Unilever PLC (ULVR) Earnings Call Transcript & Summary

My name is Richard Taylor. I head the European Consumer Staples team here at Morgan Stanley. Welcome to our virtual conference and the Unilever presentation, which is going to be in fire-side chat format and last around 45 minutes. I should say right upfront for important disclosures, please see the Morgan Stanley disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. We are absolutely delighted to welcome Unilever's CFO, Graeme Pitkethly, to our conference. Graeme joined Unilever back in 2002 via PwC and Flag Telecom to become Unilever's Chief Accountant. He became CFO of Unilever's important Indonesian business, then onto roles, including Group Treasurer, Head of U.K. and Ireland, and for the last 5 years, group CFO. Welcome, Graeme.

Hi, Richard. How are you doing?

Well, thank you. Thanks for joining us. So I'd like to jump straight in, Graeme, and ask about unification. Unilever has been on a long journey since you joined the firm in the early 2000, in terms of corporate culture, corporate structure and organization. So maybe you could start by reflecting on that transformation journey and why unification is an important transformation milestone.

Well, Richard, I think I describe it as a long run well traveled. Unification has been incredibly complex to achieve. In fact, my first interaction with the theme of unification was actually a project on project Skyline, and it started in 2004, only a couple of years after I joined Unilever as you said. It really has been all about creating greater strategic optionality and more simplicity for Unilever, modernizing our structure and putting us on a level playing field with our peers to ensure that we are really best positioned for future success. We want to accelerate the pace of portfolio change from structurally lower growth to higher growth categories, and unifying unlocks flexibility to achieve that, including through equity-based acquisitions or major demergers or to support further organizational autonomy. It really is -- it's been a historic moment for Unilever. It's 90 years coming to an end and giving us a good platform for a new future. But essentially, I think we should always keep in mind, it's essentially a technical legal change more than anything. We are, as you know, a highly international company, very, very multi cultural, and we're really in no way less connected to our Anglo-Dutch-European heritage, which we love, as a result, but it is a historical moment for the company.

Maybe just going on to emerging markets, Graeme. I suppose emerging markets are the big differentiator for Unilever versus peers in terms of things like penetration and distribution. I think you said at one time, there's 1.5 million distribution points in India alone. So can you talk a little bit about your experience at Unilever Indonesia? And perhaps give us some insight into the power of the brands and the history of Unilever in these markets?

You're taking me back into my nostalgic past now. But first of all, I mean, let me reminisce for a minute, if you indulge me. I mean my years as the CFO of Unilever Indonesia, I was there nearly for about 3.5 years. There really were some of the best experiences that I've ever had job on. Actually, they were terrific. As you pointed out in the intro, I was a mid-career hiring to Unilever back in 2002. And in 2006, Indonesia was the first operating posting that I had in the company. It was then and still is our fourth largest company. It's growing very fast. But it also had a history of 75 years. The company had celebrated 75 years in the company when I was down there. It's also one of the country's biggest companies. And quite amazingly, the company has a product in every 1 of 270 million Indonesia homes. What really struck me though -- surprised me was its absolutely job pool of really strong local Indonesian leaders. And in fact, for much of my time on the Board at Unilever Indonesia, I was the only or perhaps 1 of just 2 non-Indonesians in the -- on the Board of the company, the leadership of the company. And that actually, Richard, is really very typical of Unilever's representation in our emerging markets. I think it's worth remembering that we've built up our strength in emerging markets over decades or, in some cases, even centuries. I'll give you a couple of examples. Our history in China goes back 100 years. Lever Brothers started trading in China in 1913, and Sunlight Soap bars first appeared in India back in 1888. So that's really the basis of the strong market positions that we enjoy today. And we do have some really, really strong positions. You know in India, we're the largest FMCG company in India. We reached 9 out of 10 households there in China. We're very much a Chinese company in China. 97% of our managers in the business there are Chinese. And we are a successful employer. We've been the Top FMCG Employer of Choice in China for each of the last 3 years. Another big market is Brazil, where we hold a really strong #1 share position as well over 40% across most of our categories. And just to break to the sort of category lens of emerging markets in fabric cleaning, in our 4 largest emerging markets, our household penetration or reach is 2.6x the number of households of our next largest competitor in bath, cleaning and in shampoo, it's about 1.6x. We've got a really strong stable of both the global brands in the emerging markets. So for example, Lifebuoy, which just this year has crossed into being our latest EUR 1 billion brand. And also some of the strong local brands like Kecap Bango in Indonesia or maybe Cream Silk in the Philippines, et cetera. We've got really, really strong channel strength. You touched on it earlier, actually, with our reach in India. But across our emerging markets, we directly reach and serve 5 million small stores through a network of 5,000 distributors and 30,000 ship -- salespeople, which is a channel presence that's being built over many decades. But we are very actively modernizing it. We've digitized 1.3 million of those 5 million stores to date, and we're adding them at a clip of about 100,000 per month. What that digitalization allows us to do is to build the right assortment, build our pricing and promotional plans by communicating with the storekeeper themselves and allows us to provide optimum mix suggestions for the small store holders. We're also really transforming in 1 or 2 areas, like in Latin America, we are developing a very innovative, effectively a B2B e-commerce platform like Compra Agora, which started in Brazil, and is now going out over a couple of other markets in Latin America. And just to remind ourselves, why are emerging markets such an engine for Unilever. Well, over the last 20 years, our average underlying sales growth in emerging markets has been about 8%, and about 4% of that has come from volume and 4% of that has come from price. And it's easy to oversimplify and say that all of the price is linked with inflation. I think it's offset by devaluation. But on a multiyear basis, that doesn't happen and typically hold on to about 1% of pricing. So we end up with about 5% real growth overall after foreign exchange movements. That time period covers a whole ton of different crisis events. So we've got really good experience of managing through all of the opportunities and the challenges in emerging markets. And that, we think, stands as a really good stead in the current climate. It's not clean sailing, though. I mean in Southeast Asia, the markets in Indonesia, in Thailand, and in the Philippines, have just seen a very, very sharp market growth downturn. And in Brazil, where we had sort of mid-single-digit growth in the third quarter, that was being boosted by government handouts, which have recently been halved. And we expect the environment in some of these markets to become more challenging. It's one of the reasons that we're focusing on the competitiveness of our business, not necessarily the percentage outcome because it is still very, very difficult to think quarter-by-quarter where we end up.

And maybe just linking those 2 questions on unification and then on emerging markets. Unification provides Unilever with more flexibility in terms of M&A and disposals, as you said in the past. You closed the Horlicks acquisition this year in India, your largest acquisition since Best Foods in 2000. So could you talk a little bit about Horlicks first? And then also how you think about M&A in emerging markets?

That Horlicks ones doesn't cover us because you didn't realize it was the largest since Best Foods until after we had done the deal. But it really fits perfectly with a key strategic focus area for us, which is functional nutrition, health and wellness. And Horlicks, together with the VMS, vitamins, minerals and supplements, acquisitions that we've made -- in fact back most recently with SmartyPants gummies that we announced last week, that takes this area of Unilever already to well over EUR 1 billion of turnover on an annualized basis. And more broadly, you might have seen last week that our Foods & Refreshment division recently announced a refreshed commitment to double the number of products that deliver positive nutrition globally by 2025. Back to Horlicks, though, it really significantly increases our presence in India foods, where we've historically been a little bit subscale compared to HPC. We had a roughly 5% share in Indian foods as opposed to 35% in HPC. And I think we're the, if not one of the, largest food businesses now in India. We were able, I think, to buy the business, if you recall, from GSK using equity or part using equity in Hindustan Unilever. And that very nicely navigated the challenge of, let's just say, the higher Indian market multiples compared to global averages. And the close of the Horlicks deal and the integration of the business has gone very smoothly. It was 100% virtual, right at the peak of the Indian lockdown, which was pretty remarkable really. And we're off to an excellent start. In Q2, we launched a brand-new variant of Horlicks with zinc that boosts immunity. And in Q3, we expanded the footprint of the Boost brand nationally with -- and we also introduced new comms on Horlicks, all about courage and confidence, and the performance has really been very competitive. We grew volume share in Q3 according to Kantar. On your question about emerging markets, I mean, more broadly, we're really open to opportunities in any market provided that they increase our presence in the right strategic areas of higher growth, and that they are priced and structured in a way that secures appropriate value creation. A very -- a really relevant emerging markets, for example, beyond Horlicks was Quala, which is now fully integrated, rolled out in Latin America with the extension of the acquired brands very quickly across our footprint. For example, we launched within 45 days after closing into deals using the acquired brands of eGO and Savilé. And of course, we now just very recently secured the opportunity to roll out our Prestige Beauty brands into China with the animal testing requirements there set to change in 2021. So there's lots of opportunity there to build the brands over time.

Okay. And then I think Unilever, if I'm right, now holds 62% of Hindustan Unilever. So 2 related questions here. Is -- one of them is quite loaded. Is it one of the best uses of capital to own more of your best businesses? And more broadly, what do you see as the priorities for capital allocation at the moment?

Short answer, yes. I mean I think it's always worth buying more of a business if you believe it's a really good business, but provided you can get at a price that you think creates value obviously. And we're obviously very active in continually reviewing that dynamic. Let me maybe talk more broadly about capital allocation and how we think about it. Broadly speaking, there are 3 different categories or buckets of capital allocation for a business like Unilever. The first is investing back in the business for growth, obviously. The second one is M&A to adapt the portfolio to higher growth spaces. And the third one is returns to shareholders. And on the last one, our dividend has been a really, really high priority for us. We know how important it is for many of our shareholders, and we seek to be able to deliver a growing attractive and sustainable dividend, which undoubtedly is, and even through the challenges and turbulence of 2020, we very comfortably maintained our dividend through a heightened focus on absolute profit delivery and cash conversion that resulted in really very strong cash flow in the first half. I think we generated EUR 2.9 billion, which was up a whopping EUR 1.3 billion from the previous year. And all of that sort of supports our leverage position of around 1.9x, which sets really comfortably just below the sector peer average of 2.1%. So I think everybody's thinking pretty consistently around that. We touched on M&A for capital allocation already. But the key here is really to be very clear and focused on the priorities that you're going after, and very disciplined in the valuation and execution processes. But as you said in your question, another good way to invest capital back into our business is to increase our ownership interest in listed or less than wholly-owned subsidiaries. And I think over the last 10 years, we've invested over EUR 4 billion of capital into what we've done minority buybacks. And as a result, we now own 100% of our businesses in Vietnam, in Algeria, in Egypt, in South Africa, and most recently, actually in Malaysia, where we bought out the minority investors in the second quarter of this year. By far, the biggest example of doing that was in India with Hindustan Unilever back in 2013 where we increased our stake from, I think, it was 52% up to 67%. We -- so we bought another 15% of Hindustan Unilever for EUR 2.4 billion. We then, as you mentioned, dropped down from 67% to 62% as a result of the Horlicks acquisition, which was settled apart through the issue of new HUL shares. But I think those 2 transactions, really, really nice bit of value creation between the 2 of us.

Okay. So maybe a little bit more on M&A, if I may. If Unilever's advantage is distribution and penetration in emerging markets, perhaps the next phase of the transformation is about categories, which you alluded to a little bit earlier. So shifting the portfolio to these higher growth segments. You've put together a near EUR 700 million Prestige business since you became CFO, and that's growing strongly. And you've recently made moves in well-being, functional nutrition and VMS. So maybe you could talk a little bit about that M&A strategy and what you look for?

Sure. Maybe just to reiterate a point I made earlier, Richard, which is that the whole goal of M&A for us, whether it's acquisitions or disposals, is always to reposition the portfolio for higher growth. We do think that you need to be really clear and focused on your priorities, as I said, and really, really disciplined when it comes to value creation. The M&A strategy of everybody in this space is pretty similar. And the future growth vector spaces are quite easily identifiable for most people and that does give rise to quite a lot of multiple inflation, a lot of competition for good assets. And you have to be super, super focused around value creation. Just to sort of size it for you, I always do tend to mention this, but the conversion, we want a very active M&A funnel, which is principally led through the strategic thinking of each of our 3 divisions, but the conversion between the top of the funnel and the bottom of the funnel, so transactions that we -- not transactions rather targets that we choose to investigate and spend time on, the conversion between the top and the bottom is about 10x. So we look at 10x more since than we ever end up announcing, and we don't do 9x as many things as we do. It's another way of looking at it. In terms of the velocity and the shape of our M&A, we pretty much have the same view today that we explained around about this time last year in our last Capital Markets Day. It seems like a long time ago now, but I think there Alan explained that he was reviewing every single aspect of the portfolio. And we gave a general indication that we expected to reduce the number of acquisitions we do, if we can, but increase the average ticket size, that would be a goal of ours, not always easy to achieve, but nonetheless shape wise that's what we're looking for. And probably more significantly, we were seeking to use divestment and disposals more actively where we believe we were operating in more structurally lower growth segments and where we think that some of the things that we bring as a global marketing and science-backed innovation company can bring something to the table where we think that, that's a little bit more limited. So while the clear objective of M&A was to shift the portfolio into structurally higher growth segments, where that science-based innovation behind big global brands works best, if you think through that lens, it does tend to favor HPC over foods. But that does not mean that we will not deploy M&A capital in the food space because we're one of the world's largest food businesses, and you know that we will be very a good owners if we weren't prepared to use all aspects of capital allocation in that food space. There are 2 really sharp examples of the strategy of moving to future growth spaces where we believe we have a right to win are in Prestige Beauty, which as you said, is now past EUR 700 million, it grew by 8% in the third quarter. There's not a whole of Prestige beauty businesses that did that. And it's on its way to passing EUR 1 billion, which is the original objective that we set for and thinking about where do we go from there. And as I said earlier, we're about to enter China in a much more meaningful way with great brands like Dermalogica, Tatcha, hourglass, and some of those, et cetera. And the second area, that's a really good example, is functional nutrition and VMS. As I said earlier, we've already passed EUR 1 billion now annually with the acquisition of Horlicks, OLLY, SmartyPants and Liquid I.V. So in some respects, that area has come from behind and past prices already. I do want in the context of M&A just to say a final word about ROIC, return on invested capital, because it's a really important measure when we're talking capital allocation and M&A, especially, and I want everybody to be clear on our performance, on what is a pretty critical metric for CPG companies. We're very, very disciplined on ROIC, and our ROIC is comfortably in the upper end of our peer group. Despite the very active period of portfolio change that we've had, we've made over 35 acquisitions since 2015, but we've done that whilst maintaining the high teens ROIC position. It was 19-and-change percentage points, 19.2, I think, in 2019. And the benefit of the work that we've done thoughtfully and structurally to improve our operating margins since 2015, which has been in key areas like Home Care in our business in Southeast Asia, in our business in China, in Unilever Food Solutions in all form of ice creams, et cetera. All of that has meant that we'll be able to pursue an accelerated period of portfolio change, whilst keeping our group ROIC very competitive. I just want to clear on that.

Okay. And then maybe just a little follow-up on that question. You're talking about the funnel for M&A. Has the flow increased this year? I suppose, with the pressure with the pandemic, has there been any sort of change in the velocity of that flow?

That's an interesting question. I don't think of it -- I'd say not. To be honest, Richard, I think it's been fairly consistent at the sort of levels and dynamics that we've seen for the last 2 years, I would say. It did accelerate a couple of years ago, and it's pretty dynamic. I do think, though, that the onwards consequences of the pandemic, and in particular, what we expect to be a pretty profound period of global recession, as economies repair themselves, I do think that, that will give rise to opportunity in the M&A space. It's one of the things that was on the Board's mind when we were thinking about the timing of our second unification proposal that we're likely to operate -- to enter into a period of substantial opportunity and challenge. And in doing that, one of the reasons for unification is that we felt that we wanted to level the playing field and put Unilever in exactly the same position of strategic optionality with the companies that we compete against. So that was certainly in our mind there. But in terms of what's sitting in our funnel today, I don't I think we've seen the uptick yet, but I do expect over the coming years, we could see that happen.

Okay. That makes a lot of sense. I wanted to ask a question, which I think you're asked about very rarely. In fact, I can't remember anybody ever ask you about it, which is venture capital. Unilever have got 2 important arms in Unilever Ventures and Unilever Foundry. So I want to dig into what I think could be a very important part of the business in terms of that expertise, the entrepreneurial spirit and the learning for Unilever people still working for the parent. So maybe you can just talk about that venture side of the business, please? And where it fits in with your broader innovation agenda?

I'm really chuffed that you asked about it because it's a fascinating space. I love spending time with the team in Unilever Ventures. It's run by a chap called Olivier Garel, who I used to work with when I was Head of M&A., Olivier was a big part of that team. And it's a fascinating space to spend time in. But we -- you're right, we hardly ever talk about it externally. So let me spend a little bit of time on it. We were quite an early corporate venture. We set up Unilever Ventures back in 2002. And we have had the opportunity to learn quite a lot about the space, and we have very actively adapted and involved our approach several times over that period. We are now in a position where we're 2 years into investing the fourth fund of Unilever Ventures. And if you go right back to the start, we have invested a total of about EUR 750 million. We've deployed that to date. But we've had EUR 450 million of that returned. So we are net-net EUR 750 million own, EUR 450 million back in. We make a mixture of direct venture investments into companies, and we also invest from time to time into other venture funds, so we make some fund to fund investments. We are now, we weren't always, but we are now focused on 3 main areas of investments. We have 3 themes that we think through Unilever Ventures on. The first one is emerging consumer brands across beauty and well being. So brands in beauty and well being. The second one is what we call e-commerce models. Now that can be either B2C platforms or B2B platforms, but e-commerce models is the second one. And the third one, interesting enough, I think is enterprise technology. We're interested in investing in companies and collaborating with companies that can improve the speed and efficiency of how Unilever operates tomorrow and the related enabling technologies. So far, Unilever Ventures creates a financial return, so more than covers its cost of capital. And it keeps Unilever connected, and this is probably more important, connected with Unilever itself and high growth smaller companies. The way I think about it is it allows us to look around the corner a little bit into the future. And it's a very important flow, just as you touched on there, of bringing new thinking back into the wider company, staying close to new market trends and connecting us with entrepreneurs who are bringing change to the industry. And that's an awful lot what we ask and we need to do, is to bring what is locking on back into the business. And just since 2014, we've backed about 28 beauty companies in North America, India, Australia and Europe. Things like The INKEY List, FabFitFun, Frank Body, Plum, True Botanicals, Trinny London, which is in the news a lot, things like that. And we've got a award just this year, we were named the Investor of the Year in the Beauty Independent Beacon Awards. So we're kind of recognized we're doing some professional things in the space. So that's Unilever Ventures. Unilever Foundry, which you mentioned, is a very different concept. What the Foundry does is it helps our branch teams to connect with marketing tech, start-ups and innovators to seek solutions through specific briefs that pretty much come from Unilever. So the Foundry provides a platform where marketing start-ups can review and participate to work on specific challenges that the Unilever brands are looking to solve. That's how Foundry operates. And we now actually have a third platform, which we only launched in September, and it's specific to Beauty & Personal care in China. We call it the Uni-Excubator. Now what this is, it's a 100% digital incubator that's designed to create collaboration with entrepreneurs, innovators and tech start-ups in China. We actually partnered with Tmall. They hold the Uni-Excubator flagship store, which is called Uni-Topia Planet. Very early days, but we've had 40 start-ups that have shown interest. We've got 20 onboard. And we've already quite a significant revenue stream for those businesses through that Tmall flagship. So this is a leading-edge of Unilever really. But beyond Ventures, Foundry and Uni-Excubator, the really core work of the business takes place in the division with our marketeers and our R&D teams driving the creation of their impactful innovation under our big brands. And just to remind you, that's part of the 5 growth fundamentals that are driving the step-up in the competitiveness of the business. We are now working to much sharper divisional innovation strategies. We've got much strength in innovation performance management, for example, 100-day reviews with faster stopping or pivoting of unsuccessful projects. And as a result, actually, we've already cut 30% or more of our innovation tail this year, but seen increased performance from innovation overall in terms of funnel size, quality, penetration gains, testing wins, et cetera. So we've talked a bit there about the leading edge of the company, but I want to just remind you that the core remains innovation and new quality marketing.

I've got 100 follow-up questions on that. Well, I will move on to Foods & Refreshments. This has been an extraordinary year, of course. But for Unilever, seeing the North American business grow double digit, driven by Foods & Refreshments, it's not something that I think I ever imagined seeing. You said in your initial unification document, I think I'm right, that you can -- if you ever consider spinning off the Foods & Refreshments business, you'd commit to do that as an IPO in Amsterdam. So can you talk a little bit about the background there and also this extraordinary growth you've been seeing in the U.S.?

Yes. Maybe I'll start with the growth in the U.S. and then cover off the unification point. I mean I agree with you, it's been an absolutely amazing year for F&R businesses generally. And for our F&R business, all around the world, really, but especially in markets, like the United States, United States F&R for Unilever grew by 18% in Q3. Remember, this is a business that typically grows 2%, 3%, engineered for that. In Q2, it grew 23%. Both of those numbers are, if you exclude the Unilever Food Solutions business in the U.S., because that was obviously negatively impacted by restaurant closures. But what was driving that was this is amazing return to home consumption, home cooking, scratch cooking, in addition to the obvious comfort and pleasure of you know screen in a pandemic. So really amazing. We saw very, very positive household stocking impacts in March. And after that, consumption levels have settled down at elevated levels of demand for -- and what we think, although it is volatile, and I do want to keep emphasizing that really month by month, we are focusing on our competitive performance and we're accepting what comes in from our markets in terms of top line delivery because of that enormous swings that we're seeing recovery in some places, second lockdowns, an unwind of household stocking. So really, really a super-volatile position. The other search category that we've seen in the U.S. has been hygiene. And again, one of the things we do expect to see as a more lasting impact of the pandemic is heightened consumer awareness around hygiene, surface screening and hand hygiene, et cetera, more generally, but we don't expect to see a repeat of the, frankly, exponential growth in the hand sanitizers that we saw in the second quarter of this year. Turning to the unification commitments to the Netherlands, I have to caveat this. We have no plans to list out Foods & Refreshment division as a separate entity. I want to be clear on that. But what happened, Richard, was that the Dutch Government recognized quite rightly, I think, the unification creates a greater strategic portfolio optionality and facilitates more significant business demergers even though we were clear with them as well that we don't have any plans to do so. But understandably, they then sought reassurance from us about our commitment to the Netherlands and asked us to underpin that by the possibility of any future merger over Foods & Refreshment division being based in the Netherlands. And we were happy to provide that clarity, frankly, given the very strong continued Dutch presence that we have, the fact that our Foods & Refreshment division is already headquartered in Rotterdam, we were happy to provide that reassurance.

Okay. That's very clear. And maybe stepping into market share a little bit. I think Alan said on the Q3 call that over 50% of the business is winning share. But your goal is to get to 60%. So can you talk about market share and how you see stepping up to that 60% level?

Yes. We're -- I'll give you some of the building blocks of it. And good progress continues. That's probably the message I really want to learn. Well, one of the keys to it was how we were operating the business through the pandemic and how we continue to operate the business. We've really simplified our focus, and we simplified on 3 things; competitive volume growth, absolute profit delivery and cash delivery. And of those, our competitiveness really is our first and only goal in terms of -- in times like this. It's much more relevant, as I said, than a particular top line growth outcome, which can swing quite dramatically. And the way that we are measuring the success of the progress that we're making in the company is really through that lens of competitiveness. That's how we are thinking about it, and it's where we are, as you said, looking to step up. Now the reason for that is that competitive volume growth. It's a super-important objective because we have analysis that shows the brands which grow volume during recession periods tend to grow value share much faster coming out of recession. It's about a 1.4x multiple. So we think we'll get into recession. Therefore, we think it's good to get our volume share very competitive because that will give rise to a sustained period of value share performance going forward. We shared in Q3 with you the 5 growth fundamentals. We're delivering good results across the business. More than 50% of our business is now gaining value share, both on MAT and a little bit more on a last 12-week basis. And we're winning volume share over 60% of our business. So we're heading in the right direction here. Now our aim is to convert this volume share performance into 60% of the business, consistently winning value share quarter after quarter after quarter. And to do that, all we need to do is continue to work hard on improving our execution through the 5 growth fundamentals. They're really strongly embedded now across the business. They're tracked and performance managed very actively. And they are delivering the progress that we're looking for, but with more areas for improvement over time. Once we're on the subject of competitiveness, I just want to tackle what is now I think a minority view, but it's out there nonetheless, that we somehow and we'll even need to reset margin in order to improve our market shares. We have never seen a trade-off between growth or competitiveness versus margin. We would never deprive our brands of investment in order to meet a margin goal, and we don't do that. Our brands are really healthy. 82% of the brands have been stable or increasing brand power and our shared -- expanded share of market and that trick is to choose one is very competitive year-to-date across all 3 divisions. But our lens to put on it is that we've been very focused and structural in the areas of margin improvement that we've made over the last 5 years. And that's probably the best evidence to debunk the idea of growth versus margin. Some of our fastest-growing and most competitive businesses have been the largest contributors to our significant margin progress. A couple of examples just. Home Care in the last 4 years -- sorry, 5 years, in fact, has added about 640 basis points of margin, but it's grown by an average of 5% and is over 60% of the business winning share competitively. Our Indian business increased its EBITDA by nearly 900 basis points, put up an average sales growth of 9% over the last 10 years and has over 75% of this business winning. So I don't hold a lot of sway on this idea of growth versus margin because, frankly, the data just doesn't support and people ought to take the time to understand the data and understand the company and not just stop at the first hurdle basically.

Very loud and clear on margins. I'm going to jump straight to ESG. I'm just conscious of time. So Unilever is a leader in sustainable business and sustainable business practices. How has the pandemic changed the way you're thinking about your sustainability initiatives?

It hasn't changed our thinking at all. If anything, it has made us more -- given us greater conviction. But one is ultimately the vision of Unilever. Our stated vision is to be the leader in sustainable business. And in a more stretching way into short by doing that, we are delivering superior financial performance as a virtue of running our company that way. The human impact of the pandemic are really awful. But we know that the impact of climate change, nature loss, packaging waste, the imbalance of the global food system, all of those things and others like it, already caused a lot of suffering globally and longer term are likely to eclipse the impact of the COVID-19 prices. So we feel that we absolutely cannot take our eye off the ball in terms of sustainable business. And in fact, even at the height of the crisis, you might have seen that we continued to make various reprice commitments in 3 major areas of climate, nature, decarbonization, in particular with our Clean Future strategy in Home Care, and just last week, our future food program in Foods & Refreshment. It's really important we do that because we know that the consumer cares more than ever about this and will care more as time passes. So Edelman has said that 74% more of consumers wanted the companies who put profits before people won't lose their trust. And 33% of consumers have already stopped using a brand that they didn't feel responded appropriately during the pandemic. And Kantar says that almost 2/3 of millennials, and Gen Z want a brand that have a point of view in the world and they stand for something still, very much part of the strategic change agenda still at Unilever and really important that we continue to make those changes and invest now in the future.

Great. I just wanted to make sure we had enough time. We've actually got 2 minutes left. And if I can, I'd like to squeeze in 2 questions. So this is going to be a little bit of a task. Alan has described the BPC business as Unilever's biggest, most important, highest margin business. Excluding the impact of COVID, why do you think the growth of that business hasn't quite fired over the last couple of years? And what do you think the key is to driving the growth? Obviously, the easy answer is Alan moving from the Head of the Division. I won't let you get away for one.

I can't say that as one of the one for you. The key in BPC and the rest of the business is to get that execution up through the 5 growth fundamentals, continued portfolio evolution into faster growth spaces. In the last few years, BPC was impacted more than the other divisions by 2 factors, one of them is external and one is internal. The market growth lens were larger in geographies with a higher BPC mix in the portfolio on the ground. So LatAm, India, parts of Southeast Asia, for example. Depended on us is the -- our organizational change program connected for growth had a byproduct that it diverted attention to lots and lots of small local projects. And BPC has a particular focus now to get back to fewer big innovations that move the needle on the bigger brands in the bigger geographies. So that's why BPC got more of a -- more impacted through the last few years.

Okay. That makes a lot of sense. And then final question, if I may. One of the areas Alan and you've talked about for investment is IT infrastructure and digital. Obviously, we've seen something of a giant digital leap in many regions this year. So maybe you could just update us where you are on that investment journey in terms of both the IT backbone, but also those digital capabilities versus peers?

Yes. Thanks for the opportunity to talk about this because we've made so much progress, and I don't we talk about it often enough. We've invested really heavily in our core technology infrastructure in the company to drive resilience and agility. 50% of our technology space is now transitioned to the cloud already. And our IT resilience in our core system sits at 99.98% or better. So we've made good progress there. Critical to the growth plans is the power of data. According to Microsoft, we've got a strong partnership, we're the third highest user of Power BI with 28,000 active monthly users. So that's good news. We're upskilling lots of people to get -- 8,000 employees have been through the user training called Demystifying Analytics. And we've got further 2,000 citizen data scientists in the supply chain. I hope that doesn't mean they're amateur data scientists, but anyway they're on the journey. We're also using technology to expand our market reach. I mentioned earlier that more than 100 small stores that we're adding every month to our B2B e-commerce platform. So the goal here is to reach 3 million plus stores there out of that 5 million universe eventually. So that's having a piece. We're enhancing our core processes in UniOps, which is our global business services organization. We've got a -- we're moving it to the next level now with a transformation program called Future For Operations and through a very big automation program. We've got effectively a factory for the creation and application of RPA across the business. We've released about 2.2 million personalized in productivity. So lots happening there in the space of bot. Our partner ecosystem is really strong. We've moved away from transactional buyer supplier relationships to around about 15 truly strategic partnerships with companies like Microsoft, Google, Cisco, SAP, Adobe, et cetera. And even then, things like that give us access to technology that makes our operations more sustainable. One of the really exciting things we're doing is with Google's Earth engine, which helps us to track and trace our agricultural footprint through technology more actively. And then, as you mentioned, this year is really the 5 years of e-comm shift in 1 year from a consumer perspective. And the capabilities that we built up in digital marketing have been really critical. We've got 40 digital hubs. We've got 30 people data centers, all supported by our leading capability in digital media buying, audit, brand safety on social platforms. And of course, our in-house use studios that allow us to create digital assets at 30% lower cost on average than using external leases. It's all about, Richard, that's really essential badge our capability that we've built up over time.

Brilliant, well, I think that's us just finishing about on time. So thank you so much for joining us at our conference, Graeme, and look forward to having you here another time. Thanks very much, everybody, for joining.

Thanks a lot, Richard. Thanks a lot.