Unilever PLC (ULVR) Earnings Call Transcript & Summary

Welcome. Today, we will take a deeper look at the Unilever U.S. business. The presentation will last approximately 25 minutes, and then we will open up for your questions. My name is Fabian Garcia, and I am the President of Unilever North America since January 2020. So before I start the presentation, I'd like to give you a flavor of my background, a quick summary of what I have done in my first 15 months on this job. Many of you probably know me, but for those who don't, I've been in the consumer goods business for over 4 decades. I spent most of my career at Procter & Gamble and Colgate. And I worked also in Chanel and Revlon. I joined Unilever because of 3 reasons. One is I always admired this company from the outside as a competitor for the clarity of the purpose of the company, the very strong and market-leading brands it has, and because of its globality not only in geographic footprint but also in mindset. Number two is I wanted to make an impact at scale, and this is the right place to do that. And last because I was attracted by the challenge to help the company accelerate growth in its largest market. So 15 months in, let me share a couple of observations. First of all, what I came here for has all proven to be true. Unilever has every ingredient to grow faster. Yet, we are a large and complex enterprise, and we have a very ambitious and demanding agenda. So during my first 15 months, I have focused my organization on sharpening execution; enhancing our customer centricity, and I will tell you more about what that means; reducing complexity; improving prioritization; and above all reorienting my team towards competitive growth as the #1 objective. So I will elaborate in the next few slides. We start, as always, to the safe harbor statement. So I draw your attention to the fact that I will be making some forward-looking statements and non-GAAP. So that's the disclaimer for that. This is the agenda that we will follow. I will first refresh for some of you the facts and figures about our business. Then I will tell you what we have done and are doing now to sustain growth. And finally, I will share with you our outlook for the market and for our business before I take your questions. So let's get the message straight now. First, winning in the U.S. is a strategic priority for Unilever. You know well the history. 2020 was preceded by 5 years of modest growth. In late 2019, the company acted to resume growth, and that growth accelerated during COVID. As you can read here, and I will tell you what we did, we expect to continue to grow based on sustaining the key recent pivots we put into the business. First, the reshaping of our portfolio; innovation of big purposeful brands; exploding e-commerce; and becoming digital-first and a lean, diverse and highly engaged team. And with our evolving portfolio, we believe we are well poised to capitalize on the expected growth post-COVID. As I take you through the presentation and when we get to the end of it, I hope I would have impressed upon you that the U.S. growth drivers are fully aligned with the strategic choices Alan and Graeme laid out for you in the year-end results presentation as well as more recently in the CAGNY presentation. So we start with the photographs of my team. I have the privilege of leading a diverse team of domain specialists. They collectively have, on average, more than 15 years of experience in the U.S. and in global CPG business. That's an outstanding team. So facts and figures for you. First, as you can see on the left-hand side of this slide, we're big. We are nearly twice as big as our India business. On the right-hand side, there is a description of the businesses we have in the U.S. where we call here the operating company of EUR 8.5 billion is what I'm going to be focusing most of the conversation on today. On the right-hand side, the so-called global units, EUR 1 billion, represent effectively a lot of the recent acquisitions that are U.S.-based, but some of them are run centrally. So for most of my remarks, we will be talking about the operating company. This is a picture of our category footprint, which is evolving. I will comment on the acquisitions and the progress we have made on those acquisitions. But I would like you to see that we have already about 15% of our business on categories that are not Foods & Refreshment or Beauty & Personal Care. Also note that in the F&R numbers, we are including the Unilever Food Solutions business. When you look at the right-hand side, in 2020, consumers migrated channels favoring grocery, club, discounters and e-comm, while reducing the contribution of some of the other channels. Also for clarity, e-comm here includes both omni as well as pure-play business models. The next slide is a reminder of our brands. As you know, we are very strong brands. Our top 10 brands account for 2/3 of the turnover. On the right-hand side at the top, you see our medium-sized brands between EUR 100 million and EUR 250 million. They are about another 23% of the business. And I want to call your attention to the fact that you might find new names in that box, especially from our functional nutrition brands that are already getting large. We lead where we compete. And that's the next slide. Not only do we have significant absolute share, but with leading market positions in all our key Beauty & Personal Care and Foods & Refreshment categories. Also for perspective, we have grown share in 5 of our top 10 brands in the last 12 weeks. We have momentum. So on the left-hand side, a bit of clarity here on the statement I made in the beginning. The U.S. business started to turn before COVID. So you have 2015 to '19 modest growth, low bar there at 1%. Then the beginning of 2020, January, February, we had started to grow, and that accelerated obviously with COVID. And it sustained through the end of the year. On the right-hand side, the blue bar represents our externally reported number. That number contains the performance of foodservice and Prestige units, which deflate the 12% growth rate of the U.S. operating company. And the green bars are the comparison of our performance to the performance of our peer group North America businesses. So obviously, we compare favorably. Last but not least is competitiveness, and I know this is a subject of conversation. So I want to be clear that this is clear for you. So we had a dip in competitiveness in the third quarter as we chose to conserve spend in the first half of 2020 related to the uncertainties of COVID. In the summer, we restored higher levels of brand support to improve our competitiveness. And of course, our business responded. So our fourth quarter and the first 2 reads of 2021, our market shares indicate that over 50% of our business is winning share. For transparency, this is different by category. So hair care remains a challenge, but progress is steadfast in deodorants and skin cleansing that we lead, of course, especially since the new shelf sets have been installed in large customers. Our food shares are strongest in mayonnaise and premium ice cream, despite in the latter category some supply constraints we've had since the peaks of demand from COVID. I also call your attention to the fact that we are experiencing competitive growth in pure-play e-comm retailers, you will see the numbers in a moment, and in our newer health and wellness businesses that are growing well ahead of the market. And the last thing I want to impress upon you is the fact that the percent business winning in volume has been north of 50% since the third quarter and close to 70% in the latest read. We take that as an indication of things to come. So why are we growing in the U.S.? I'm going to take you through our growth pillars in 2020, and we obviously are doubling down on this as we go forward. There are 4 pillars. We are accelerating our portfolio reshape. We are innovating with our big purposeful brands. We are exploding e-comm. And we are step changing our culture and our capabilities. So let me take you through some examples on each one of them. We start with reshaping and accelerating the reshape of our portfolio. So you will remember this slide from the CAGNY presentation. The top box establishes our criteria for acquisitions. So of course, we're looking for scale. We're looking for high growth potential, global potential, leadership of the categories, and of course, categories where our competencies in marketing and R&D will allow us to bring those competencies to these categories and accelerate our growth. The bottom box, as you remember, will illustrate the categories that we're interested in. So in the U.S., I refresh your memory on the next slide, we have made 12 acquisitions in the past few years following that criteria. Last year, we stepped up the performance, I will share with you the numbers in the next slide. And if you look at the bottom of this chart, you will see once again that now 15% of our portfolio is already in these new categories that are accelerating. So when we look at all of those acquisitions grouped by different categories that we operate, Beauty & Personal Care, Prestige, functional nutrition, Foods & Refreshment and Home Care, you will see that in aggregate, all these acquisitions grew 17% in 2020. And despite the challenges we had in the Dollar Shave Club and the recent challenges in Prestige, that performance is quite encouraging. And if I only look at the acquisitions that we made within the perimeter of the operating company, these acquisitions grew 28% in the year. So we're very happy with the pivot that we have made to make these acquisitions work for the business. The second area, growth pillar is bringing breakthrough innovation to market. Now there are 3 elements here. The first one is bringing the breakthrough technology innovation that is global in nature to our business. We have locally based resources to deploy that technology to our brands. For example, if you look at the first illustration on the right-hand side here, those refillable deos come in a stainless steel reusable case designed for last -- to last for life. We use 54% less plastic in the refills than in a regular deo stick pack, and that amount of plastic is 98% recycled. The early demand of this new pack where distributed is off to a great start. And Ben & Jerry's cookie dough snack, they are part of the strategy to expand Ben & Jerry’s into snacking. Obviously, I highly recommend that you try them. But the point is, the first thing that we do is we bring that technology breakthrough to our emblematic brands in the U.S. Now we augment that innovation with co-created innovation with our larger customers that goes against white space opportunities. That's been a key intervention in 2020, where we have more closely collaborated with our larger customers to co-create that innovation. Critical to the success here is to leverage our rich mutual data sources and put at the service of our customers, our extensive analytics capability. And this is critical because this is how we identify new insights of opportunities for them and for us to grow categories and their mutual business. As a way of an example, we have landed 2 custom design bath innovations at the 2 of the biggest mass retailers in the country. You may also know that we expanded the Dollar Shave Club into retail last year. And the last piece of innovation is that as you know very well, brand purpose drives consistent competitive growth when you add up innovation into it. So we firmly believe that brands with purpose grow. You have heard that before. And in the U.S., we have enough evidence that such is the case. So these 3 examples are of our, of course, most iconic brands. The boxes in blue show you the growth these brands have experienced in the past 3 years, consistently ahead of the market. And that is a testament of how purpose, activated well, can drive superior performance in our business. The third bucket here for our growth pillars is exploding e-commerce. Now e-commerce is a priority for many companies, but for us, it's a business that we have exploded. Indeed, I want to show you the numbers in the next slide. And we have started with the basics. The basics is collaborating closely with our largest customers. We're highlighting here Amazon, but they could also be in omni. And this again is centered around data exchanges that lead to designing specific innovation that meets the specific requirements of this channel. These requirements are for value density, for profit per unit. And the way we think about it is that specific SKUs that were designed for this channel represented 10% of the turnover last year. We doubled that in 2020, and we are expecting to continue to grow that in the near future. Now we're focused on optimizing return on marketing spending, developing relevant and real-time content, and continuing to improve our margins. In this space, we need to stay ahead, and we're stepping up our capabilities to do just that. So we have dedicated resources for testing and analytics. We have more in-house search and display specialists that day to day optimize our media spend. And we have integrated search and display teams that capture learnings and drive best practices across retailers, categories and business models. It's working. So first, on the left-hand side here, e-commerce now represents 14% of our U.S. sales; with the operating company business, as you see in the darker blue here, doubling in importance in 2020 to almost 10%. Second, growth in this channel is competitive across models and retailers. Specifically, at the largest grocer and the largest mass retailer, 80% of our click-and-collect business has a higher market share than our corresponding brick-and-mortar business. We have work to do with the second largest retailer, but we are on it. And in the largest pure-play retailer, 70% of our business is gaining value share. And last, but not least, we are growing our profit margins by being smarter with mix, portfolio and our marketing investments. The last pillar here is not the least, for sure. So we are creating a lean, digitally enabled, diverse and engaged organization. So we're fast in a journey to become end-to-end digital, leveraging our analytics capability and resources. Now that's -- those are big words, so perhaps I need to break that down for you with a couple of examples. First example I will use is how we use data and analytics to identify consumer-relevant advertising. You have heard Graeme and Alan talk about our people data centers. These are the social listening centers that we have around the world. Here in the U.S., the people data center identified the strong sentiment around supporting frontline workers during the pandemic, as well as they identified a huge rise in volume at those centers of people asking us if we could help the frontline workers early in the pandemic. So we leveraged that data to activate the Dove frontline Courage is Beautiful campaign that many of you have already seen, and also to take supportive actions with frontline workers with the United for America program that we put in place at the time. This was really successful, and we were quite proud of the speed with which we acted with these insights. Another example is Ice Cream Now. You have also heard that term used before. So we have a business unit called Ice Cream Now you may want to use after this meeting. That unit allows consumers to order ice cream via popular apps like Uber Eats or Grubhub. In analytics, we identified specific times of day by brand that have the highest potential for conversion, given the rapid shift to online delivery during COVID and at-home ice cream eating habits. So we were able to tailor our digital advertising to optimize to this delivery and even layer weather data to enhance sales, and get the right message at the right time to trigger orders. And the last example I will give you is how we're leveraging artificial intelligence to provide superior consumer engagement. So we're using artificial intelligence to automate some of the routine online chat functions with consumers. This improves responsiveness and allows us to better direct feedback, and more importantly, frees up the time of our consumer engagement associates to focus on the most critical and valuable interactions with those people who are calling us. So I hope those 3 examples give you a better sense for what we are doing digitizing our company end to end. We have worked hard to change the mindset here from explaining to delivering and ensuring that everyone is focused on growth. We're leveraging obviously our diversity, critical for us as we are representing a very diverse group of consumers in the U.S. And last but not least here is that the focus we have on generating fuel for growth from the P&L and using technology to optimize our spending. So I hope you recognize this chart. This chart is to illustrate that through our description of the growth pillars, we're really close to the 5 strategic choice that Alan walked you through at CAGNY earlier this year. So let's move to the last part of the presentation. Let's talk about the outlook. I'm going to build this slide to illustrate how we see the post-COVID trends and their impact on our business. For clarity, these are not predictions in any way, and the environment continues to evolve as we navigate the pandemic here in the U.S. So on the left-hand side here there are at the top, global trends in developed markets; and at the bottom, very specific U.S. trends. I want to describe them for you in a moment. And across the chart, you have -- across the columns, you have our main product categories, from hair, deos, all the way to Prestige and Food Solutions. So let me explain the trends on the left. Holistic health, so we expect consumers post-COVID to have more holistic health needs with increased sensitivity to mental, social and sleep health. And they are more proactive in their attitudes towards prevention. Pleasure starved, self-evident, true for many. 2020 was, of course, a year of limited enjoyment -- joy and fun, so we expect consumers to become more impulsive and indulgent in 2021. And home experiences is what we are expecting now that more consumers will seek to recreate out-of-home experiences at home. Many of us have rediscovered the pressures of family dinners, and we believe some of that is going to stick after COVID. Then you have the specific U.S. trends. The stimulus bump about to hit with the extra $1,400 going into consumers' pockets. Mass vaccination, this is the reflection that by late summer, we expect a large majority of the U.S. adult population to have had the chance to have been vaccinated. And I choose my words carefully because there will be availability of vaccines for the majority of us. There will be, of course, a desire to return to normal and -- whatever normal that is. And last but not least, is the notion of hybrid work. We expect several managerial jobs to no longer require 5 days in the office. So there will be again, work from home and work at the office, a different routine than before. I'm going to show you color codes. So greens will mean where we expect to benefit. Red will mean where we expect a headwind. And gray means where we see limited impact on the category. So of course, you will see in the next click how we see this. And I'm not going to take you through specifics, but suffice it to say that the simple message I want to convey to you is that we believe a return to normalcy will have a net positive effect on our U.S. business. And our portfolio is evolving to benefit from these trends. So what's the outlook? We are obviously looking to grow with the consumer. The consumer -- we have great confidence in the U.S. consumer and how she will spearhead the recovery. But of course, there will be challenges and opportunities. The challenges have a lot to do with the bifurcated economy we're dealing with. So it's 2 speeds, one at the top that is going really fast, and one that depends more on how fast we get to better employment numbers. The migration to e-comm will accelerate, and we will have to deal with that. And there is inflation in the horizon. And of course, we're lapping historical performance. So in this environment, for us it is absolutely critical to stay focused on competitive growth, come hell or high water. So in summary, I hope the presentation has helped impress upon you 2 things. One is that Unilever in the U.S. is big. The U.S. is big for Unilever. And winning here is a strategic priority for the company, and that we expect to continue to grow competitively as we accelerate the pivots that we put in place last year. So that's the end of the presentation. And I would like now to thank you for your attention and ask Richard to help us with the Q&A.

Okay. Thank you very much, Fabian. Thank you. [Operator Instructions] I'll then be going through the questions and read them out for Fabian to answer. So we've had a few in. And we have 2 questions from Guillaume Delmas at UBS. And I'll take them one by one, Fabian, so you don't have to remember them. The first one is, "To what extent was last year's strong underlying sales growth of 8% primarily reflective of the at-home trend?" And last, "Do you expect some marked sequential deceleration this year?"

Okay. Thank you, Guillaume. I think in the Foods & Refreshment business, we benefited with the at-home trend. As I was indicating on the last slide for the outlook, we expect some of these habits to stick. And I'm not the only one saying this. CEOs of large food companies in America have said exactly the same thing in public forums like this. So the expectation is that they will be, I'm going to call it a running rate of consumption at home that will be much higher than pre-COVID. Yet the other source of recovery and growth for us is the return of the foodservice business as well. What's the second question?

And the second also category question is for the Home Care category. "Do you believe you have a critical mass in the U.S.? In other words, could a lack of size in the Home Care category represent a challenging hurdle to overcome in your ambition to accelerate your growth?"

Interesting. We -- as everybody knows here, we divested our Home Care business here many years ago and came back with Seventh Generation. And Seventh Generation is by far they are leading in the green space. So from a point of view of scale, our aspiration is not to become the #1 brand or category or leading brand in the Home Care category, given the competitive landscape in America. But what for sure we want to be is the leading brand in the green space, and that's what the aspiration is with Seventh Generation. And as everybody knows, that subsegment in the category is growing very fast. We were very successful last year with Seventh Generation, and our expectation is that, that will continue.

Okay. Thanks, Fabian. Thanks, Guillaume. The next question comes from Antonio Zanella at T. Rowe Price. "Do you have enough resources to invest in growth? Or would you like to have more to push the innovation and advertising and promotions pedal?"

It's a bit of a loaded question, Antonio. You always want more spending. But I think from a competitive point of view, what we want to make sure of is that our brands are growing ahead of the market. We believe that we are very smart with the way we spend money in this market. They can -- the resources we have to optimize spending is second to none. So my sense is we have enough resources. And the last thing I would say is that as I remarked actually in the presentation is that our organization is focused -- laser-focused in finding more money in the P&L to reinvest in the business. So as you know, this is a uber-competitive market. Well this market is home to some of the largest multinationals in the world. But as you also saw, we are the market-leading company in the larger categories where we compete, and we have the #1 brand for most of those categories. So I am happy with the resources that we have and with the effort that we're putting in to ensure we have competitive spending in our P&L.

Okay. The next question comes from Martin Deboo at Jefferies. Actually has 2, but I'll do them one by one. First is, "How do I reconcile the fact that competitiveness close to doubled between Q3 and Q4, yet growth in North America slowed by 200 basis points in Q4?"

Well, first of all, thank you for the question, Martin. And I would say 2 things. The first topic is the brutality of our measurements. So our measurements are if you are at 0, you don't count us growing in the delta basis points period-to-period or last 12 weeks, last 52 weeks. Second, if you are at minus 5, minus 10 basis points, that's a no. So we were really, really close in some of our categories for the first half of the year. But the most important thing here is to think about the growth that we were experiencing quarter-to-quarter in different categories. Because the mix was really different in the beginning of the year, last year and in 2019. So it is a conversation about mix. And the way I would like to -- if we could share with you the details, the way I would like to answer the question is category by category, what was happening with shares and what was happening with USGs.

Okay. And the second question is an e-commerce question. "Within e-commerce, what is the approximate split of omnichannel versus pure-play? And how material is direct-to-consumer?"

The larger part of the business is omni, but both are growing very fast. E-commerce pure-play is triple digit, but it's not so far behind -- not so far ahead of omni. Direct-to-consumer is a smaller part. I'm not going to count Amazon as direct-to-consumer. I will define direct-to-consumer as to where we sell off of our websites and what we sell through the Dollar Shave Club. That's the smaller part of our mix.

Okay. Thanks, Fabian. Thank you, Martin. I have 2 questions here from Warren Ackerman, and I'll take them one by one again. "What growth do you expect from the U.S. in 2021 when lapping tough comparatives and then sustainable growth in the U.S. in 2022 and beyond?" So a question about the future.

Yes. So thank you for trying again that we'll give you a number. I'm not going to give you a number. What I will tell you is that we will grow competitively, and we will follow the 4G growth model that I think so well captures our framework in Unilever. So competitive growth is the way forward. And in 2022 is this exactly the same message is competitive growth. I said at the beginning that we are really focused in changing the mindset. There is no reason to worry about the base period because you have to grow year-to-year. So competitive growth it is, Warren.

Okay. And the second question is a Dollar Shave question. "What is the strategy from Dollar Shave Club, given the management change?"

Our strategy for the Dollar Shave Club is to grow the business. The management change came to play because the founder gave us enough time, literally a year, of his intentions to move on with his life. And we literally, we're super happy to have found Jason, who's an expert in this space. The early going has been terrific. As you know, we expanded into omni with the Dollar Shave Club. And public domain information market shares is very encouraging in the first 6 weeks of expansion in retail where we measure the shares. So the Dollar -- the direct-to-consumer business is improving profitability. So we're really happy with where we're going, but obviously, the strategy is to grow it.

Thanks, Fabian. So the next question is from Javier Escalante at Evercore ISI. "Very clear strategy to re -- to hold the competitiveness of the U.S. business. To what extent is the focus on new but smaller brands is an issue holding growth back when you joined Unilever? If so, your thoughts on legacy brands such as Suave, which has lost share for years? Should assets like these be divested?"

Javier, thank you so much for your question. I know Javier from a prior life, and we are fellow Venezuelans. So it's always a pleasure to hear from him. And as always, he asks very tough questions. First of all, I think one of the -- this is a question about size of brand and impediments to growth. One of my first realizations here is that we need to be proud of the brands that we own. Suave and TRESemmé are market-leading brands, and they need to grow. And the question for us is not to think about divestment, but rather to think about how do we assert their leadership. And that has been what's going on here. We need to assert their leadership, and that is happening. There's literally, as we speak, a relaunch of the Suave brand. On TRESemmé, the issue is specifically about styling and was exacerbated by COVID. Of course, people are not going to work or participating in social activities. So TRESemmé has suffered because it was the, by and large, market-leading brand in styling. Obviously, that is coming back. And that when it comes to the new brands, that's the future. But it's not a future that replaces the present, it's a future that builds over the present. So the smaller -- so-called smaller brands, you saw some of them represented in the acquisition section that I talked about, are growing over 50%. I'm talking about SheaMoisture. I'm talking about SmartyPants. I'm talking about OLLY. Those brands are booming. So my view of the future is that all these brands are going to contribute to growth. And the large brands are the foundation of our leadership.

So the next question comes from John Kirby at Surveyor Capital. "How do you define a successful outcome in the U.S.? Is it business winning share value greater than 60%? And how do you think about the time line to achieve that success?"

That objective is annual. So we are actually paid on reaching that objective, 60% of our business winning share. I think success here is about sustained growth in the 3% to 5% level or higher than the market. So that's what we're trying to achieve here over the next 5 years.

Thank you. And the next one comes from [ Rahul Desai at Ikia. ] "Based on your experience at other large FMCGs, how would you compare Unilever's culture to the other large FMCGs? What have been the biggest surprises, positives and negatives for Unilever? And what about Unilever's culture do you think contribute to Unilever being left behind on e-commerce, digital and ability to innovate and build disruptive brands?"

That's a bit of leading the witness. So what's the biggest cultural difference between the Unilever and the companies that I have worked in? I find it on the positive side that you Unilever is the pioneering company when it comes to showing the world that you can do well and you can do good. I think this company established a new benchmark here that it is not enough just to be profitable. It's -- you have to be profitable and be positive to the planet. And therefore, it is a motivating force for the company to perform. And that drives the culture, because we -- the way we do business is elevated. It's not just about profit making, number one. Number two, and I said it in the beginning, we have a very ambitious growth agenda and a very ambitious agenda overall. We're very -- we're complex, and we are large. So one of the big differences between what I have observed in other companies is that we need to attend to a multiplicity of tasks. And the way I have responded to that challenge simply is about prioritization and focus. That's a simple cultural change, that you first do the things that matter the most, and then you move on to the next ones. So I completely reject the allegation that we have been left behind. For me, there's 2 ways to think about that. I think you -- the potential this company has to stay ahead and be -- as opposed to be left behind, is one of the reasons why I'm speaking to you today and one of the reasons why we have what I believe is great potential to deliver on the commitments that Alan has made publicly to you in terms of growth and in terms of margin. So I completely reject that notion.

Thanks, Fabian. So we've got a question now from Alan Erskine at Crédit Suisse. "I believe that P&G's Native natural deodorant brand has overtaken Unilever's Schmidt's brand. Can you give some color around this fast-growing omni trend category and the plans you have in place to improve competitiveness?"

Yes. We are, by and large, the market leader in the deo business globally, as you know. And the natural segment in the U.S. is starting to gain traction. And the brands that I mentioned here are growing in that segment, one growing faster than the other. The leading brand in the space of naturals is Dove by a substantive margin to Native. So the way we believe this is going to impact growth is expect more activity in this space from the market leader, Unilever, across all the brands that we have. And the other thing that I would ask that is taken into consideration beyond just the natural space is that in deos, we have a brand that has just been relaunched, that has been a brand that was declining for a while, which is Axe. And Axe is one of the pillars of our leadership; Axe, Degree and of course, Dove. So I would focus on the natural space to be watched, but I would also remind everyone that in the rest of the category, we lead.

And I have a short question from Kim Bretz at State Farm. "How should we think about the future pace of portfolio shaping for the U.S. business?"

Well, I hope the presentation illustrated the spaces that we want to play in, and the spaces that where we have invested capital to reshape the portfolio. I hope you also take into consideration that we have announced, of course, the separation of tea and the [ tail ] brands in BPC. So think of growth in terms of -- we want to grow our business in the categories where we lead today, so pretty much along the lines of hair, deos, skin cleansing, condiments and ice cream. On top of that, we want to lead in the health and wellness space, functional nutrition, and last but not least, in Prestige Beauty.

Thank you. So the next question comes from Roohi Siddiqui at Close Brothers. "Why is your value share progression running behind the strong volume share gains that you have seen?"

That's usually the sequence. Volume share is an indication of things to come in value. We also have a lesser premium portfolio. This is no secret, everybody knows that, though we tend to lead in the value segments of the categories. So the reflection of the market share is simply a mix equation.

Actually, a follow-up question there which I think you partly answered it. But it says, "Do you feel the U.S. business was well invested prior to you taking on the role?"

You know this, although this is in there, [ absolutely all there, ] I think this business is now receiving enough attention and prioritization from the company. The resources that we have had speak to the investments that were made here. When I arrived here, the infrastructure was in place. The analytical resources, the analytics resources that we have, the automation resources that we have, the digitization transformation that had started, all of that was put in place before I came here. So investment is not just about brand marketing, it's about capital deployment and investment in other areas of the P&L. So my sense, and I am a beneficiary of those investments.

Thanks. So the next question comes from James Targett at Berenberg. Two questions, I'll split them. First one is about functional nutrition. "Aside from dietary supplements, what other products fall into this category that Unilever would like to be present in?"

Vitamins, minerals and supplements to be specific is where we have spent most of the capital here. We have a big business in the hydration space. So not to tip my hand beyond that, I'll stop. But those are the 2 spaces where we have been most active in the U.S.

And on another question associated is, "What does a return to normalcy mean for the future of the Unilever Food Solutions business?"

Well the obvious, of course, is that the top line will return as more establishments in the foodservice business open. And the second conversation is about how do we capture the organizational changes that we are making to integrate that business with our food business -- our retail food business. So those are the 2 changes that will be reflected in the return to normal.

Thank you. Slightly technical question from Chris Pitcher at Redburn, "You disclosed that the U.S. opco business is higher margin than the group. Is Unilever USA still higher margin when the global units are included?"

I will not answer. I don't think we have to disclose more than we have already.

That's clear. So next question is from Celine Pannuti at JPMorgan. "The new M&A you did in 2020 grew strongly by 28%. Can you flesh out what are the sustainable growth of these businesses? And then specifically, what are your plans for SmartyPants and OLLY?"

Well, first of all a clarification: we didn't buy these businesses all in 2020. They've been bought over the past 5 to 7 years. What is the -- the growth drivers here are effectively macro trends. I was speaking about the most proactive attitude consumers have, especially millennials, to take care of prevention when it comes to their own health. And that is one of the driving forces for our presence in this space. This space is more fragmented. And this space is more, I want to call it sensitive to technology changes. So consumers are buying direct-to-consumer. They're buying on e-commerce. And of course, they're buying in the brick-and-mortar retail. But the secular trends are favorable. They are tailwind categories. And that is, I would say, most of the reason why we expect these trends to sustain. The brands that we have acquired have Net Promoter Scores through the roof. They have high repeat. And they are very well placed when you think about their audiences. So you have millennial, millennial families, and in general, people who have a younger profile and fit that attitude of being more proactive with their management of their health. What are specific plans for SmartyPants and OLLY? I obviously will not be in a position to reveal those in a public forum, but expect them to be expanded.

Okay. And the second question from Celine, "Can you explain what drove the huge growth in Home Care of greater than 50% in 2020?"

Well, I think it's partially COVID; but more importantly, the strength of Seventh Generation, which has been growing double-digit for the past 3 to 5 years and speaks to the clarity of its position, the clarity of its mission and objectives and the consistency of its performance. So the other thing that I would say is this is a brand that fits really, really well for the -- bringing Unilever technology into it. You have seen our statements about Clean Futures in Home Care, and that's what Seventh Generation is all about. So I am really confident in the future of that brand.

Thanks. The next question comes from Karel Zoete at Kepler Cheuvreux. "The U.S. GDP growth outlook looks strong. And in 2021, there is strong support for low and mid-income families. However, long-term income inequality is rising, and Unilever is mostly a mass market player in the U.S. Shouldn't you be making a stronger push for premium and luxury brands, for example, in Beauty & Personal Care?"

We are. I mean this is a nonsecret conversation. We are in the process of premiumizing our brand offerings. We're in the process of buying brands that serve consumers at different price points and at more -- higher price points. Premium beauty is all about that. So it's unequivocal what the intent of this company is. But let's not forget that although the U.S. is a developed market, more than 40% of the population is cash strapped. So this when I go back to Javier's question is we have the market-leading brands that will sustain our growth, because that foundation is catering to a large percent of the American population.

And the next question comes from Alicia Forry at Investec. "Given your outlook on the trend for more working from home, do you think the outlook for foodservice and Prestige Beauty growth rates will be lower than they have been going forward? What is your plan for these businesses as we move out of the crisis?"

Obviously, those 2 businesses are going to grow, perhaps one more explosively than the other. Because we were talking about pent-up demand. We were talking about indulgence. We were talking about the craving that consumers have to socialize again. That speaks wonders for the Prestige business. And obviously, those of you who are in lockdown will appreciate greatly the fact that as soon as restaurant and foodservice establishments come back, we would all flock to them. So frankly, that to me is almost like a self-evident forecast is that those 2 business are going to do very well.

Yes. And I've got a couple of questions here from John Ennis. But I think you've answered them, except for, "Why do you think volume share will be a leading indicator for value share?"

You're selling a lot more units. And the way we think about it is that when you have the volume and value equation right, you start first by building share in your units, and then reflecting that in your value. Of course, there is more than one variable to that. And the mix of that volume share gives us, when you analyze it in 2 or 3 degrees of specificity, you end up understanding what's -- what is a predictor for your value share going forward. It's different by category, it's different by brand, but it is an indication for us that things might improve.

And here, we've got a question on brand purpose from Eva Quiroga at Bank of America. "Which of your brands do you think are strongest and which are weakest when it comes to conveying their purpose, big or small?"

I talked about our most emblematic brands, our most iconic brands in the presentation, of course Dove, of course Ben & Jerry's, and of course Seventh Generation. But many of our other brands also have purpose and are starting to drive it. One of those brands is Vaseline. Another brand that has absolute purpose at the core of the societal issues in the U.S. is SheaMoisture. So it is an endeavor of each and every one of our brand people to identify a purpose that is consistent with a societal issue that matters. And consistent with their own history, because not everyone can speak with authority about these issues. And it would look in fact disingenuous if they did and had never talked about it before. But in our brands, there is a history of a purposeful intent. So some of the smaller brands might never have a meaningful purpose. And some of the smaller brands, as Alan said in CAGNY, might not see themselves in our portfolio in the long run. But all of our big brands are -- either have a very clear purpose that they are talking about and activating now, or they're working on articulating what that is and ensuring that they activate it going forward. So this is one of the reasons I work here is that we have meaning in what we do.

Thanks, Fabian. We're coming towards the end, but let's see if we can fit 2 or 3 more in. Another question from Chris Pitcher at Redburn, "There was a very dramatic acceleration in market share. How much of this came through price competitiveness versus innovation?"

It's hard to tell. But I would say it's a combination, I would say mostly driven by innovation. So more innovation is pricing up, back to the question that was asked before. So I would answer by saying that it is a combination of both, driven mainly by innovation.

And the second part of the question, which I can only suggest is a fishing question, Fabian. "Can I clarify, are you saying you expect Unilever USA to grow in 2021 versus the elevated 2020 base?"

I think I said we are going to grow competitively.

I think you did. Let's just take one last question about innovation from Alan Erskine at Crédit Suisse. "Can you share with us 3 innovations that you have already announced to the trade and that you think will move the needle in the U.S.?"

I think you saw them today in the presentation. First of all, you saw the presentation in -- for deos and the pack for life innovation. I think you saw the innovation in bath that I talked about. And I think you saw the innovation in -- those for Seventh Generation, which continues to do very well in the market. There is brand-new innovation in deos for performance across our brands. In Degree and Dove, there is innovation with vegan and plant-based food both in condiments as well as in ice cream. Frankly, we cannot produce fast enough of those innovations. And I can go on and on. But there were -- there was one last thing I would mention to you is that our innovation led to a record distribution pickup this year in the new modulars in the trade. That innovation, of course, was presented last year and it's landing right now. So I feel really bullish about the innovation that we have, and I feel really bullish about the impact that it's going to have in the marketplace.

Okay. Thank you. And I think we should end there. We're nearly out of time. Thank you, everybody, for all your questions. Broad range of questions, very much appreciated. If there are any other questions you have then just e-mail the IR team, and we will get back to you. Fabian, thank you very, very much for the presentation and for allowing me to pump you with questions for a good 30 minutes. Really appreciate it. Everybody, enjoy the rest of the day. Stay safe and stay well. Thank you very much.

Thank you very much.