Start Time: 15:00
End Time: 15:36
The Clorox Company (CLX)
2022 Barclays Global Consumer Staples Conference
September 07, 2022, 15:00 PM ET
Company Participants
Linda Rendle - CEO
Kevin Jacobsen - CFO
Conference Call Participants
Lauren Lieberman - Barclays
Presentation
Lauren Lieberman
Thanks everyone for joining us. Next up, we have Clorox and we've got the company's CEO, Linda Rendle; and CFO, Kevin Jacobsen with us. So thank you both very much for being here. Really happy to be next to you in person.
Linda Rendle
Good morning. Thank you.
Lauren Lieberman
So we'll jump right in because we got a tight 35 minutes. So, Linda, with earnings in July or August, I guess you announced a new streamlined operating model with the aim of increasing efficiency, improving how you meet customer and consumer needs. Can you just discuss the mechanics, the cost savings $75 million to $100 million, and any kind of actual changes in organization structure that may go with that in terms of this being a changed operating model?
Linda Rendle
Perfect. Maybe what I'll do, Lauren, is to step back and put that in context of the choices and then get into the specifics if you don't mind.
Lauren Lieberman
Sure.
Linda Rendle
Perfect. So, it obviously is a very challenging environment. And we're taking a broad set of actions under our control to ensure that we're growing margins and maintaining our top line momentum. And this operating model that you referenced that we announced in August is an important component of that. And that goes along with pricing and cost savings, all the work that we're doing on our digitalization that will start to impact fiscal year '25 and beyond. And then this operating model change is to help us be faster and live our IGNITE strategy, particularly the one that we chose around reimagine work. But it also provides a cost savings benefit. So we would see that cost savings benefits begin in the back half of our fiscal year '23, and then flow through in fiscal year '24. I'll have more to share about the details of that operating model change in the next couple of months. Obviously, we're rolling that up to our team as well. So we're going to get that information concurrently, when we show some additional details. But really, it's around ensuring that we get closer to the customer, closer to the consumer, and that we ensure that decision making is fast as the world is moving and that certainly has been an increased pace lately.
Lauren Lieberman
Okay, great. And on a related note, the summer prior, right, you announced a $500 million digital transformation investment, including a new ERP system. So I guess it'd be great to maybe hopefully take a step back on that as well and talk about some of the capability gaps that this investment will cover. So let's start there.
Linda Rendle
Perfect, Lauren. So mapping the first question, we're doing everything we can under our control to grow margin. This component is, let's make sure that we're doing everything we can to invest in our brands, in innovation and the capabilities of our company. And that's part of ensuring that we invest in advertising and sales promotion and innovation across our brands. We launched innovations in 28 categories in the last fiscal year, and this digital transformation is in support of long-term growth for the company. We need to replace our ERP which is over 20 years old. But in addition to that, we are implementing a set of capabilities across supply chain, across demand creation and innovation, building a data lake and an insights platform to ensure that we have the right data at the right time to make fast decisions. And this is in support of achieving that 3% to 5% top line goal. So it's an effectiveness component and how we market and how we build brands. But there's also a big efficiency component that will continue to support our cost savings program. And we target 175 basis points of EBIT margin expansion each year. And that will be in support of that as we move to fiscal year '25 and beyond. This is really modernizing the capabilities of the company, in some ways catching up across some of our capabilities, and another's continuing to lead like in digital marketing.
Lauren Lieberman
Okay. So on the catching up piece, and a little bit less about digital marketing and analytics, but more about maybe internal visibility, financial planning, are there also capability gaps that get addressed with this new ERP system? Or do you feel like you actually have the -- it's modernizing but you already see everything you need to see?
Linda Rendle
No, this would be a step. We're making some short-term steps. Kevin can talk about how we've implemented some of those this year and in the year prior in terms of scenario planning, given the volatility and durability were experiencing, but this really is about systemically building the capabilities. And this marries, Lauren, with the operating model, what we would expect for our Clorox teammates. How they work today will not be how they work in two years and how they work in five years. Today, a lot of our processes are manual, and we want to automate those and we want to put our highest and best talent against big customer problems, against solving innovation, against working with our retailers to ensure that we execute with excellence there. So this will be about standardizing work, changing those work processes and those two things marry together. That will give us better visibility into both consumer demand and upstream into our suppliers so that we can marry that signal together, do things like reduce inventories, reduce costs, support our cost savings program, but we are doing the short-term work to improve that forecast accuracy, but this will build it in more systemically moving forward.
Lauren Lieberman
Okay. So Kevin, maybe you could share a little bit about what you're doing in the shorter term --?
Kevin Jacobsen
In this environment, really what we focus on is I'd say two things. First is the frequency of forecasting. In a pre-pandemic environment, we might check in once a quarter on our forecast, it was pretty stable. Clearly in this environment that no longer works, so much more frequent forecasting, to make sure we're getting the best signal possible both on the consumer and for us as well as the cost environment. And then the other thing we're working quite a bit on is scenario planning. I don't think anyone in this environment can say they've got a crystal ball and have certainty about exactly how things are going to unfold over the next 6 or 12 months. And so we've spent a lot more time thinking about not only what's our base set of assumptions and plans, but [indiscernible] what is our pivot. And so that's really about scenario planning. I don't think you're going to get everything right. But I think what's going to differentiate those who succeed versus those who don't are the folks who are most prepared to pivot and understand what those pivots will be. And so we spend quite a bit of time on scenario planning as well right now. And to Linda's good point, we will automate that as we go forward. It's a bit more manual right now. Ultimately, we want to turn that into a much more automated process.
Lauren Lieberman
Okay. So also as you bring more automation in and less manual processes, because it's funny that one doesn't think about Clorox as a company with a lot of excess costs from an external looking at the P&L standpoint and the growth even in your SG&A line, not marketing, hasn't been all that significant over the last decade. So, I guess, does this mean that those dollars in the P&L get reallocated over time, those resources let's call it get reallocated to more growth constructive activities? Or does the company actually get even leaner than it was let's go back to 2017, pick a time?
Linda Rendle
Yes. So first and foremost, this is about working more effectively and efficiently. And we want to ensure that we can move as fast as our categories do and support our top line growth and margin rebuilds that we have significant work to do on. But also this is as cost savings. So we target between our digital transformation and this operating model to get to 13% of sales from an SG&A perspective. We average about 14 or higher this year, given our digital transformation. But we would expect us to put us in the leading pack from a peers' perspective. And what we're looking at is just fundamentally changes work. This is not -- although we will reduce headcount as a result, this is less about that. It's a benefit but it's more about ensuring we have decisions at the right level that people are empowered to do their work, that it does not take three levels of decision making to make a decision that somebody very close to the consumer can make. So this is fundamentally about making a more modern, fast, efficient company that moves up faster after growth. So we will reallocate everyone's kind of thinking more about the consumer and customer. That's what we want them to do; less spreadsheets, less manual processes, more thinking strategically, but then we will -- we do expect a headcount reduction as part of this as well.
Lauren Lieberman
Okay. Because one thing that I've thought about a lot is kind of coming into the current state of affairs, let's probably call it and even where things were pre-COVID that there's been an open question as to whether there had been a degree of underinvestment at Clorox in infrastructure, in capabilities. But why is now the right time for tech to be focusing on cost savings and rebuilding margins, of course? But why is now the right time to be thinking about lowering your SG&A spend as a percentage of sales when it almost feels like if anything, the last five to seven years, the company has been a victim of that spending too low or too constrained?
Linda Rendle
I step back and look at this all the time, Kevin, I, the whole team. We are always looking at, do we have the right investment level, Lauren, because it's exactly the right question. And especially given the world that we live in, the number of categories to plan, the brands that we have in 9 out of 10 households, we have to make sure we keep them healthy, that is absolutely critical. So as we look at advertising and sales promotion, which we have a 10% of sales and we've maintained that during this time, we've absolutely not cut it, we've increased our spending on innovation in the attempt to get double the impact from innovation that we did in our prior strategy period. We've invested that $500 million, which was -- that was a decision in a tough economic time that we don't think can wait, because we think it's important for the future of the company to ensure that we can maintain that top line momentum that we've built during the pandemic. And we don't want to let that go. And we need those capabilities. And it takes a few years to implement an ERP, so we didn't want to wait to build those capabilities. But that's really how we're approaching this is where are the places we need to invest and they're sacred and are hard to do in times like this when we're experiencing the type of inflation we're experiencing, but they're the right choices for the long term and the company. And the way that I think about SG&A, if this were simply we need to reduce headcount to save have $75 million to $100 million, I would not have made that choice right now. What I've recognized, the team has recognized is that we're not moving fast enough. And we we've improved over the pandemic, but we need to move faster. And so this really is about being a more effective and efficient company in that way, it comes with a bonus of having $75 million to $100 million, and we're making every choice we can to return profitability to the company. And those are tough choices. But this really is in service of being a stronger company in the future.
Lauren Lieberman
Okay, great. Sticking with rebuilding profitability, the topic of kind of rebuilding gross margins is a topic across the industry, right? So actually almost stepping away from Clorox for a moment, mathematical, the industry pricing to cover doesn't cover inflation, right, that doesn't get you there in terms of percentage. So at a high level, do you think that investors should be thinking about pre-pandemic, pre-inflation margin percentages as a benchmark? Or no, that maybe we should just be saying cover it in dollars and move on and stop focusing so much on the gross margin percentage question?
Kevin Jacobsen
Yes, it's a great question, Lauren. I'd say, as it relates to us, we are committed to rebuilding gross margins back to those pre-pandemic levels. And for those of you don't follow Clorox, that was about 44%. We've lost about 800 basis points through the pandemic. And we think we're taking the necessary actions now to rebuild those margins. Now what I think it's important, and Linda and I and the team spend quite a bit of time talking about this is you don't want to think about margin recovery in isolation, but you want to think about it in the context of your business. We want to continue investment in that top line momentum and rebuild margins at the appropriate pace. We think that will really maximize the value of the company. And then what I'd say, if you look at what we're doing this year, we expect to make progress. So we said about 200 basis points of margin improvement we will make this year. And that's in spite of another 550 basis points of cost inflation we're expecting this year. And so another difficult cost environment, but between our pricing actions, our cost savings program and optimizing our supply chain, we expect to make progress. And then I expect that to continue as we move into fiscal '24. And I think more on the question of timing, when you get back there, we're going to continue to drive the levers that we can control and that will certainly work to rebuild margins. I think that the ultimate pace of that margin recovery to some extent will be dictated by the external cost environment. The commodities we purchase, we purchase these commodities for very long periods of time. They're cyclical. At some point, they'll turn deflationary. When that occurs, that will certainly accelerate that timeline. It's just hard in this environment to predict exactly when cost will roll over. We don't think it'll be this year, but I expect at some point it will. And that'll certainly contribute to that margin rebuild process. But to your very good point, you won't recover margin circling through pricing. It's got to be cost saving, supply chain optimization. It'll be all those levers that we pull will get us there over time.
Lauren Lieberman
Yes. Okay. When does that -- when not if of deflation of costs rolling over in some way and with [indiscernible], who knows when that is? But I feel like the excel exercise of rebuilding margins is easy, right? Real cost were up this much, now they're down this much. And look, now we're back. But I don't think that retailers look at their excel spreadsheets the same way, right, and enjoy feeling when their suppliers have massive jumps in margins and profitability, particularly businesses that shouldn't be very cyclical. So again, not knowing when that will be. But how do you think about that? How you think about whether or not retailer pushback or retailer relationships end up putting some sort of cap or limiting factor on margin recovery. And it's an industry kind of perspective question not just for Clorox, specifically?
Linda Rendle
For retailers, if we were to backup at a strategic level, we have shared the same goals. We want to grow category and we want them to be incredibly attractive to their shoppers, we want to bring innovation and move to those categories to keep them healthy. And in order to do that, we have to ensure that we have the right margins to be able to invest back in the business. And that is a fairly straightforward and senior level of conversation with a retailer that we all have. The nuts and bolts that you call out of a buyer making that decision and the pressure that they're experiencing, that's a real pressure for them. So what we answer with is, number one and number two share brands that we're investing in bringing them great innovation, helping them think about how to maximize their category. And those are really trying to have the discussions and we show them why pricing is a necessary action to help continue to keep those categories healthy. I think your point is right though. It's going to get harder, but discussions with retailers will be more intense because the consumer is under a lot of pressure and they want healthy categories. So far, in our categories, that's gone very well. And we haven't seen the customer under stress in the categories that we compete. And for retailers, that's really helpful to them, because a lot of their categories are under stress. So that's where we're really focused on ensuring we have the right inventory levels, that we have the right merchandising plans, and that we have the right distribution. So I think that's the focus at a strategic level. As in the third, we've been very clear with them. We're expecting another $400 million in cost inflation this year on top of the $800 million we had last year. So we need to price and we have that discussion of what it means if we don't, but I do think these discussions will become more nuanced and what do we do about it. It won't be as straightforward. We're coming in with truckload pricing. Now we're talking about how do we have the right sideline up? How do we use press pack architecture in a different way, in addition to this truckload pricing that we have to take. But you're right, the last nine months has been a different type of pricing environment. Everyone's been experiencing this inflation. But going forward, we're going to have to really think long and hard about how we combine pricing with other actions to ensure we keep categories healthy. And that's what retailers really care about.
Lauren Lieberman
Okay. Since we're talking about retail, right, so I have an emerging question, has been the degree to which retailers are also addressing inventory across staple categories, not just general merchandise as they kind of manage the full burden. So have you seen anything in that regard in terms of changing customer order patterns of late or inventory cleanup efforts at retail?
Linda Rendle
We have not seen anything outside than we saw in Q4, where we did have a material change in inventory at retail in our cleaning business, particularly wipes. That was about two points of top line for the company in our fourth quarter. Since then, though, we have not seen anything material in our categories, nor does our outlook contemplate that. That could change as retailers make a decision in our categories. But generally, because they've been performing all with consumers and we have about the right inventory level, we haven't seen anything material. And we'll keep everyone updated if we hear something different. But at this point, no impact.
Lauren Lieberman
Okay, great. I want to shift and talk about cash flow. So Kevin, your inventory is about 50% higher than was the case in 2019, both at the end of fiscal '21 and '22. How should we think about the timeline to work through that, and the degree to which that could be a multiyear headwind to gross margins as you're carrying kind of higher cost inventory on the books?
Kevin Jacobsen
Yes, I think we hit our peak inventory last year. And so for a number of reasons, we've taken inventory levels up. I'd say the first one is the supply chain disruptions going on, we had a lot less confidence in our supply chain. So we've raised safety stocks. We've talked about this a number of times, we had hundreds of force majeure declared on us during the pandemic. And that caused us not to have the same level of competence in our supply chain. So we raised inventory levels. The other item that was the demand signal from our retailers was much less consistent than we've historically seen, was another reason we were holding higher inventory levels. And so typically at Clorox, before the pandemic, we might have held 52, maybe 55 days of inventory on hand. We got up into the low 60s, which we think was appropriate for the environment we're operating in. And we're seeing the supply chain start to improve, it's not back to a pre-pandemic environment, but certainly I'd say more stable than it's been in the last 12 to 18 months. It's allowing us to start taking inventory levels down. I'd say demand from our retailers is starting to normalize. We're also able to take safety stocks down. And then the last item for you folks who follow us, during the pandemic, we moved out to third party contract manufacturers a way to increase quickly our ability to supply product. We've stepped out of those relationships now. And so that was more inventory we're holding throughout the network. We've been able to end those relationships as demand has normalized. We brought that inventory back in house, and that allows us to be a bit more efficient. And so we're making progress. This last quarter, sequentially, we reduced inventory about $50 million. We're down to about 60 days on hand. I'd expect that to continue to improve this year. We'll get back into the 50s. Maybe to your one question, where does it go? I don't think we get to a pre-pandemic level. I think you're going to expect an ongoing level some level supply chain disruption, it'll never be as stable as it was before the pandemic began. And so while I think we'll continue to make progress, it probably ends up a day or two higher than where we were before the pandemic began. But I think over the next few years, you'll see us take that inventory down.
Lauren Lieberman
Okay, great. So this is a tactical time, right? I think about a lot of the movement is to have some very strategic and longer term work that you've done on the bigger picture investments you're making and the operating model decisions and so on. But also a lot of work is going to repairing the P&L, right? So I guess, Linda, I was curious how you're managing your time in thinking about trying to manage the balance of demand normalization, and that happening and the reality of that happening while also keeping up reinvestments, innovation and marketing?
Linda Rendle
You're absolutely right. It was an incredible time of detailed tactical execution combined with let's not take our eye off the long-term ball. And how do we balance that every single day? Someone asked a very good question in one of our one-on-one today that asked what's the first thing when you wake up in the morning that you think about more? And this is exactly it, the balance of those two things. And we need to execute with excellence. Really, a never before done set of comprehensive choices to rebuild margins, the level of pricing we're taking, the level of cost removal that we're undertaking, ensuring that we are executing the operating model with excellence, that's going to require every single person at Clorox to execute. And that's what we expect. That's what we're tracking. That is the first thing I think about in the morning. And the last thing I think about and what I dream about. And that is definitely by the way the same. So it's an incredible time of execution. But at the same time, it would be a very big mistake to pull back advertising money right now to not invest in our brands, to not ensure that we have innovation that's consumer relevance. So we assign our general managers targets that relate to both of these. They have gross margin targets, they have top line targets, and then they have very specific market goal objectives. And we're balancing that continuously as we talk to him about the plan. And we're making adjustments because I think to your good point, it's so volatile that it's set a plan and then the next day make sure the plan is still the right plan. We have that balance. And we have to do both of them. And there's not an either/or in my mind that we'll either set the future generation up or years down the road for a lot of pain. We do the hard work now and that's what we intend to do is both execute with excellence, all the tactical and margin building options that we have, and not lose sight of the consumer and the long-term capability building for the company.
Lauren Lieberman
If I look back pre-COVID, only 2020 was meant to be -- I'm sorry calendar, sorry, calendar 2020, it was meant to be a time as we're rebuilding distribution, bringing a lot of new product activity to market after a tough kind of 18 months for the portfolio and arguably in relations with retailers and supporting the brands. That work was obviously interrupted by the pandemic. And you were very necessary in different ways to retailers and consumers. But it's where do you, and then of course you've had the supply disruptions that you had to look to prioritize SKUs. And so it's just where do you think you stand now versus what, if you look ancient [ph] history, but back to call it 2017, 2018 levels of distribution of ACV of full deployment of the portfolio?
Linda Rendle
I think we're in a much stronger place than we were, although it's difficult as we have the impacts from lapping what we're doing in cleaning and seeing that normalization. So I think some of that is being what's weighing on our results, but we're seeing good strong growth. So for example, in the portfolio, we've averaged 5% growth over the last three years. If you look at Q4, if you take out health and wellness, which has that cleaning organization, that portfolio going on again [indiscernible] those three segments 5%. So we're seeing really good momentum in the work that we're doing on our other brands. And inclusive of cleaning and disinfecting if you see back up that lap to look at the fundamentals of the business and some of the proof points. One, we have grown total distribution points for seven consecutive quarters. We were up high single digits in the last quarter. We're not back to where we were pre-pandemic, but we're getting there. We're making good progress. And I would say that overall distribution is more effective. We're getting more out of that, because we leaned into higher profile SKUs. We used the opportunity when we had to narrow down our assortment from a manufacturing perspective to do that work at retail. So I think we're in a much stronger position when it comes to distribution. I think we have used this opportunity during a really difficult time to rebuild relationships with retailers in a meaningful way. It's not easy to call their largest retailers every day and say I can't ship it to your borders. And we did that for a very long time as many of our peers do here and we leaned in to over communicating, we leaned into partnership with them, and we've come up strong on the other end. And that's allowed us to price. And that's allowed us to have great ACV on our innovations, such as like that's in a stronger place. And then I think when it comes to the speed we're operating it in, the understanding that our people have about what's important, like market share, we're not where we want to be right now at this point in market share, but we're all clear market share is an important goal and that over the mid to long term, we must grow it to be successful. And the team has embedded that in how we think about growing categories. So I think we're stronger. And I think we're going to become stronger just in the fact that we're continuing to invest and also growing margins back at the appropriate pace. But I look at this, this is going to sound, do not look like at the pandemic as a gift, because it certainly was not for anybody. But this time of disruptions has made us stronger, and we will be stronger coming out of it, because we're making all the choices necessary to deal with it. And so did I want anyone in the world to go through that? No. But am I glad that as a company, we're going to address some of the issues that we needed to address and become stronger? Absolutely. So that's why we're taking it as an opportunity to do better.
Lauren Lieberman
Great, okay.
Linda Rendle
I know. I like it.
Lauren Lieberman
We definitely do. So as it relates to demand, your big three also coming out of earnings, this summer was just that more, as you referenced, the more severe change in cleaning demand, especially for whites and discussing the normalization. I think previously, even the company did use it, there wasn't a household pantry inventory dynamic at play. Retail inventories were in a good spot. Demand would be structurally higher than it was pre-pandemic. So I guess with those three things, and kind of thinking of this normalization process, like what are those three things was the biggest surprise on the other side? Did it turn out people aren't appropriately reporting the household inventory, or was it the structure of demand question?
Linda Rendle
It's a little nuanced. I would say, largely helpful that inventories have played out. We have not seen excess help with inventory being the issue in the normalization. Retail, we had a correction in Q4, but that's against normalized levels we would have expected that and I don't look at that as a strategic issue. We have a timing issue. And then structurally, PC people continue to care more about cleaning and disinfecting than they did before. Here's what changed though? Massive inflation, pricing, and all of that mix combined with the fact that consumers care more about it. And where does that net us at the end of the day and the fact that the pandemic went longer than we anticipated. No one anticipated the Delta wave or the Omicron wave that we experienced, and we're having to lap those now. And we had thought we were beginning to normalize, and then we have those two waves. And now we have to lap those again and get some [indiscernible]. And I think people got tired of the pandemic and had a wonderful summer holiday. And we saw some, probably less than the behavior than we did, we probably would have expected coming out of that. I think it was just starting to be clear from a consumer behavior perspective. But we have to lap these two waves of COVID we had last year. And when we do, we still expect this business to be structurally higher and we expect it to be a strong contributor to that 3% to 5% sales growth we had. Our innovation plans are working really well. We've made some entries into new sub-segments in homecare that are working very well for us. And so I feel good about overall cleaners' contribution. It's just unfortunately the pandemic went longer, and we have to deal with the impacts of that and the lapse of that. But overall, we think that this business is in a better spot than it was pre-pandemic in terms of what consumers need from us. But we're going to be watching really closely as we implement pricing and what that means and what choices they'll make, but feel good about cleaning right now just have to get through this period.
Lauren Lieberman
Okay. But really call it two months into the July price increases being in place and you've talked about expecting dollars. You just said, you're not happy with market shares yet. You had expected dollar shares to start to improve once the pricing was in place. So how is that developing, anything notable in terms of incremental volume pressure as those price gaps narrower?
Linda Rendle
Yes, so the July pricing is you're right, Lauren, just shy of 60 days in. It's still being passed through by retailers. It's not fully passed through yet. In terms of our lapse to the expectations, which we expect it to be a little worse than last year returning to pre-pandemic legacy levels, again, early if you haven't seen it folks, that purchase cycle is largely on track. So as we went from a plan perspective, we're starting to see share improve in places as our pricing flows through. Dollar shares are still strong. And we would expect that pricing fairly flows through that to continue to improve. If you look at shares, for example, Q1 versus Q4, Q3, they are at an absolute higher than they were just not going versus year ago. But we're down close to flat right now and we're hoping to change over to green here as we fully implement those. It is dynamic, though. We're still seeing prices go through. We have additional pricing plans in the year. But we are committed to growing market share. We go through it every month, every quarter. We've talked about that. But we are committed to doing that. And pricing will be important that we get back to those price gaps that we had pre-pandemic in order to do that. So I'd say progress, but not where we want to be right now.
Lauren Lieberman
Okay. And can you just remind us of the further pricing plans for this year?
Linda Rendle
We haven't spoken in detail about those reps. We will have more information coming up here. But we do have additional pricing plans. It is not a sizeable of an increase as we did in July, which was our largest of the three increases we've done to date. And we'll also include some price pack architecture work across categories, so ensuring that we have the right size and mix across the retailer landscape on the note that it will be implemented mostly in the back half of our year for both truckload pricing and price pack architecture, and more details to come.
Lauren Lieberman
Okay. And at this point, knowing what you know about the competitive landscape, will those moves get your price gaps generally back to where they were prior to pandemic and inflation?
Linda Rendle
That's our belief.
Lauren Lieberman
Okay. And that will cover effectively the incremental inflation for this year, or you'll still be running behind uncovering dollars of inflation?
Kevin Jacobsen
We will be covering inflation this year, and we'll start to build back some of what we lost last year. And that's how we'll grow margins this year. Because the pricing plus the cost savings will more than exceed the cost inflation we expect this year.
Lauren Lieberman
Okay, great. To talk a bunch about cleaning -- other areas of the portfolio that is worth talking about, either kind of bright spots in terms of demand and brand momentum, or areas that maybe require extra attention. Charcoal as a category I think has been under some pressure based on the growth side of the fence. I'm happy to open it up on other categories you think are worth calling out positive or negative at this time.
Linda Rendle
Yes, I think it's really important. In short, we addressed that. So cleaning and disinfecting are an important part of our portfolio. But as I mentioned, if you back out our health and wellness segment where cleaning and vitamins, minerals and supplements are reported, we delivered 5% organic sales growth in Q4 for the remainder of that portfolio. So we're seeing a lot of strength in consumer tailwinds behind the majority of our businesses as people stay at home, people have adopted cap, as people do more to take care of their health and wellness. So one of our strongest growing business during the pandemic was actually Kingsford. So we're wrapping that right now and that's part of what we're experiencing as well where that normalization actually lands, combined with some other issues we talked about in Q4. And so we're just watching that one to see where will that normalize? That would be one what I would call out. But we've had great strength if you look at our Brother [ph] business. We've had so many people, millions of households enter that water filtration category. And it's a place going forward we can address a triple win for the consumer, great tasting water, so better consumer experience at a lower cost versus the bottom level alternative and a more sustainable option. So we'd leverage that during the pandemic and we expect that to continue to grow. We [indiscernible] other things, like municipalities, et cetera. Our cat litter business has done very well as cat has been adopted and thankfully kept overly nervous that there will be some returning charges. But that hasn't happened, which is wonderful. So there's a lot of pet parents out there who need to take care of their pets. Kevin Menzel [ph], I call them pet parents, but they are pet parents. And we've had great little innovation in our lineup that has done very well. We still actually aren't able to meet demand in litter, but we're opening a second facility coming up here that will start in the back half, which will help us get there and also help us reduce costs over time. I'd also call it our food business as more occasions at home, people love using ranch for all types of bread [ph]. So that's been a business that's growing very strongly for us. And we'd expect to continue [indiscernible] with the flavoring and season trends that we've seen. We've done some really cool innovations with partners lately that have gotten so rich in Hidden Valley [ph]. So I could name them all, but I'll keep my comments to that. But it was just -- we're seeing broad strength across the portfolio. And we have plans on innovation on all of them. We launched innovations in 28 categories this year. So that would be incredibly important as we continue to invest in our brands for advertising and innovation to keep them healthy. It's across the portfolio, of course, not just cleaning.
Lauren Lieberman
Okay, great. I'm going to sneak in a very quick question to some international. International has sort of varied over the past two decades in terms of like, the company's focus not -- what it wants it to look like. So just how would you articulate kind of the current intention when it comes to non-U.S. markets? And how would you describe progress since the start of the pandemic?
Linda Rendle
International, we think this is an area that can grow faster for us and it has recently. We did the work in our last strategy, Lauren, as you well know, ongoing to get the right foundation to grow from and the team did good work there. And when we declared that 2019 as this business can grow faster for us and be a larger contributor, and it has from an organic sales growth perspective over the last several years. We want to move more of our business away from Latin America, which has been highly volatile and to other markets. Saudi Arabia is a good example. We acquired the majority ownership in a joint venture we have there, and that's under our Clorox brands. And that has gone very well for us as well as categories. Cleaning is one of them, just like in the U.S. We have opportunities around the world. We've doubled the distribution, number of countries that have rights right now and we'll grow that for many years, like we did in the U.S. And then we have things like Burt's Bees and Cat Litter that provide us great growth opportunities international. So what I would say is, we don't expect international to be completely out of whack in terms of the percentages today, but it can be an outsize contributor for the company and it is right now.
Question-and-Answer Session
Lauren Lieberman
Okay, great. That was highly efficient.
Linda Rendle
I tried. I saw the minute, I was like --
Lauren Lieberman
That was amazing. Thank you very much. Please join me in thanking Linda and Kevin for being here. I really appreciate it.
For further details see:
The Clorox Company (CLX) Management Presents at 2022 Barclays Global Consumer Staples Conference (Transcript)