Woolworths Holdings Limited (WHL) Earnings Call Transcript & Summary

[Presentation] Good afternoon, and welcome to this year's Good Business Journey Investor Session. As mentioned in our inaugural session last year, we've developed these engagements to share with you how deeply sustainability is embedded in our organization and across our value creation model. And so I look forward to sharing with you today the progress and the accomplishments we've made in this regard over the past year. We also want to use these sessions to take a closer look and do a deep dive into specific areas of our Good Business Journey, areas that we believe are not only topical but of keen interest to all our stakeholders. And the topic we've chosen for today is Ethical Sourcing. And so I'm joined by Lawrence Pillay, our General Manager of Sourcing and Technology who will provide an in-depth insight into our approach to Ethical Sourcing, specifically as it relates to our apparel supply chain. So in today's session, I'll provide you with some initial feedback on the progress we're making. Lawrence will then take you through our Ethical Sourcing strategy. And then we'll wrap up with a Q&A session. So you're welcome to post any questions you may have online during the course of the presentation. Woolworths is and always has been deeply committed to our vision of being one of the world's most responsible retailers. And we bring this to life through our good business journey, our GBJ, as we call it, it is critical to who we are to what we do and what we stand for as an organization. Testament to the importance we place on sustainability and our firm belief that sustainability is not something that is separate to the business, but rather integral to how we manage and operate our business is the priority given to this by the WHL Board. In fact, we have both a sustainability committee and a social and ethics committee at Board level. Additionally, the full Board regularly engages with both internal and external subject matter experts on a range of key sustainability issues affecting the group. This ensures that sustainability priorities are fully deliberated at the highest level in the company. In our first investor session last year, Belinda Earl, Chair of our Sustainability Committee; and Thembisa Skweyiya, Chair of our Social and Ethics Committee shared with you the role and mandate of these respective committees, as well as their key priorities. Both committees comprise the Group Chairman and several members of the Board, both executive and nonexecutive, which means that through the cross membership, they work closely together to ensure effective oversight of the execution of our sustainability agenda. You'd also recall from last year that we announced our new GBJ strategy, what we call Vision 2025+, which outlined an ambitious set of goals to 2025 and beyond across 8 key focus areas. 5 of these focus areas: Sustainable farming, ethical sourcing, packaging and waste, water and energy and climate change fall within the first 2 pillars of our strategy, a thriving and resilient environment and a fully transparent, traceable and ethical supply chain. And these are overseen by the WHL Sustainability Committee. The other 3 focus areas being people, social development and health and wellness collectively form the inclusive justice pillar of our Vision 2025+ and are overseen by the Social and Ethics Committee. In line with our strategy, we've set ourselves headline goals designed to really stretch and challenge ourselves even further. These include a fully transparent and traceable supply chain by 2025. This incorporates amongst other things, publishing, supplier list on our corporate website and ensuring traceability of all our key commodities. By 2025, we're committing that all our private label fashion and home products will be designed to be reused, repaired, repurposed or recycled. All our energy requirements will be met by renewable sources by 2030. And very importantly, we're committing to net zero carbon emissions from our direct operations by 2040. In addition, we have an approved science-based target to half our scope 1 and 2 carbon emissions by 2030 and are further committed to work with our top suppliers to set their own carbon reduction targets. In fact, we are 1 of only 4 South African-based companies and the only South African retailer to currently have approved science-based targets. These headline goals are supported by others in areas such as water usage, food waste, packaging, regenerative farming, responsible sourcing of commodities and our commitment to adjust wage. Last year, I said that we were going to do more to keep you up to date on the key sustainability issues relevant to us and our industry and the progress we're making against the targets we've set for ourselves, which is partly what today is all about. Here are just a few of our notable achievements over the past year. Almost 70% of Country Road Group's energy now stems from renewable sources. In South Africa, we were the first retailer to partner with Eskom on a renewable energy tariff programme through which we are now powering 6 of our sites with wind energy. We're also the only and first national retailer to have announced the rollout of electric vehicles for home deliveries. This comes after a successful 10-month trial of these vehicles in [indiscernible] which not only reduced carbon emissions, but also reduced operating costs. In a first for South African retail, we published a full list of suppliers that manufacture all our private label apparel products, not only just for Woolworths here in South Africa, but also for our Australian businesses. This is not only a vital step towards a fashion industry becoming more sustainable and more accountable, but it also serves to empower our customers to make informed decisions and, therefore, better choices. We've achieved 3 major sourcing milestones. We now responsibly source 100% of the palm oil, the cocoa and cotton used in our various private label products. In fact, we are the only South African retailer to source 100% of our cotton through better cotton previously known as a Better Cotton Initiative or BCI. In the case of our Woolies private label products, almost 90% of food and more than 30% of Fashion, Beauty and Home products are now locally sourced. Country Road has introduced a traceability rating for selected products on their website. This enables product traceability through the supply chain from fibre to factory floor. They've also launched the Towards Circularity capsule featuring fabric made from 50% recycled cotton fiber sourced from our own production runs. The Country Road made in Australia campaign is a great example of how showcasing our transparency and traceability in the supply chain is not only the responsible thing to do. It also drives deep emotional connections with our customers. [Presentation]

Following our partnership with GlamCorner and Reloop for fashion rental and resale, David Jones has partnered with Blue Spinach in an extension of our Circular Fashion commitment. 99% of all Woolworths Food private label products and almost 80% of both FBH and CRG products now have sustainability attributes to them. And I'm very pleased to report that all Country Road Group stores and all our Woolworths Food Markets are now plastic shopping bag free. EC Bags, the exclusive supplier of our Woolies reusable bags has been producing bags for us for more than 15 years. As a result of our commitment to replacing all our single-use plastic bags with reusable bags, this black owned business has grown exponentially and now employs over 100 unskilled and semi-skilled workers, most of whom are women. We've also been recognized this past year, not only for the initiative we have taken in linking more than 80% of our debt to the delivery of specific sustainability targets, but also as the most sustainable brand in South Africa in the Annual Kantar BrandZ Awards. Looking beyond our own borders, we also maintained our listings on the FTSE Russell Responsibility Index and also the FTSE4Good Emerging Index series achievements we are very proud of. While we often talk about the E in ESG, I don't think we spend enough time talking about the social component, which is just as important, particularly in the context of a country like ours with the challenges we face in terms of social inequality. To intensify our focus on the social and people facets of our Good Business Journey, we established our Inclusive Justice initiative which addresses issues of diversity and inclusivity and has a very strong focus on racism, gender-based violence and the advancement of women across the group. And as one of the first in this space, we are the only national South African retailer to become a signatory to the UN Women's Empowerment Principles, further reinforcing our commitment towards taking action on gender equality and the empowerment of women. In the area of inclusivity, one of the focus areas for us this past year has been the LGBTQIA+ community where aside from our W Pride campaign, we also launched our first voice platform which provides a space where everyone is accepted, protected and respected regardless of sexual orientation, gender identity or gender expression. We've supported the creation of almost 400 new jobs through our Woolworths supplier development program for small and medium-sized black and black women-owned businesses. The development of black SMMEs is a key transformation and commercial strategy for us and we are currently in the process of setting up a dedicated entity to support us in this regard so that we can scale our impact, not just significantly but sustainably. We've also supported our local communities with contributions of ZAR 1 billion in 2022, including the donation of over 15,000 tonnes of surplus food to charities in support of our food security initiatives. Our Woolworths #ZEROHUNGER Programme was recognized at the recent Intercontinental Group of Department Stores Awards as one of the Best Sustainability CSR campaigns of the year, reflecting the important outcomes a program of this nature delivers. In another food security initiative, Woolworth's Infinity Culinary Training, which operates out of our head office has provided 2 million meals to the surrounding Cape Town CBD community. The ICT provides disadvantaged South African women and men with basic cooking and life skills necessary to find immediate employment in a professional kitchen. This center also provides a pipeline for candidates to join our business with more than 50 graduates from ICT currently working at Woolworths. In line with our Just Wage Initiative and our ongoing investment to enable not merely a living wage, but a just wage, I am pleased to report that our South African hourly wage rate is now 21% above the retail sector minimum wage and 58% above the SA minimum. In line with our commitment to the development of unemployed youth and in particular, black unemployed graduates, the South African Graduate Employees Association announced Woolworths as the 2022 Employer of Choice in the retail sector and one of the Top 20 Aspirational Employees in South Africa, bringing our total wins to 9 out of the past 13 years. And then finally, its something personally quite close to my heart. This past month, we celebrated the 25th anniversary of our MySchool, MyVillage, MyPlanet program, in conjunction with the Department of Education and the Department of Social Development. This innovative loyalty and CSI program has provided support to nearly 8,500 schools and NGO beneficiaries across the country since its inception, contributing almost ZAR 90 million this past year alone. [Presentation]

So as you can see, there's a lot we're doing in the space and a lot that we've achieved. But turning now to the focus for today's session. As a multicategory retailer, we form part of a complex global supply chain with inherent potential human rights and environmental risks and impacts. It is critical for retailers to adopt an Ethical Sourcing approach, which mitigates where necessary and positively influences where possible these risks and impacts. As part of our Vision 2025+ strategy, we have set ourselves the goal that by 2025, all our key commodities will be responsibly sourced and traceable. Simply put, we care for how products are made and are therefore committed to a fully transparent traceable and ethical supply chain. Today, we want to take you through our approach to Ethical Sourcing. Firstly, we only partner with suppliers who subscribe to our commitments around ethical sourcing. These commitments are laid out in our supplier contracts and codes of conduct, and we continuously work with our suppliers to deliver against these. Secondly, we measure our suppliers' progress and performance on an ongoing basis. And we also partner with leading institutions such as through our membership of the ethical trade initiative to constantly strengthen our approach to ethical sourcing. And importantly, to drive progress in our ethical sourcing commitments, we train our staff and our suppliers in human rights, ethics and responsible commodity sourcing. So given the focus for today's session, I'm now going to hand over to Lawrence Pillay, General Manager for Technology and Sourcing to take you through how all of this comes to life in our Woolies Fashion, Beauty and Home businesses.

Hello, and welcome. Thank you for affording us the time to take you inside the difference, to share with you the intrinsics about our product that makes it so uniquely Woolworths. Before I get going, I'd like to set some context. And I would like to share with you some very important statistics. In the making of a conventional cotton T-shirt, 2,600 litres of water is used in the making of one cotton T-shirt. Three kilograms of carbon dioxide is emitted into the atmosphere in the making of that T-shirt. 150 grams of insecticides and pesticides go into the making of that one T-shirt. And 20% of the world's industrial waste comes out of our industry, the clothing and textiles industry. In addition to that, the UN has quoted as of November 2021, that there are 89 million displaced people the world over more than at World War 2. Now these individuals have been force out of their countries for various reasons and often end up as exploited labor. Our industry employs almost 40 million modern slaves. Now these are sobering facts and provide a burning platform for us to think about how we do things differently. So we have built a sustainability strategy, and we launched that strategy in 2006, 2007 and it became the foundation upon which we have chosen to do things differently. The pillars within that sustainability strategy includes social and ethical compliance, radical transparency, sustainable fibers, green factories, water stewardship and last but not least localization and supporting local manufacturing. Let's take social and ethical compliance. At Woolworths, all of our suppliers are socially and ethically compliant. We make sure that we apply the most stringent standards available in order to ensure that our suppliers conform to those standards. So we use [ SDX ] and [indiscernible] for both of our local and of our international suppliers. We audit them on a regular basis to make sure that they're fully compliant. In fact, we are so confident around the compliance of our factories that we have become the first retailer in South Africa to openly publish our list of suppliers. This suggests that anyone has access to these factories and can go into these factories and confirm the levels of compliance that we are truly proud of. Compliance is one aspect. The other is radical transparency, which I've shared with you. And there's much more work being done in that space, and we have more exciting news to share with you as we strive towards going to the level 2, 3 and 4 tiers of suppliers. In addition to compliance, we have driven sustainable fibres. We have become the first South African retailer to have 100% sustainable cotton being sold in our stores. All of our cotton is sustainably soft. Only a handful of retailers across the world can make that claim. And we are the first South African retailer to make that claim. That means that all of our cotton is either sourced via the Better Cotton Program or the organic cotton. What is the Better Cotton Program? The Better Cotton Program ensures that the ecosystems in the firms are maintained, that soil management is properly enforced, that water stewardship in the farms are properly applied, that the biodiversity in the farms are well maintained, that there's reduced insecticides and pesticides applied on the crop and that the farmers are paid the proper wage. All of those elements deliver the Better Cotton Program, and we are proud that all of our cotton is sustainably sourced. In addition to that, we have begun the journey around recycled polyester. And we have driven more and more recycled polyester into our value chain. Since we've begun the journey, we have taken 32 million plastic bottles and have converted them into garments, from polar fleeces to puffer jackets all the way to duvet in us, and we continue to drive that journey. The third largest fibre that we use is viscose. And as you may know, viscose is produced from wood pulp. Now the risk around deforestation is high in the manufacturing of viscose, and we know the impacts of deforestation on the ecosystems of the planet. And so we have begun the journey to make sure that all of our viscose is FSC certified. It means forestry, stewardship certified. And so we have started that journey 2 years ago. Currently, 97% of all the viscose in our store is FSC certified, and we aim to be at 100% by the end of this year. So I have shared with you so far the intrinsics of social compliance, radical transparency and sustainable fibres. And these are the pillars that sit within our sustainability space and makes us uniquely different as a brand. Let us now look at some products and understand how the other elements or the other pillars within our sustainability journey also further support the product. Let's take the basic cotton T-shirt. Now we run cotton T-shirts in our women's wear range, in our men's wear range as well as how kids wear range. We sell about 7.5 million cotton T-shirts a year. What makes the Woolies cotton T-shirt, truly different and unique from the rest in the marketplace? Firstly, it is made from 100% sustainable cotton. I've shared that information with you already. Secondly, our knitted fabrics go through a special process called combing. In the combing process, short fibres are removed, which makes the fabric stronger, makes the fabrics look more beautiful and makes the fabrics more durable. We've introduced a new innovation called Stay New technology in our dying and finishing process. And what it does, it allows the T-shirts to hold colors better. The Woolies T-shirt has been through 100 domestic washes to make sure that the color is consistent and that the fabric and the appearance of the garment stays intact. Now that is the Woolies difference. So over and above the sustainability elements, we also have the quality elements. Green piece of identify 12 hazardous chemicals that sit within the value chain of the clothing and textiles industry. We've been on a journey to eradicate those 12 hazardous chemicals. All of our cotton T-shirts are OEKO-TEX certified, which means it is free of those hazardous chemicals. So that is an incredible combination of different intrinsics that make our T-shirts uniquely different. Most of our T-shirts are made in 2 of our local-based factories, one in KZN and one here in [indiscernible]. Now both those factories have an incredible story to share. They were previously enterprise development, small operations that we have taken and developed them into centres of excellence. We have funded them. We have supported them with technical advice. We have supported them with production advice, and we have grown them into incredible enterprises that are able to give us unique products. Those factories are exclusive factories that service Woolworths. Let's take a look at one of those factories. [Presentation]

So that's the incredible story of Lance and Seasons fine who currently does all of our men's T-shirts. We have also collaborated with some incredibly talented young South African designers to add color and print to our basic T-shirts. A few examples, it's [indiscernible] where we've launched with people, not a few seasons ago, that was an incredible success for us. And currently, if you go into our stores, you'll find [ Carrabba's ] range, an incredibly talented young designer that we're currently collaborating with. So in summary, what makes a Woolies T-shift, a truly different T-shirt. It's the quality that we have built into it. It's the innovation. It's all of the sustainability elements and all of that underpinned with it being made in a local-based factory. And those elements together give us a T-shirt that is truly Woolworths, that has all of the intrinsics often you may not be able to see, but it sits inside the difference. So if you chose to wear one of our incredible T-shirts with a [indiscernible] denim jean, let me share with you our denim story. The denim industry is an extremely dirty industry. You apply an indigo dye stuff and then you're washing off that dye stuff to create an effect. So there's an excessive amount of water use, excessive amount of chemicals and an excessive amount of waste is generated and chemical waste is generated in the process. We have chosen to do things differently at Woolworths. And we aspire to be one of the most sustainable denim brands in the world. 90% of our denim comes out of one factory based in Mauritius, and they have taken sustainability seriously. So our denim uses far less water. It uses far less energy. It uses far less chemicals. We have other new technology that has been introduced into the denim space that we apply. eFlow technology that uses mist -- nano mist to clean up or to clean the denim and create the effects. We have ozone treatments, which uses oxygen molecules combined to use a gas effect to clean up the jeans. At Woolworths, we allow no sand blasting in the manufacturing of our jeans. Sand blasting creates this fine molecules of particles in the atmosphere that's when breath and it can create serious respiratory diseases. A disease called silicosis is quite prevalent in this industry. The fact that we use one factory for most of our jeans. This factory is a vertical operated factory, which means they bring in the fibre, they spin the fibre into yarn. They weave the yarn into fabric. They dye the fabric and then they manufacture the jeans. So we have 100% traceability through the entire value chain of our denim jeans. And so therefore, we can say, our genes are truly sustainably. So let's talk about our iconic chino, be it the men's, the ladies, or the kids chinos. Beautifully constructed garments with incredible handle and finish. The fabric, as we know, is sustainably sourced cotton, the dye stuff use, no hazardous chemicals, OEKO-TEX certified. It has a finish that is uniquely Woolworths finished, which is a soft emerizing, which gives it a truly incredible handle. All of the stress points in our garments are reinforced to make sure that the garment is a lot more durable. The chino is made in Madagascar, in a factory, there is a true center of excellence for chinos. The factory is situated in a little town of Antsirabe in Madagascar. Through all of its social initiatives is able to support that town, so they provide free meals for all their employees. They subsidize their groceries. They provide a healthcare center that provides healthcare for their workers. They have a primary school that is subsidized by the factory itself. The fire station of the town is also subsidized for the factory. As part of their programs to go carbon neutral, the factory plants 10,000 trees a year on the island of Madagascar, such an incredible and inspiring story that speaks to the values of Woolworths. This winter, we featured our recycled puffer jackets. Another incredible sustainability story of where we've used a blend of recycled Nylon and out of the garment as well as injection-blown recycled polyester filling on the inside. Our puffer jackets have wind and water resistance, which drives the innovation elements within that garment. Even our pool of fleece jackets have been made from recycled polyester. And as stated, we have taken 32 million plastic bottles, and we've ensure that they have been converted into garments that can be reused through the value chain. Just moving over to other winter items. Our heat [indiscernible] item also hold a great story. This is Japanese technology -- groundbreaking Japanese technology that is able to use your body temperature and regulate your body temperature to keep you warm. Originally, we used to import the fully made up garments from overseas. But over the years, we have been able to create capability in South Africa to produce this garment. So currently, what we do is we import the Japanese technology in the form of yarn into South Africa. The yarns have been knitted and affecting Atlantis to make the fabric, and the fabric is then shown into these incredible garments here in South Africa, an extremely inspiring story of how we're bringing groundbreaking technology back to home soil. So let's talk about the walk base, a homegrown kids footwear brand that has truly become iconic in the marketplace. Every mom wants to have a kid in a walk make pair of shoes. What makes these shoes unique? They're approved by a research [indiscernible] so the shoes are designed for little feet. They leather uppers, which makes them extremely comfortable. The most incredible story about this iconic shoe is it's made in a little factory in Port Elizabeth. This factory is able to produce 15,000 pairs of shoes for us a week, and this is how big this incredible brand has grown. Woolies is famous for its beautiful baby wear. And in addition to the quality, the incredible innovation, sustainability elements that go into our baby wear, safety is at the heart of what we do as far as baby wear development is concerned. All of our baby wear factories are audited for stringent safety compliance. No pins are allowed anywhere across the factory. There is a stringent broken needle policy that ensures that if any needle is broken during the manufacturing of baby wear, every piece of that needle is reconciled so that we know that baby is safe. On top of that, we have a metal detector. Every garment is required to go through a metal detector to make sure that there's no risk to baby. All of the rivets and the poppers that go into our baby wear garments have to be nickel and ferrous free, which means that there's no risk of any allergies to baby. We believe that our baby wear are the safest baby wear products in the market. [Presentation]

And so we've shared with you the numerous sustainability stories of our products. What is evident is sustainability is not an initiative that we drive with a single product that sits in the corner of a shelf, in a Woolworths store with the sustainability label. It is intrinsically linked in everything that we do, and we have started this journey some time back, and we are proud of the milestones that we have achieved. Many retailers in this country have only begun the journey. In addition to sustainability, we have driven a localization strategy. 50% of everything that we buy comes out of Southern Africa, 30% comes specifically out of South Africa. And in addition to driving a local agenda, we have built small businesses. 25% of all of our local suppliers are black on suppliers. These are achievements that we are truly proud of. However, the work is not yet over. And we have set ourselves some aggressive targets. We will grow that 30% of local supply to 40% by 2025 as we continue to aspire towards our sustainability targets as well. And so you see the entire picture. It's in a holistic approach. It's about driving quality, it's about driving innovation, it's about driving sustainability. And all of that underpinned by a truly South African brand that supports South African manufacturing.

Thank you, Lawrence. As an industry, the impact of our operations on people, communities and on our planet is undoubtedly considerable. But the opportunity to make a difference is even greater. As a leading retailer and more broadly as a responsible corporate citizen, I believe that we have a critical role to play in developing solutions to many of today's challenges including the integration of sustainable choices into our supply chain management. The [ onus ] is on the sector. It's on us to significantly reduce the environmental impact and increase the positive socioeconomic impact throughout our value chains. We are clear that profound and sustainable impact requires conscious and active collaboration amongst all stakeholders. This philosophy of social compacting is core to the success of our good business journey. It's only through collaboration and partnership with government, with NGOs and other industry bodies that we're able to deliver exponentially greater impact that we're able to deliver enduring positive change. And with that, I would like to open the floor to questions.

Thank you very much, and welcome again to everyone. Joining Roy and Lawrence in our Q&A session today is Feroz Koor, Head of Group Sustainability; and Zinzi Mgolodela, Director of Corporate Affairs.

Our first question. We've seen other retailers making acquisitions within their value chain to own their own manufacturing in the garment industry. Is this something you're considering? And if not, why not?

Thanks for the question, Jeanine. Our intent is to onshore and to play our role in supporting and developing our local industry. But our preferred approach is one of collaboration and integration, not through ownership, but through empowerment, actually broadening the economic base by supporting and building small business owners and true entrepreneurs as opposed to just buying out their factories. And that's proven to be very successful, not just for us, but for our suppliers, too. And we've seen that happen very successfully for us in our Foods business.

Lawrence, is there anything else that you would potentially like to add?

Yes. Thanks, Jeanine, and thanks, Roy. I think just to build on to -- on some of the points that Roy has raised. It's our objective to drive localization and the onshoring of as much product as we can. We've set ourselves some aggressive goals. As stated earlier, we've come a long way on the journey, 50% of what we buy comes out of Southern Africa. And currently, 31% comes out of South Africa. Our objective is to take that to 40% over the next 3 years. Now in order to do that, we are driving an aggressive localization strategy that involves onshoring product that currently exists offshore or is currently produced offshore. To do that, we are creating the capabilities within our manufacturing base using small businesses and turning them into formidable centers of excellence. In that process, we are creating entrepreneurs who can build legacies for themselves and their families. And we have a number of success stories. We have 7 exclusive suppliers who contribute to almost 12 million to 13 million units to our total unit buy. And they have incredible stories to share. Lance was a video that I played earlier is one such story. A gentleman who was a small CMT that has grown his business now to become one of our largest T-shirt manufacturers. We have an incredible story in Port Shepstone, where genre clothing, a small baby wear supplier, has now built the capability to allow us to onshore underway from China and India back to South Africa. And in so doing, he's been able to bring in next generations of office family into the business. So we have chosen the route of building entrepreneurs who can build great legacies and great stories.

Lawrence, Thank you. Our next question, you're clearly making substantial investments behind all sustainability initiatives. In the context of South Africa, where a large proportion of the consumer base is highly price sensitive and living below the breadline, do you not think it will be more beneficial to put that investment into price?

Well, I mean, we're certainly very alive to issues of pricing and affordability. And I mean that's why we're investing over ZAR 1 billion into pricing both for our Foods and our Fashion, Beauty and Home businesses. And that's to make our products more accessible. And we're working with our suppliers to do this as well. Importantly, though, we're doing it without compromising in any way quality and sustainability efforts. You would have seen specifically in the case of Foods, our level of food inflation is below headline inflation. And in fact, below that of some of our competitors as well. So we're very mindful about affordability, notwithstanding the fact that we are an aspirational premium food player.

Thank you, Roy. While we're on the topic of food, you say that the majority of your foods packaging is recyclable. But as a customer, my own experience is not that. It seems like the bulk of your packaging is not recyclable. Could you comment on that, please?

Yes, yes, certainly. I mean, and that's a good -- it's a good question, but it does, in part, I think, reflect the complexity around packaging, food waste and waste management. 98% of our Foods packaging, in fact, is technically recyclable. This means that packaging can be recycled. If appropriate recycling infrastructure was available or in place. And in the case of South Africa, we still have some way to go in this regard, which is why we're really pleased with the new mandatory EPR legislation. And maybe Feroz, do you want to dig in a little bit deeper on that question?

Sure. Thanks, Roy. So as Roy said, the majority of our packaging is technically recyclable. And the constraints lie in the infrastructure available and the collection in South Africa and which is why our labeling of the recyclability of product doesn't match the number we just stated. So if you go in and buy a product, you won't see 98% of our products packaging label is recyclable because we label it to reflect what the status is in the country at the moment. We're working with industry to support the increase in recycling and collection infrastructure. We believe the new EPR legislation is a good step in that direction. We're very happy to say, for example, one of our biggest packaging suppliers for a particular type of packaging on a thermo form PET, which has never been recycled in South Africa before, has just commissioned a plant that we're supporting and which will now start allowing for that type of packaging to be recycled. And so we will benefit from that and not just -- not only us, I think the broader retail industry will benefit from that. And over time, our packaging labeling will be changed to reflect that. So it says not recyclable, no. In a few months' time, we should start saying recyclable on these types of packaging. So -- the whole idea is that in as much as we can make certain packaging choices to ensure recyclability, we're very dependent on the supporting infrastructure in the country for that recycling to actually happen.