Royal Unibrew A/S (RBREW) Earnings Call Transcript & Summary

Good afternoon, everybody. A very warm welcome here to our premises in the Netherlands, in Bunnik. My name is Jonas. I'm Head of Investor Relations and Communication in Royal Unibrew, and I will try and take you through the day, both for you who are here in person, but also for the ones that are looking in from behind the screen. We've been looking very much forward to this day to try and tell you a bit about our business and how we see it and how we see the future, especially. We have a busy agenda. So we will be strict on time today. In a minute, our CEO, Lars Jensen will start by talking about our strategy, the growth framework and the growth opportunities we see going forward. Then we will have Henriette talking about ESG, our journey to zero emissions and a lot of other interesting stuff. Michael, who's heading up our International division will talk a little bit about what has been impacting it for the past couple of years, where we are right now and where we are heading in the medium term. We will have Jakob and Ilco talking about their individual markets, the Norwegian and the Dutch markets. It's the 2 latest platforms we have established in Royal Unibrew. They will also talk about where we are seeing from an integration perspective, the markets, how we see it and what we expect for the future. And then we'll have Lars Vestergaard wrapping up the presentations with all the really interesting stuff like CapEx, M&A, return requirements and capital allocation. Again, it's going to be a busy day. There will be breaks in between, but please be back in time, so we can start on note. And with that, I'll just leave the stage for Lars, who will take you through the first presentation.

Thank you, Jonas. And I would also like to welcome you here. We planned actually in the beginning to do it in London. And then a lot of you complained to us why can't we come and see Vrumona and also to meet the team here. So that is the reason why that we moved it to these premises. What are we going to address today and what I addressed today, I'll go on the group side of things, and I'm going to talk you a bit through what happened, I would say, since the new Unibrew era was created. And some would say that, that started when I became the CEO, but that's not the case the way that I look at it. It actually started back in 2018 when we acquired the LemonSoda business in Italy because that was a strategic change in Royal Unibrew, and we have followed that's -- that road since then. So what I'm going to talk about, I will give you a little bit of historical perspective, and then I'm going to walk through the strategic thinking and as emotion for all, of course, the growth opportunities that we have as Royal Unibrew with the platform that we have today. If we boil down Royal Unibrew to what we -- what kind of business we were before we acquired the Hartwall business back in 2013, it was a business that basically consisted of 2 strong, call it, home markets, where Italy was not a home market. Italy was very dependent on the Northern European platform with Denmark as a starting point. So it was Denmark, Italy and then an international business, which was a good solid business with very high margins, but a very opportunistic business. So it was not a very focused business. And that is what Michael will talk you through and that is that we have transformed international since then to a business that has 5 growth pillars that we are working on, on a consistent basis. Then we acquired the business in Finland from Heineken, which basically after spending 3 to 4 years on cutting costs, trimming the organization, downscaling, taking out all the complexities, turning it into a more extrovert organization rather than an introvert organization. We basically cemented another home market in Royal Unibrew. And with that home market, we also created I would say, 3 organizations. So the Danish organization, Baltics and Finland became organizations that could contribute to the group so if you look at it before we acquired the Hartwall business, then projects, they were all ran by Danish staff. Then over time, as we implemented our SAP suite in the Baltics, that organization also took part of the integration process. And then at the end of the day, we got -- after Finland was up and running on SAP in 2015, and we also built a muscle out of Finland. So we came out with extra muscle, both from an organizational standpoint, but also from a financial standpoint because we got 60% bigger when we acquired the Finnish business. So that was a real transformation. Then we acquired the business in Italy in 2018, and that is what you -- when you look at the graph on the right-hand side, you would see that our turnover was relatively flat from we acquired the business in Finland, 2014 is the first full year. And then into 2018, relatively flat business because we were focusing on trimming costs, trimming costs, trimming costs. Then in '18, we acquired LemonSoda, the legislation change in Finland, so we could sell Original Long Drink, not only in the alcohol system, but in all retail outlets, and that created a distribution that came from about 300 outlets to 3,500 outlets. That made a big difference to our turnover in 2018 and also earnings. And then lastly, it was a great summer. So the transformation in my mind, that started back in 2018 when we acquired the LemonSoda business, but also the original laundering position that has strengthened our Unibrew every year since then. So what we could do basically and the discussion that we had 3 years ago is we could do a bit of the same, squeeze more blood out of the stone. I think you have heard that expression from my predecessor. You can do that until a certain moment of time, right? Then you start to cut things that is going to help you in the future. And we were not really in the camp of doing that. We were more in the camp of if we could make a transformation of Royal Unibrew as we did in 2013, then let's try to see if we can make another transformation of Royal Unibrew. And by transformation, it is more about geographies and categories than it's about new processes and new ways of working and so on and so forth. So it's copying more of what we have already done, but in new markets. So when we look at our map today, then it looks like this. We have been adding new platforms to our business. And yes, it has gone a bit fast, right? Because normally, you would say that a new platform, a new country every 2 to 3 years. So when you can sign on -- sign off that you have integrated the businesses, then you're kind of ready for the next one. The issue with M&A and partnerships, by the way, and that is that you cannot decide on the time line yourself. When an asset comes up for sale, you need to find out if you -- if this is something that will help you in the long run or not, if you believe it will help you in the long run, then in my mind, you participate and then you man yourselves, you staff yourself, you check your balance sheet that you have the muscle to do it and then you should do it. We are born to take risks and you do not get a job like my job unless that you take risk and calculated risks. So if you want 2% to 3% return, then go somewhere else. If you want to have a higher return and loss, we will also come back to that later on. Then in my mind, you should look at somebody like us. The way that we run our business is the same. So the return on invested capital requirements that we have is the same as we have had for the last 10 years when we look at CapEx and when we look at M&A, and Lars will give you the specifics around how we think about it. The same goes for margins. So when we look at the margins that we want to achieve with our own portfolio, with partnership portfolio, the trading portfolio, it's the same requirements as we have had them for the last 10 years. So that Royal Unibrew has in that respect, not changed. What has changed is the size of our business and the amount of markets that we work in. And when you look at this map, there's one thing that is new to the map, and that is that Belgium has also colored. And the reason for Belgium being colored is that we have signed an agreement with PepsiCo to take over their beverage business in Belgium. That is a carve-out. So there's a number of things that needs to be sorted out, like negotiations with work councils. So that is working on -- or Pepsi is working on that process as we speak. We hope that those things will be cleared over the next couple of months and that we would get the keys for that business in the beginning of July. And that -- that is a part and has been a part of the business case for Vrumona since the first day when we started to talk to Pepsi about how can we create a muscle in the total Benelux area. So this is not a project that has come up after we acquired it. It's a project that we have worked simultaneously with Pepsi about how can we do this to create the synergies between the countries. And that would also enhance the return on invested capital which Lars is going to talk about a little bit later on. Of course, we have not been able to talk to anybody about it, although that we have known that this would likely happen. But it's a little bit of the way that we think in Royal Unibrew. So remember that when you look at us. So what we see now with the map that we have today is that we see a lot of opportunities in the new countries that we operate in. There's ample opportunities for us to grow in the markets with the portfolios that we already carry but we also see that there's a lot of growth opportunities coming out of building our partnership stronger. So this is not just about having new partnerships. It's also about working better and closer with the partners that we already have. Yes, I think that was the words on -- about our footprint, so to speak. And then I'll give you an example of or building a partnership. And this map could be other partners. Now we have -- this is the map of one of our biggest partners, PepsiCo, the PepsiCo system. And with our portfolio thinking, it is important for us to create winning portfolios with must stock brands or mega brands because those brands, they open doors. And at the end of the day, helps each other. So local brands and international brands will help each other in getting more airtime with the retailers get more size so that you have bigger implementation power, et cetera, et cetera. So the history here is that with PepsiCo back in 2013, we worked together with Pepsi in one country that was only Denmark. So in the PepsiCo system, we were relatively small. And at that time, our market share in Colas was also something different than it is today. Then if you look at the map in 2024, we are working together with PepsiCo in 10 countries. Some countries, we only do beverage. In some countries, we only do snacks. And then in some countries, we do both snacks and the beverages. And when it comes to the Belgium business, we are going to take over the Belgium business. That is what is in the -- in the agreement, but we are also going to service PepsiCo in the field force. So we are going to have the power of one in the field force, so doing the snacks. So they will do the key account work but we will do all of the execution on the snacks so that we make sure that we get as much muscle in the market as possible. And then we will combine it with the business that we already have in the -- sorry, in Belgium today. So we have some products from Vrumona like the vitamin water that you can find in Belgium, and we also do have Crazy Tiger from the French organization. So all of that is going to be brought into the same and unique muscle. So creating synergies is important for the partners, and we have other examples of partners. Now this is just PepsiCo. And then the -- another question here is why do you see that there is an opportunity to do good business with Pepsi. If you look at the per capita consumption of PepsiCo beverages in some of our markets here, then in Denmark, 31-liter is the count. So every single Dan is drinking 31-liter of PepsiCo products a year. Now we have about the same share as Coca-Cola in this market. So that means basically that about 60-liter is about the average consumption of cola for a Danish person. And then if you look down to the more, I'll call it, immature markets where PepsiCo has a lot of growth potential like in the Netherlands, like in the Baltics or in Belgium, then we see ample opportunities. We're probably not going to go to the Danish level because in some of the markets, you have other categories that have a larger part of the category. If you look at Finland, as an example, the water category with flavored water and enhanced waters is a very, very big category and basically covers a bit of the carbonated soft drink space. But I think if we could move the Netherlands to Finland, then that will be a great exercise. And we have done it before. So it's more of the same. When it comes to our strategy, it has been the same strategy for the last 3 years. We haven't changed anything to the strategy. We believe that it works really, really well. Is this a unique strategy? Probably not. I think most FMCG companies that we put in some of the same words as we have done here, customers, consumers, people, shareholders and so on. I think the difference that we have here is that when you look at the wording, we have words around local. So that's super important for us, and that is that we think local. So when Ilco will present how we think about the Dutch market, it's in a Dutch perspective. So it's not a Royal Unibrew portfolio of brands that we try to push down the throat of a Dutch consumer. We need to look at the customers and the consumers in a local perspective. That is our strength. Then we have partners, international partners, they will give us the international angle that would then balance those 2 out. But our most important role is to be local, agile, entrepreneurial, those are the words that we put in here that are different if you look at our big competitors. And then the last thing that Henriette is going to talk about is the future. We have built in the ESG agenda as a part of our strategy and not an add-on somewhere that you need to remember. And we use this as a checklist and basically in everything that we do, it needs to fit to the strategy. And then the other part of it is what we call expectations. And that is for all of our Unibrew employees, what is it that we expect from each of you. I think the most -- the biggest difference between us and many of our peers and that is that we do things in a team play. So that is the most important thing for us. Our colleagues are the most valuable treasures that we have in -- around us. We want to do things together, and we enjoy doing things together. The other one is the bravery part with an entrepreneurial spirit, an agile mindset, and you really need to listen to your customers and consumers, you need to do trend-breaking initiatives. So that's the thinking that we have when it comes to the bravery part. That is that we cannot just play the rules of the game, we need sometimes to change the game. Sometimes you can steal with pride, that's extremely efficient, and it works well, and we do that. But at other times, you need to find out how do you break a trend. Because if you don't break a trend, then you just follow a trend. And that's, in our mind, that's not good enough. That's not strong enough. That doesn't put us ahead of competition. So that's the internal thinking that we have. From a model point of view, we have 2 models that we are basically in its extreme trying to pursue. We have the multi-beverage strategy which when you look at the diagram here is the market where we have a lot of different categories that we work in. And on the other side, you see how deep we work in the market. So that's more like channels and customers and type of customers that we work together with and if you look at all the Nordic countries, we want to move towards the multi-beverage. In Denmark, Finland, the Baltics, we are clearly multi-beverage. There's hardly any categories that we could add. In some countries, there's a few categories. And when you look at the availability of our brands, you would find them everywhere. So there's no channel that we are not servicing basically. And when you get to that point, you get a lot of scale synergies which Lars will talk a little bit about later. And then you have the niche market. So that's 1, 2, 3 categories at a maximum. And then you can work very deep in a market so that you get some of the same scale synergies, but the tipping point between the 2 is the 1 that is very difficult to massage because you need to get to a certain level of scale of portfolio before you can move into the multi-beverage. So at a market like the Dutch market, I think mentally, we consider ourselves as multi-beverage. That's the way that we talk about the business also because of the size. It's a relatively big business here. But if you look at it from a total scale point of view, then there's a lot more we can do in this market to make ourselves multi-beverage. Then we have created growth framework because in beverages in Europe, the market is basically flat. That's the way that we see it. So people are not drinking more. They're not drinking less either, but they drink differently. And our job is to try to nail down differently. And these are the 6 categories that we have identified where we see that there's growth opportunities, so real volume growth opportunities. Now in beer, as an example, there's no volume growth opportunities unless that you're in premium or you are in no/low alcohol. In any other category, if you're in mainstream beer, you're up for a decline over the next 10 years. So this is our guiding model in all markets. We are challenging ourselves on each of these categories, that is what we do when we have business reviews and we do deep dives on what is going on in each of the categories? How we're going to address it? What is our role in that specific category? In some of the categories, take Norway as an example, in energy, we are a challenger. So we cannot change the rule of the game. We are a little bit too small, even though that we are building up steadily. But if you take the RTD category, we are a market leader and then we need to play a game of taking responsibility of how the market is developing. So in each of the markets, we need to play out our portfolio to the maximum and in reality, I don't care if we sell beer or RTD or we sell water as long as we get the right profitability out of it. So in that respect, we are more category driven the way that we run our business than some of the bigger guys that we compete against that are more brand-driven and where their success is measured on how much they sell of a specific brand. We are more in the category thinking in Royal Unibrew. When you look at the categories, most of the categories that you had on the previous slide, that's categories where the general picture is that the earnings per liter is higher than it is on an average portfolio. So we can talk about premium, we talk about RTD, we talk about energy drinks as an example, then that is categories where we earn more money. So the thinking around categories and profit pool and what we get out of it, should overall deliver a higher profitability as a part of our growth formula. One of the things that, again, makes Royal Unibrew different to some of the other players in the market, that is what we call in outlet value creation. And this is about being super, super sharp in the outlet, no matter if this is an On-Trade outlet, if this is a convenience outlet or if this is a retail outlet. And the way that we do it, and you consider this as a circular thinking, we start with data, a lot of insight data. We want to understand the shoppers in each of the outlets and how do we then combine that with our brands. We build a plan. We start to discuss with our customers in terms of how can we maximize this so that we get a value creation not only for us but also for the outlet and then we make sure that we create a customer experience that we create visibility in the outlet so that the consumers, they get attracted to the category at first. And then secondly, of course, that they get attracted into our brands. And a part of that is also the price pack that we talk a lot about that we need to make sure that we have the right pack for the right occasion. And then finally, with all the merchandising and so on, then we evaluate at the end and then this is a continuous circle. And this is not only on a key account level, this is something that we discuss on an outlet level. So each of the supermarkets, we need to have this mindset. So we talk to the local person in the supermarket, Who are your consumers? What can we do to maximize and get the most out of it? And at the end of the day, examples of this is what we want to see. Now this is just a few ones where we combine brands and when we have new launches and so on and so forth. The growth formula that we have, it remains the same. You have been listening to this for 7 years or so. So what has changed is the opportunities to grow. So premiumization, that remains the same in our thinking around how much value we can create out of that, and that is also price pack. Volume growth, we have increased the ambition here because we have new growth platforms based on the acquisitions that we have made, operational efficiency. We have spent a lot of time during COVID on managing scarcity, and then we have been spending 2 years on managing inflation. We have not worked as intensive on efficiencies, as you would normally do. So we believe that there's more to come on the efficiency agenda, and Lars will talk about that. So what are the key takeaways? Our strategy and growth framework that remains unchanged, and it has been the same for many years. We don't see any reasons why we should change it. The toolbox that we use when we get new markets in is the same toolbox as you would recognize from the more mature markets where we have been operating for many years. There's higher growth because we have a different platform. So there is more growth to come from our own portfolio, but also the opportunities that sits with the partners. And then finally, in our mind, we are stronger than ever so that's the message that I want to convey right now. And then I would welcome Henriette on the floor.

Thank you so much, Lars. Yes. Hi. My name is Henriette. I've been with Royal Unibrew for the past 5 years, and I've been working with ESG sustainability CSR pollution for many years. I don't want to allude to how many if that's okay with you today. I've been looking really forward to see you all today. And hopefully, you get some really good questions at the end. I just want to give you a flavor of where we are on the ESG journey, our performance and the next steps, the next challenges that we foresee. Yes. And as Lars said already, we are fully integrated. So sustainability ESG is fully integrated in the company strategy. And I think that's actually what's setting us a little bit apart from the ones that you normally would compare ourselves to and that means that not only are we integrated in the strategy, but we also use exactly the same governance models. We use exactly the same operating model. So we actually also provide and enable the company in producing results not only from, let's say, the hard position, but actually also hard core financials, efficiencies, optimization, supply security resilience is just a couple of headlines for that. And is it new to us. Lars talked about that our strategy is approximately, let's say, 3 years old, but actually, we have been working with sustainability ESG for many, many years. It's been a huge focus and still is on efficiencies and optimizations historically. And then in 2018 is one of the important points that was decided to actually sit down in a more structured fashion and look at what are the material issues for Royal Unibrew and we identified at that time, 42 issues, which is quite a few, and it's aligning totally with what we see to do with the new legal framework of CSRD, which is fewer altogether items or topics, which is 10, but it fits right in there. Then in 2020, we sat down and said, okay, let's also formulate some longer-term targets because, as you know, climate is not done in 2 years. We need to have an outlook a little bit further, and that was the KPI setting and now we are kind of transforming into having -- I wouldn't say, solved everything inside the fence, but at least we need to change our focus to outside the fence where actually the biggest part of our environmental footprint is. We set out with huge ambitions. You know the company, you know we are really ambitious, and we actually also achieved it. So we want to be amongst the leaders globally within sustainability in our sector. So that's kind of a small piece of thing that we want to do. And I get extremely proud and energized when I think about this. This is really a great place to be if you're that ambitious. And of course, it needs to be in a balance between people and planet, but also the profit. So we need to keep on realizing our strong financial performance and also being local. So we keep the local focus while we improve in this area. And we are not the only ones that believe that we actually are doing quite a good job. So a couple of years ago, we started an in-depth analysis together with Morningstar-Sustainalytics to see what is actually their view on our profile, measuring 400 different items in 70 different dimensions on ESG. And as you can see, we started out from, let's say, an average or a little bit below average point of view, a low number is good. You probably know this already, so a low number and low risk. So that's good. And then we actually move quite fast. And in '23, we became the #1 in our sector, which is beer, wine and spirits, and we were extremely proud of that. And then you can say, okay, but how could they do that fast? It doesn't make sense. And I guess the main word here is disclosure. So I guess, being a Northern European Scandinavian country where we do everything in the right way and buy the book, which you don't normally tell or you don't necessarily tell anyone all the things that you're doing that are going well because that's just the norm but when you start telling what you're actually doing, then you actually score better points. And then you might ask, okay, yes, but that was '23. We're already in '24, so a year after. How is it going now? And what we can see is that we are not only #1 in the beer, wine and spirits, but we're actually also #1 at least today, as of today in the beverage in general. So that's an extremely good results. But of course, we also know it's a moving target, and we need to improve year-on-year. So I mean, we just need to keep and do more of the good stuff and the reason why we don't have the official assessment this year is that they have changed the methodology, so we cannot get rated until Q3 or Q4. So the in-depth rating will be there. Very ambitious targets and addressing, of course, health and nutrition being in our sector, we really need to do that and enable our customers, consumers in order to make better choices for environment, for themselves. Our products, of course, climate is a big piece of it, and I will get back to that. And then, of course, packaging material, you will see that in a minute, is a huge part of our footprint and not the least, our people, which is the daily enabler and make sure that we get there. And as you can see in the numbers, we are tracking quite well. And then you can ask yourself, like Lars asked the question, well, how does that set us apart with the competition or our peers, not really. I mean it's pretty much the same KPIs that they are operating with. But I think the big difference is the speed of implementation. So we are way ahead of the curve in terms of when we want this job done. And second of all, you could ask yourself, yes, but is that realistic? Because if the others are spending 5, 10, 15 more years than you -- can you do that? And I would say what sets us apart there is, again, back to the way we operate, how we are organized, we can make really fast decisions. So if we realize that something is not going in the right direction, we can change it and we can do that more or less overnight. So that also sets us apart. And then again, a proven track record. I mean, this is not new results. It is something that we do year-on-year creating better results. And here, I would like to take you around the world. [Presentation]

Yes, I'm sorry, we went kind of abruptly into this, but this was just a bragging journey around the globe from a CO2 point of view. And I just would like to add that, of course, we don't stop here. And we've also mentioned the heat pump here in the video. And actually, we already have that up and running in Faxe. And it reduces our energy consumption of natural gas by 30%. So it removes the natural gas consumption. So that's the money down, let's say, the bottom line. And it's also making sure that we -- we are in a good place if we should see gas shortages in the future. And Lars would love this. It's 1.5 years we pay back on that one. So it's kind of a no-brainer. So we can also work with clever investments in this area. And then last but not least, where are we going now? So as I said before, we are now starting the journey of looking much more outside our own production sites. And here, we use the carbon footprint as an example of what we do. 90% of our carbon footprint is outside our own premises. So that is at our suppliers, at our customers at the end of life of our products. So it's a huge task, as you can imagine to take care of that. And we have done that. Again, historically, of course, packaging material has been -- is a big part of our business. And it's also, as you can see, almost half of the carbon footprint. So that means we have been looking and down gauging, simplifying our packaging systems to make them enable recycling and reuse for many years. And on the right-hand side, you can see what teams we have had historically. So I guess, today, I would like to emphasize what is the next step? What is it we need to do more of now? So first of all, we need to look much more into our agricultural-based raw materials. And I just want to add again a little bit of a bragging thing. We just got our final targets for net zero in 2040 and including FLAG targets approved by Science-based Target Initiative, which we're extremely proud of and I can say that we are the third brewery in the world to get the FLAG targets approved. So we are kind of thinking we're in a good position of our ambition of being amongst the global leaders in this space. But looking at the raw materials, of course, we have been working on recipe changes and just for your info, so if you remove sugar from CSD, an average of 70% reduction in the carbon footprint right there. So it's healthy for you, but it's also actually reducing the climate footprint right there. Of course, we look at optimizing production processes, and that is something we just continue to do but I think very importantly that we are also stepping up on our collaboration with parties outside of facilities. So it could be a local pharma, for instance, again, going back to being local. We have some huge farms in the vicinity of our production sites in Finland and in Denmark, and we had direct cooperation on the ag. So on the brewed barley and on the malted barley where they have production methods that are more sustainable, let's say, the conventional type. And that means not only can you reduce the carbon footprint, you can actually also make it more water resilient. And third and not last, improve the biodiversity in those areas. So we are really extremely excited about that. But of course, it's also important to -- if you think about it and the ag commodities, of course, malt is a small fragment or a small slice of the totality in the food sector, obviously. But therefore, we need to work in consortia with our colleagues for feed and food and say, okay, let's set the standard for these types of operations going forward. For packaging material, we have been doing a lot over the years already, and we need to continue that. And one of the challenges here is actually to find the sweet spot between the cost, the fit for purpose and also the environment. And there we do not want to go for a huge environmental benefit, huge cost and not really fit for purpose. And we see that with some of the recycled materials today that they actually have a problem in terms of new transportation damages, et cetera, because they are not strong enough simply. Then if we turn into distribution, we already saw that in the video. So the thing about moving closer to the market takes our transportation totally. And even though we don't fly things around in the world, even though we sell it and do it in a good way, we still can cut a lot on our footprint by moving closer. We have the example in the video with Canada. But we also, as you know, we have bought Giorgio in Italy, and that's also going to move a lot or remove a lot of the distribution that we see today from Denmark to Italy. So it makes sense again, from a cost, but also from a CO2 perspective. I would also like to say that transportation is probably one of the areas where we are challenged because we don't see a lot of innovations in this area yet. So we really need to push hard on our providers in order to get some alternatives. We are looking at, of course, introducing more circular, let's say, milk rounds between suppliers, ourselves and our distribution hubs. And also we are looking at, of course, EV and testing a lot of things out. So there's nothing new there. But it's just to let you know, we don't see a lot of solutions yet, but it's very, very powerful to move closer to the market is something we are going to continue on. So I would say that you should sit back and think they are well underway, Scope 1 and 2, not done, but almost done with a patchwork of different technological solutions and Scope 3 is the new frontier, and we have firm roadmaps and initiatives to get ourselves to the target of 50% reduction already in 2030, 2030 -- 5 years ago -- 6 years ahead of now. I also hope you sit back with the, let's say, the knowledge that ESG is not just driven by compliance. Of course, compliance is a big piece but it's also driven very much by the people that are there, but also the responsible sourcing and those pieces that are not directly linked to efficiency. We already mentioned CO2 reductions is a big challenge. And actually, when we look at scarcity, electricity is probably going to be quite a scarce resource. So what we foresee is actually that there might be some challenges down the road where the infrastructure simply is not built out fast enough for the use that we actually would like to have because we would like to electrify as much as possible. So change from, let's say, gas-driven heat to electrified heat that can actually be a true challenge. And then, of course, we need our customers -- sorry, our suppliers' commitment to get there. And then we want to continue on the co-development and cooperation together with our suppliers. You saw 90% of our footprint is outside our fence. That means our suppliers is a very, very big piece of our success. And I think when we can create a win-win situation where we have many examples, then we are actually in a good place, and we will get there, but we need to step even further up on that. And then last but not least, we are still #1 at least when it comes to the assessment of Morningstar-Sustainalytics. Thank you very much.

Thank you. I'll present myself a little bit. My name is Michael Jensen, I am a 30-plus year veteran in the beverage industry. I have worked for several companies. Carlsberg, managed quite a lot of the countries in the Carlsberg portfolio. In Asia, I worked for Coke, abroad as well, half of my life I have lived and worked abroad. And I'm now back again for the second time in Royal Unibrew, and that's super exciting. I'm heading up what we call the international business and that business is defined as everything outside of Scandinavia, the Baltic, Holland, France and Italy. So basically, the rest of the world, which is pretty big, but super exciting as well. What I'm going to talk to you about is basically how we conduct our business in the international arena, what we focus on, how the latest development has been and where we're heading in the future as well. So basically, we operate in 5 geographical areas, as you can see, we operate in Europe, Canada, the Americas, Latin America, Caribbean, in Africa and Asia, rather specifically in China. We work through a setup of partners, through partners, with partners, which is basically carrying the majority of our work and workload in the individual countries that means that we are ultra asset-light. We don't spend much resources, except for overseeing the distributors and our partners. We develop -- we spend quite a lot of resources in identifying the partners and training the partners abroad as well. The local partners are basically the one who is taking our product through to the consumer. That also means that we are insulated, isolated or whatever you would call it, for local fluctuations because we operate, we sell in the same area as we operate, et cetera. Asset, with super asset-light, we utilize the capacities and group functions and take them basically abroad in a very defined strategy. So our business model is we do things very simple. We do them very targeted. We are very niche-oriented where there is an interesting profit pool we can operate and that's basically it. That's the whole idea of international that we are very, very focused and that we operate in a controllable, stable profit pool abroad and where we -- and that's where we pursue our growth. We don't have an aim of being a mass market, brand provider internationally, but a very targeted niche-oriented brand provider. We are utilizing the resources that we have from the group perspective wherever we travel. This is an overview of the brands that we actually operate with. We have a beer portfolio, which is strong, both from partners and from our own beer brands. We are having a very, very strong malt position in Africa, Caribbean, and the Americas. We have a strong cider position in China and with other brands like no/low, et cetera. And then we are in CSD and energy, water and a little bit in wine and spirits in Canada. Within the recent years after basically from COVID and throughout the COVID area, we have been suffering a little bit from increase in COGS, especially also increasing shipping costs which has hit us quite significantly internationally at least in a short period of time. And we've also had a little to say, capacity constrained, which has actually put damper or lit over the growth opportunities that we actually have internationally. I'm happy to say that, that picture has been changed significantly. As an example, our organic net revenue growth has jumped 47% in the first quarter of this year, a development that we expect to continue as well as our EBIT has now -- are now back to a solid interesting level as where it should be. Our business model has been that we would like to reorient the way we operate away from being -- from Faxe being the sole supplier and sourcing point to spreading out the sourcing and localizing it as an example with what we've done in Canada by buying Amsterdam brewery, we've moved the entire Faxe production to Canada. We are working in the Caribbean. We have through license partners and other partners set up as an example, in Trinidad, where we are localizing as well. So we are avoiding transporting water throughout the world. But it also has a different opportunity for us and that is that we are far closer to the market. We're far closer in adjusting to market needs and tastes and developments as well. So our reaction time has reduced -- has been reduced significantly, while we're reducing so to say, our carbon footprint as well. And you saw that in Henriette's presentation. Recently, we have also localized our production in China as well. So the China example is an interesting example, and that's basically what we see replayed everywhere else where we begin to localize. And that is that we are eliminating some of the import barriers. Some countries have some pretty nasty import duties, et cetera, by localizing, we avoid them. Then we exchanged a European or a local COGS environment with a domestic COGS environment, which sometimes looks pretty different to the ones that we are coming from. As an example, a European COGS is slightly different than a Chinese COGS, et cetera. And then we also get in tuned to the local taste. And most importantly as well, we're reducing our shipping costs significantly, and therefore, also shortening our value chain to the local market. So in the journey of the acquisitions that we've made and in the journey of redoing or relooking at, to say, the way we produce and how we source we're actually freeing up capacity for new growth within the international market area. So the key midterm initiatives is that we will continue to look at optimizing the route to market everywhere in the Caribbeans, Latin America, in Africa, we have some -- done some significant inroads in optimizing our route to market and especially our value chain to the market. We will, in Canada look at expanding our market position centered around Toronto and Ontario because that's where the biggest profit pool is in Canada. In Asia or rather in China, we will expand Tempt cider. And we will do that very controlled city by city by city. So we can chew the animal which is China. It's a very big country. Trust me, I've been in Asia for many, many years. I know that. Malt, we will expand our category leadership, and we will bring new life to that category as well, wherever we operate, there are some interesting opportunities there in the future. And for CSD, we'll keep accelerating the growth in key markets area for us. Of course, the Danish border is huge, and we will keep pushing for CSD, but also for LemonSoda in Central Europe as well, where we see a lot of good and solid growth opportunities as well. So the key takeaway that I would like to leave you guys with this that, yes, we have been negatively impacted. Yes, it has taken a little bit of the growth out of our business short term, we are back on track. We are seeing some very healthy numbers for the future. We have reorganized our route to market. We ended in a better, more solid position for the future as well. And from a sourcing perspective, we actually expect that we will have full access to the sourcing and the capacity that we need. That's also helping that -- I'm also managing the Danish supply chain. So that's within my own area of expertise. So that's fine. Our net revenue is jumping up and we are looking at some very healthy, solid EBIT numbers for the future. And we will be looking at a good solid international business going forward. So thank you for that.

Thank you, Michael. You can stay.

Yes, I will stay.

And I also like to invite Lars and Henriette back on stage because now we will have the first Q&A session for today. Just start by reminding all the analysts that they have one question at a time. There will be a microphone being carried by Pernille and let's start off here Pernille with the first question. And you can, of course, present yourself and tell us who you are.

Andrea Pistacchi from Bank of America. I had a question on partnerships, which you've clearly highlighted as a big opportunity with the platform. Do you -- is there a -- do you have a specific ambition of sort of how much sales, say, on a 3- to 5-year view partnerships could add? Or how much partnerships could contribute to your sales growth? And is there an optimal sort of balance within the group of partnerships versus own brands a level maybe beyond which you go, you lose a bit of focus on your own brands?

I think the history has shown that we -- first of all, I would say that we deal with the partner brands as it was our own brands, and we are not doing -- we are not a wholesaler. So when we work together with the partners, we control the brands in the countries where we work together with the partners. I think we look at it as a totality. So this is a category thinking. And if we can grow our share in a children category, then we should end up in a situation where we basically grow both our own part, and we also grow our partner brands. I think in the country where we have seen that kind of a journey is in the Danish market, where we have been working together with Pepsi for decades. The launch of Pepsi Max is about 25 years ago or so, I think it is by now. It came from nothing. And then that was helped by the Faxe Kondi brand. So Faxe Kondi is a must stock brand and then over time, by adding the Pepsi portfolio next to the Kondi portfolio, then we have been able to build up Pepsi Max. And today, from a volume point of view, Pepsi Max is actually bigger than Faxe Kondi but the 2 brands are still helping each other as we grow. So I would not say that it's one or the other. In other categories, we do not necessarily earn less money because if it's more premium brands, then in reality, we can end up in a situation where we are in as much money on partnership brands as we do on our own brands. In mainstream, yes, we need to share profit. But if you look at niche positions, you should not consider it as a given that it is always something that is -- that is I allude it to the totality. I think the general is, yes, it will be dilutive because you need to share the profit. So we see it as an integrated part of our business. I think with the acquisition of Vrumona, the Belgium business -- the Pepsi business on the border trade and the snacks that we have incorporated, the Diageo portfolio in Norway, et cetera, there's a lot of growth opportunities within the partner area for the next couple of years. But the aim is that, that will help our own portfolio as well.

So I'm Andre from Danske Bank, Andre Thormann. I have a question to Michael. And that's related to the profitability of the international business. So you showed the wrong direction on the slide. So what is the normalized profitability level of this business? And can you get back to the 2020 profitability in the international business? .

I would be tempted to say that we are more or less back. Yes.

You only tempted. I think it is a progression, of course. And then there is a market mix that you need to take into consideration but I think -- what Michael is saying is the ambition to go to something that is where we came from is intact.

Soren Samsoe from SEB. Just on your Slide 21, sort of the numbers on your growth model. And in your 6% to 8% EBIT growth, you included 2% to 4% volume growth. Those 2% to 4%, is that -- does that assume that you grow in line the markets you're in? Or does that assume you gain market share? And if yes, to that question, then which markets do you assume where that you will gain market share?

We expect to gain share of throat, right? So that's -- in Europe, people are not drinking more. They drink about the same amount of liters overall. So in the total market, then that means that we need to gain some market share. I think the Dutch market is a market where there's a lot of growth opportunities. Norway is a market with a lot of growth opportunities. We have very solid numbers both in the Baltics, in Denmark on the border trade, in international. And we are growing also in Italy in all of our 3 categories. So we see a lot of opportunities to grow our business by volume but it's not just about volume. It is also about getting the right mix out of the volume, which is the other part of it, right? So at the end of the day, you need to see the 2 in conjunction.

And 2 rows behind in the white shirt.

Yes, I just wanted to ask another question, it's on Slide 21, it was around the growth targets and the composition of growth targets. I find those targets very relatable, 1.5%, 2% premium utilization, volume growth, operational efficiencies and then on top, you have the buybacks and the M&A. But I mean, in a shorter perspective, let's say, 2 to 3 years, you have -- in my mind, there are 3 bubbles that are not on this slide. First, the one that you just pointed to, normalization of the International business; second, the synergies from the acquisition here in the Netherlands and in particular, around Norway that are yet to set in. And then third, normalization of the COGS and the gross profits from the, yes, very volatile period of input prices. So there's actually 3 more parts that adds to earnings growth, I would expect. So could you maybe now or in the course of this presentation, maybe touch on those 3 again. What do you think about those?

Lars will touch about it a little bit later, but I think in general, we agree with that the positive list is pretty long. But we also know that, that's something that will not work out as we expect it to work out. So this is what we believe is achievable in a year where we would see that there's ups and downs and not everything will materialize in all markets at the same time. I think on the COGS side, we have not included a heavy reduction of COGS in the scenario. So what we have included in the scenario is that we are going to work on optimization, also on the procurement side as we would normally do. But if suddenly the gas price gets down from the 35 to 7 where it was before, then that is not a part of the scenario. So that's the thinking that we have. And yes, we're also very optimistic about international as an example. But we also know that with a sequence of 2 years or whatever, then there will be some new groups that might bring our business into half a year of instability and these kind of things, we, of course, need to manage that in ambitions like we have put forward here. So I think what you should think about here is that it's the same as you have seen before, but we have added 2% because the opportunities are bigger than they have been in the past.

Then Richard, just behind. And then Thomas, afterwards.

Richard Withagen with Kepler Cheuvreux. Back to Belgium, Lars. I mean, in terms of capabilities, what can Belgium provide for other group companies and the other way around what can other good companies provide for Belgium.

I think short term, Belgium cannot help a lot in the group as such. I think they will get help from the group. It's the same topics that we are discussing as we are discussing with Ilco here in Holland on how to become a challenger -- a real challenger in the market. It's a lot to do with implementation in outlets at the first stands and then the price pack discussion that we have also talked about on Holland is exactly the same for the Belgium market. I think the new thing about Belgium in that respect is that we'll build our own portfolio next to it. So we -- the way that we are used to it is that we have a strong base by ourselves with our own brands and then we add partnerships with that. . Now it's actually going to be the partner piece that is the biggest of the business as the beginning. So that will be slightly different. We have built an integration team that is ready to start whenever that we can start working on it. And that is a team where Belgium will get help from France and Holland and from the Danish organization or headquarter functions. So that's kind of like a multi -- sorry, multi-organization from a language point of view that we are putting together so that we tailor for each of the needs that we see in Belgium.

Thomas from Nordea. A question also on the growth formula or long-term EBIT margin. Adding the numbers together, then it's 6% to 10%. But back 3 months ago, you announced a new long-term EBIT growth of 6% to 8%. So what is the missing 2% here? And what is the risk? And why not say, 6% to 10%? .

It's a little bit back to the answer that I gave before. Of course, you can always add the one in the bottom or you can add the one on the top. I think the reality is that it will be midpoint mix of all of the points in reality. Yes, our list that we have in our mind, it is longer, and it is more optimistic, but we also need to put the realism piece into it that not everything will go as expected. We are not going to stop if we hit the ceiling of the 8%, I'll promise you that we're not going to stop. We will continue.

It's Mitch Collett from Deutsche Bank. One for Henriette. Is there any tension between the sort of growth drivers that Lars outlined sort of energy and other categories and the sort of ESG side of things. I'm thinking about smaller pack sizes, occasionally products with higher sugar or even alcohol content. I know you talked about low and no sugar being lower environmental footprint. But do you ever get tension between those growth opportunities and the ESG side of it? .

I think it's a very good question. And I think our main focus is actually on the Health & Nutrition piece, which can be obtained by either removing sugar as an example or removing alcohol, but also looking at portion sizes. So that is also part of what we are looking at for sure. But it's also maybe coming up with completely new innovations with other functionalities like the vitamin drinks and stuff like that. So I don't see any kind of clashes between. But I guess we are in the party business. So that's part of who we are and -- but we have an obligation.

And when we're putting portfolios together, our view is that we cannot just service what is low/no alcohol or no/low sugar. So we need to have a portfolio, but we will leave a choice for the consumers to choose it they want to have it with sugar or without sugar or they want to have with alcohol or without alcohol. I think that's the key mindset that we have. We are party company. It's -- most of the beverages are consumed when you have social gatherings or you've been out doing sports and you need to reenergize and so it's a positive consumption area. And we need to just deliver the choice for the individual consumers about what they want to have in that specific area. And I think on the container side, I totally agree with you that that's one of the ones that as we are downsizing, we get -- we use more material -- and the way that we talk about it internally, and we also act upon it with the Brewers associations or drinks associations or the return systems that we have. . That is that everything needs to be returned, and then we can reuse it because if we do that, then we immediately caught off in most instances, more than 50% of the CO2 just by making it recyclable. And of course, if we can then be reusable, then it's even better from a CO2 perspective. And I think locally, we are in almost all countries by now apart from Italy and France, but all other countries have some kind of deposit schemes. So that helps us quite a lot or will help us quite a lot on our journey on reducing the pack and the packing area, which is 42% of the total CO2.

Then Soren has a follow-up.

It was just on the international segment. You had some capacity constraints at some point. Are they completely solved now? And if you continue to see these growth rates you saw in Q1, will you be able to sort of keep up with supplying?

We actually freeing quite a lot of capacity by localizing as I said, moving Faxe to Canada, moving Tempt to China, et cetera, et cetera. The new acquisitions has given us additional new capacity. So we actually are looking into a very different perspective of capacity and access to growth in the future, also for international.

Yes. So just adding on that, so we have a number of capacity expansion projects in its making. We're putting up a new canning line in Italy. We are putting of a new canning line here in Vrumona. We are rebuilding the glass line, so that will also both have better capability but also capacity. We're putting out a new PET line in Denmark. So that's -- if you start to do the math on how many liters that is, and that's quite a lot. So we're trying to get back to a scenario where we free up or have about 85% of capacity utilization, not more than that because if you get beyond the 85%, you start to run your assets down and the average cost per unit goes up. And this is where we have been for the last couple of years. And one of the reasons why that we see that we can get more efficiencies out of Royal Unibrew, and that is because we are ramping up on the CapEx side so that we can get down to a reliable cost level, which is more reasonable than what it has been in the last couple of years.

And then the last question before the break from Andre.

Andre from Danske Bank. I just have a question regarding the Slide #14 on the growth categories. Because it seems that at least compared to when you did the CMD in 2021, then the profit contribution per hectoliter has declined a bit compared to what you presented back then. So is it a little less profitable now today to, for example, produce energy drinks or RTD than a glass was back in 2021 as the slide indicated?

No. We have restated -- per liter profitability has been reestablished with the price increases that we made. We have a margin dilution in percentage so that is where we are right now. So there's very, very small changes. And if any changes, then that would more be countries. So if one country grows faster than the other, and there's the profitability difference between the countries but the underlying profit margins on each of the categories give and take the same.

Lars and Michael, and we will now go into a break and be back here at 2:00. [Break]

And you're still doing good on the timing. So please keep up the good job. With me on stage here, next speaker is Jakob Simmelsgaard who heads up our Norwegian business, and will tell a lot more about that now. So Jakob, the floor is yours.

Thank you, Jonas. Since there are some of you who are a little interested in here about our integration in Norway, so that I will do. My name is Jakob Simmelsgaard. I've been part of Royal Unibrew for the last 13 years, now moved from Denmark and staying with my family in Norway. So good to be here and good to meet all of you. So the key topics I will go through today is Hansa Solera, showed in a brief. Whom are we? What are our market position and our footprints in Norway? Secondly, as status of our key development areas, we have identified during the acquisition process of Solera and the remaining part of Hansa Borg to gain all the synergies and become one company in Norway. Thirdly, we have a very strong starting point already in Norway. We have still identified further growth opportunities, which I will go through and share with you all later in the presentation here as well. . So looking a little bit back, we have a long-term knowledge of the Norwegian markets, through the 25% of the minority share we have had since 2002 in Hansa Borg. Moving into 2021, we acquired 100% of the shares in Solera Beverage Group, a leading importer and distributor of international brands within mainly wine and spirits but also other beverages like beer, soft drinks, et cetera. Solera Beverage Group, which during that time, covers across Norway, Sweden and Finland. In 2022, we acquired the remaining parts of Hansa Borg, 75% of the remaining shares, Hansa Borg, being the second biggest brewery in Norway, the 4 production plants and a water [indiscernible] plants as well. Today, [indiscernible] beverage engine in Norway. . I would say the 3 most important priorities for the organization in Norway and for me, is to leverage on our good starting points which I will share with you in a moment. And then fix the integration meaning the 4 key development areas I will share with you. And then thirdly, growing the business going forward. As you see here, we have a good starting point here. A strong position in [indiscernible], Off-Trades, On-Trades and the Vinmonopolet supported by local production, a strong route to market a great sales force and today, a great organization and a great team. Looking at the Off-Trade channel here. We have a quite dominant position within the cider and RTD category that are growing in this year going forward as well. We are the second biggest player within the beer category in Norway in the Off-Trade. And then we have just entering the non-alc category. Even Vinmonopolet here. We also have a dominant position, 17% market share in spirits, a good position in beer and wine as well. I'll share the overview of the local and international brands we have in the full portfolio. In the On-Trade, we have the opportunity to sell in the full portfolio and we have a good position in all main categories of the beverage area, beer, cider and RTD, wine, spirits and also here, we are entering the non-alc category here. We have 4 production plants, including the water facility in Olden. And then we have our own logistic company called Cuveco. Cuveco leading logistic provider, serving both ourselves but also our importers with full service concepts in Norway. This is the overview of our portfolio we have. This is a super strong starting point. This is quite unique. We cover all categories within the beverage areas: Beer, cider RTD, energy, wine and spirits, other beverages, coffee, tea, snacks, water, and now starting to entering also the CSD here. We cover all main categories with strong local and international brands. This is a unique portfolio where we can drive value, we can drive traffic together with our customers and become their preferred choice. That is what we're aiming for. . So looking into the 4 key areas for further developments that is part of the integration process. This is the 4 areas to gain all the synergies from the acquisition of both Solera and the remaining part of Hansa Borg to become one company, again, the synergies. I will go through what we are calling the performance model, the route to market, the operational effectiveness and how to improve that going forward and also how to make sure that we, through the full organization have a winning mindsets and how to win in the future. . Looking at the performance model to become one company, the key challenge we have seen until now has been lack of transparency and also limited fact-based approach and data-driven decision making. So what we have delivered throughout the last year is one common IT infrastructure that are now covering the entire company. We have adapted implementing Royal Unibrew policies and HR tools. Also, we have one common infrastructure for the finance and accounting parts. This leads to much data quality improvements, much better and faster data decisions and events, we have finalized a pre-study for upcoming SAP implementation. So looking on what is in scope going forward, that is to implement not only the standard SAP from our Royal Unibrew Group, but we see this as a total IT program. IT program consisting of SAP as an ERP but also all local applications. This will also means new ways of working for the organization. And as a consequence of the IT program, we will harvest all the system transparency from the Royal Unibrew Group, which will lead us once again to a much faster much better data-driven decisions in the future. Looking at the route-to-market. The route-to-market and the key challenges we have identified through the acquisition process is an inefficient supply chain setup to bridge the full potential of synergies by being one company. So here, we have delivered now an integrated sales force into each of the channels that we have in Norway. We have in Solera respectively, Hansa Borg use different external 3-party logistic providers that we have now consolidated into one. We have closed down one of our breweries in Kristiansand and we have within the end of last year, [indiscernible] production site. All this have also left us with increased efficiency throughout the supply chain already now. As a consequence of the SAP implementation and the IT program, as an overall frame, we will end up with one front-end invoicing in Norway. We will, as a consequence of that, have a joint logistic with improved efficiencies. And at the end, we will be able to sell, especially On-Trade the full portfolio and by that, gain all the synergies from the cross-selling parts of the integration. This will -- what will be the positive impact of the IT program implementation here. Looking on the operational effectiveness. We have been really good in the past in zooming in, but we have lacked the long-term horizons of what we do. We have, of being one company have inefficient processes and that is what we have worked with throughout the last year. So we have merged the local procurement organization into group procurements and by that, harvest all the synergies in relation to that. We have implementing the last year sales and operation planning, not only focusing on short term, but especially the long-term horizons is a big part of this. Performance Management as a tool throughout the Norwegian organization. And then we have been through a year with organizational changes, we have set a new leadership structure throughout the organization and one management team for the Royal Unibrew Norway going forwards. Focus and what is in scope in the next period of time is to implement supply chain tools, drive optimization and efficiencies. It is as a consequence of the IT program to have better data and more streamlined processes as well and also implementation of commercial tools in order to leverage already the starting point we have with the full portfolio we have available now. . A winning mindset that is part of the Royal Unibrew's DNA. We have had different companies in terms of Solera. We have Cuveco. We have Hansa Borg. So also this means different cultures different ways of talking to each other different ways of working. There have been a conservative mindset and a lack of ambitions, meaning we want to push more a winning mindset throughout the organization. So here, we have been implementing the leadership expectations. Lars was referring to as well, which is coming from the Unibrew overall frame. But with the organization in Norway to define the values and how we lift the leadership expectations here. We have been implemented common policies and aligning employment contracts and also implementing HR tools. We have worked a lot throughout the last year in removing silos become one company. And then we have also implementing performance based bonuses for employees in order to drive a winning mindset hence growing the ambition level. For the future, we are going to implement the Royal Unibrew growth framework as part of growing the portfolio even more and then increase the profit focus in general. Looking at the growth opportunities. Like I mentioned, we have a super good starting points. We have the most interesting portfolio in Norway at all. Besides that, we have still identified several of growth opportunities going forward. We have a dominant position inside in RTD, which is a growing category. We still believe in growth in cider and RTD. So what we have on the agenda is to drive the cider and RTD through expansion in On-Trade even more and accelerate growth in the overall total markets with cider and RTD. Looking on beer, we want to maintain the volumes gain, while focusing on increasing the value through our innovation pipeline going forward. We have super strong partnership with existing partners. We want to utilize that even more going forward as well, strengthening the partnerships we have, but also look into potential new partnerships. As I have shared with you, the portfolio is really the uniqueness of what we have in Norway. So win in On-Trade by succeeding with the cross-selling strategy and the ability to sell in the entire portfolio in On-Trades. And then increased market shares in wine and spirits, that is also part of the full portfolio we have available for the On-Trade, but also to the Vinmonopolet. Finally, but not least, the non-alc is a huge category in Norway. So establishing a strong footprint in non-alc beverages is a key focus for us going forward. So we somehow should summarize this. Our starting point is good. We have a good position, strong assets. We have came a long way with last year. We need to finalize the remaining part of the integrations, meaning the 4 development areas, the performance model, the route to market, improvement of the effectiveness and a winning mindset and then capture the growing opportunities going forward. That's all. Thank you. Ilco?

Good afternoon, everybody. And for those here present, still welcome also on behalf of Vrumona here in Bunnik. It's really a joy to have you all here on site. And later on, have also you walk most of you on the premise. I would like to start with a very short introduction of who I am. I have a few years under my belt in the beverage industry. And Michael also, he is a returning employee of Royal Unibrew, so am I. I've been working for 75% of my career in drinks, as you like numbers, 25% of that roughly in other countries than the Netherlands. In the last few years, I've been working for a company called Cargill. But I have been with -- between 2015 and 2017, I was the Marketing Director in Denmark for Royal Unibrew. And then obviously, when my previous employer, Heineken sells something back to Royal Unibrew, it really starts to become very interesting to see if there's an opportunity to assist and support the growth ambition that we have here. So those 2 elements brought me here. And yes, it's a very exciting journey to be on. . I would like to take you a bit through the business that we have here in the Netherlands. With first, a very brief and short overview of who Vrumona actually is and what Vrumona is, how we currently look at the growth opportunities here, but also how we're aiming to grow the momentum in terms of the earnings that we also need to improve as well as on the side of the efficiencies. So starting with where we are here in Bunnik, really at the center, I think it's 30-35 kilometers away from the center point of the Netherlands. So very nicely positioned in order to serve the entire country here. It has created a bit like Royal Unibrew coming from a large group of suppliers that is united in order to make sure that they are better off to fight competition. So since 1945, it has been the base here in Bunnik and as you also can see, much like Royal Unibrew, we also have a very long-standing partnership already with PepsiCo. That started in '49 and even that one lasted longer than the previous ownership in collaboration with Heineken. So also here, we have a very strong and long heritage in nurturing and working together with partners. We do -- we have a long-term partnership with PepsiCo as well as we do one with Rivella, the Swiss company and brand. Then in '68, officially, it became a part of Heineken and that period ended last year when Royal Unibrew took over Vrumona. And I think that is really a key mark for Vrumona in order to make a step change towards the future. It has been a relatively stable company when it comes down to the volumes that were coming out, but also it has been very stable in terms of investments that weren't necessarily coming through as they should have in order to be able to be better compatible in the market. . Vrumona has been focused also very much on the sustainability part. And on the left side of this chart, so this is the picture from '23. We're updating it as we speak. But on the left side is very much one of the key focus areas, which is the no/low sugar agenda that has been driving Vrumona for the last few years. We are -- you will see it later. We are the #2 in size and the #2 in footprint, but that is only because we compare ourselves also to a water company that is in this space but obviously, we are leading in the now and low sugar category from a sustainability point of view. The majority of our new launches are on no sugar. We have a focus on our communication and our point of sale where we push the no/low sugar agenda significantly. So 85% of our ATL and BTL expenses are driven towards that part of our portfolio. And then the other side is which is an area mostly on the Scope 1, 2 and 3 of over footprint where we make significant steps as well and where the partnership with Royal Unibrew has even generated more attention and a faster implementation of those types of measurements. This was an agenda that was set out with Heineken to be ending somewhere in 2030. Well, you've seen just now in the presentation, it's 2025 for Royal Unibrew that is a bit too soon for Vrumona to keep pace, but we're definitely catching up and bringing that deadline a few years forward. And then here, the picture, as you've seen it before, so Vrumona very much centered in the Netherlands, very closely connected also to the new addition that is currently under discussion with PepsiCo for Belgium. And with that, I think we are building a significant platform in which we can serve not only the Dutch market but also very well the Belgium market after a certain period of time once that is established. . In terms of our position in the market, I think overall, we're #2. And I think that is typically something that we need to address better here internally. We need to have that #2 mentality. That challenger mentality and by the time that we are #1, we still should keep that mentality of being the challenger. And that is something that might have been lost a bit over time because of the investments that haven't come. You need to also be able to equip your team in order to fight and win in the market with the tools that are there. So that's what we're currently working on in '24 here in Vrumona to make sure that the investments that are being done on the plant side, the investments that we do on the commercial side are also enabling the entire team in order to win and really drive that forward and start looking at opportunities that we can capture that -- before that, we're not really in scope. So we're the #2 in the overall soft drinks market. We're also the #2 as said in the low/no sugar segment. That is only because water is probably less sugar containing than any other category. But our footprint is very, very much on this side. I think we're about 60%, 65% of our portfolio is sold in low/no sugar from that perspective. We are the #1 in the adult soft drinks. That's a segment that we have defined around the mixers, Royal Club with the gin tonics, bit of lemons, a bit more the acquired taste, I would say, mainstream CSD, which contains cola, orange, lemon lime, we're the second player. In lemon lime, we're still #1 with 7-Up. If you define it, if you define your own market, you're always a market leader. Functional Waters, #2. And then in energy drinks, we're #5. That is still a category in which we're late in the game and we're supporting the Rockstar brand in order to grow, which is growing fast, but that is definitely an area where we need to step up, and we are working towards that with our partner PepsiCo. And this is the portfolio that we have, as you see, very clearly driven by Pepsi and 7-Up as the licensed brands. We have our own orange brand here, Sisi. The large portion of Sisi in the orange segment is the No Bubbles, which is actually a category that was driven here, so -- and a significant contributor to this brand. A local with full flavor opportunity with Crystal Clear. It's both also in still and in carbonated. Rivella as our brand for -- also for the adult soft drink market, Royal Club, our lead brand for it. And then we have a partnership with Lipton, which we do go fill here for them for the retail market as well that we also work together with them in the On-Trade. Rockstar for Energy, we have our local heros Sourcy of which the -- well it's actually on site and a very good addition and you -- I think you've been able to taste a few of those samples here as well with vitamin water in which we're also doing a lot of innovation. So in the coming few weeks, you will see something new entering into the market where we enter much more into the functional benefits areas of this segment. We are well known for our mixes. We work together with a small company called Double Dutch for the premium segment in the On-Trade. And then obviously, for the larger part of that, we do that with our Royal Club brand. A recent new brand that has joined Vrumona also last year just before the acquisition is Butcha, which is in the Kombucha area, a small brand that is now just being launched in retail as relatively successful in there, but obviously, a small niche area and then some lemonades with Russel & Co as well as Ranja, which is a syrup. We already start looking a little bit beyond in adjacent categories and for us, there is a logic step next to mixers, which is also in the RTD, where also the rest of the group has its expertise. So that is exactly the model that I think we should be applying here. We should see what works well, what is close to our areas, what are -- what can we sell at customers that we already visit and from there, take the expansion and grow. So in terms of what we need to do here, there's a very clear first step, which is the separation from Heineken and the integration into Royal Unibrew. And I think if I look at where we stand today, we have had a massive step done in the beginning of April, which was literally the unplugging of the systems from Heineken and bringing it back into Royal Unibrew. Everybody has switched their laptops. We have changed the systems also in the factory. So I think we're more or less 80% done with that part of the integration. We have only our HR systems that are still running on the Heineken side of things, and that is going to be completed by October. So we're very much on plan with the integration. No massive hiccups. Obviously, you have a few areas where you need to dive into a little bit deeper, but the teams have been able to solve every single issue that came up. Then obviously, the change of focus during the retailer negotiations and really become a challenger, I think that is one of those areas that we still need to further work on. We have already a good position now in order to start building with those retailers. We are expanding with the number of distribution points also with the larger retailers in the Netherlands, they have incorporated all the innovations that we're bringing to the market. Also there, I'm quite confident that we're able to make the steps towards the future. And then another thing that is keeping us busy every day is the capacity and capability expansion on the other side of this parking lot, which is very much the investments that we're doing in the new canning line, the capabilities on the glass line Euro pallets. So we're able now also to serve the network from here with Michael's area in the border. So the production of Pepsi is happening here in which we also serve the network further for Royal Unibrew and that has started end of last year and is now really fully on stream from Bunnik. So this is basically what comes down to what we need to do, right? So it's the unlocking of the capabilities that we actually have here. We have a fantastic site that aces every single opportunity when we need to do audits from our partners. But I think what we can do is really elevate that still one more level. We are increasing the capacity in order to serve the market in a better way and also be able to address it with the right type of pack, which is something that we're currently still missing. Glass line is for premiumization, so we can be better in terms of separating different bottles, we can handle more than one bottle type from that moment onwards and obviously, the better distribution and the in-store execution. We're really forming a strong team in the market, visiting the accounts and -- today, some of you will also visit the markets, but the execution in store is really something that we can, from day 1, make a difference on. And I think that is definitely a model that in today's world will help us grow. And then the next edition, obviously, once the works council in Belgium has given their approval to Pepsi, then we start immediately with the integration of Belgium and Luxembourg into the system. . So how do we foresee that we are able to manage the profitability also for Vrumona. So that is very much on the mix. So we see that we can drive higher-margin products like a vitamin water, we can -- and we should put significantly more efforts into cold availability. This is not a market in which the retail has fully embraced cold availability yet. And it's our task and our objective in order to make sure that they understand that, that is actually something that is helping both them and us. We're driving a better mix through data and opportunities from updated production capabilities, but also from a sales and commercial perspective. So we're driving very much cross-sell opportunities that are being generated by the system simply by matching a few data points that we already have on our side. And then efficacy clearly comes from the CapEx investments. It comes from the carve-out of Heineken that is already starting to yield success and further a growth platform that will help us to also work more efficiently. So the runs that we do for the water are definitely helping in our efficiency and our -- on our supply chain side. I think the conclusion here that we have. So these are the elements that we are working on and that have partially been completed already is on the carve-out. We're very much on plan. We might even be slightly ahead of plan because on our IT systems, the majority of it is done. On finance, we have brought in already the majority of the work that needed to be done except for the payroll. The people are being hired. Procurement has been moved into group function and HR is the only lasting element that was already planned to be last in line. So they are very much on plan. I think the commercial potential is on plan as we are progressing throughout the year. Our results are on plan but I think we still have a long way to go with when it comes down to the implementation of the price pack architecture, where we definitely have something to win field sales, they are starting in 2 weeks from now. It's also there, very good momentum. On the supply chain side, a new canning line is on its way. The bottle sorting is on its way. Euro pallets has already been as a capability been implemented in our factory. And then obviously, the sustainability agenda will definitely be geared up and be driven faster. On the people side, we've started with the whole cultural change to become a real challenger in the market, and that's not something that you just push the button and will start, but we are on our way. And Belgium is to start. I think that's the fair part. So also here, a bit like what Jakob also had mentioned as a strong starting point for us. We're on plan, we're on target. We're confident about future. We're looking very much forward to all the growth opportunities and capturing those. We will focus on the store -- in-store execution. We will focus on the large CapEx projects that we have on the production side and also start leveraging the network and doing the integration for the Belgium and Luxembourg market.

Thank you, Ilco. Thank you. Very interesting, if you ask me -- you didn't. And then if Jakob will come back on stage and also for the first time today, Lars Vestergaard, our CFO, and then we'll do a Q&A now. I think we have a very good time. So if you come with some very good questions, we will try and answer them. Andre up here.

So Andre from Danske Bank. A question to Jakob regarding the profitability potential because one of the focuses in the winning mind is increase profit focus, as I read it. So what is -- I mean, profitability has been lower than what we know from Royal Unibrew in Hansa Borg for many years, and it's obviously also much lower in Solera. So can you maybe talk a bit about what's the profitability potential on the longer term for when you combine Hansa and Solera?

I think, Jakob, you can start, and then I'll join whenever you get too close.

No, I think like I mentioned in the presentation as well, so the starting point is divided into, you can say, the portfolio coming from Hansa and the portfolio from Solera with the wine and spirits, where we see the biggest growth potential there is actually within, especially with cider and RTD, where we're looking on the profits in general here. On cider and RTD, that is profits that are higher than the average we have seen. So that is also why it's one of our key [indiscernible] that is to continuing growing and driving cider and RTD. So leverage on the portfolio, and then we have the synergies, we will cover during the next year, that it will also enable us to increase profits in general.

Thomas from Nordea. Also a question for you, Jakob. On one of your slides, you have growth opportunities is maintaining volume scale in the beer category. Just is that the ambition for beer in Norway? Is that maintaining volumes? Or how should we understand the beer in Norway?

Yes. Like Lars was mentioning, the overall consumption is more or less flat in Norway. The beer is going a little bit down while cider and RTD is growing. So if you can keep momentum on the beer on volume part, we will grow shares while the key focus for us is to drive the value parts through On-Trade, but also through the innovation pipeline.

And then [ Peter ], just to keep you in good shape, Richard, down in the back.

Richard Withagen, Kepler Cheuvreux. Yes, sorry, Ilco but Jakob again. Jakob, I'd be interested here as you go with your multi-beverage portfolio to your customers, what is the feedback from customers on what you have to offer them? What do they value the most, 2-3 things? And what do they tell you they still miss from you?

Within the last year since I moved to Norway, I have been out and meet several of our customers, especially with On-Trade where we have the full portfolio available. So where they see the value is to have a partner which actually are aimed to offer this full portfolio of categories to the spa or nightclub or restaurant. In general, the On-Trade market also suffering, getting in employees having enough time, driving traffic. All that's we can help them with, all that we can support them. So having one partnership with Hansa Borg and Solera the free of time for them, we can drive traffic, we can drive growth together. And that is also the focus from the [indiscernible] out and talking with the customers.

Mandeep Sangha from Barclays. I do actually have a question for Ilco. Just referring to Slide 74, where we look at sort of the category strength that you do have across the Netherlands. One area of weakness is the energy drink where you said you were #5 player. You do have Rockstar in your portfolio. Obviously, Rockstar has been challenged in a few other markets as well. Do you think there's an opportunity to leverage the energy drink brands that Royal Unibrew has in other countries like Crazy Tiger and the like to maybe come to the Netherlands? Or do you think Rockstar is the right brand to drive growth and probably linked to that, is there any other categories you think you can leverage Royal Unibrew's portfolio to drive growth, both in your On-Trade and Off-Trade in the Netherlands?

Well, thank you for the question. I think for us, at the moment, Rockstar is the key driver that we will be pushing, particularly also because we have several other areas where we believe that we need to put our attention in our resources behind it. So we're -- otherwise, we would be spreading it too thin. Will it remain the only brand forever in the Netherlands in the energy drink? I can't tell you that at the moment. Maybe there are other opportunities as well within our portfolio, but that's just speculating at the moment. In terms of the other categories, as I highlighted on that slide as well is that there -- to me, it is the most logic opportunity for us to go a bit broader into ready-to-drink, very closely connected already to the mixers that we have launched a range of mocktails. I mean, there is only about time that we open up our vision a little bit beyond that into the categories that we already know as a group as well. And also we are likely able to make those here.

Thomas?

Maybe a question for both of you. How do you see price increases going forward in your countries? Will it be more focused on value management and mix and then you give some way -- give away some of the price increases and instead you get more shelf space or yes. How do you see that?

I think from Norwegian perspective, the last year, we have worked with devaluating currency with the COGS inflation and have worked a lot with general price increases, but also going forward, it is a right product mix, channel mix and how to improve that going forward as well.

I think here in the Netherlands, I mean, the challenge on prices is very obvious. We have a very concentrated retail market here. At the same time, we're hit with the soft drink tax that is not a sugar dependent one. We do aim to -- and we leverage then the price increases based on the strength of our brands. And in that, we find a mix also with complementing that with growth opportunities that we align together with the retailer in order to see where we can push it further. So it is literally a PxQ equation for which both elements are relevant.

Let's take Andrea before we take Soren.

Yes, a question on the Netherlands. So you talked about wanting to have a real sort of number to challenger mentality, which sort of positions you sort of against CCEP. But private label also has a large, I think, market share here in the Netherlands. So what do you see as the opportunity of gaining share from private label and are there sort of price gaps versus private label and any difference here from sort of the other main markets in Europe?