Okay, welcome to day two of the Barclays Global Consumer Staples Conference. I'm Warren Ackerman, the Head of European Consumer Staples. I'm delighted to welcome François-Xavier Roger, Nestlé Chief Financial Officer, to the conference. I hope you're all feeling rested, caffeinated. The format today will be a fireside chat with François and I, and then we're gonna do a breakout next door afterwards for your questions. We'll have plenty of time for the breakout, so don't worry. We're gonna kick off in earnest. Welcome, François. Thank you, Warren. Good to be here. Clearly a lot going on. It's hard to know where to start sometimes. I guess maybe just a general question on the state of the consumer. You know, what is Nestlé's general outlook for the consumer from here, and how resilient are Nestlé's categories, particularly to private label, which is a question that's coming up all the time at the moment. Maybe we can start there. Okay. No, we can start. It's a good question, Warren. If we look at our performance in H1, actually we have been positively surprised by consumer sentiment and reaction. As you could see, we had a stronger revenue growth, but beyond pricing, we were very happy to see that our RIG has been very resilient. Positive RIG. Positive for the two components as well, be it volume and mix, so very happy with that. Why did we get there? Probably because, first of all, we have strong brand equity, we have strong market position. I think we have more than 80% of our business which is in number one, number two positions, and we are more premiumized than we were. 35% of our sales today are in premium products. It was 11% ten years ago, so it does help. All of this does help. I think that we activated quite a lot of pricing activities as well, but I think we did that well in terms of execution. We paid very much attention to do it in a responsible way, which mean that, for example, if we had to put through 10% price increase, we didn't do it in one go. We spread it three times 3%, for example, over a reasonable period of time. It was relatively seamless to the consumer. That probably explains why we did not see too much of a negative reaction. Going forward, we expect that we could have some, possibly, some negative reaction in terms of negative elasticity based on volume or probably more on mix, which will be a reflection of down-trading by consumers. I think that we are a little bit more worried about Europe today, given the energy crisis and the price of electricity and gas, which is going to impact certainly the purchasing power of the populations in Europe. If I look at categories, the categories where we have maybe less strong positions, maybe we are not number one, number two, or less strong brand equity, maybe this is probably where we are more likely to feel a little bit more of the pressure going forward. Private labels have gained market shares in the beginning of the year. I saw your very interesting report on that matter. That being said, they have gained essentially market share that they had lost during the pandemic, so no major concern at this state, but this is something that we are monitoring very carefully. We have a range of products which is deep enough and wide enough, we believe, to accommodate any down-trading by consumers, but that's something that we are monitoring very carefully. Okay. Maybe moving to the COGS inflation question. I remember in the first half last year, COGS inflation was 4%. In the first half of this year, it was 14%. That's a huge number. Could you maybe break down that 14% and what the kind of swing factors in the second half could be? 'Cause we're seeing some spot prices coming down. Any early thoughts on 2023? I know it's difficult, but just given where current spot prices are, that would be really helpful. We were indeed at 14% in the first half, which is big. We should be around 14% to 15% for the full year. We have a decent level of visibility today. The main items there are certainly dairy- Yeah coffee, transportation and logistics and energy as well, our big items on the list. Indeed, we start seeing some items which are moving down in terms of pricing. We'd mention oil. Oil prices are today at a lower level than they were at the beginning of the year. Yeah. Palm oil is down as well. Grain prices are down as well. That being said, some other items are moving up. If we look at energy prices, electricity, gas, I mean, they are really skyrocketing, particularly in Europe, but probably all over the place as well. In 2023, difficult to say exactly what's going to happen. What we know already is that there is one other cost item that will come on the agenda next year, which is salary and wages. We have done some salary increases already, especially for blue collar workers in the US or in some European countries, but much more to come next year, so which is a significant item. The rest of it, we lack visibility. Of course, we have a little bit of hedging and forward buying as well. Yeah. Very difficult to know. Now, what I need to mention as well is that we know that in 2023, we will still have a significant input cost inflation coming from the carrying over of whatever we have received during the year 2022, but where the same applies to pricing as well. Yeah. Whatever we have implemented in pricing in 2022, part of it will be carried over in 2023, even if the consumer is feeling it today, but it will be reported in our accounts for part of next year. Okay. You touched on energy prices there. Maybe you can shed some light on Nestlé's exposure to the rising gas prices in Europe and any potential shortages. Just how much of your kind of cost base relates to gas? In which region? Which, you know, which factories? You know, Germany. If you can give us some idea about how you're trying to de-risk the situation. Okay. We are not a heavy user of gas. Yeah To start with, we have started to work on the case a few months ago, and we have identified about 5% of our global industrial footprint, which is potentially at risk. This means around 15-16 plants. Mm-hmm Predominantly in Europe and predominantly in Germany and Switzerland. We have set up a contingency plan and business continuity plans. There are two main thing that we can do. The first one is to convert whenever possible the source of energy from gas to oil. Yeah. Oil is widely available today, so not an issue. Whenever it's not possible, we will pile up inventory ahead of the winter. We can start piling up inventory now to make sure that we can supply our customers. We should be aware as well of the fact that we are producing essential goods, so this is the same as what happened during the pandemic, which means that if there are cuts in terms of supply, we are unlikely to be the first one on the list. That being said, we are very careful because if there is no gas, there is no gas. We need to be prepared. Sure. The other thing that we look at is our supply chain as well. Some of our suppliers may be affected as well. In that case, we are really working on piling up a little bit more inventory or looking at alternative suppliers mainly outside of Europe, because, I mean, outside of Europe the situation should be okay. Okay. I've got a few questions on margins. I mean, you're guiding to 17%, UTOP underlying trading operating profit margin this year. That is the second consecutive year of no margin expansion. Obviously, inflation is there. Given the very high levels of reinvestment around ESG spend in particular, and now wage inflation that you're calling out, should we expect 2023 to be another year of no or very modest margin expansion? How are you thinking about that? Well, it's still early to talk about 2023. We are currently working on our budget 2023. Let's start with 2021 and 2022. By the way, our margin started to decline only in the second half of 2021 and in the first half of 2022, mainly because of this timing difference between this massive input cost inflation that we have received on the one hand and our pricing on the other hand. It has nothing to do with pricing power. It has more to do with the fact that we could not execute as quickly as we received our pricing. The other thing is that we decided to act in a responsible way, as I explained earlier, which is not to put significant price increases in one go. That explains this timing difference. Going forward, we stay with our ambition for a moderate margin improvement. Mm-hmm. This should apply logically to 2023 if things remain where they are today. We have the ambition even to catch up what we have lost because we were at 17.7% two years ago, 17.4% last year. The ambition is really to catch up over time, depending on how the situation evolves. Clearly, we don't see a major issue there to go back there. The other question on margins is which geographies or categories do you see the biggest upside in terms of margin? Also related to that, what is the difference in margin between your premium portfolio, which is 35% of revenues, and your PPPs or your, you know, your value? Is there a big difference in the mix between the premium and the value? In terms of geographies, I don't see any major changes in terms of margin by geography. In terms of categories, I see one, which is Nestlé Health Science, clearly because they are around 12% to 13% of operating margin today. Clearly there we have significant ambition to reach a much better level and to reach a level where it will not be dilutive to our total business. Yeah For Nestlé Health Science. You are talking of affordability and premium. Premium obviously has a better margin, which is around 3-4 percentage points higher, which is linked to the fact that we sell at a higher price. Even if the cost of doing business is higher as well, we need to spend more A&P, for example. Affordability looks a little bit counterintuitive, but we have a higher margin than the average of Nestlé as well, which is for different reasons, because we have scale. We have very high market shares as well in these businesses. We are extremely cost efficient, and we have very large volumes as well. These products in the affordability segment, we sell only in emerging markets. This is about scale, cost competitiveness, high market share. As a consequence of that, we have attractive margin levels there as well. What is in the middle, which is mainstream, has a margin which is slightly lower than the average of Nestlé, but we have a very positive view on that business as well. Okay. Maybe we can turn to marketing spend. Marketing spend was down in the first half. I know there were some specific reasons. Maybe you can elaborate on that. What is your expectation for the second half around marketing, and how are you seeing promotional activity trending? I'm just trying to get a sense of, you know, how much of the spend is now, like, digital versus traditional. How quickly is it moving to ROI? I know there's lots of questions around marketing, but it was a topic for analysts and investors in the first half of the year. Okay, a more general answer first. At Nestlé, we will never start cutting long-term investment for growth to reach short-term objectives. This applies to you, we are talking of sustainability, for example. We are raising the bar, investing much more, significantly more today than we were in the past. We are investing big time in digitalization. We are investing significantly as well in CapEx, really investing for growth in the future. That applies to marketing, except that in H1 there was a special case because we had some capacity constraints for some of our products, more specifically pet care in the U.S. and Europe, coffee to a certain extent, and food as well. Since we didn't have the capacity to supply the market, there was no point to advertise or make promotional activities for products we could not sell. Yeah. We expect to increase our level of marketing investments in H2 because some of these issues will go. We expect to increase as a percentage of sales and in absolute value in H2 over H1. As I said, we are working on our 2023 budget as well with an expectation to significantly increase the level of marketing investments over 2022. You are talking of the part of our marketing investment which goes into digital. Yeah. It's about 54% today, so, which has increased regularly over the years. We do indeed have a better visibility on the return that we get on that. That's something that we are really working very, very actively upon. By the way, we have a capital market day at the end of the year. This is one of the topic that we will cover during the capital market day because we can create quite a lot of value through that. You mentioned supply chain challenges in the last quarter. Can you maybe update us on how those are trending? I think you said that overall they were easing. Can you maybe elaborate a bit more on what you're seeing on the ground? Where specifically are the bottlenecks? There are three main parts in terms of supply chain constraints. The first one is capacity constraints, as I said, for coffee, pet care. Which is the reason why we are raising our CapEx investment significantly. This is good news to a certain extent because there is increased demand for our products, and it came in the context of the pandemic, but we expect to retain most of it. The second bottleneck has been over the last couple of two years, let's say, access to raw material, packaging material, ingredients even. From time to time, it's a very simple ingredient that we have difficulties to get, and we can't necessarily reformulate our products immediately. That has been an issue. It is still going on, although it is reducing a little bit as we progress over time. The third bottleneck that we have is on logistics, transportation issue. It has been very, very tight on truck availability, truck driver availability in the US last year. It's improving a bit in the US, and it was in the summer exactly the same case in Europe, for example. We had, as you could imagine because of the heat wave, very significant demand for water, for example, and we had extreme difficulties to find trucks and truck drivers. This is complicated. The other one is labor tension as well. Yeah. Labor shortages. We don't suffer from a big resignation, so it's okay, but we never had as many open positions as today. That one may be structural by the way. It's not necessarily something that is going to be sorted out in the short term. I think that the age pyramid is such that we could see this problem going on for some time still, especially in Western countries. Okay. Very helpful. Maybe switching gear to talk about pet food, one of your star category. I mean, the growth's been amazing. You're seeing growth on growth on growth. The question I guess we're getting is how, you know, how do you keep the bar high in pet food? Where are you now focusing your attention, either geography or sub-category? We're hearing some signs of issues, some slowdown a little bit in the US from some competitors. A little bit of private label moving in Europe. We're not seeing it in your numbers, but clearly larger numbers, you can't keep growing 14% every quarter. How do you see it in pet food? No, very happy with the development with pet food. I mean, we are growing in 2022 for the third consecutive year of double-digit growth. Amazing. Beyond, the number even for 2022, what I like is the quality of the growth. We saw it in H1. I mean, we had 5% RIG, so it was largely made of volume and mix as well, so which is extremely good. I agree with you that we may not be able to sustain necessarily double-digit growth again, but we clearly have the ambition to maintain a high single-digit growth level. There are two main factors really driving the growth. One is the caloric, calorific conversion in emerging markets, which is the number of dogs and cats which are taking processed food in turn instead of family leftovers from the family table. Yeah. This rate keeps on increasing year after year. In the developed market, this is very much about premiumization. There is not much to expect from calorific conversion, which is high, but premiumization works. There, you know, we are working towards going one step further than the mere supply of pet food, moving into the business of providing solutions to pet parents. What do I mean by solutions? It's addressing some of the issues that they are facing, like obesity for dogs and cats, or cat allergies, or dogs barking too much, or aging dogs and so forth. We have products to address that, and pet parents are very happy to get them, and they are ready to pay a premium for it. Yeah. It does work very well. Look at the one of the latest example that we have, which is cat food that reduces or eliminate the production of allergens for cats. This is really addressing and providing the solutions to pet parents. Very happy with what we have seen. We see pet care as well as an ecosystem, so it's not just about the mere supply of food, but we are investing on websites, you know, for pet adoptions. We have made an investment as well in a veterinary clinic. Yeah Chain. It's a minority investment, but that gives us access as well to veterinarians and so forth and so forth. Very happy with the development there. Maybe just turning to the RIG outlook. I think you've said that you know the real internal growth slowed in Q2. It was a tough comp. Are you confident that RIG, both the mix and volume can remain positive in H2 despite a likely weaker consumer? I remember a few years ago you broke out the mix from RIG, which you don't normally do, but you did do that. How confident are you that you can still maintain strong mix gains against a much weaker consumer backdrop? Okay. In H1, RIG was positive and the two components were positive. Yeah. Even since you are talking of mix is important because this is where we create value, volume as well. We don't create value through pricing, by the way, because pricing is a mere passing through of whatever we receive, so which is the reason why we always insist on RIG and its two components. Mix was positive as well as volume, and mix was positive at a level in H1, which was relatively similar to what we had experienced over the last couple of years. Frankly, very happy with that. Which means that, by the way, so far we have not seen too much of a downtrading by consumers. Going forward, we said it in our H1 call that we are trying to maintain RIG at a positive level in H2. There is no certainty we will get there, but we are really working in that direction. The comps are a little bit easier. At the end of the day, we were quite happy with the RIG performance in H1 because it came over a very strong base last year, 6.5% of RIG. Yeah. Which is almost three times more than what we had in the past. It's a little bit easier in H2, 4.2. It remains high, though. We do expect probably a further slowdown of the RIG. Will it be positive? We are trying to maintain it in positive territories for H2. Okay. The other category I wanna talk about is Nestlé Health Science. You mentioned it at the beginning. Can Nestlé Health Science really be the third big growth pillar for Nestlé that sits alongside pet food and coffee? I mean, you've done a lot of deals in Nestlé Health Science. I know you're gonna talk about it in Barcelona in November at your CMD. Those deals seem to be quite unique. Are you able to harvest synergies between the different elements that you have, the businesses within the health science portfolio? Very important. We have a sizable business today. It will be north of CHF 6 billion already this year. We made quite a large number of acquisitions. We are present in three categories. Consumer care is one, medical nutrition is another one, and novel therapeutic nutrition, which is more at the periphery, at the border of pharma, but always around nutrition and gastrointestinal, maybe by default. Very happy with what we have done so far. These are categories that are structurally growing mid-single-digit% as well. Yeah. I agree with you that now that we have done a lot of acquisition, we need to bring consistency between these different businesses. We need to make sure that they complement each other both in terms of brand architecture, in terms of price points, in terms of distribution channel as well, in the same way as we have it for coffee. Yeah. Coffee, we have Nespresso super premium, Starbucks premium. Mm. Nescafé mainstream. These brands complement each other in terms of price point, in terms of distribution channel, because they are not necessarily sitting on the same shelves. We are building exactly the same for Nestlé Health Science. This is about positive synergies on the top line. In addition to that, there are significant cost synergies that we will extract on the back end of the business, especially in terms of, you know, aligning manufacturing because they come from different sources. We have a large number of co-packers as well. Let me just give you a very concrete example as well. Atrium Innovations that we bought first, they are extremely cost competitive to produce gummies, and the other assets that we bought are less competitive. Aligning, for example, the cost competitiveness of gummies for the other assets to what we have achieved with Atrium Innovations will deliver a lot of synergies, just as an example. Yeah. Okay. Maybe again, shifting gear to CapEx. I mean, obviously, you're signing off the CapEx check, so you're the right man to ask. CapEx is usually 4% to 5% of sales. I think you said this year it could even reach 7%. Again, a big number. Where is that spend going? What hurdle rates do you target on CapEx? When do you expect CapEx to normalize? Presumably, it's not a new norm, 7%. No. No, no, certainly not. Historically, we were between 4% and 5%. We believe that given our growth profile, it was the appropriate level. That being said, we always said there is a need to do more. That's good news, which is what's happening today, because there is increased demand for some of our products in the context of the pandemic, for sure, which is a reason why we have decided to increase our CapEx spend this year and next year, as well, for last year, this year, and next year. Last year, we were around 6%. This year will be around 7%. It will remain high again next year, and then it will start to decrease in the end of 2023, beginning of 2024, then it will normalize. Once again, I see that as good news because that means that there is increased demand. It is putting, in the short term, a little bit of pressure on cash flow generation, but this is a deliberate decision and this is really what I was saying before, investment for future growth. Is it mainly going in coffee and pet food? Yes, mainly for coffee and pet food, indeed, because this is where we have a little bit more of constraints from a capacity point of view. Pet food is a main one. We are starting to commission some of these plants. We just commissioned a new plant in Thailand a few weeks ago, and we have new industrial units being commissioned in Europe and in the U.S. at the beginning of next year. Okay, thank you. Maybe moving on to Buitoni, the contamination issue in France, obviously, it's a very sensitive issue. Maybe you can outline for everybody what measures you have in place, now in France, but also in your other factories to ensure there can be no repeats, and that your food safety is best in class. First of all, I would like on my behalf and on behalf of the executive team to pass on my sympathy to the families affected. We take these matters very seriously. First of all, as soon as we heard about this case, we stopped production. We did a voluntary recall immediately. We are cooperating with the authorities for the investigation, which is in progress. I cannot tell too much about it because there is an investigation by the Justice Department in France on that case, and so we cannot really comment. What I can tell you in terms of safety, this is something that we take extremely seriously. We have very few incidents. Just to give you an indication, we have less than 10 recalls a year globally for a company that is producing 1.1 billion servings a day. That being said, you know, our philosophy is very clear on that. One incident is one too many. This is the way that we see it. We want to strive to get less than even this, less than 10 recalls a year. We do invest a lot in quality as well. Just as an example, we have 9,000 people working on quality within the company, and we perform, for example, 4 million quality tests a year. I could just tell you something more personal. For example, when I joined Nestlé seven years ago, I was extremely positively impressed by the fact that for each and every single executive board meeting that we have, the first thing we do is to look at quality incidents individually, what happened, what should we do differently, and we look in the same way as the safety of our employees as well. We take that very seriously right from the top of the organization. Okay. Thank you very much. Maybe we can talk a little bit about your digital, 'cause you have a target to get to 25% online sales by 2025. Seems to me quite ambitious, given where you are today, 12% to 13%. What needs to happen within the organization to make that kind of number happen? And does the consumer slowdown put that at risk as we are seeing kind of brick and mortar recovering and online sales normalizing from incredible heights? There's two-part question. Yeah. Today, e-commerce is accounting for about 15% of our sales. Yeah. We like it. By the way, we did invest quite a lot, and we have been able really to meet pent-up demand during the pandemic. In 2020, it increased by 50%, and we had everything that was necessary in order to meet the demand. Be it IS/IT facilities and specific SKUs, because they need to be a little bit more resistant for shipping and handling. I agree with you, the objective of 20% in 2025 is relatively ambitious, but we like the ambition as well. We want to invest more because we gain market share in e-commerce as well, so we have a market share which is better higher online than offline. Mm-hmm. We are investing, and e-commerce is accretive margin-wise for us, so which makes it attractive as well. This is the reason why we do invest a lot. I agree with you, it's a little bit ambitious because we see the category everywhere slowing down, not only us, but slowing down. We still had 8% growth in H1, which is good, but it's less than what we had in the past. Yeah. That being said, you know, we are very flexible. At the end of the day, if consumer want more of it, we'll go for it. If they happen to need a little bit less of it, we will adjust. I mean, we are present in all channels anyway. What is important is to meet consumer demand, whatever it takes. Okay. I wanna move on to nutritional standards. In the past, Nestlé has been criticized in some quarters for having parts of its portfolio that are, let's call it unhealthy. Could you please share some of the progress that has been made? You know, we're seeing new regulations coming in, like the UK high fat, sugar, salt coming in October, and Nestlé's new nutritional standards policies. Nutrition is really at the very heart of what we want to do. You know, the foundation of the company is about nutrition, health, and wellness. Let me just give you a couple of examples of what we have done lately. For example, we have reduced the sugar and salt content of our products by around 15% in the last 7 years, so it's something which is quite evident. Last year as well, we have sold 200 billion servings with fortified micronutrients. Out of which 124 billion of these servings were for emerging market where it is extremely relevant. Yeah. I think that this is illustration really that we are doing well. I must say as well, we are well-recognized for our nutritional benefits. If I look at the ATNI, Access to Nutrition Index, which is an independent assessment, we have been number one in our industry since 2018, and we were in the top three since 2013, which means that we are internationally recognized. Just quoting one, but there are other indices on which we are very well ranked as well. Yeah. That being said, it is true that we have about a third of our portfolio which is made of product which are a little bit not meeting the highest nutritional standard. There is no big surprise there. At the end of the day, everybody knows that we are selling pizza and confectionery. This is part of a balanced diet as well, and so we are comfortable with it, especially so that we ambition to improve the nutritional and health profile of these products within their category. Mm. We want to make sure as well that there is a conscious decision by consumers, many adults, most of these products are for adults, about that they know exactly what they consume. It has to be totally transparent to the consumer as well. Be aware of the fact that we will communicate more on our portfolio as well. This is something that we believe is important, so we do expect to do further communication on that topic. Mm-hmm Before the end of the year. Okay. Maybe switching gears to M&A availability, our favorite topic. How many deals are Nestlé evaluating at any one time? I mean, we're hearing that multiples are starting to look a bit more realistic. Is there an opportunity for companies with strong balance sheets to be a bit bolder, look at bigger ticket deals, especially when private equity is struggling with higher bond yields, higher interest rates? In terms of category, geography, or even capability, what would your priority areas be for M&A? We look at many things. Sure. I think we have a duty to do it. Anything that appears within our categories, we look at it. I mentioned two years ago, I think that we had looked over the three previous years at $35 billion of potential deals and that we walked away from, essentially by lack of financial return at that time, because multiples were very high. We have been very active in portfolio management, rotating 20% of our portfolio. We did more disposals than acquisitions. Yeah ...which happens to be the right time to do it because it was a seller's market with high multiples. Very happy to see now with increasing interest rates that it will probably trigger more reason within the M&A markets with lower multiples. It's a reality already for public equities today. You know it probably more than I do. It will probably go into the private sector as well for sure. It's going to take a little bit of time as well. Mm-hmm. Probably one or two quarters, because a lot of people are still thinking last 12 months in terms of, you know, pricing. We see that with a lot of interest. That being said, we will remain very disciplined. It's not because it is cheaper that we have to go crazy for M&A and buy not in a considerate way. We will be extremely disciplined in what we do, always looking at, you know, the strategic intent and the strategic fit with our portfolio. The cultural fit as well, because we are interested in that, finding businesses that we feel like managing, that share the same values as we do. Financial returns, we are looking among other KPIs at return on invested capital with a view to exceed, in terms of return, you know, ROIC, the work of the acquisition within five-seven years. Yeah. Certainly more opportunities coming in. Anyway, we said that since we had disposed more than we had bought, we are interested. Where do we want to invest? Essentially strengthening our existing categories. We need to be careful because it's going to be a little bit complicated because of potential antitrust issues. Which probably limits the ability that we have to do large deals. Anyway, we are not necessarily that interested in large deals to be seen. I mean, if a unique occasion presents itself, we will obviously look at it. Strengthening of categories, this is very much about growth assets as well, which is what we have acquired. If you look at what we have done over the last four years, it contributed last year CHF 6.5 billion of sales, so it's material. Yeah. Growing 2.5x faster than the average of Nestlé. This is not just about buying growth either, because if you look at everything that we have done in M&A over the last four to five years, it did contribute a third of the margin improvement at the same time. That's pretty much what we want to do. From a geographic point of view, no specific interest because we are, you know, well, present in any markets of the world. There are no real weaknesses that we have. I would mention maybe one, which is maybe India, where we are a little bit under index- Mm. Versus our presence worldwide. Asset prices are extremely expensive there. At the end of the day, I think we are probably the most profitable MNC in India as well. Uh- Because we are very focused on the not high volume, low value business, but more, high value and low volume, stuff. I do want to touch on one deal that's been a success, which is Starbucks. You know, you bought it was a $2 billion revenue business. I think you've added 50% to revenues, now $3 billion. Can you just talk about how you see the outlook for that? You know, in terms of the rollout, are we there or is there more to be done? Indeed, very excellent deal. We did that deal four years ago, CHF 2 billion of sales at the time when we bought it. This year, we will be north of CHF 3.5 billion, probably even maybe CHF 3.7 billion. We have almost doubled the size of the business in four years. Superb achievement. A lot of it had to do with, you know, land grabbing because we expanded. That business was predominantly in the U.S. Yeah. Now we are present in about 70 countries. We did more than that because we expanded into new categories as well. Like for example, it gave us access to the Nespresso compatible business because we were not present in that business. We needed a brand to get there, and the Starbucks brand has been really instrumental. Mm-hmm. In the last three years, we have gained 20% of the Nespresso compatible market worldwide. Without cannibalizing our business, which is really great. We expanded as well. It gave us a better footprint in the U.S. because we were a little bit under index in coffee in the U.S. Gave us a better access to food service. Mm-hmm. to roast and ground because it's subcategories where we were not that great. I think in terms of geographic expansion, probably not much left. In terms of expansion into new categories, we can do more. Let me just give you a recent example of what we did. We are selling now coffee creamers, branded Starbucks. As you know, we have our own brand, Coffee mate, which is extremely successful, but we expanded into with a new brand, Starbucks as well. Can we stretch a little bit the brands, the brand in new territories as well? Not new geographic territories. Okay. We're running a little bit short on time, so I've got two more I want to try and squeeze in. One is on sustainability. Nestlé has made some really big moves on sustainability, whether it's carbon or plastics or child labor in West Africa. What will be the next big focus on ESG for Nestlé in the next 12, 18 months? We have a plan which is relatively clear, which has been well received, I think, including by our investor community. We get a lot of support. This is very much about zero carbon by 2050 and with a very tough agenda because it starts already with a 20% carbon footprint reduction by 2025, which is basically tomorrow. We are on track to achieve it. I mean, our peak carbon is behind us, but that requires a lot of commitment, effort, and financial commitment as well, which we are comfortable in doing. The second part, which is even more urgent, is sustainable packaging. Mm-hmm. We need to move away from non-recyclable, non-reusable plastic. We need to move away as well, which is more complicated from a multilayer packaging. You know, this packaging which is made of a layer of plastic, a layer of aluminum, a layer of carton or paper, that's very complicated to recycle. This is very urgent, probably more urgent even if our objective is for 2025 because a lot of regulators are moving. Mm-hmm. This is about license to operate to a certain extent. We have other agendas like, for example, child labor and the cocoa plan. We just announced a new plan. That's a very sensitive issue. We want to make things meaningful as well. You know, this is not just about paying more for our cocoa because then you help the larger farmer. We really directed our efforts to help the smaller farmers to be more productive, to send their kids to school, and so forth, which is very different from what has been done in the industry so far. Okay. Final question for you, François. I know it's a question you've been thinking a lot about, which is value creation. Nestlé's unlocked significant value over the last year, last five years since Mark's been CEO. How are you thinking about value creation from here? Is it more the same or are there other levers that will become more important in the value equation? I'm just trying to get to the heart of how you, the Nestlé finance team think about it. Okay. Some of it will be the same. It's still about growth, it's still about cost discipline as well. That we need to continue. It's still about, I mean, portfolio management as well. Yeah. We just said it, but it will be different, by the way, on portfolio management. It will be less about disposal, probably more about acquisitions. I think a lot of the stuff that we have done over the last couple of years were what I would call hard stuff, which we can measure. Mm. You know, massive reduction of our working capital from 8% of sales to zero. Very significant reduction of our underlying tax rate, for example. Very significant reduction of our cost base. We are far less capital intensive and labor intensive than we were. Yeah. We have today, almost 100,000 less employees than we had five years ago. We have 82 less plants, for example. All of these things we can measure. Going forward, a lot of the value creation will come also from intangible. Yeah. For example, data analytics. For example, you know, return on promotional investment, which is something that we will cover during our Capital Markets Day at the end of the year. Yeah. We spend huge amounts of money in marketing trade spend. We do understand already well the return that we have. If we improve that, and we aim at improving that through data analytics and digitalization, I think this is a lot of soft stuff there. Mm-hmm. Where we can create a lot of value going forward. Okay. I think we're on the buzzer, François. Thank you very much for your time. We are going to do a breakout next door, so please do come and join us for your questions. Thank you. Thank you, Warren.