Unilever PLC (ULVR) Earnings Call Transcript & Summary

Thank you, Hein, for supporting the conference. It's great to see you.

It's great to see you again.

It's -- I think it was December last year when we did our last fireside chat, and a lot's happened since then with the Growth Action Plan or the GAP. The shares have responded a lot. So first question, can you maybe summarize where we're at on the GAP, kind of what's next?

Yes. So the Growth Action Plan that we launched last year in October is really about making choices, doing fewer things, as we say, bigger bets with greater impact. So that means, amongst others, a strong focus of our funds behind 30 Power Brands. It means growing those 30 Power Brands through a comprehensive framework on unmissable brand superiority, which is all about execution, bigger bets behind innovation, not too many but a few big ones. It was about strong focus on gross margin. That was absolutely critical for us for this year and over time and improved competitiveness. So if you now look at it, sort of not a year but close to a year down the road, I think we've seen good progress in the first half with volume-led growth in the business, strong gross margin expansion. And in competitiveness, I think we've made steps. So sequentially, I see some improvement, but we're not yet where I would like to see it.

Okay. Can we talk a little bit about your 6P strategy? Because for me, it's the key to the whole turnaround. I mean we saw the top 30 brands -- Power Brands growing 6% USG. What I want to understand is the methodology because it seems to be real substance. I think you've said that you've tested it in 120 business cells, and it shows great correlations. Could you elaborate on what were the 3 most relevant insights you've gleaned as you've gone through that process?

Yes. So unmissable brand superiority, it's really about a very holistic view on brand performance. And we have now -- or by September, we will have it implemented in roughly 70% -- 2/3 to 70% of our business. And it's very important. It's always at the intersection of a brand and a geography. So think of it as Dove in the U.S. or Hellmann's in a certain country. And then what we do is we measure superiority through the lens of the consumer along 6 pillars or the 6Ps. And in total, that's about 21 metrics. So it's a lot of data but that enriched data. They inform us very well on what decisions we need to make to make the brand just a little better. So that could, for example, mean that we find there is opportunity to increase placements, increase distribution in a certain type of store. It could mean that we need to adjust our pricing, our strategic pricing for a certain SKU. And I can go on and I can go on. So it's a lot -- it's a very comprehensive way at looking at brand health, much more than the functional superiority. And the correlation that we see if a brand is improving on its superiority, holistic superiority, and market share growth is very high. So the chances that if the brand is superior versus the competition in all these dimensions, the chances are 10x as high that the brand will then also grow share. So it's something that will take time to take full effect because while we have implemented it now, we know the baseline, and we know what to do to improve, but it will take -- it's really a methodology that will take effect in years to become truly superior in everything, I believe, that we do. If you ask early insights, I would say we had some work to do on our packaging side. And that meant that in some of our business, we have really improved on the design of our packaging quite strongly, recruited new people for that, more with beauty background and so forth. And we're seeing the first effects on that. We just did a relaunch, for example, on our body wash here in the U.S. for Dove, the same on face care in Latin America. So there are some early learnings, and we're moving fast to implement them.

You mentioned Dove a couple of times. It's your biggest brand in the portfolio. What is the growth of Dove at the moment? And how do you make that brand unmissably superior. And I'm quite interested just as a side. You're entering the dermocosmetics market in Brazil, which I think is the first for Dove. It looks like quite a big bet. Brazil is normally a testing ground for -- and so that's happening. Can you maybe just talk about that as well?

A little bit about Dove. So Dove, more than 10% of our total turnover. At this point, it is Unilever's largest brand. And the first half -- first 6 months growth number on Dove was 10%. So we're quite optimistic about Dove. So there's a lot happening. I mean first of all, I think the brand is stretchable to multiple categories and probably a little bit more so than what we had assumed for a while. If you think about it, this has a leading position in Hair Care in India. Of course, here it's more body wash. But we see opportunity to leverage Dove across different verticals. So that's one. But if we do it, clearly, we must come with a brand proposition that is a bit more united and a bit more aligned than what we had before. Of course, the whole real beauty purpose is still the background on Dove, but we're changing tone there a little bit. And we are premiumizing behind Dove. So in some markets, we see more room to premiumize than in others. And particularly Latin America, what you say, dermocosmetics and so forth, face care, there we -- through the design on packaging, through enhancement of recipes. I mean we're seeing a real premiumization opportunity, and the brand is responding extraordinarily well to that. But at the same time, we also need to be a bit realistic one because in a country like the U.S., Dove can go to some price points and probably not above, but that's fine.

Okay. On innovation side, you're talking about trying to double the average innovation size, more EUR 100 million platforms, 10, 12 big projects rather than 50 or 60 projects. Question is, how do you get better at scaling your brands? And how do you mitigate the risks of making such concentrated bets? I'm trying to understand where are we in terms of building a multiyear innovation funnel. And what does that mean for the R&D department?

Yes. So obviously, innovation is the lifeblood for CPGs, much more so probably than what we have thought for a while. And I think it's our role. If you're in 80% of where we play, if you have a #1 or a #2 position, you need to build markets, build categories and make markets. So I'm a big -- very big believer in innovation, but it needs to have a serious program. So first of all, you need to think about innovation through multiyear programs. And it needs for us -- because of our scale, you have to have a scalable innovation. And I think that's where we had to step it up. You're right. So versus 2020, roughly, we felt that we had to double the average size of innovation. And we had to put a number of big bets down. That was very much in the Growth Action Plan. And in 2024, I believe that every size of innovation we are indeed doubling. So that means we're doing less, but when we do it, we're more serious about it. And we have clearly made a number of -- 12 actually big bets that should become EUR 100 million platforms in 2, 3 years' time. We're well underway to do that. But of course, it's only 1 year down the road, and we need to see how it develops. But I feel very good about it. And all of these big bets, by the way, they're all behind these 30 Power Brands as well. So they go hand in hand.

In terms of margins, obviously, gross margin was up 430 bps in H1. You raised your EBIT margin guidance to above 18%. The question we're trying to get at, how much of that gross margin was deflation year-on-year from the NMI change? I'm thinking number EUR 500 million. Is that too high, too low? And can you sort of sort of walk us through the savings and the kind of medium-term gross margin? Because obviously, you were so strong in the first half. Some of that is one-off and it's going to kind of roll over. So how should we think about the kind of gross margin cadence from here?

That's a lot of questions in one question. But let me take a step back on gross margins, but I'll quickly get to your point. So when I started in the role last year, gross margins by the end of 2022, I believe, were 40%. And they, pre-pandemic, were 44%. So we had to close a gap of 400 basis points, and we're absolutely keen to do so. The good news is, first of all, we thought we were going to get there in 2025. We pulled it forward, and we're sort of there, and we believe that's quite structural. So that's number one. Now then let me go to the composition of that. The first one is just the part that you can always control. That's the controllable cost part. It's around 10% of your cost base. And there, we're implementing a program on net productivity, i.e., cost per ton, lower cost per ton every year. And I think that's something that consumer goods companies in a moderate inflation environment simply need to do. And this year, we had a target of minus 2% on controllable costs, and that's something we will exceed. So that's one part, and that will help us going forward. So that's one. Secondly, our mix given the focus on power brands -- and power brands are accretive to the group. That will help, of course, a bit. And then thirdly, as you say, I think in the first half, we did have tailwind of some deflation and rollover pricing, and the combination of that gave us expansion. And we simply were buying better than the market. I wouldn't confirm or deny your EUR 500 million. But yes, we have tailwind. And therefore, I expect that expansion of 400 basis points, we will not continue in the same rhythm in the second half. But probably the way to think about it is year-to-date, we were on a gross margin of 45.7%. On an MAT basis, 1st of July, it was 44.5%. And that probably gives you a good indication, the second number, of where we want to land.

Because I guess the other driver is the cost savings, the EUR 800 million that you've talked about. Can you maybe spell out where that's coming from? Obviously, Fernando is doing a lot of work on different verticals. You've mentioned surfactants is one, but I'm sure there's other -- many others that you're doing. But how that plays.

Yes. So just to clarify, there's 2 programs on productivity. The first one is something that you need to do every year. That's the one that I talked about, net productivity in the supply chain. And therefore, we're also quite adamant that we will spend at least half of our capital expenditure this year or next year behind net productivity improvement in the supply chain, and that will benefit gross margin. The EUR 800 million program that you're referring to and impacted quite a number of jobs, it's much more on the overhead side. And that is meant to, a, offset stranded costs from the Ice Cream separation that is -- that we aim to get to by the end of 2025, free up funds for investment in brand and marketing investments and capitalize on technology that is there in the company but we didn't always take the consequence to then say, hey, we have increased productivity and good technology but now we need to take the people consequence. It is what it is.

And on the people consequence, you've taken out -- I think the number is 7,500. I think it's 1 in 3 office jobs in Europe. It's obviously quite a big change. How is that going? Are you able to do that with the minimum of disruption? Because obviously big bang -- not saying it's a big bang, but we've seen it in other companies. It can be quite disruptive.

No. I mean an exercise like this is not something that you like to do. Definitely not. But we felt that for the reasons that I talked about, it was the right thing to do right now. And of course, it's unsettling. So we announced it in March. We went through consultation in Europe with unions and works councils before the summer holiday, and we're now in execution. Outside of Europe, we have done the design, and now we're also going to execute. So quarter 3, we're in the thick of it now. Again, there is anxiety in the company. It is a bit uncomfortable. But I think providing clarity is also respectful here, and we aim to get through it swiftly and to the other side by the end of the year.

Okay. In terms of market share, you talked about green shoots. So are you able to maybe elaborate a little bit where you're seeing those green shoots? I mean you still talk about the 70% of the portfolio that's measured and 30% is not measured. Are you able to kind of give us a view on the whole portfolio as you see it today?

Yes. So on competitiveness, as I said, we're not there yet. That said, sequentially we are improving. So if you look at the last 12 weeks and last 12 weeks and you do that on a monthly basis, we are seeing improvements. But I don't expect a swing from losing share to real winning share for the full year. But I do expect improvement in the second half, which is also what we, by the way, indicated when we announced the Growth Action Plan. But then if you look at where we're winning and losing, so the way to think about it is -- I always think about it 40-40-20, and that is still the reality today. So Europe under pressure, mostly on local brands in Nutrition. I would say the rest in Europe, actually on Personal Care, we turned the corner. That's going very well. The same on Nutrition on our main brands, is going in the right direction. And the second 40% was the United States, and that was predominantly due to premiumization in deodorants and body cleansing and in Hair Care. And here, we've seen that, that masstige segment, so the much higher price point, not the super premium, but just below, has been growing very, very fast. We gained share in the premium segment that I talked about with Dove. But simply, the category grew faster in the more premium part. Hey, that will continue, although we're seeing some bit of slowdown. And look, we are not super present there, so we will accept that. And at the same time, we will continue to evolve our portfolio. The third area is Indonesia, the 20% remaining essentially. And Indonesia has been a tough story for the company for 10 years. And if there is one area in my first year that I'm not happy with the progress, then it's probably that one. I would have loved to see that turn around quicker, but it's a very sticky situation.

I mean given you mentioned Indonesia. Can you actually sort of unpack it a bit? Because obviously, on the surface, it's consumer boycotts. You were talking about recovery in the second half. That's been pushed back to next year. You're now talking about, I think, quote/unquote, significant portfolio initiatives and a full reset of route-to-market strategy. So it sounds like you're really going deep dive and sort of blank piece of paper. Any sort of color on that? Because there seems to be a bit of a change or a big change.

Yes. So as I said, so Indonesia has been under pressure for a long time. Last year, we made a significant change. We changed the leadership of the company in Indonesia. We changed our go-to-market. But I felt already at last year that somehow we did not keep up with the developments in Indonesia itself. So we were very focused on the general trade sector, but actually, the consumer moved on. If you think about it, Indonesia today is the second biggest TikTok country in the world. But if I then sort of looked at how savvy are we in reaching our consumers through social, how savvy are we reaching the consumers through the convergence of marketing, commerce and entertainment channels, how good were we in driving a modern trade presence, and we were simply behind. And that meant we had to step it up. We started doing that. But of course, consumer boycotts came in, and they spiked. They continue to spike and then they moderated. And of course, that's not helping. So it pushed us back. But I certainly don't want to say that the consumer boycotts were the sole reason for underperformance. And once again, I would have loved to be more ahead by now. But it's sticky. It's a full transformation that we're doing. I believe we're doing the right things. We're very committed to Indonesia. So we're definitely not giving up. I think this is a super important country for us, but it will take longer to turn around.

While we're doing the world tour, can we touch on a few other countries, China being one of them? We were talking before you've just come back. Clearly, the consumer's weak. The macro's weak. Can you maybe give us your latest thoughts on China?

Yes. So China, I was there actually last week, spent a full week there. All the categories in which we play in, I think that's for all our competitors, obviously, as well, I mean they're under pressure. So it's minus at this point or at best 0. I feel good about what we do in China. So I'm here -- our presence in China is actually good. We have grown the business organically. So this is not an acquisition business. We've grown it organically with very strong market positions in a few of our core categories: Hair Care, number two; Food Solutions, by far the #1; Home Care, still a top 3 player; and a growing business in Prestige Beauty. So we're gaining share in China. We have a good team. And I feel with the price positioning that we have, I think we're actually well positioned in China. But clearly, I don't expect for the next 2 years that double-digit China growth that we've obviously seen in the past. It will be very subdued for the future.

And the other -- the big one, of course, is India, is your biggest emerging market by far. There's a lot of stuff happening around channel shift in India. I mean your dominance in the mom-and-pops is well known. But clearly, there's more digital apps, much more quick commerce. Does your historic distribution advantage get eroded over time because of that?

No. Well, let me first take a step back on India. So India, of course, is very important to us. And I think India as a country, we really see that they are just over that tipping point in terms of where the middle class is ready to spend more. I mean the premiumization that's happening in India is astounding. Channel shift is clearly happening, and modern trade is now really booming. But also, of course, social is super important as well. We are leading in 85% of our categories as a #1. Will our shares always hold because we tend to have very high market shares? Probably not, but we're really interested in growing the pie and building premiumization, building categories. So I'm very positive about it. I mean if you think about it, the second quarter, 3.8% volume growth and yes, negative pricing. That deflationary impact will turn a bit in the last quarter of the last half of the -- second half of the year, I think, with inflation coming back somewhat. That's usually positive for us. So very -- I mean the short term this year 2024, okay, but we remain very bullish about the medium term for India.

And the other big opportunity to see that everybody is talking about is the beauty opportunity in India. It's the next big growth avenue for 10 years. You've got interesting brands already in India, Lakme. But you've also got a portfolio now to potentially take advantage in India in a way that perhaps you didn't in China a decade ago because portfolio was very different. So the question is, how are you going -- so I know we've spoken about this before, but I'm interested in 6 months on. Have your thoughts evolved in terms of how you actually bridge that and how you go about trying to get your fair share of that growth?

The growth. Yes. I mean as I said, we're obviously quite bullish in India, but don't forget that those more premium brands actually, we've entered with China with these as well, also organically and through cross-border e-commerce. We do it selectively, but that's an important growth avenue for us because as you say, we were not there. So it's incremental. In India, we -- I want to make sure that we're not going to get behind on this one for sure. So we're actually introducing -- and I need to obviously not give all information here, but we are introducing quite a few of our Prestige Beauty brands. Lakme is an important vehicle, but also in Hair Care, with Dove, TRESemme, these brands are 4x the next competitor. So there's a lot of opportunity to continue to develop those brands that are already on the premium side. So I think we're well positioned, but we are moving in India with -- more bullish than what we've done in other countries.

And turning to the U.S. consumer, obviously, here we are in Boston. And your U.S. business is in -- it looks like it's in pretty decent shape. Are you, however, seeing any areas of trading or any hot spots where promo spend is spiking or channel shift you'd call out? And do you think that pricing in your business in the U.S. could actually turn negative? Because obviously, it did roll a fair bit in the second quarter.

Yes. No, I mean we're not projecting negative pricing. So let me be straight on that. If you look at the U.S., look, there's, I would say, 3 businesses. The first one is the Prestige Beauty part. There, we absolutely do see slowdown. So where we were growing that for many quarters double digit, it became single digit in the first half, and it will be at best that in the second half from what I'm seeing today. So there, we're really seeing slowdown. At the same time, our Health & Wellbeing business, led by brands like Liquid IV, Nutrafol, OLLY's, still growing very strong. So I feel that there, we still have runway. Probably, they are a bit more -- a bit closer to where the consumer sentiment is today. Then if you look at the core business in the U.S., and I talked about Dove already, look, we're seeing the consumer, as I talked, they continue to trade up actually on that for a long time because these higher-end deodorant spend has gone up for a long time. The same on body wash. We see it slow down, and I think we're well positioned. But I -- from what I see, the U.S. consumer, they're probably not on the top, top end, but they are still spending.

Okay. Maybe can we move to the Foods business and Nutrition? I think Nutrition returned to volume growth in Q2. How do you see sort of Hellmann's and Knorr performing from here? Because clearly, pricing has been very high. Pricing is rolling. Volume is clearly key. You've got a new head of the division. There's cleaning up to do. So maybe just your assessment of how you're feeling about the Nutrition business.

So our Foods business, I'd like to call it Foods because I find it more a Foods business than a real Nutrition business. But we're -- the nomenclature will change at some point. But if you look at the Foods business, I'm actually very happy with that business as part of the company because if we're capable to streamline it further to its strategic core, and the strategic core for me, these are 4 blocks. One, which is led by Knorr, and that's cooking aid, and Knorr is about 70% of that vertical. Second, condiments, led by Hellmann's, about 2/3 of turnover. Third, Food Solutions, which is the business-to-business angle, mostly in China and Asia, and they only do Knorr and Hellmann's. So there's a lot of leverage there and a lot of innovation as a result. And the #4 block is our Nutrition business in India. And yes, then we have local brands, et cetera, et cetera. So I expect some -- over time, some further pruning and focus on those 4 key blocks. They are accretive. They are disproportionate in cash generation for the group. And we can clearly leverage innovation by rolling it out across many geographies. So I feel good about that business, but it needs strong focus and strong execution in the months to come. And I know Heiko is behind this agenda.

Okay. Ice cream. Why doesn't a JV or sale create more value than a demerger or an IPO? I would have thought it brings proceeds in the door immediately. The margins are clearly still quite low. Top line is still not being fixed in Q2. But I'm just -- where are you in terms of sort of carving out the ERP system? And because I imagine that's quite a big chunk of work within the organization. And my understanding is you're running it like a parallel process. But when I look at the numbers, it would seem to me that a JV or a sale would actually make more sense. I know it gives you certainty to say that you want to do a demerger, but in terms of if you had a preference.

Yes. Well, I mean, we made a strategic call on the Ice Cream business that we felt it's a distinct business model. It's different, as we mentioned before. I know it's repetitive. But it's frozen. The rest is not. So from a go-to-market, it's different. It's seasonal. The rest is not. It needs a higher capital expenditure than the rest of the group. But it has a very focused brand portfolio. On a relative basis, we have the most premium brands in the category in Ice Cream and the most global brands. So I feel this is actually a very good business. It's a very strong business. And it can stand on its own. And it needs to stand on its own to flourish and to grow faster. That's very much what I believe. And the route that we have -- the route that we're taking, I think, is good for shareholders because they can benefit from that stand-alone nature of that group by holding shares in that company. And I think it would be -- it's a higher value creation route. That's number one. Secondly, it's a route that we can control, as you say. And the other route, it takes more to tango. As we said, we are open for other options. And I remain open for other options. But we are absolutely determined now to push this one through towards the end of 2025. And we're well underway with the disentanglement of systems. And I would say at this point, we're really on track in doing that. I would have liked operating performance just to be a little better. It is probably a bit of a delay, but I feel we are making those improvements, and I'm still very much there. And I think I said it to you that I expect 2024 to improve versus 2023 on all metrics: top line, gross margin, operating margin and cash delivery. And I'm still convinced that we're going to get there for the full year.

Because you're still saying that the trading performance -- it sounds like you've done a lot of work, but the trading performance still wasn't great in the quarter. I know the weather was poor. China, you called out. Ice Cream as well. I think it was a factor. So what is [indiscernible] sort of near-term priorities in terms of -- just need a sun to shine or...

I mean I was smiling because I hate to say that the weather was not good. But actually, the weather was awful in June in London and -- well, in Europe, so it wasn't great. So that didn't help in the second quarter. But I also felt that the operating performance in Ice Cream in the -- it came -- we made a lot of improvement, but probably a little slower, 1 quarter slower than I had hoped. But we are seeing fundamentally strong improvements. And when I talked about share, our market shares in our main geographies, particularly in the U.S., are on a very -- are positive. We're also improving market shares in Europe. So I -- again, I feel that by the end of 2024, I'm still convinced that we are improving Ice Cream essentially in every metric and most operating metrics as well. China has been a tough situation. Local competition, very strong, but pipelines were extremely full. Distribution channels, a record number of inventory days. We looked at it, said, hey, we're not going to participate in that with all its negative consequences. Took a step back, cleaned the business, and now we're moving forward. And I think it's on a firmer footing now.

So I'm moving around here, but Prestige and Health & Wellbeing. I mean the thing for me that was interesting is you've delivered the 14th consecutive growth -- 14 consecutive double-digit growth in that division despite the fact that Prestige slowed down significantly in the quarter. So therefore, the Health & Wellbeing part must be flying. So you've got Liquid IV that is being rolled out. But you've also got K18 coming into the portfolio.

Prestige Beauty.

Yes. Yes. We've also got Nutrafol as well. So can you maybe just talk a little bit about -- Liquid IV I see in the -- over there is flying off the shelf. I'm not going to -- hangover cure is sort of...

Well, I mean...

But it's doing really well. I've seen in the U.K., you've got a sugar-free version. So can you maybe talk a little bit about how you are going to get the most out of those 2 particular brands of Nutrafol and Liquid IV?

Yes. So for -- I mean we manage 2 verticals globally, right? So first is Prestige Beauty. And I think the play there, if you -- I'll take a step back. If you look at Prestige Beauty, we're focusing more on the bigger brands, Dermalogica, Paula's Choice, and scaling these brands across the globe. So we have introduced essentially -- I mean, those 2 -- K18 is a great example. It's ahead of the business case. So that's good. But it's scaling already internationally quite fast. So that's what we want to do there. Bigger bets behind a few brands. By the way, in the power brands, there's 4 brands already of that part in there. Then Health & Wellbeing, Health & Wellbeing has been indeed the success behind Liquid IV. Nutrafol, which we called out in terms of growth, in the first 6 months grew 4%. That's really strong behind the subscription model. And we're expanding from hair now also in skin care, so a beauty from within concept for skin care. We're very bullish about that. And OLLY's remain strong, but the growth of OLLY's is mostly in China. So also here, it's scaling those brands, and we're not going to choose many. So we choose Liquid IV and we choose OLLY's to scale them in big markets. So OLLY's in China. Liquid IV, we're rolling out in Canada and then the bigger European markets. So that is what we can offer, of course, to those brands. And at some point, we need to bring them to the world because otherwise, why would they become part of Unilever. So I think Prestige will be under pressure a bit for a while here, particularly in the U.S. I believe for the next 2, 3 quarters, you will see good performance on Health & Wellbeing overall. I'm not promising another consecutive quarter of double-digit growth. I mean that's a bit -- at some point, that will be hard to do. But selective internationalization, bigger choices behind which brand to really grow and continue to refresh the portfolio.

But the other thing that's interesting is that in parts of the U.S., you have high price points. You mentioned U.S. deodorant and U.S. skin cleansing, which historically Unilever's wheelhouse would be like a price index of 80 to 120, 130. But some of these are growing at price indices 300, 400. And we've talked about it a little bit previously. But how do you go about trying to access that kind of growth. Can you take Prestige brands down? Can you bring other brands up? Or do you need to buy new brands? Because that could happen in other markets because we're seeing a polarized consumer, super premium value. And normally, people think of Unilever outside of Prestige, it's more like a mass market consumer in terms of the DNA of the company.

Yes. So first of all, premiumization as a concept is something that is very important in the growth action plan. So when we talk about market making and when we talk about multiyear innovation, it is -- in a way, it is premiumizing, but it comes in different forms. So if you think of Unilever going forward and the bigger bets and the strong -- that we will make, the strong focus that we will exercise is you premiumize in large markets like Brazil, like you talked about with Dove in dermocosmetics. And there, we're capable to premiumize those brands into categories that are skin care, face care and so forth. We're premiumizing in India in Laundry by going into a liquid -- from powder into liquid and doing that decisively. In developed markets such as Europe and the U.S., yes, we want to -- we can premiumize brands like Dove, which we are doing, TRESemme through styling and treatment solutions that we borrow from the Prestige Beauty segment. But I think we also need to accept that in some price tiers, our brands were not playing. And people were quite hung up about it. And shouldn't we do this? Hey, we have a good Prestige Beauty business. It's still small. But it's, on a group scale, growing. It has been growing. That's good. And we have brands that we can continue to premiumize up to a certain price point but are very strong. I talked about 10% growth of Dove in the first 6 months. And hey, maybe you missed a certain price segment, but I'm okay with that as long as you do the right things for the -- for your existing brand portfolio.

I've got to ask you about ESG and particularly around plastics because it's 1 of your 4 pillars. Do you think there's going to be a legally binding plastics treaty this year? And if there is, do you think it will have teeth? And what -- it sounds like you're quite active in this area. What do you want to see from that agreement? Any kind of update that you can share? Because it sounds to me like Unilever is one of the companies leading the charge...

I'm Co-chair of the global Business Coalition. It's a coalition for -- that is more than 200 companies, pushing governments to get to a global plastics treaty. And I think it's tremendously important for our sector because our sector is a big user of plastics, and we simply have to make progress to -- for our own credibility and, of course, to manage externalities that are simply not right. It's just better for the planet to take them out. I am cautiously optimistic that there will be a treaty. I went through the previous negotiation round in Canada. The next one is in Korea. And now we're managing in between to see how far we're going to get. The treaty has to be binding because otherwise it doesn't make sense. You have to have a binding agreement. In the binding agreement, you have to have rules around the design of packaging. You have to have rules on things like hazardous chemicals that are -- that should not be part of packaging material. And you should have clear design -- clear rules around recycling and what we call EPR, so Extended Producer Responsibility. But it means what is the role that companies need to play in markets in the whole recycling system. And I think we are ahead of the game as a company. We are reducing our virgin plastic now by 18% versus 2019. That sounds not much, but actually, we're quite ahead of the rest. The problem is with voluntary action, we cannot make more progress. We can't -- we need the system to cooperate. Rules, regulations, recycling systems, et cetera, et cetera. So I'm cautiously optimistic, but we have quite a bit of -- quite some way to go before we're getting to a real plastics treaty. By the way, the plastics treaty will be, I just want to say, good for government. It will be good for business. It's good for investment and it's good for the planet. So this is a win-win-win, but yes, we need everyone to play.

That's very interesting and watch with interest to see how that developed. The one thing I forgot to ask you earlier I was going to through my geographic tour was, of course, the European question. And having followed Unilever a long time, it's been one of the Achilles' heels. We were seeing progress in Europe. It seems like you're premiumizing Europe and you're pushing -- you're executing better in Europe. Is it just a category that are getting a bit better? It seems like you're being promotional in some areas. Can you just give us a sense of -- do we still see sequential improvement in Europe from Q2 into the back half into next year?

Yes. First of all, on Europe, I mean, when I joined the company, we had 3 geographic priorities, which was U.S., China and India. There, we did make a change. So we said, hey, we run the company through 5 global business groups. And if a group, Personal Care or Nutrition, I mean both of them, if they have a significant presence in Europe, and that means both are exposed to more than 20% of that turnover to Europe, hey, Europe is important. You can't make your algorithms if you have 20% underperforming. It just doesn't work. So first of all, we have increased our attention to Europe by -- by the way, the same on Home Care, by developing, again, scalable innovation that builds categories and therefore works with retailers to do so. The best example, I think, is the introduction of Wonder Wash in Home Care that we're now rolling out across Europe. And we're doing the same on -- we're introducing whole body deodorants in Europe as a first mover under Personal Care. We've been working on plant-based mayonnaise, a different variety, more -- spicy mayonnaise in Nutrition. So we are developing European specific but still very large and scalable innovations, and I feel that we have a good pipeline for the next year. So for me, Europe, it's not a lost continent in CPG. You can win. Yes, it's a share game, but you can build categories if you do it in the right way. And we will continue to play in Europe in those areas where it's a significant part of our business.

Well, I think we're in the buzzer, Hein, so I think we're going to leave it there. We're going to do a quick breakout with Hein next door. So if you'd like to ask Hein questions, please do join us. Thank you.

Thank you.