Unilever PLC (ULVR) Earnings Call Transcript & Summary

Okay, everybody. I think we're going to start. Welcome Graeme, CFO of Unilever.

Good morning.

We've got an action-packed fireside chat today. We've also got a breakout after this next door. So please join us when this is finished.

So Graeme, I'm going to start with [ the recent ] change at Unilever, [ Hein Schumacher as the new ] CEO and Chairman. Obviously, you're moving on as well. Given the new org, lots of people believe at Unilever, the challenges that create to the organization, any drawbacks and any new tradeoffs you need to think about? And then [ you're working outside ] and you look back at Unilever in a few years' time, what was the [indiscernible]? I'm just trying to get a sense of your -- or kind of see where you think there is a real unlock of the company?

And let me tackle with C-suite Board level changes first. It does seem like ever since [ in place of short order ], but if I actually see -- that Nils our Chair, his 9 years are up, he's going to move on for good governance, et cetera. [ Nils ] had said that [ you would see him in the next ] 5 years. And having a pretty decent things and it looked like it's time to move on to different things in my life. The way we set it up is I have quite a long lead time in order to help in the transition into the business and [ you see ] and good time in really high-quality success of [indiscernible]. It does seem a little bit [indiscernible] but actually is well thought through and well managed, which I think at the end of the day, almost [ approved your ] question more, and I think one of the biggest area of changes you touched about, which is our new organization. It's really quite -- it's quite a fundamental change in how we run [indiscernible] the 5 years [ to decades long-term ]. And frankly, we've got really talented and experienced people. The organization we liberate those people in order to have much more end-to-end accountability, bringing strategy and execution together, bringing much more of the cost base of the company into control and [indiscernible] revenue line with 5 really big scale businesses where really our effort is to try and get more and more of the business into the hands of the business group presidents and their teams, and that's where the real continuity sits, but also that sort of liberation of a better way to what Unilever [indiscernible] strategy and resource allocation and performance are all vested in one place for the first time. These businesses can really invest behind our strategies and be accountable for that. So on the last part of your question, looking back in the sunset, so to speak. I think there are 2 things that I really expect to see stand the company in great stead for the sort of mid-term future. I think the first one is the degree of portfolio change that we've done in the last few years. Rotated 17% of our portfolio more than that actually in our business in North America and that is all determined to expose the footprint of the company from a category and a geography exposure to a higher inherent rate of market growth, move the company into faster growth spaces. I think that has a big benefit. And when you partner that with the change in the organization and the ability to drive strategy more consistently through investment behind that strategy, I think those 2 things will give us what I would certainly be looking back to see, which is quite simple, really, which is a Unilever that grows at a faster rate of growth more consistently with fewer surprises. That's what I think.

I mean just turning to cost and margins. I mean you've guided to EUR 400 million with net material inflation in the second half. That's way down year-on-year. Are you -- and it's early days, are you expecting deflation in '24? I'm just trying to get a sense of the moving parts of how much of that benefit you'll need to hand back and with the margins in the 16%. Is there any structural reason why the markets can't go back to, say, 18%, 19%, where they were in 2021?

Look, I think the first thing to say is we are very pleased actually with how accurate would be in assessing and projecting the level of material inflation and fundamental cost inflation that we would see in the business over what has been an extremely volatile and very high inflation time. You're quite right, it was EUR 1.6 billion in the first half. We think it will be about EUR 400 million in the second half. At the half year point, we were about 65% covered on that. So we've got a pretty good grip on what will be there for the second half of the year. Just to give you the personality of what's happening there. I'll break into 3 parts. We basically have deflation happening in feedstocks. So when you go out and you look at the fundamental commodity base that's deflationary. Offsetting that, we have inflation, mostly labor and energy cost inflation within the conversion costs that sit within our supply base because whilst you can look at palm oil as a commodity, we don't actually buy much palm oil. We buy it, convert it into fatty acids and fatty ethanol. And it's that process of conversion within our supplier base. So you get feedstocks down, you've got conversion costs up, they relatively offset, we think, in the second half. And what does that leave us the EUR 400 million, it leaves foreign exchange. It's broadly foreign exchange. A large proportion of that is in hyperinflationary economies like Argentina and Turkey, et cetera. And that gives us quite a high degree of confidence around covering that in price because if you think about our business in parts of the world with higher inflation, Latin America is a good example, we're typically able to price due for that. So that's the kind of landscape of where we are. On the margin question, I don't see any reason why we can't restore our margin. But I would like to say where is our focus. Our focus is on driving the end-to-end gross margin up because that gives us the optionality, portfolio investment into R&D, into innovation, into brand investment behind our brands. And we're very keen to keep that optionality. So I appreciate the question. I know where you're coming from. There is no reason why, in my view, but I think our focal point will be on making sure that we drive the bank, if you like, a gross margin in the company. And there are many reasons why we should be able to do that. Of course, the pricing coming in, but we're also getting very positive mix you saw in the first half results. Part of that is portfolio change, part of that is consciously driving mix and the work we've done on SKU rationalization, et cetera. So the goal is to restore that bank and then have the optionality to continue investing in the business to drive that higher rate of [ products ] that I mentioned earlier.

And just picking up on that reinvestment. You've kind of said that you're in a multiyear step-up, A&P, R&D and CapEx through to '25. Obviously, you all remember what happened after Kraft Heinz when investment was coming out of the business. Why do you think that's necessary? And could you try and quantify the scale of the step-up of the reinvestment? I'm just trying to get a sense of if you increase brand to marketing investment by, I don't know, EUR 500 million or EUR 1 billion, what kind of benefit or rule of thumb might we see to volume mix? I guess it's all about volume mix into next year as pricing rolls.

Yes. I think we should acknowledge that we've done what we said we would do with regard to increasing investment in the company. The company is now investment ready. That's a combination of the portfolio change, a combination of the work that we've done on product superiority in testing our products. Lots of hard work within the R&D community to making sure that our science and technology platforms that underpin multiple years of innovation. All of that has really been quite a heavy lift and done days. So we believe we're really ready to invest behind that. I mean I think at the end of the day, we paid EUR 0.5 billion of extra BMI in last year. We did EUR 400 million in the first half of this year. We put EUR 60 million more into R&D last year. We put EUR 30 million more into R&D in the first half of this year. We drove our CapEx up from about 1.8% to 2.7% last year. We think we'll be about 3% last year. So we've got the capacity to achieve those investment levels. When it comes to the return on investment, it is quite a different landscape across our portfolio. If I take our Health & Wellbeing and Prestige Beauty businesses, these businesses that will be EUR 3 billion to EUR 3.5 billion of turnover this year that were extensively built through acquisition. A large portion of those businesses is D2C, it's direct-to-consumer and it's lower funnel marketing. That is an area where you can get a really, really clear sense of the performance of your marketing investment because you're measuring direct conversion across the sale with your consumer. But there is also quite a high proportion of our pro forma marketing, and that's where it's difficult to -- and I understand your question, you're going to put this money in what should we see a volume response. But really, it works in a much more holistic way than that. What we're doing is the typical things that we do. Are you seeing the reach and frequency that you were looking for with your communication? Is your communication good enough? Are you testing the quality of that communication before you go on air? And in particular, it has been a much more multiyear theme for us and myself in particular, are we making sure that the investment goes into media so that we're making good assets but spending more money showing those assets to import consumers through the right communication channels as opposed to jumping off to make another piece of communication too quickly.

And maybe moving to SKU because it's been a bit of a theme in the conference so far. But I mean the number you came out with a 25% reduction in SKUs over 18 months is a pretty crazy number. I'm so interested how big a driver of the new organization behind that step-up in SKU? I'm just trying to get a sense of the difference in growth and margin between your billionaire brands and your kind of your more local brands. Is that -- what kind of mix benefit is that driving the business? Presuming it's quite material.

Well, I'll start at the tail end of the question. About 70 basis points of mix benefit in gross margin in the first half of the year and quite a bit in the second half of last year. So we are focused on mix as a driver of gross margin to the point that I explained earlier. [ The number ] of the SKU reduction and why you've heard it from so many companies and we all say we work on rationalizing our SKU portfolio. In Unilever's case, about 86,000 SKUs across the global business. The reality, I think, is that when we had the benefit of high inflation, and lots of price growth in the business. I think, in all honesty, that provides quite a bit of air cover to allow companies to really start working on the parts of the portfolio where they can take the hit in terms of top line or in terms of market share. That's the reason why [ you think you have ] lots of lots of companies. But that, I think, is not the main reason in Unilever. I think in Unilever, you're seeing the impact of the organizational change. The empowerment that takes place of the infrastructure is quite fundamentally different. I'll just give you one example. In the past, when you wanted to do the healthy portfolio [ if we think about ] SKU portfolio in a business, a new category leader in Unilever. In order to do that, you would have to negotiate with perhaps 10 to 20 big business leaders in the organizations who are managing their country P&L. And of course, there is a short-term turnover market share implication of dealers and SKUs that provides an awful lot of friction and resistance to doing that. In the new organizational model with the 5 business groups, they have complete impairments, and they no longer have to walk through that additional step. And that's why you're seeing such an impact and why it will be a continuing theme.

And maybe moving to market share. There's been a lot written about the topic and the number that you came up with the 41% winning share and it's a binary measure, that obviously means that 60% of the portfolio that moves in share. People are a little bit surprise with that number. But despite that, you're still doing flat roll mix last quarter. So does that actually kind of trying to triangulate those 2 things? Does that mean that the underlying category growth is accelerating? And maybe within that market share number, can you kind of -- just talk a little bit about those spaces where you are losing share and what you're doing to trying to get there?

Yes. So the reason you can triangulate, I think, is exactly the point that you made around very stretching measure of our particular percent business winning measure. It's relatively binary. 1 basis point either way as red or green and there is no perfect coverage of that measure across all of our business. And let me try to explain that for you. So every company in our space needs to be able to answer the question, in aggregate on a global basis, am I competitive. There are actually many ways of looking at that. We look at market weighted absolute share movement in aggregate. We look turnover weighted absolute share movement in aggregate and looking at percentage business winning. And we second on percentage business winning a few years ago, put it in our long-term compensation, which was really unpopular, I have to say, partly because there is no perfect answer when it comes to answering that question of, are you broadly competitive. I ask myself when we were at 41% in the second quarter. Just that means that 60% of Unilever is losing share and then [ we complement in the company so that's now ]. And I'll just dimensionalize that in a couple of ways for you. So we have got a significant proportion of our business, which is very strategic for us, which is attracting an awful lot of our capital allocation, Prestige Beauty, Health & Wellness, our [ 4 major ] business, which is the most strategic part of our Ice Cream portfolio and our Food Solutions business and Nutrition, it's a very important global channel for us in food service. That's 15% of Unilever, and it's not in the base or percentage business winning. These are things that in the Board room and with Heinz, we need to think through, [ Heinz used ] to be under the table. How best it's express that question about Unilever competitor. But I do just want to mention one last fundamental point. We do have parts of the business, but I don't want to give you an impression that I'm comfortable with 41%, but I'm not obsessing about 41%. The actions that we've taken, the right actions that were taken across the business groups to delist unprofitable SKUs and really get the portfolio pruning. That has an impact to our percent winning because it's [ NIT ] measure, and you have 2 years of impact when you do that. We need to do the right thing and not allow things like that measure to get in the way of doing the right thing. Secondly, with the 1 or 2 consumer moves around the world. One is what I would call extreme value movement. Two examples of that are very big fabric cleaning business in Brazil and the big key business that we have in India. The consumer has moved through the inflation cycle to parts of the category that we don't play in. So for example, very low quality [ out of these ] in India, 3 or 4 brands in Brazil. We're not concerned about that. When consumers get a bit more spending problem, we move back into our brand business. That's 5% of Unilever, by the way, just those 2 sales. And then we do have some longer-term challenges that we need to address. And that's extreme value to show you how bifurcated the world was at the moment, moving to extreme value in 2 countries, moving to super premium here in the U.S., which is particularly impacting our [indiscernible] business under skin cleansing business here in the U.S. Our U.S. business is performing well. We'd love to have that opportunity to explain that in a second. But we don't have a strong portfolio offering in that particular space, so that's having an impact as well. And the final thing, not to belabor the point, but over the European retail and buying lines, the top [indiscernible] price. And we have a big Nutrition and Ice Cream business in Europe. We have continued inflation in Nutrition and Ice Cream, and we had some tough discussions this year, which have now been completed. We're very happy with the outcome that we got, but we made a conscious decision that we would do the right thing in those negotiations for the fundamental long-term good of the company.

And just picking up on North America comment. I was intrigue to learn that Prestige Cosmetics and Health & Wellbeing and now account with 20% of one's higher U.S. business and that's making a real difference to growth. Can you maybe just talk through how that is being built by M&A primarily, how sustainable that is? And is it actually hiring any weakness in the rest of North America? I'm particularly interested in how U.S. hair, U.S. skin care is doing and particularly the Dove prelaunch here in the U.S.

Yes. So U.S., biggest market for Unilever, biggest geography that we have in the business. Just look, I'll move back to the portfolio change that we've done. On aggregate across total unit or the exit from spreads, the exit of [ tea ], the acquisition of [ skin precision ] is in Prestige Beauty, Health & Wellness and Functional Nutrition and the exit of Suave in the U.S., and that is about 17% portfolio rotation. Benchmarks quite well against most of our peers. It's hard to say what the right, wrong number is, but that's the scale of it. In the U.S., it's even higher than that. What we've done is the divestment of tea and Spreads in the U.S. and the exit from the Suave value position, it's 10% out and we build up of the Prestige Beauty business and Health & Wellness business as you correctly say, 20%. So those 2 businesses, they were expensively built, are performing very well and will continue to perform for the 10 consecutive quarters of double-digit growth in those businesses. This is very well positioned from a market growth perspective to continue to deliver very high rates of growth, and that benefits our U.S. business. The turnover of those businesses at acquisition. If you just set up what we were doing at acquisition is about EUR 1.5 billion. And I think those businesses will finish this year doing between EUR 3 billion and EUR 3.5 billion. So this is a substantial amount of incremental turnover, and that will continue. It's very important we do continue because that's the strategy. That proves through to good U.S. performance. So U.S. business for the last year 7% or 8% with slightly negative volume, but almost slightly negative volume, and it grew again 7% or 8% in the first half with positive volume and again, you see the benefit of that in the premiumization of our skin care portfolio, that's when the Prestige Beauty assets and you see good performance in the hair care, hair care styling in particular. So I think U.S. is in good shape. The portfolio work is providing the benefits that we were looking for. The one thing I do want to come back to is the super premium position that I mentioned earlier, in particular, in skin cleansing and in deodorants where we simply don't have a strong offering in that space, and that is work for us to do over the next 2 or 3 years.

Maybe turning to Europe. I mean the vol mix was down 9% in Q2. I mean, whichever way you can say that's an upgrade I mean what drove that decline? Are you -- I'm sure you're going to tell me SKUs in there as well. But I mean, are you seeing the private label share gains stepped up promos? I mean, I'm following Unilever for a long time, I've always thought that you've managed your [indiscernible] as a kind of a cash cow, maybe the [indiscernible]. How does that kind of need to evolve on the new management? Do you need to radically rethink the way you treat your -- you look at those kind of numbers?

Yes, we certainly don't think of Europe as a cash cow. But Europe is the most challenging part of our portfolio. And so for all consumer companies, it's a challenging portfolio. But there is growth in Europe. There is growth within our categories in Europe, and we've not been able to access that satisfactorily over the course of the last decade, in fact. So let's just come to the minus 9% volume, and that was on 15% price. And just to dimensionalize the 15% price. Over the last decade in our categories, there has been 0 price deflationary price for 10 years. So the moved to pricing in Europe is coming from a base of continued deflation to suddenly large inflation, and you would expect to see that sort of reaction. Second thing is that, as I said earlier, our European business has disproportionately large Ice Cream and Nutrition, there is continued inflation there. And you've got the challenges of landing price in the European retail environment. I'm very happy with what we did this year, but it's -- we're doing the right thing but it's hard yards and challenging to get there, but it's the right thing to do. Yes, the SKU rationalization was stronger in Europe than in other parts of the geography. But fundamentally, for [ Unilever ] -- how we think about Europe, Europe is an opportunity for Unilever. We can do better under the new organizational models [indiscernible] last week and I spent 3 or 4 days, but all 5 of our business units in Europe. And again, just the sense that the new organization gives them the levers to pull in a way that is different to the old model, which was particularly strong in Europe because that is the historical base of Unilever at our local geography organizations where we're large and [ cater a lot of ] authority in that model.

Maybe just diving a little bit into Nutrition and Ice Cream. You have acquired a robust [ performer ], but there are some pressure points you mentioned In-home Ice Cream. We're seeing about pressure on [ Knorr ]. What can you do about that? And where are the pockets of growth? And this is related to more of a kind of a more medium-term question, you have this future food initiative, which is about products that deliver positive nutrition and you've got this target of plant-based sales of EUR 1.5 billion, I think it is. So the question is what is Unilever's definition of positive nutrition and where are we on that kind of plant-based target?

Yes. So as I said, you get Nutrition and Ice Cream much, much later in the inflationary cycle. We're still in sort of inflation. If you actually look at our numbers, it's a little -- we've got this kind of many time machine operating in the company right now. If you look at our performance, price and volume in Health and Wealth and Beauty & Wellbeing and in Personal Care, you can see we're moving out to balance price and volume growth. And the focus there is very much about managing the inflation and bringing the volume number up. Home care is just on the balancing point of that, and you'll start to see that move but Nutrition and Ice Cream are still in an inflationary environment. I think about our nutrition business. So what we -- last year, we sort of revealed a presentation on nutrition for the first time. And I find that fascinating that Hein was presenting, and I found that fascinating to watch the room because there were a few things about our Nutrition portfolio that we can see [indiscernible] going off. I mean 2/3 of our nutrition portfolio is 2 brands, Knorr and Hellmann's. We've got almost balance between emerging markets and developed markets within that. Moving to Ice Cream. We've got 40% of our business in out-of-home. Out-of-home, by the way, has performed pretty well, a double-digit growth and positive volumes in the first half. The issues are in in-home Ice Cream, and that is focused in the U.S. and in Europe. Now Ice Cream is -- there are 3 things about Ice Cream. Obviously, it's weather-dependent in most of our footprint in Northern Hemisphere. But it's also our most discretionary category, which is very relevant what we've got lots and lots of inflation and pricing is coming up. The consumer feels that pricing. And it's also the most impulse-driven category. So it's not really a surprise that you see that coming through, in particular, in the in-home Ice Cream business in Europe and North America. And that is really the most focused part of the business where private label is attractive to the consumer.

Maybe moving to M&A ambitions. You showed your hand last year with GBP 50 billion bid forecast for consumer, Haleon, which would have made the world leader in consumer health. Do you still have an ambition to be a consolidator of this fragmented category? I mean you should talk about doubling your prestige cosmetic sales to EUR 3 billion. Is that still a thing? Or will that change under the new management? And have you have the scale back your ambitions a little bit, and you mentioned some of these are expensive, but your ROIC has come down from 19% down to 16%. Do you need to get more out of what you've already acquired? Or do you think that the consumer health opportunity is still so significant that you do need to, at some point, get involved?

And it starts with a fundamental expression and qualification of our capital allocation at the end of the day. And that's very clear and very consistent. We're going to invest back in the business in CapEx, in R&D, in innovation behind our brands, et cetera. Secondly, we can continue to evolve in the portfolio but through bolt-ons. And you see us doing that. The exit of Suave, the acquisition of [indiscernible] that we've done in the first half of the year. It's marginal, but it has a real impact, as you can see from the 17% portfolio rotation, the step-up in the inherent growth profile of the company and how much more impactful actually that is in a geography like the U.S. for us. So I think that's the right strategy. And then after that, the third element is returns to shareholder, attractive dividend and continue to return money through share buyback when we see the opportunity to do that. So it's all anchored in that. We were -- Consumer Health, we've built, and this linked into your question about the scale of Prestige Beauty. But those businesses, as I said, will be between EUR 3 billion and EUR 3.5 billion this year. Each of them has got 8, 9 brands within the portfolio, and they were running very, very effectively, and we're delivering what we want them to do by building those positions. Now being that size of Prestige Beauty still put you on the meniscus of the top 10, et cetera. But we do have to be thoughtful about how we build scale within those businesses because assets are expensive. We've got to get the right returns on the capital that we deploy. And you do see the impact, you'd like to call out the impact on ROIC, and we are conscious of that. So we've got the heavy lifting done. We're applying exactly the same principles that we usually do towards further acquisition and further divestment. Consumer Health, as a space, it remains attractive. I mean the Health & Wellness business that we built. We'll talk about a couple of brands within it. Nutrafol, which starts to enter our growth numbers from about now actually onwards. That EUR 100 million in the first half, very attractive. I think Nutrafol and one other in that space Liquid IV. I think you're looking at the 2 -- I may not be here to see it, but I'll [indiscernible] this fortunate and say that I think there's a couple of billion brand opportunities with Liquid IV and the Nutrafol, similarly published choice, doing very well. So we're pleased with what we've got there doesn't mean that we have to do something radical. I don't think so. But the fragmented nature of Consumer Health. The ability to apply marketing, science, technology, consumer know-how to it, that mean it's attractive. We're in the confluence of holistic health, beauty, nutrition, et cetera. And that's why it's attractive to really to all.

I'm sorry to keep shifting gears to different topics. But emerging markets, obviously, 60% of your portfolio. We heard on the last, I think, it's on Unilever call that they're talking about pricing maybe negative, I think, from next quarter and volume only picking up gradually. Does that picture that we can see another emerging market? I'm thinking about like Indonesia as well, where negative evolving in Q2. Hopefully, does that get better in the back half. And then Lat Am has been incredibly resilient could probably even get better as pricing rolls because affordability improved. Just trying to get a sense of the shape of it.

I think it's really important not to read across the India pathway that they need to go on now between moderating price and building volumes back up and [ cut and paste ] India across to the rest of our big emerging market footprint. They're really quite different. I'll just get a specific on the India situation. India, about 40% of our portfolio in India is fabric cleaning and skin cleansing bars. And we know from experience that they are highly correlated to the underlying commodity prices, principally palm oil pricing. When inflation happens, a lot of smaller local players in the category drop out of the category and then they reemerge once deflation starts to come in. So we're starting to see that in India. We're starting to see that in terms of, for example, the competitiveness of media spend, and we'll continue to dial that up. We have a lot of experience in this and it is the right thing to moderate our pricing and retain our volumes and our market share. And that's the journey that India is going through. By the way, I think we're making a bit of help there from the rural consumer because the rural consumer who is the most pressured is starting to, I'm sure they have been a positive volume again. But I really trust our team in India to manage that dynamic properly. If I contrast that directly with Latin America that you mentioned. First of all, those 2 categories are much smaller as a proportion of our business in Latin America. Secondly, the competitive dynamic is very different. And the consumer let's say, familiarity with high levels of pricing is much more robust. So that's just one example why not to [ cut and paste ] that across. But the challenge is clear. The challenge is pricing will moderate. We now need to drive volume and get back to that higher rate of growth top end of our 3 to 5 range in aggregate that we're shooting for.

And just maybe moving to management incentives. I know that's in your core, but following the payer evolves, I think your shareholders voted against the advisory pay offer. What changes are you -- or is the Board looking at in terms of adapting the KPIs in the LTIP. I mean should you replace, and we talked about earlier, percentage winning with something else, volume or underlying sales, do you need to include the total shareholder return? Because it's obviously going to be pretty key for the new management team to understand what the incentives are?

Absolutely. I mean just a personal reflection, if I may. I was really surprised by the negativity with the vote because I think there were many, many facets to it, but I think one that actually became a bit of a focal point was the incoming -- Hein's incoming package, which was at the end of the day, very much just aligning with our compensation strategy and that was clear. So there's an opportunity in engagement we do, just to explain that and to take people's savings. And we're being very active now and from now on until the AGM next year to do very deep consultation with investors. We're not defensive about this at all. We will get in and we will listen. When it comes to long-term incentive packages, I've expressed what I believe is the other strengths and weaknesses of the percent business winning measure is very unpopular. So I think U.S. is perhaps more value correlated, it's more understandable for everybody. So I do see some benefit in that, obviously. It's towards the end of my ability to impact it. But I think you'll see that in the consultation coming through. I like TSR personally. I think it's very important that you have the peer group, right? But I think it's highly -- it's a high correlation there with our shareholders and I guess it intrinsically like that. So what you can expect from us is good proposals, lots of engagement, also taking on board that many views, I should say, around how compensation works. [ Divest ] for a second. And I think long term that stock is the best way but it's a personal view, best way of incentivizing managers of the company with the shareholders of the company, Hein's very engaged in this, very thoughtful around it. Andrea, I said this, has been taking note of things, and I think we'll get to a good solution.

Maybe turning to ESG. I mean there's a lot we could talk about, very limited time, but maybe what do you see as Unilever's biggest successes in this area? And where has Unilever fallen short? What are the biggest challenges that the team is looking at right now and then out to 2025?

I think as I'll go back, the strength of Unilever and ESG sustainability however you want to badge it in a company that you move is we've made more progress than most in integrating the sustainability agenda, the ESG agenda into our business. Many examples of that. But if you take our Clean Future strategy in Home Care, we prove to biosurfactants, what we're doing in capsules with cardboard packaging and plastic packaging, et cetera, you can see that's really driving the multiyear agenda. I see a concentrated liquids in Latin America, et cetera. Then to move on to [indiscernible] and I didn't answer your question about future foods, and I maybe do that now. Incredible things happening within a brand like Knorr to introduce fortification, things like zinc in our product in [ Ethiopia ], forget the compound. I mean [ this iodine ] in the Royco brand, which is Knorr in Indonesia. And of course, everything we're doing to take Zero Salt bouillon, et cetera. This is just -- it's inherent within the brand and the innovation that we're bringing. And it's always been like that, but we're starting to see it across more and more of the portfolio now. Take a brand like Hellmann's. I mean the Hellmann's tagline [indiscernible] make taste, not waste. So it's going after food waste, but it's doing it through the very essence of the brand communication. That's what I mean by integration. And then you go on to the more obvious ones that we sometimes forget about. But in our oral care business, the programs we won for toothbrushing for kids across emerging markets and everybody knows about Lifebuoy, and it's global handwashing campaigns and Domestos all around safer and cleaner toilets in the emerging markets. It's tightly integrated. So that's the good stuff. That's the good stuff were. Where we think we come up short is where we were complicated. I think we should -- you can see us start to focus -- we don't walk away from anything, but bringing us down into 4 things that really matter for us, which are our carbon footprint. We're probably -- we're very advanced with our carbon transition action plan. Our shareholders got a right to vote on that every 3 years, just like the [indiscernible] report. We were quite leading on that. I think that's the way companies could go. Everybody needs to have a transition plan. So carbon is one, plastics is another. Regenerative agriculture is another one. And making sure that there are decent social remuneration within our supplier base. Really the 4 things. I think the certification would be good for that. Integration into our business is really important. And just on Future Foods, I think we're making really good progress. The goal was 1.5 billion but the business was 1.2 billion, I think, last year, and it's growing double digits. So I think we'll get there. And we've got some very good criteria now what we call USNC, Unilever sustainable nutrition criteria in which were aligned with WHO. And we see it in things like our ice cream portfolio where more than 90% of our ice cream units less than 250 calories. So [ long-term stuff ].

We are on the buzz of time. I am trying to squeeze one more in, but looking at 2024, it does look to me that pricing is going to normalize back to, I don't know, 2%, 3%, so that those will be roll mix. Your 5-year average roll mix has been 1.4%. Are there any reasons to think that you can do better than this average, can it really be 2, 3? And if you think it can be what would be the 2 or 3 biggest swing factors to get you to that higher volume mix?

Nice question. Going back to question about some years from now. We got to get ourselves to be a higher growth company more consistent with, say, a third to half of that coming from volume. We're navigating our way now through deflation in some parts of our portfolio, and you're starting to see that volume come through. The question we get to the top end with 3% to 5%, with [ a third to 50% ] in volume. That's the absolute goal. And I think we're close to that. What are the drivers? The new organization, which you've spoken a lot about because you can put investment by strategic choices that move a lot faster and more consistently. And secondly, the portfolio reposition, which was done through deployment of quite a lot of capital, but also a couple of very big divestments. And inherent step up in the growth footprint that we have gets us towards that. So again, that's what I'll be looking back 2, 3 years seeing [indiscernible].

Well, we are going to come to an end here. Thank you, Graeme, for your time. And then we'll move to breakout. So do please join us.

Thank you.