MERCADO EM PAUTA - Convidada Juliana Azevedo

Good evening everyone, thank you for this opportunity. Marcio, I've known you for a long time and always learned a lot from you — today will be no different. The pandemic is transforming all of us; nobody will come out the same. P&G was classified as an essential industry, so Gillette, Pampers, toothpaste — we didn't stop here in Brazil. We have 4,000 employees: 1,000 administrative staff went to work from home, and 3,000 continued operating but in a different way, because we prioritized first the health of employees and then the supply chain. Imagine starting lockdown without diapers, without sanitary pads, without toothpaste — that would be an even bigger crisis. And third, how to strengthen the social pact, because one of the positive legacies is a societal awareness of what we need to do to simplify and grow by doing well. So we restructured quickly, we sold a lot. We had the benefit of watching the pandemic develop across China, Europe, and the US, so we could increase inventories and supply the entire chain without interruption. Our long-standing supplier partnerships paid off. April and May were adjustment months because government aid hadn't reached the most vulnerable yet, but we're already seeing a recovery — our categories are really strong. But we'll have to adapt because everything has changed. When offices reopen, there's already distancing, the discovery that working from home also works. The consumer wants something different from products and companies. So there's a post-isolation — I say it's not post-cough but post-cocktail party. It's a new society we're building now.

Absolutely. Strong social impact has always been in our values, and this crisis made it more accentuated. The first area we dedicated ourselves to was product donations — 40 million reais in product donations, plus 78 tons in basic food baskets donated by the company and employees. But we didn't stop there. Innovation is in our DNA, so we invested in research — DNA decoding for USP, we bought an artificial lung to help develop mechanical ventilators. About a month ago we launched a social accelerator, a platform to gather ideas from people so we could better direct proposals — some we could help with services, some with funding. We have almost 100 projects and have already accelerated about 30 in different ways. Our brands also reinvented themselves with services in a very beautiful way. We quickly developed baby care support, helped physical education teachers who couldn't give classes by creating digital platforms, connected hairdressers with clients who couldn't work, and created bridges for product usage tips with remuneration. We saw brands go from being just products to being products plus experience plus problem-solving solutions. I think that's a point of no return — this awakening of the company's greater purpose is irreversible, and this brand positioning that transcends simply removing stains or the product itself.

This is also a very positive legacy of the pandemic. Twelve years ago, P&G defined goals, and we had proposed reducing our carbon footprint by fifty percent. We said that's good but not enough. We would reduce fifty percent acting on two fronts: first, in how we operate in factories — reducing emissions, purchasing renewable energy. But we understood that given our energy matrix in Brazil and the world, we wouldn't reach zero. So the commitment wasn't this until last year, but the academy itself told us this isn't sufficient — we need to do more. So the way we see it is to be carbon neutral throughout this decade through reforestation projects, using nature to compensate where we can't zero out emissions. Three projects have already started, including here in Brazil in Espírito Santo, together with Suzano, doing Atlantic Forest reforestation. All the numbers are validated — they're not made up. So it's very exciting.

It's a super critical point. As we discussed about the carbon footprint — scopes 1 and 2 — a large part of the carbon footprint in our categories is from product use, not manufacturing or transportation. It's whether you wash clothes with hot or cold water, whether you leave water running when brushing teeth. So packaging — what it's made of, how it's transported, how it's disposed of, and what information it carries to educate consumers — has an extremely important role. In laundry, sixty percent of the total carbon footprint is in use, not manufacturing. That's where we need to do a very big job. Getting back to your question, we're increasingly engaging with suppliers to build solutions, because the big challenge is that it has to be an industry solution, not a company solution. I can have a recyclable, wonderful, biodegradable material that costs an enormous amount — then it's wonderful for half a percent of the population with no real impact. The big challenge is finding solutions for entire industries, because we're talking about our planet, not competitive advantage. I participated in achieving that fifty percent recycled content in Downy packaging — where it could be assembled, the cost wouldn't be too high, and it could be shipped to northeastern Brazil by ferry. It's not easy. Our suppliers are critical and very important to us. We opened an innovation center in Brazil in May 2019 to find solutions with the industrial park and universities, because Brazil can and should be a generator of solutions — not just adapting international ones but developing and exporting solutions. Our center is based in Louveira with FGV. There are 13 centers worldwide and it's the only one in Brazil — a great declaration of long-term commitment. It's uniquely positioned in a manufacturing hub with four or five categories, a distribution center, and proximity to universities like Unicamp and many suppliers.

We're starting this journey. We did a big project with Ariel — recycled packaging. Here in Brazil, we weren't able to make it viable. We have some small circular economy projects in parts of our manufacturing, and we use circular economy with water and energy reuse in factories, but not yet one hundred percent with our packaging. We have dedicated people working on this because we understand it's part of what we need to work on. The bar is always very high in economic viability. That doesn't mean we're giving up — we're in pursuit of it. Brazil is still taking small steps in circular economy, and it would be very relevant. I think partnerships are key — bringing together different groups, industry, suppliers. You don't need to do everything alone. The challenge is finding multiple actors to justify the initial capital investment needed. In Ariel, we're already doing work with collection partners, working on shampoo reuse in the circular direction, thinking about more durable packaging and refills. For diapers, we have an even more serious problem — collecting them is extremely complicated due to organic material. But we're leading a project that in 2021 will bring together actors and investment in the main cities worldwide. P&G has a very strong belief that sustainability work is one of our pillars in the citizenship agenda — it's part of our growth strategy, not something that comes after we handle other priorities. We're in a search with research, investment, and human capital working so these become solutions not just for one product or company but for the industry.

There are 13 innovation centers functioning like a network — not every center can do everything. Packaging isn't the biggest focus of the Louveira center, but they work on it too. The center is relatively new — just over a year old, and some months it had to be in quarantine and semi-open. We have 150 scientists, and one of the expansion areas now is thinking about what we could work on more in different packaging and other areas.

I think it's a combination of all those things, plus one thing called cost. I worked directly on this project with these suppliers. They would have to structure themselves here in Brazil, and the cost of that packaging is higher in a Brazilian cost structure that already starts higher. Then the consumer is just beginning to develop a perception of value for these things. So that equation is sometimes still difficult to close.

There's no doubt that yes. Packaging is the only communication vehicle that reaches those five billion people — other vehicles reach parts, but everyone at some point will pick up packaging. That's why I find it truly fascinating — the content, material, functionality — it all speaks to the consumer. And brands like ours, which enter homes, can truly change habits. The concentrated product helps a lot both with the carbon footprint from manufacturing and from use — it's easier to transport. But it's not easy to change habits — that's the hardest thing. However, connecting with the pandemic and understanding the responsibility brands now have — that goes beyond functionality to experience and service — can be an opportunity to do more good, using innovation to explain to consumers the difference between product A and product B. Packaging is not just the label — it's the format, text, material, functionality. What the consumer remembers most is how easy it is to open. If it's hard to get the toothpaste out at the end — people get frustrated. It's very important, especially in a market like ours where up to sixty percent of sales happen in very small stores with poor lighting and no proper display, where you find fabric softener next to sausage. So packaging has to be of such purity and clarity that it communicates even in less-than-ideal environments.

In some markets like the US, Venezuela, Panama — domestic products have strong US influence. China had many products that we sold with American branding because the imported product had more prestige. But that's not the case in Brazil, unless a product became popular for some reason — we don't have that cultural connection. So Downy's naming won because there was an additional advantage in supply, packaging, and labels. I think with digitalization, that part has become much more flexible. I imagine we'll increasingly define seasonal guidelines — you take Downy, this is Juliana's opinion, the logo might not all be the same, but with the same positioning and identity, does a color difference really matter? Would someone buy it differently? Manufacturing and supply used to be the constraint, but with automation and digitalization, I imagine some expansions could have greater flexibility.

I think at this exact moment, with digitalization generally, that part has become much more flexible. I imagine we'll increasingly define seasonal guidelines. Take Downy — this is Juliana's opinion — the logo might not all be the same, but with the same positioning and flower identity, does it really make a difference? Would someone buy it a different way? I think manufacturing and supply used to be the constraint, but with great advances in automation and digitalization, I imagine some expansions could have greater flexibility in names and lettering.

It's something we're going to learn and discover. Online sales grew enormously during the pandemic, including in our categories that previously had low penetration — diapers, fabric softeners, sanitary pads, shampoo, detergent. You need innovation. I saw innovations made in the US, in partnership with suppliers and clients like Walmart, because it's a waste to ship the same shampoo bottle the way it's normally packaged. There needs to be innovation in final packaging and transport unit packaging, done in combination with industry and clients, for both efficiency and sustainability. Everyone's received Amazon boxes — the environment is crying. On the other hand, in this digital environment, packaging really comes to life — augmented reality that you can create. We're going to follow that path and develop a range of things. Consumers will want more information — ingredients, materials, origin — and you can't fit all that on a label. How do you give access to that content in a more friendly way? I think packaging can communicate with consumers much more interestingly than it already does at the point of sale. There was a product we launched in China — a super premium organic cotton sanitary pad with Japanese cotton, in recycled cardboard packaging that was a work of art. One panel told the story of the ingredients — where they came from, who harvested them. The product gains life through packaging, even without advanced digital technology.

Actually, much more. When I arrived here in 2018, we studied the last ten years in Brazil. One of the key learnings was that during the 2014-15 crisis, my industry including P&G greatly reduced innovation volume and invested heavily only in promotions. And with that, we saw categories shrink — it hurt consumers and retailers. So one of the learnings is to maintain innovation — not reduce it. During these pandemic months, we talked to consumers more than in all of 2019 — 100 hours of conversations. We paused innovation only in April because we didn't know how orders and suppliers would be. But from May we already resumed, bringing new things first — packaging innovations in different sizes, because Brazilian consumers now have different value sensitivity. Everyone going to the supermarket needs to clean everything, so large or small sizes were the first things we did, and they're doing very well, beyond actual new products. We revised our entire innovation plan. So I'm sure innovation is part of the answer, but it has to be adjusted. The first thing we did was new packaging.

Brazil is the third largest market in potential, and we're among the top ten subsidiaries. Closing that gap is the mission. We have a very engaged consumer — we're the largest market for hair treatment, above average in deodorant and shaving, still with growth potential. Brazil has great protagonism in being an exporter of solutions and innovation, because growing profitably here isn't easy — the volatility is gigantic. Since I arrived, we've had the truckers' strike, a turbulent election, and now this pandemic. You have to model your P&L expecting some big problem — you can be sure there will be one. But if you can grow while generating real profitability in this context, your solutions are truly resilient, your processes robust, your people talented, as are your suppliers. So the mission for me and P&G's people is to learn, and with that, Brazil gains even greater protagonism. The innovation center, the carbon footprint reduction project for 2030 — that started with investments in the Philippines, Germany, California, and Brazil. These are real declarations that we're gaining greater protagonism in a very important scenario.

First of all, thank you very much for the invitation. Marcio, you're really — as someone who has the privilege of knowing you for many years, both as a person and as a professional, you're a ten out of ten. Anyone who wants packaging solutions and hasn't spoken with this young person should talk to this young person. It's a real pleasure to exchange ideas and reflect. We're all on a journey of reinventing ourselves — we already were before this pandemic. It will leave many marks, but I believe it's a watershed moment that can give us the opportunity to accelerate subjects that were perhaps moving more slowly. Thank you very much for your time — I know your schedule is busy. You're a thousand as a professional and two thousand as a woman.

Thank you very much for your time. Big kiss. Thank you.