David Hayes: Thank you. I’ll go for two, if I can. Firstly, just on the new CEO appointment. I guess you guys were involved with that. So I’m just trying to understand, obviously, you came in October was when that appointment was made at a Board member, was there an option of thinking that, that may extend into the CEO or when you joined or does that change after he joined. And I guess just in terms of your headline proposition to the Board during the process of assessment, what was it that you would say was this kind of key vision point that kind of differentiates you from the other competition that I’m sure that was very severe. And then in terms of sort of going into the beginning of the new year with the new division set up. Just wondering if there’s any impact on inventory or volumes in terms of those businesses being sort of reconfigured so that as we go into 2023, everything in place, where there’s any volume impact from that kind of process? Thanks so much.
Alan Jope: Thanks, David. Good questions. I think it’s appropriate if I take the first one and Graeme has raised his hand on the second one. If you look at the chronology, Hein joined our Board and was going through the interviews to join our Board, long before we announced my intention to retire. And before we initiated what was a substantial external and internal search, — so Hein was brought on to the Board as a non-exec for what he brings in that capacity. No other part of that story. However, when emerge that we were looking for a new CEO, he checked so many of the boxes and the Board included Hein obviously in the search process. It’s not for me to comment on what Hein’s agenda would be. But what I can tell you is that in an internal video that he recorded unscripted, unprompted, he highlighted three things: number one, his absolute focus on performance and value creation; number two, his commitment to the organization that Unilever has put in place.
I think that’s important, A, as validation of the organization, but also to keep our troops come. And the third thing is his belief that performance can be enhanced by staying the course on Unilever’s long-standing commitment to sustainable business. So those are some of the messages that Hein chose to put into the organization. And apart from being very experienced in consumer goods with a good track record, outstanding values. He happens to be an extremely clear communicator, a hell of a nice guy. So I’m looking forward to seeing what he does at the home of this great company. Graeme — down to the earth subject of year end volumes and the
Graeme Pitkethly: Good morning, David. Yes, I mean, it’s a great question. So we are seeing — and we saw in the second half immediately really from the establishment of the new organization, some really fast and decisive decisions from each of the business groups. We touched on a few of them. I’ll just comment on one or two that came through in the prepared remarks. But let me turn to Indonesia. So actions in Indonesia to address promotional and pricing strategies were taken by all five of the business groups very, very quickly, and we’ve moved to reduce trade stocks in some channels just to make our overall supply chain more efficient as we start to learn better innovation and our products in Indonesia. So that’s one example for you.
Turn to Nutrition. We made — we touched on this as well, some decisions in U.S. dressings to exit unprofitable lines of business. That actually tipped our very big U.S. dressings business from winning into not winning just at the end of the year. You see that in the drop-down in percentage business winning. It’s the right thing to do for the business, absolutely the right thing to do for the health of nutrition, and we’re very confident that we’ll get that big sell back into winning performance around about the midpoint of the year. So that’s another example. Also in Ice Cream, removing unprofitable volume in Ice Cream tubs. I should talk a bit about Personal Care, tremendous SKU rationalization happened very quickly in personal care. We delisted about 5,000 SKUs in PC already.
and we’ve actually discontinued 50 or 60 local brands, which frankly add up to less than 1% of PC’s overall sales. And I could tell you a very similar position in Home Care. So much work happening by the business groups to — and you see some of it reflected in volumes and some of it reflected in inventories. But the end to the year in good shape with good strong plans — and much of that tidy up work happened in the first — in the last — second half of last year and will continue as we go forward.
Richard Williams: Thanks, Graeme. Let’s turn next to Tom Sykes at Deutsche Bank. Go ahead, Tom, with your question.
Tom Sykes: Yes, thanks Richard. Good morning everybody. Just I wondered if you could say some things about how the levels of net revenue management have progressed over full-year ’22 and what the expectations are going into full-year ’23, particularly thinking about in response to pricing what’s happened on sort of pack sizes and promotion? And then thinking specifically, I suppose where do you think you’ll end-up promotion levels versus sort of 2019, ’20 by the end of ’23 please?
Alan Jope: Yes. Let me take that, Tom. So when we talk about net revenue management, there are multiple levers. So of course, it includes list price changes. We’ll frame it, first of all, list price changes, pack, price architecture is the second lever, and that’s the idea of upsizing and downsizing and developing specific sizes to meet specific consumer or channel needs. The third is the way that we use mix. The fourth is consumer promotion and the fifth is trade margin management. And I think the overall story for last year was that we use that first lever of straightforward list price increases more than we have for eight years. And in full candor, I don’t think our muscle was as strong on landing list pricing as it should have been going into this period.
And in a way, we were surprised how quickly we were able to fire up that machine after many years of avoiding list price increases. It’s almost impossible to give you a flavor of the work done on pack, price architecture. Because it is literally done brand by brand, category by category, pack size by pack size and channel by channel in every country. But many examples of introducing different pack sizes as a way of satisfying consumer preferences. In different parts of the world, we see different big consumer behaviors. We’ve talked about this before. So in places like South Asia, Southeast Asia, small sizes, affordable unit pricing is really important. In South Africa and Latin America, some of the most price stressed consumer environment actually big sizes take off at times like this where people realize the superior value that can be realized even through group buying and things like the stock well phenomenon in South Africa.
So we are using pack, price architecture a lot. We believe looking forward, there’s more opportunity in mix. And the final one I want to talk about is promo levels because there’s been some coverage around that. For quarter four, actually, we see Unilever’s deal promotion — sorry, proportion of our turnover sold on deal is down year-on-year in the fourth quarter, particularly so in Europe. And this is not surprising because when you are trying to land and establish new pricing, if you accompany that with promotional chaos, it certainly does not help the landing of the new price levels. So that’s a bit of a comprehensive towards on the last year characterized by heavy levels of list pricing and pack price architecture, lower levels of promotion.
This year, we will need some list pricing and probably we’ll use mix more in 2023 than we have historically.
Richard Williams: Thank you, Alan. For our next question, let’s go to Martin Deboo at Jefferies. Go ahead, Martin.
