Momentum continues to improve Yesterday Unilever hosted an upbeat investor event focusing on its US operations (c. 19% of group sales, when US sales of the globally managed units are included). The Head of Unilever USA, Fabian Garcia, presented. The key takeaways for us were 1) the underlying growth of the US business, ex Food Service & Prestige Beauty, was 12% in 2020 (vs +8% reported at the FY results), which is a very respectable rate of growth compared to its large peers, 2) over 50% of the business is gaining value share and 70% of the business is gaining volume share, and 3) growth can continue in 2021. Still hampered by Hair Unilever US is highly skewed to Beauty & Personal Care and Foods & Refreshment. Beauty & Personal Care is 49% of US sales, Foods & Refreshment is 36% of sales, Home Care is 4% of sales, Functional Nutrition is 6% of sales and Prestige Beauty is 5% of sales. Although margins in the US are high, the gross margin still expanded 250bps during 2020. While momentum is improving across the business generally, as evidence by the market share gains, Hair Care is still not where it needs to be. Efforts to turn it around continue; Suave is currently being relaunched. Tresemme is challenged by its high exposure to styling products which remain out of favour during restrictions and lockdowns. Unilever US is very focused on the e-commerce opportunity (14% of sales). Garcia stated he was happy with the existing digital capabilities of the business, and he expects e-commerce to accelerate further. Outlook and portfolio Garcia provided some thoughts on consumer trends that will affect the US market over the medium term. These included holistic health, pleasure starved, home experiences, stimulus bump, mass vaccination, and hybrid working conditions. Garcia expects ‘competitive growth’ to continue in 2021 even off of the tough comp in 2020, though the economy will likely be bifurcated (with winners at the higher income level and losers at the lower income level) and inflation is on the horizon. Unilever will continue to evolve the portfolio to higher growth areas. Already 15% of Unilever USA is in the desired categories that management identified with the FY results. Recently acquired brands delivered impressive sales growth in 2020: the Functional Nutrition brands grew over 50%, the Home Care brands grew over 50%, and the Food brands grew over 20%.