Premier Foods PLC

LSE:PFD

Earnings Call Transcript 2021-Q1

[Operator]

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Premier Food's Quarter 1 Trading Update Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today. And I would now like to hand the conference over to your first speaker, Mr. Alex Whitehouse. Thank you. Please go ahead.

[Alexander Whitehouse, CEO & Director]

Thank you and good morning, everybody. Thank you for joining the call for our quarter 1 trading update, which covers the 13 weeks to the 27th of June 2020. I apologize for the slightly delayed start. It seems to have taken quite a long time to process everybody and can get them on the call. So we thought it was wise to wait until we've got everybody on, but now we can press ahead. So I'll give a brief introduction to the first quarter trading, and then we'll open the call to questions. I'm also joined on the call this morning by Duncan Leggett, our Chief Finance Officer, who will also be around for answering questions. So overall, our headline group sales for the 13 weeks to the 27th of June are in line with what we highlighted at our preliminary results 5 weeks ago, with sales increasing by 22.5% compared to the same quarter a year ago. And now, of course, we all know a large part of that sales growth is due to people cooking and eating the vast majority of their meals at home. Obviously, there have been very few opportunities for eating out of home over the last few months. However, I think aside from that effect, I think it's important to note that we were, in any case, expecting to continue to deliver good progress through our branded growth model strategy and maintaining the positive momentum from last year. But I'll come back to that shortly. Well, actually, first is, let's take a look at that 22.5% growth in the quarter and draw out a few of the key trends as to have different parts of the business have performed during what was obviously being a rather, let's say, unusual quarters trading. If we start with the branded Grocery business, and the sales increased by 39.2% in the quarter. And this, of course, is where we've seen the main impact from consumers eating most of their meals at home, and that's resulted in much greater demand for our Grocery brands. So some of the major brands actually delivered particularly high sales growth. So above that 39.2% average and I'll probably pull out Oxo, Ambrosia and Sharwood's in that. And also our Nissin noodles, which have seen very strong demand continuing with sales more than doubling as consumers continue to enjoy the authentic Nissin Soba and Nissin Cup Noodles. It's also interesting that the growth isn't just due to the same households consuming more of the same stuff. It's also a result of additional households buying into our brands. And if you look at household penetration for our Grocery brands over the quarter, it increased pretty sharply by 620 basis points, that's over the 12 weeks to the middle of June. So what that's saying is that over 6% more U.K. households bought into our brands than in the same quarter a year ago. So that's up from just on the 69% to now 75% of all households, which for a quarter is a really high number. So again, a significant increase, and it serves to indicate that we're seeing new consumers coming in and buying our brands. And encouragingly, this appears to be quite broadly based across the demographic spectrum. A really good example of that is our Sharwood's brand, where we saw an additional 2 million new shoppers buying at least one of our Sharwood's products over the last 12 weeks. And Sharwood's isn't alone, we saw similar trends across many of the brands with around 1.7 million new shoppers buying each of Ambrosia, Bisto, Oxo and McDougalls flour. So it's very much across the board. So all these data points, I think, provide further evidence. But as I said before, in the premium results a few weeks ago that Britain will get cooking again and consumers are expanding their repertoire of meals that they are preparing and eating at home, and then including our brands in these new recipes. And that's important because if these consumers continue to cook and enjoy those new recipes, we might expect and then to continue to use our brands in those recipes into the future. We also see this trend for trying new recipes in the sales of our new recently launched products. So you'd be aware, we have a very aggressive NPD agenda. And our new products actually accelerated faster than the core range, again, reinforcing the fact that consumers have been looking to experiment and trying these things during lockdown. You may recall, actually, last year, we reached an innovation rate of 6.5%, so 6.5% of our branded sales have being derived from new products. And this year, in quarter 1, that rate has risen quickly above 7%. And that's, again, indicating the acceleration of the new products as people try different recipes. One of the product ranges that have got actually particularly popular is the Cadbury baking mixes, and that's obviously due to the recent trend for home baking, and we have actually just launched a range of Cadbury baking mixes and also Mr Kipling baking mixes at the back end of last year. So in the right place at the right time with those. But also our Sharwood's 30% lower fat cooking source range has also performed very well. And these low-fat versions are actually part of a wider commitment. We've got to offer at least one healthy option within each of our core ranges. So it's really good to see those products performing well. Now while our categories have seen some very strong growth in the first quarter for all the reasons I've just highlighted, I'd also just like to point out that, again, just as we did last year, we've grown faster in all the categories that we play in. So consequently, we've gained market share in all those categories. In fact, actually around 200 basis points of market share gain in several of our key categories. And that's typically come off the expenses of own label in those categories. And we believe this is due to -- primarily due to 2 key factors. I think, firstly, we have strong market-leading brands, and we've got great new products, and we've already discussed that those new products grew faster than the core business. But what's also being key over the last quarter is simply keeping our products in stock and on the shelf and available for shoppers to buy. And I think we've done a particularly good job on that front, actually. You may remember I said at the beginning of the COVID crisis, and we said we believe we've got an important responsibility to do our bit to keep the food supply going and keep the shelves stocked. So throughout, we've put a huge focus on maximizing our output from our supply chain and delivering the consistent high level of availability of our product ranges, of course, working really closely with our key retailers. And I think this is testament to the excellent, sustained and dedicated work of all our colleagues across the supply chain. And as I've also mentioned in previous updates, we took decisive action back early in March to put in place the raft of additional hygiene and safety measures across the supply chain and to safeguard our employees through these very, very difficult times. And so far, this has worked well for us and all our sites have remained fully operational. So I would like to say a big thank you, actually, to all our teams, which have consistently maintained these high standards and helped us to continue to do our bit towards feeding the nation. I also want to talk about online. So the online channel -- and by that, I mean, the sales that we make via our retail partners and online services and websites. And I know we're all aware that this channel has seen very significant growth since lockdown as many households have chosen or, in fact, actually have been restricted to shopping for groceries from home. And in fact, sales of our brands online more than doubled over the first quarter, so increasing by 115%. And going ahead of the channel and taking 270 basis points of market share. And the background for this is that we've been working hard on our online presence now for the last couple of years or so, actually, investing in our online capabilities, ensuring our brands are presented and marketed effectively online using the tools that are available in that channel, which are a little different from what you've got in standard bricks and mortar and retail. And that's now clearly working really well for us. If we now switch to Sweet Treats. So our Sweet Treats business, we saw a more modest trend in the quarter. Sales up 0.7%. And branded up 0.5%. And this is a mix of a soft April with volumes down for the entire category as consumers focused on buying core essentials and then a much stronger performance and with our brands very much back on track through May and June, supported by strong commercial plans and with Mr Kipling back on TV using that successful little thief advertising campaign we have. Sales also helped there actually by recently launching new products. So I'd include in that the Mr Kipling mini range and the signature premium ranges. But also actually the core Cadbury Mini Rolls also had a really strong growth quarter. I'd now just like to touch on non-branded sales, which, overall, were down 3.3%, and with Grocery down 4.5% and Sweet Treats growing by 1.7%. And the 2 key factors here sitting behind that Grocery decline were declines in our business-to-business volumes from our Knighton and Charnwood businesses, and they both supply out of home, food and drink outlets. So that's not really surprising. And it was partially offset by stronger demand for non-branded grocery products that we sell into our retail customers. And then moving briefly on to our International business. So sales at constant currency were up 13% compared to the same quarter a year ago. And you'll recall at the prelims a few weeks ago, I outlined our new strategy for international. We believe there remains an interesting opportunity for our brands to grow in international markets. And we're well into the implementation of that new strategy. And I think we're making good progress. But it is early days, and I don't want, at this point, to give you the impression that the quarter's performance is a result of that strategy already bearing fruit. That's going to take a little more time for the results to start to take effect. And in fact, those Q1 numbers are really more down to a soft comparative in the base in Ireland, where we have lower volumes last year than the aftermath of Brexit stock build in the previous quarter. But in terms of how we're getting on in implementing the new international strategy, we've recruited a number of the key roles that are in the new structure. And with the recent appointment of a head for Australia and New Zealand, we've now got 3 of the 4 market heads in place. And we're also on the brink of appointing an American distribution partner for our cakes in the U.S. We're also now operating our Irish and U.K. businesses much more closely together. This is leading to a number of the successful U.K. new product launches being rolled out much more quickly into Ireland. And we're also working to replicate the success in the last couple of years, and Mr Kipling in the U.K., which includes getting that U.K. TV campaign on air now in Ireland and also making some tweaks to the promotional strategy. So I think early days, but good progress in terms of implementing the strategy. And then lastly, just to touch briefly on capital structure. You will remember that we redeemed GBP 80 million of our GBP 210 million floating rate notes in the quarter, and that was using cash that we generated during the course of last year. Those notes attract a coupon of 5% above LIBOR. So consequently, you can do the math, we expect to reduce our ongoing interest costs by over GBP 4 million a year from now on. So now if we just look forward to the rest of the year, we expect that volumes are likely to return to more normal levels as we progress through quarter 2 and into quarter 3. And that's obviously as the out-of-home sector opens up and we all start to feel more comfortable going out to eat. However, as that happens and the current elevated levels of demand start to subside, we would expect to pick up the positive momentum that we had last year by continuing to deploy our branded growth model that's now delivered us 12 quarters of back-to-back sales growth in the U.K. And as I've said many times before, but I'm going to repeat, our branded growth model strategy is all about leveraging our well-known market leading brands. It continues to work well and is at the heart of everything we're doing. And specifically, bringing insightful new product innovation to market and based on really an in-depth understanding of current consumer needs and trends, supporting our major brands with emotionally engaging and meaningful marketing and advertising and working closely with our key retail partners to deliver excellent in-store execution for our brands. So we'll be continuing to deploy that model. And we've got a number of exciting new products to come for the balance of the year. And we'll also be increasing the number of our brands supported on TV from 4 last year to 6 this year, funded in part by the previously announced cost-saving initiatives program, which, in particular, I'd single out our operational excellence program, which includes things like Eat Smart energy initiative. As a reminder, by the way, we did double our media investment last year, some of which was new investment and some of which was achieved by switching other marketing spend around to put more into advertising. So with that in mind and looking forward to the rest of the year, quarter 2 has started strongly, as we expected. However, as I've said, we expect this to steadily fall back to more normal levels as we go through the quarter. And as we move into quarter 3, and we expect to see progress then being picked up by our innovation plans and our brand support. In terms of the full year, therefore, we expect to continue to make good progress. Employing that successful branded growth model strategy and our recent upgraded expectations are unchanged, which includes further anticipated net debt reduction in the year. So in summary, I'd say a very strong start for the year, very much helped by all those additional meals that are being eaten at home, but still to come a strong pipeline of new products and brand support plans in place for the remainder of the year. I'd just like to take the opportunity to actually just say big thank you again to all our colleagues. You've worked tirelessly over the recent months to help keep the food on the shelves. We are outperforming in all the categories in which we play, which themselves have been going incredibly strongly. And that's a reflection of both the strength of our portfolio and I think the fantastic sustained efforts of all our teams to keep our product ranges available. So thank you very much for your time. I'll now pass back to the operator, and we'll be very happy to take any questions.

[Operator]

[Operator Instructions] And your first question comes from the line of Charles Hall from Peel Hunt.

[Charles Hall, Head of Research]

Could you just provide a bit more detail on those impressive online numbers? Could you just chat a little bit about what you're actually doing in order to promote your products online? And also comment on how broad-based it is? And are there any particular brands that stand out? And also with the growth in the online channel, will you be looking at your portfolio lineup that you can see any tweaks or changes or new product developments that might be more suitable for the online distribution model?

[Alexander Whitehouse, CEO & Director]

Yes, of course, Charles. So as I said, we've been focusing online now for a couple of years or so. And obviously, it was anyway a high-growth channel, that's clearly been accelerated quite dramatically during lockdown. But having identified as a high-growth channel before, we've been working pretty hard on it. And in my experience, the way we make this work is actually by a couple of things. It's doing a lot of what seemed like fairly basic things very well. So it's things like making sure that your product naming strategy is very clear, so that if you were to type in cooking source that actually our products appear in your search. It's things like making sure that we've got product labels, which are simplified. So that if you're shopping from your mobile phone, which a lot of people do, clearly, those images are pretty small. And if you just have your normal product image, it would be so small, you won't be able to see it. So we work quite hard to make those things very clear so that people can see what they're searching for, even from their phone. But in terms of the product range, the product range actually is pretty consistent with what we would sell in bricks and mortar. And we -- whilst we will tend to see people will buy more and they'll buy heavier items online because they don't have to carry it. But broadly speaking, there's no real need to tailor the portfolio, if you like, to the online channel.

[Charles Hall, Head of Research]

Great. And just one other question. With the lockdown period, did you see any material extra costs during that period?

[Alexander Whitehouse, CEO & Director]

As we talked about in the prelims, we've got some additional cost in the supply chain. So those incremental measures that I talked about that we put in place very early in March. So that's extra clean downs, ways in which we separate people and keep shifts separate from each other, but often incremental costs associated with that. But they're more than outweighed by the upside from the volume.

[Operator]

Your next question comes from the line of Nicola Mallard from Investec.

[Nicola Victoria Mallard, Consumer Analyst]

Couple, if I may. First off, could you give us any guide to how July is looking? You said all 3 months were in double digits, but clearly, a stronger start to Q1 versus the end of Q1. I mean my anecdotal evidence of how much people are eating out is it's very patchy, and people are still pretty cautious. I'd assume that the eating at home is still very much a valid point. And secondly, in terms of meeting that 39% increase in grocery, did you have a sort of a big stock depletion? I mean, obviously, you've managed to keep your factories open, which has been fantastic. But just wondering whether you have to then give into stocks as well and whether that needs to be replenished.

[Alexander Whitehouse, CEO & Director]

Yes. Thanks, Nicola. So July, we've said, has started strongly. To be fair, that's what we expected. So I think we will go back to prelims, we said we expected July to be start, if you like, pretty strong and then as we got to at the end of September, we'd be then starting to get more back to normal. The thing we're not clear about, of course, is what the shape of the curve looks like in between the 2. And that really is going to be a function of the amount with which there is eating out capacity opened up and then the extent to which it's filled by people feeling comfortable with it. And again, that remains something that will play out, and we don't know yet. But I think probably the only thing I can say at the moment is July started strongly, but we expected that. In terms of that 39% increase and the impact on stock, so at the end of the last financial year, so the end of March, I think you might recall, we said that there was an incredibly strong peak as people stocked up their kitchen cupboards ahead of lockdown. And during that period, we did see a significant depletion of our warehouse stocks. Since then, obviously, we've been batting from a low stock base, but we've serviced that demand, therefore, through incremental capacity and incremental output from the factories. And so there are many examples where we've moved factories that were working 24 hours a day, say, 5 days a week, up to 6 days a week and up to 7 days a week, and that's where a lot of the capacity increase has come from.

[Operator]

Your next question comes from the line of Martin Deboo from Jefferies.

[Martin John Deboo, Equity Analyst]

It's Martin Deboo at Jefferies. So I've got 3, I'm afraid, that are sort of completely disconnected. So let me go through them. First of all, it's a slight flip from Nicola's question about manufacturer stocks into consumer pantry stocks. Obviously, a concern of all companies that are benefiting from COVID like yourselves is what's the risk of any sort of unwind of pantry stocks, particularly given you've got long shelf-life products and the sort of nightmare scenarios, people with a pantry full of Loyd Grossman jars they've hoarded. What is your sort of own internal analysis telling you about that? Clearly, the further we get from lockdown, the less of a risk that looks to be. But just what's your sense of that? That's first question. Secondly, conscious, the government has launched these new draft regulations on high fat, salt, sugar, foods and restrictions on promotion. Early days, what is your initial assessment of that vis-à-vis Premier Foods threat opportunity or something in between? And thirdly, if we just play out a scenario of a more permanent structural increase in demand, what is your sense of your available capacity? I'm sure you can manage a 20% quarter by building stock and whatever. But just if you're in a permanently more structural demand scenario, what can you comfortably service from existing infrastructure before major CapEx? Is it 5% higher sales? Is it 10%? Is it 20%? So sorry, those are all rather different questions, but they're all important to me. So...

[Alexander Whitehouse, CEO & Director]

Sure. Thanks, Martin. So look, I think in terms of pantry stock unwind, it's difficult to be sure, but it is our belief that the majority of that has actually unwound during the last quarter. So as people got comfortable, the food was available that they've gradually wound down their COVID stock, but it's anecdotal. I mean it's not -- we don't have a quantification of that but that's our current assessment. So we're not currently anticipating any major snapback on that. We think it's already happened, and it's varied, if you like, in the already strong growth from the quarter. As far as the government anti-obesity strategy is concerned, I think, look, overall, we support the government's desire to improve the nation's health. And I think we've got an important role to play that we've been recognized for some time, in particular, providing consumers with healthy choices. And I know you're aware, Martin, we've done a lot of work on that in the last few years. And I've talked a lot about the 5 key consumer trends that drive our renovation thinking, and health is the #1 trend we work on. So we've now got better for you versions of more than 80%, actually, of all our core ranges. So things like low-salt versions of Bisto and Oxo, the low-fat Sharwood's sources that I talked about. We've got 30% reduced versions of some of our best-selling cakes. And we've also, of course, launched entirely new healthier products, including plant-based brand Plantastic. So we'll have to wait and see the full details, but I think we're broadly supportive of the overall intent. I think specifically on the advertising point, for us, we're not actually advertising our brands to children anyway. Our brands are generally bought by adults as part of creating a meal. So the impact of advertising will -- any advertising restrictions, I think, will be very limited for us.And then from a promotional point of view, I think it's also important to recognize that we've got a very broad portfolio, and there's a large number of products in there, which don't fall into the high fat, salt and sugar restrictions. But we'll continue to work with government on it and give our inputs, and we'll see where it lands. And then I think the first question was our ability to cope with the structural increase in demand. Should it happen? I think if I go back to the question that Nicola asked, I mean, we have serviced that 39% increase in grocery demand from production, not from stock because our stock was already depleted by the -- by that covered stocking phase at the end of March. So on aggregate, I'd say we can comfortably cope with what's likely to be down the road, given that we coped with what we saw in quarter 1. Obviously, it depends on product range because we've got some lines more subscribers than others. But broadly speaking, I'd say that we're pretty comfortable that we coped with that 39% uplift in Q1. And therefore, we're probably feeling pretty comfortable with what's likely to be ahead.

[Operator]

Your next question comes from the line of Clive Black from Shore Capital Markets.

[Clive W. Black, Head of Research]

A couple of questions, please. Just building on Nicola and Martin's question, actually. Does that capability to meet the elevated level of demand imply that you're enjoying particularly positive operational gearing through the quarter and indeed into July? And can I just also ask about post the coronavirus influence market, how you see your SKU count panning out on an ongoing basis and indeed, promotional participation, please?

[Alexander Whitehouse, CEO & Director]

Okay. Yes, sure. Thanks, Clive. I'll take the second one, and then I'll pass the first one to Duncan, actually. So if we look at SKU count, we have worked really closely with our key retail partners. And in a number of cases, we've, what we call, rested certain SKUs. And the logic there is if you've got a range of 8 flavors of something and demand is on the brink of what supply we can both cope with between us and if you drop off the last 2 or 3 flavors temporarily, it just allows longer production runs in the factory, a simplified supply chain, and it just allows you to keep in stock. So there was a period in time back end of last quarter and into quarter 1 when that was the case. But gradually, the vast majority of those SKUs are all now back in production and back in store. So that was essentially a temporary adjustment to help cope with the extraordinary levels of demand. And so I don't really see any significant longer -- medium- or long-term change in SKU count as a result of that, to be honest, Clive. It include -- the first question, I think probably Duncan, you might be in a better position to answer this one?

[Duncan Leggett, CFO & Director]

Sure. I mean I think in terms of the gearing, clearly, more volume tends to be good. But I think it really does depend on what product, what lines and at what times. I think, obviously, the benefit in volume is predominantly through grocery. So that is -- that's reasonably helpful, I guess, Clive. Probably the point I'd make is that the Sweet Treats business is probably more sensitive to volume that's impacted by the trend we've seen. So I think it is generally positive for us, but it does depend on exactly where the volume is coming from.

[Clive W. Black, Head of Research]

Okay. And if I just make a quick follow-up on market shares. Just to be clear, within your major categories and brands, have you seen any notable movements in market position? You already had a reasonable number of #1 and #2 positions. But could you just give us some color maybe if there's been any adjustment in that this year? And maybe just comment on your Sweet Treats market share, please.

[Alexander Whitehouse, CEO & Director]

Yes, sure. So I think we've -- our market share gains have been very strong, as I indicated, in a number of categories we've taken approximately 200 basis points of market share, and we've actually increased market share in every single category. But that hasn't really changed the relative position, it's really just strengthened the already strong positions that we've already got. I think probably the way to look at it. In terms of Sweet Treats, yes, we've seen very strong share gains in Sweet Treats as well. We -- the overall market volume was soft at the beginning of the quarter, as I said, because everybody was focused on buying core essentials. And then as we've implemented our commercial plans in -- what for us were periods 2 and 3 and with Mr Kipling back on TV, obviously, in a low-cost media market as well, then that's really helped get our brands back into strong growth through periods 2 and 3, but also very strong share gains, yes.

[Operator]

And your next question comes from the line of [ Atif Ali ] from [ RigCore ] Capital.

[Unknown Attendee]

Two questions from me. The first one is, will you like to see net debt before you consider a refinancing of your debt stack? And secondly, would you consider achieving an investment-grade rating as a management target?

[Alexander Whitehouse, CEO & Director]

I think both those questions are coming to Duncan, actually.

[Duncan Leggett, CFO & Director]

So in terms of net debt target, we've obviously just come off of the back of the previous 3x net debt target and as we very comfortably beat that at year-end. I think going forward, we haven't set an explicit target. What I would say clearly is we've seen for the progress we've made over the last 12, 18 months or so in debt reduction, but there's still a long way to go. So definitely looking for leverage targets much, much closer to 2. In terms of interest sale, clearly, we use some of our free cash flow generated last year to the target portion of the floating rate notes, that gives the GBP 4 million benefit that Alex mentioned earlier. And clearly, there's still some of that [ callable part ]. So I guess that could be a use for some free cash flow together with relatively expensive debt. But clearly, we've also got quite an expensive fixed-rate note that we're well aware of. And with the positive momentum, and that is something that we'll be taking a look at, for sure. I think on the specific ratings, clearly, Nisa is somewhere off investment grade. But clearly, it was a positive momentum. We'd like to think that we might be able to improve on the current cost of funds that we've already got.

[Operator]

And your next question comes from the line of Melwin Mehta from Sterling Investments.

[Melwin Mehta;Sterling Investments;Managing Partner]

Great numbers. I have 3 questions, and I'll take them one by one, if you don't mind. Number one was basically, if we benchmark our products of fat and sugar compared to competition, how do they stack up?

[Alexander Whitehouse, CEO & Director]

Yes. So good question. We put a lot of effort into reducing fat, salt and sugar across our product range, actually going back over a number of years now. And as I mentioned earlier, producing healthy versions and healthy products has been at the top of our priority list within our already aggressive innovation pipeline. So we've made quite a lot of good progress. I think it's fair to say in a number of categories we would consider ourselves to be in a relatively strong position versus competitive set in terms of our credentials in that respect. So where we've taken sugar out of products, where we've taken salt out of products and where we've taken fat out of products. So we would consider ourselves to be in a relatively strong position compared to some other people.

[Melwin Mehta;Sterling Investments;Managing Partner]

Okay. And my very limited research, nothing compared to yours, really, has really -- I mean, one common denominator that comes out is people's really lack of cooking skills in spite of buying many cookery books. And my question to the management here is, are we -- because -- are we taking any initiatives and creating any programs, media, videos, whatever, whatever, to really drive the cooking skills and actually that's confirmed by your sales of Nissin, the Nissin noodles, which, of course, require well lesser except summary in the task of covering the boilings of water. But are you doing something to drive up kind of people's cooking skills, is my question.

[Alexander Whitehouse, CEO & Director]

Well, actually, we look at it in a slightly different way. But first of all, I think you're absolutely correct. And what we have seen is very clear in our research, is that the passing down of core cooking skills from generation to generation has sort of petered out. And I think we -- the period of lockdown is slightly different. So we can treat that separately, but before looks slightly broader and slightly longer term. There is a diminishing skill set, actually, from -- and that is actually the second priority within our renovation pipeline. So the first one is health, then the second one is -- actually, we dub it as convenience, but actually, what we mean by convenience is finding ways and products that actually help you make a tasty, healthy meal, even if your skill set is more limited. And you see it in things like if you talk to consumers about scratch cooking, a number of years ago, scratch cooking to most people would have meant buying individual herbs and spices and creating something absolutely from basic ingredients. But now if you talk to consumers about scratch cooking, what a lot of people will talk about is, well, I cooked the chicken and I chopped the vegetables and did the pasta and then pulled the sauce over it. And so our role there is in providing the sauce and making it easy to use so that people can still make a really, I would say, a very tasty, high-quality but healthy meal without necessarily being able to make a [ real sauce ] from scratch. That will be the biggest way in which we tackle it.

[Melwin Mehta;Sterling Investments;Managing Partner]

And my last one, slightly connected, but on branding really is obviously, apart from TV and advertising, have you been active on social media? And what has been the response if that?

[Alexander Whitehouse, CEO & Director]

Yes, we are, in some cases. So if you take our new Plantastic brand, it's a small brand in its infancy and with a very specific target audience that lends itself very well to social media. But actually, if you look at the majority of our big brands, the sheer scale of the number of purchase acts means that actually, television is the best way to reach a very broad audience very quickly. So if you think about -- and if you think about it to deliver our total sales number, we sell somewhere between 1.1 billion and 1.2 billion consumer units, just to put it in context. So it's millions and millions of households buying multiple products multiple times a year. And having a social media following of a few tens of thousands of people or whatever really doesn't help significantly with that. What makes a big difference when we're talking about that many units is actually having really great TV campaigns that build strong emotional connections with consumers, coupled, of course, with all the activity that we do in store.

[Operator]

There are no further questions at this time. Please continue.

[Alexander Whitehouse, CEO & Director]

Any last questions or should we wrap it up there?

[Operator]

There are no further questions at this time. Please continue.

[Alexander Whitehouse, CEO & Director]

Okay. All right. Thank you very much, everybody, for dialing in, and have a great day. Thank you.

[Operator]

Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect.