of Laurent. Starting with Health for Life. Food as Medicine is growing fast. 70% of people declare they want food that improve their health. We also have more than 40% by next year of the world population above 50-year-old, each with their complex and specific needs. Another example is mindful snacking the fact that there are more and more snacking occasions, 30% of people say they eat regularly on the go, more meals per day up to 7 meals per day in the U.S. Smart shopping, the polarization is not new, but it's stronger than ever. And you've heard this earlier today. So premium is growing. At the same time, affordable nutrition is a great opportunity. Digital, the newer generations will not meet our brands in classical media, they don't watch media. We will meet them on digital platforms on social media, and at the same time, connected commerce channelless commerce is growing very fast in all geographies around the world. As to the last one, we will illustrate how we leverage those megatrends as well in innovation, elevated experiences and eco-conscious consumers looking for more sustainable offers. Based on these megatrends, we have identified 6 high-growth opportunity areas, platforms within which we have developed innovations that answer specific consumer needs. And you can see a number of those on this slide that answer those needs. For example, Health for Life, which is a megatrend, is being translated into a range of nutrition across life stages as we've seen with Serena and Abigail including healthy longevity. Mindful snacking is leading us to double down on ready-to-drink and ready-to-eat innovations. The same is true for the other opportunity areas, and I will now show you two concrete examples that we have seen earlier on. The first one is the modern cooking platform, how we bring Maggie innovation to this platform. It starts with identifying those new elevated experiences that are specifically important for food. People want new experiences in food in particular ethnic world cuisine. But at the same time, it's very important for them that we offer convenient, easy-to-cook options that deliver tasty and healthy meals. Maggie is the helping hand that helps you cook the food you love from fresh and embracing then on top the emerging appliances like air fryers as well as our proprietary flavor systems we are able to come to life with new products as part of this modern cooking platform. Same is true in the case of combining the desire for new elevated experiences and the desire for more sustainable consumption. Combining the two was at the origin of the new coffee shop experience at home innovation platform that David showed you earlier, the Nescafe Dolce Gusto Neo. Now how do we speed up both the generation and more importantly, the selection of those hundreds of ideas. As I said, fewer is not about fewer ideas. Quite the contrary, we start with more ideas than ever. The fewer is about the ruthless selection to come to the few big bets and strategic seats. So for this, we have developed a suite of Gen AI powered digital tools that allow us to: Number one, tracking real-time consumer trends and insights across multiple social media and digital platforms; Number two, ideate concepts in a matter of minutes, where it used to take days or weeks to brief an agency and come back with a concept, it now takes minutes, thanks to Gen AI. And then testing those many ideas of new concepts and products against synthetic persona in order to then narrow down the options to the few that we feel have potential and will then go into real-time with real consumers research. So it's not that we stop with synthetic persona. We will still research with real consumers that we'll do the selection in the first step, thanks to Gen AI platforms. So this proprietary suite of data and technology platform are a good example of how we invest in digital tools at the service of fewer and bigger wins. Now we come back to the 6 strategic seeds that you've seen -- sorry, 6 strategic bets -- big bets and seeds that you've seen earlier today. So we're confident that we have identified those bets that will make a difference. We haven't started this process in the last 80 days. We've come to the prioritization in the last 80 days. But of course, those seeds and those platforms were existing in our pipelines that were maybe buried in a very tube-like funnel, as you've seen in the previous slide, and we have unearthed those seeds and big bets, identified those that have the biggest potential and decided to go single handedly against growing them in the marketplace with the right level of support. Let's see now with Stefan, how we ensure that those big bets indeed have the highest chances of success.

Well, that's an important question. What do we do different with those projects? Most importantly, we implemented a clearer end-to-end governance framework around those projects. This involves R&D, strategic business units, zones, but also the launch markets. This governance ensures that our big bets and also the strategic seats are prioritized across the organization and that we have ambitious but also realistic business plans in place, that we also allocate a big part of our resources to those projects. Big Bets should get big funding, that we cover more markets in the deployment of these big bets and that we get direct and quick feedback from those launch markets that we can address problems effectively and rapidly. And we are also tracking the progress with these big bets with the top 5, Laurent has also highlighted, even in the Executive Board. That's unique. We are tracking on a monthly basis, the brokers with these big projects. We never had that before in the company. I'm working very long for this company, but it's the first time that we do that. Finally, the new governance approach also helps to deploy best practices more completely and across the entire organization. Let me now move to the development of the value proposition. How do we ensure that what we develop is consumer-centric. But at the core of each of our big bets, there are key consumer benefits. Here, you see an example from our nutrition business and health science business. Nutrition across life stages. These are all the benefits which we offer to our consumers by the project, the innovation we bring to the market. You see that we have solutions for the prenatal stage, but also solutions for the high age. You see that we are addressing your consumers, which are healthy, but also which have health issues. So different health conditions. And that's not shown on this slide, we do that for humans, but also for pets. Same benefits. And that helps us to deliver economies of scale in R&D. Because finally, you work on solutions which you can roll out across this breadth in age and health conditions and also that, like I said, for humans and pets. We are probably the only company which covers this breadth in age, health and even species. There's no other company outside Nestle who can do that. Now in order to deliver those health benefits, we need two things. We need a strong clinical research program, and we need technology, technology platforms. I want now to explain to you to illustrate the strength of our clinical research with one example. It's an example from the prenatal maternal nutrition stage. Well, we conducted one of the most comprehensive -- one of the largest clinical trials in maternal nutrition. I called it always it's the first in its kind clinical trial globally. We enrolled 1,700 women already in the prenatal stage. So even before conception. Then we supplemented here with using probiotics, but also micronutrients and bioactives. And we continue this supplementation during pregnancy, until birth and then even during breastfeeding. We followed the offsprings during this long trial, and we discovered several breakthrough things. So these breakthrough discoveries are quite amazing. On one hand, we could show through this trial, which was, by the way, covering three countries in two zones, we could show that we can reduce the average time to conception to get pregnant, specifically in overweight women quite significantly. We could also show and that was a very amazing outcome that we can reduce here the risk of preterm birth by up to 60%, which is massive. It's really a discovery, which is amazing. And then also the risk of postpartum hemorrhage was significantly reduced. Finally, we found also an increase in breast milk quality. For instance, you see much higher vitamin D levels, which is very important for the health of the mother, but also for the health of the offspring. Now we started the rollout of first maternal nutrition products. The first products are hitting the market already in Brazil, and we are looking at the rollout across different markets globally. So really an amazing discovery, a very significant clinical research study, which we conducted here. But we need also cutting-edge technology. And here, you see our technology platforms. They are very important to develop the product and to deliver additional benefits. Why those technology platforms? Well, we selected them based on opportunity areas and key consumer benefits and Anna, Abigail, but also Serena referred quite frequently to some of those platforms in the previous presentation. We cluster those platforms typically in two groups. The first one are the cross-category platforms. And these are platforms, which we can roll out across different product categories. A great example is here our biotics platform, where we develop, pro, pre, post, but also synbiotics, and we use them across our businesses. You will see that also tomorrow we use them for nutrition -- for our nutrition business, for our Health Science business, but also for our Purina business for our pet food business. And sometimes, it's even the same probiotics, huge economies of scale here. Then we have also those category-specific platforms, and Anna referred to the coffee extraction platform and David did as well. Coffee roasting and brewing, we have really competitive advantage here. We are the only company who manages to bring 65% of the bean into the cup. If you brew a filter coffee at home or you get a coffee from a full automat, it's only 15% to 20%. So it's almost 5x more. That means, first of all, you have lower input costs. So you're relying a bit less on commodity prices. Secondly, you can offer the coffee at a very affordable price point. And we heard how important that is in those days. So Nescafe is not only the most consumed coffee like David rightly pointed out, but also the most affordable coffee and the most environmental-friendly coffee because the carbon footprint of a cup of coffee is mainly depending on the green coffee you use to brew this cup. So if you can reduce it significantly, well, the carbon footprint is much better. So that's while we have a huge competitive advantage, thanks to our proprietary extraction technology here. You might say, well, that's all at the cost of taste. David mentioned that we have 85% of our portfolio taste preference in blind tasting. And the remaining 15%, we have parity. So we are not losing here in taste. Contrary, we have preferred products in the market. So these platforms we are leveraging now across our different categories, our different brands, our different formats and our different geographies. Tomorrow, you will see some of those platforms -- actually seven of those platforms in action. So we will show to you those platforms, explain what's inside the platform, what is the latest technology generation but also what's the latest innovation, which we are bringing based on this platform to the market. Well, we also worked on digital capabilities to support in the innovation process. Our digital activities span here from ideation and discovery until digital tools to support the design of entire lines and industrialization of innovation. The base is always a solid data foundation. You can have AI, but NII is really meaningless if you don't have good data to feed the AI to leverage the artificial intelligence. I'm very proud, since last year -- end of last year, we have now a database of 120,000 recipes. Basically, all the recipes in Nestle fully characterized in this database and fully standardized. We have also a huge welds, a pressure of clinical trial data and an internal biobank. And let's not forget, and that's not mentioned on the slide also a huge set of data coming from our lab and pilot plant trials. This we can now leverage. And we use AI, for instance, to make new discoveries based on those existing data. So you don't conduct a new trial. You just take the existing data, you possess it with artificial intelligence, and you can make new discoveries. We launched this year already four new products based on old data, which we possessed in this way. We can use this data or to the model recipes. You can imagine with all the constraints you have in those days in developing a recipe, you have cost constraints, you have nutrition constraints, taste constraints, sustainability constraints. It's getting very tough for our product developers to come to the conclusion of the best recipe. Now using those data and artificial intelligence and complementing even with external data, we can now model recipes. So we have a recipe engine based on AI. We use generative AI also in the prototyping, for instance, of coffee machines and packaging. Last but not least, digital twins for industrialization enable us to plan lines -- entire lines and to balance those lines before we industrialize a new product much better. Then we have the product. But before we go now to a global rollout, we have to ensure that the quality of this product is simply outstanding. And we have to talk holistic quality. We talk taste. Of course, taste preference is the absolute base. But then we started now to test also much more packaging, the appeal of the packaging, the functionality of the packaging. We are testing the concept, the communication and also how incremental the innovation is. So we're looking at each innovation much more holistically. Our aim is that for 2025, 100% of our big bets are preferred in all those attributes in all those dimensions. Then, of course, we need to launch those innovations in the marketplace, and we need to activate them via investment in marketing, right, and high-quality marketing indeed. And after the fewer and the bigger comes the better. So as we stated earlier, our new approach is also about better execution through an upgrade in how we execute those big bets in our markets. And it's about, as we said earlier, accelerating their rollout across more geographies faster. With the right level of support, often, we have done this halfheartedly in the past, because we were spreading our resources too thin across more innovations that we could swallow. And that is true for our marketing support, but it's also true for our commercial support. Imagine if you have to launch at the same time, 15 innovations in one given market, our sales force cannot handle that. Our customers will not list all of these innovations. They will do a pick and choose. And finally, maximizing the distribution, maximizing the in-store presence and impact. We have an outstanding coverage, second to none in the industry in terms of channels, and geographies across 188 countries. Nobody has the ability to execute in the point of sale as we do at Nestle. So in summary, new Nestle is about this focus on fewer, bigger bets that are executed better. Now I want to show and unpack 2 iconic examples of these big bets. We've seen the 6 big bets, let's see in more detail. Two of them. One -- the first one is an innovation that leverages a very strong insight. So if you look for where is the consumer insight, this is a good example because it started with a strong consumer insight into how cats love to bite into their food. And also, of course, about the perennial humanization trend that we see from cat parents about premiumizing the food they give to their cats. All of this supported by proprietary technology. I'll show you a little video, but let me just add, we've reached CHF 100 million already cumulative since launch on this innovation growing 40%. It will be launched next year in North America. We've seen this with [indiscernible]. And then later in LatAm and Asia and in Europe where it started, the Generation 2 is already coming at the start of next year. [Presentation]

So a great example of a big bet. That used to be a strategic seed and now is a big bet to launch elsewhere in the world beyond Europe. And another example, you've seen already briefly in David's presentation, it's about leveraging this emerging trend of Barista mixology at home that you see every day on TikTok. And also piloted by our state-of-the-art coffee roasting and brewing technologies. So our coffee concentrates gained an outstanding holistic consumer preference in research. And again, this is a good example of what started as a strategic seed but then is not elevated to the status of big bet for rollout worldwide. [Presentation]

Now equally important. We want to apply the same framework, the same fewer, bigger, better principles beyond innovation to rejuvenate our core business, which still will account for half of our growth. So Nestle or New Nestle is also about brand building and marketing excellence, supplying our FBB or fewer, bigger, better framework. And for this and to give more color to this, I'm delighted to ask Aude Gandon, our Global Chief Marketing Officer, to take us through this.

Thank you, Bernard. Good afternoon. So as Laurent mentioned this morning, we are currently reaching the marketing investment to be at 9% of net-net sales by the end of 2025. But in the spirit of the fewer bigger, better, more than 90% of this investment is actually going to be focusing on our key priority brands. We had an objective to reach 2025 -- 70% of our digital spend, the media investment in digital, sorry, by 2025, and we're already at 71% which gives us an amazing ability to leverage the 340 million first-party data we have been acquiring in the past few years for better targeting, but also better increase [ media online ]. Last but not least, we continue to lead in terms of online sales by which by being on the way to reach 20% of online sales. Media investment has been proven by decades of research as being the first lever for marketing efficiency. But the second one is actually the quality of our messaging. To be able to win the hearts and minds of our consumers, we need to make sure that our brands have the right message and the right execution. So we've been increasing our focus on the quality of our creativity. But of course, we've been facing with the proliferation of all the new media platform online. TikTok is 7 years old. But since they now you have all the new streaming platforms such as Netflix and Amazon one are launching new ad format as well, becoming also the new TV. But also each of these platforms have now developed more and more ad formats within the platform. To give you an example, if you really want to leverage and get the highest ROI on Instagram you need to have at least to leverage at least 4 of the ad formats, ideally 6. So you need to have a post, a reel and so on and so forth, which makes it extremely complex for us to be able to deliver the content that all these different platforms are asking for. To be able to do so and to really kind of answer the extreme appetite of this platform from content, we have developed a content engine, which is based on 2 different type of organization. The first one are our content studios. We have now 45 content studios around the world which are delivering new creative assets day in, day out for all our brands and all our markets. The second organization is our integrated marketing shared services. We have 9 different offices spread around the world, which is now reaching 1,800 marketing experts to be able to do the scaling and the automation of all this content, obviously powered by machine learning, AI and GenAI. Let me show you how it looks today. [Presentation]

But it basically shows that the marketing mix is becoming even more complex, we have a lot of different media platforms. We have a lot of different formats, a lot of different messaging, basically kind of coming day in, day out on all our brands. And so it's becoming extremely important for our marketers to really be supported by all by analytics to really understand what investment, what messaging is actually really contributing to market share gain and to growth. And so this is why we have developed our own analytics solution called PlanIQ. PlanIQ digests more than 40 different sources of data. So our major investments, the different campaigns we've done, marketing mix modeling, sampling, promotion, competitive activity, change in consumer behaviors. And for example, if you category can be impacted by weather, we can add things like weather, for example. And the app basically develops a whole campaign cockpit for every brand manager. They can basically track where the investment is going, what is working, what is not working and all this in real time, which means that as your campaign is happening, you can start to really understand what is the asset, what is the channel, what is the platform, which is actually contributing the most to your growth and then start to shift your marketing investment from one asset or one platform to the next. What it tells to that is it basically the support when they have to do the planning because it is also a predictive tool. The tool actually is being refreshed every quarter by machine learning. So every data we gather on all our different campaigns in all our different markets from around the world, basically gets more and more intelligence every quarter to be able to really support even more other marketers around the world. We already have deployed it in more than 22 markets. We are reaching 70% of our marketing investment under that tool to be tracked that way. We, today, have seen already a marketing efficiency increasing by 20%. Now let me hand back to Stefan and...

In summary, we hope we convinced you that we have incredible strengths at this company, allowing us to accelerate our growth through our new approach to innovation and also marketing. This includes better leveraging our unique assets, which I explained to you, our brands, our technology, our route to market, our consumers. It includes also rolling out a fewer, bigger, better model across the company, across our categories, geographies, moving from speed to market to speed to impact. Lastly, it also includes stepping up marketing excellence is higher and more focused investments but also more effective media plans. So in essence, we aim at generating half of our growth from more impactful innovations and renovations. And at the same time, the other half of our growth will come from rejuvenating our core business, ensuring enhanced category growth and market share gains. So we thank you for your attention. And now we open up for your questions. Thank you. .

Great. So let's move to the final Q&A session.

Fulvio Cazzol from Berenberg. Very interesting presentations. Regarding the IP, I know what you've highlighted in terms of patents, filing, et cetera. But what about for some of the active ingredients that you're using some of your products, HMOs probiotics, are they also -- do you have the trademarks for those? Or are they externally sourced from like [indiscernible] some of these other companies? And then my second question on the Gen AI tool that you have, where you sort of try to track megatrends and social intelligence, do you deploy that just on your products? Or do you do it also across competitor products to understand what are consumers really saying even about your competition?

So I will take the first question. IP, the patent, in some cases, active ingredients, which we develop ourselves. But in many cases, we have also active ingredients, which we buy on the market, and then we patent the application, meaning the benefit. And often, this is also enabled by clinical studies. So you perform this an active ingredient, the clinical study and then you can patent the specific application. So our IP is covering all type of bioactive ingredients, biotics. So that's all covered.

And when it comes to GenAI. So we track actually conversations. We still do, of course, classical market research. That's not bad. But you cannot cope with the thousands, millions of conversations happening at any moment online on all the digital platforms about any of our categories and also key ingredients or key methods of preparations, key meals and recipes. So this tracking of conversations. And then being able to identify those emerging trends, those emerging new ways of eating and drinking, that is what Aude has put in place, Aude?

Yes. Thank you, Bernard. So yes, we have a tool that we've developed all over the world, which is basically kind of doing a social listening tool. So you really kind of go and track the conversation. So you understand what is trending in terms of obviously trends. But also the way people kind of use a product, but also use other kind of products sometime that's also the way we can have some innovation. Our consumers can be extremely accretive in the way they see kind of new ways of using some other products. I think team showed the creamer with the [ Dr Pepper ] typically. And so that's also the way some of these innovations are coming to life.

James Jones from RBC. I have 2 questions, if I may. The 9% of sales that you're aiming for in marketing. Can you give us an idea how much that is going to be consumer-facing media and how that differs from the past. And secondly, it's really interesting hearing about the changes, the evolution of innovation and marketing. Obviously, you have some fairly unique things happening from Nestle perspective, but how unique is it compared to what the competition are doing?

I take the first one. So media, I won't give you the exact number. But definitely, the increasing of our main marketing investment. They will be disproportionately on media. As I mentioned, it is the first lever for marketing efficiency and marketing effectiveness to gain market share and growth. So we are definitely doubling down on our media investment.

And on the uniqueness and competitive advantage, what you've seen with our content studio network, that is unique in the industry, and we are leading there. Especially given our complexity, our size, our presence across all continents, all geographies, content is the new oil, the new currency that is needed tomorrow to have those one-on-one personalized conversations with our consumers without content at scale, there's no chance to go and personalize those engagements one-on-one. And the way we produce this internally instead of everyone going out and briefing agencies at lower cost, higher quality, GenAI powered that is truly unique. And we believe that this is a super competitive advantage going all the way to e-com. So why we are winning in e-com, why we are gaining market share in e-com, it's in part as well, thanks to our content engine.

And let me add to that. I consider also the depth of our clinical research really distinguishing us from many competitors. But also the technology platforms. And some of the technology platforms you see also had competition, but it's about the content of those platforms. You will see that tomorrow and how we leverage them. We are probably the only company who can leverage these technologies across such a wide spectrum of age conditions, health conditions and for 2 major of our businesses, meaning the Nutrition part and the Health Science part and, of course, the pet food business. And there's hardly any competitor who can do that. So we're getting huge economies of scale here in those technologies. Hopefully, we will be able to show that tomorrow to you. It's a huge competitive advantage.

Question for Aude. I mean, I'm probably totally oversimplifying. But a couple of years ago, you did single out first-party data records as a key, if not the single most important source for competitive advantages going forward for Nestle. Now it seems you're absolutely on track because you were talking about 400 million first-party data records by 2025. So you should probably get there. So on that part of the plan, totally on track. And yet your market share development has not met your expectations. So wondering what broken that correlation between fast acquiring first-party data records and translating this into share gains.

No, great question. So yes, we are definitely going to reach our 400 million first-party data. And we stay on our objective and the importance of what it is. And it was at the time when we were going to go cookie less, just becoming less cookie, but with 79% I think of the world population being under certain type of data privacy, first-party data is key. And what we've seen is in the way we have been leveraging this data, it is actually really helping us to get very good targeting and way higher ROI on our marketing investments. And that is we've done a lot of work as well with a different platform from Google to Meta to Amazon and it's really proven. What do we need to get better at as a company is to actually to activate this first party data, this is a very new way to do marketing and to do media. And it basically means that our teams around the world but also our media partners really need to better understand how we can activate it. And so this is also one of the reason why we have been transforming our media operation that we have been really kind of focusing and concentrating our media. Europe, we now have the 47 countries have one media partner. This is really to be able to make sure that we are upskilling, transforming and really kind of leveraging things like our first party data, so we can see it in our growth and our market share gain.

And let me add in terms of market share that as we were ramping up our consumer data records, we were also reducing our advertising spend, as you've seen, right? Which unfortunately had way more impact than the number of first-party records we had in the bank.

I've got a question on the fewer, bigger, better innovations. I mean it's something which we've heard many, many other consumer product companies talk about over a long time. And now, I guess, you're talking about it much more than you have done previously. So I can get a few things that relate to that. I guess the first thing is kind of what are the barriers -- what historically were the barriers in the company to you be able to take this much more sort of focused approach to innovation. And then the second question is, I guess, why were you not doing it for? What did you see as the advantage of having a more kind of smaller, more dispersed sort of innovation pipeline? And are there some trade-offs that we actually have to think about when you go for this much more targeted approach.

I'll start and probably Stefan or Aude will chime in. So first of all, why are we coming to this and where were we before? So we are really the most complex F&B and even fast-moving consumer goods company there is in the world. Think of us about 10 different categories, 180 geographies and with also different business models. So we had the tendency to go and develop those innovations in each and every business unit of the vast Nestle organization. And what we have tried not to do is, as Laurent said at the start, do this prioritization effort. So we started in each and every category to the effort of alignment between SBU, R&D and the zones and markets and agree on a few big bets that we would then focus on for development and then rollout. And then at the top, we looked at all those submissions from the different categories, and we came to this even smaller selection of 6 big bets for 2025, knowing that there will be in the subsequent years, more big bets coming. So that effort is new. That effort and also realizing that our global platforms are winning. We have global platforms that are winning, as you've seen today. So knowing this, the benefits of going on this fewer, bigger, we have been, for the first time, I believe, really serious about making this choiceful selection of fewer, bigger, bets that have the highest potential for the future. Stefan?

So just to remind, we have also very big projects, which we showed in Barcelona, if you look back the 5 HMOs, we have now massively at scale, 79 countries and huge number of sales and Serena mentioned it, a huge amount of sales. Infant formula with the Nutrilearn Connect plan, now also in 10 markets. Starbucks, we mentioned at that time and then the sugar-reduced Milo where we have today already 500,000 tonnes of product converted to the new technology. So that's massive. So we can do it. But the reality is that we haven't had any effective end-to-end governance in place. And that's the new thing that we go really here from R&D SBU until the launch market and including the Executive Board, where we review, like I told you, on a monthly basis, the biggest project, that's new. And I'm not sure every company has that to the same extent. Let's also not confuse. We still have local projects. So it's not that we are moving now to one extreme where we have only central projects. You need to have also local innovation to cater for local needs, but we need less of that also on the local level. We have this proliferation not only in the central portfolio but also in the local portfolio. So this approach fewer, bigger and better we will roll out across the entire company to all levels until the market. And then, of course, you have more focused investment on the R&D side. On marketing side and you get a better return for this investment.

And maybe just on the trade-off, we don't expect any negative trade-off. Quite the contrary, we expect a big up uplift from our innovation efforts.

Okay. We have time for one more question. We'll take it from Tom.

Just I think Walmart announced that Walmart Connect grew its revenues by 26% in Q3. And I don't think that's in your -- that's not an A&P spend, right? That's higher at the P&L. So I just wondered if you could make any comments on the degree to which you saw that kind of trade spend increasing both in the U.S. and internationally, please?

So absolutely. So we are investing in retail media. We definitely are investing with Walmart Collect with great results. And so we're planning to continue to do so, obviously, with Walmart, but also with the other retailers where China all kind of developing their own retail media platform.

It allows the funnel to be as short as it gets, right? From click to purchase in one screen.

Okay. Thank you very much. And we will wrap up the Q&A session and hand over to Laurent to bring things to a close.

So we have come to the end of our presentation for today. And it's time for the conclusions and the acknowledgments and there as well, less will be more. We shared a lot of information with you today. I think it's the first time we have gone that broad and that deep as we wanted to show you the full Nestle potential right across the business. You heard how we will fuel and accelerate the growth, and we are wasting no time. We are making changes to make things happen and drive a strategy which will circle of sustainable profitable growth. So going forward, you will see more focus. We will do fewer things better. You will see more consumer centricity in everything we do. You will see increased investment and polarization of that investment on fewer, bigger, better. And you will see rigor of performance management. You will see teamwork, I guess, you saw teamwork and a great degree of alignment across the presentations today. Everything we will achieve will come from working as one team. So on that note, I would like to thank our presenters, my colleagues, they did great. And the broader Nestle team that supported the preparation of the Capital Market Day, Anna, David, Ian, thank you very much for lending us in a good place. Thanks to all for the hard work in making today and tomorrow happen for sharing your perspective, insights and action plans. And finally, I would like to thank you all as well. You invested a fair amount of your time with us today. And I guess, and I hope you will get a great return on that investment, that should be. With that, we conclude today. It's not finished. We will have the dinner and more opportunities to discuss and dialogue. But let me hand over to David for the logistics from here. David, Thank you.