Drew Levine

Drew Levine, on behalf of Andrea Teixeira from JPMorgan Chase & Co., sought context on the retail guidance, considering factors like pantry loading, the Hawkins issue, and poor weather, and inquired about any direct delivery phasing impacts from severe winter weather in the Northeast.

Answer

CEO Eric Foss stated that recent severe weather was a manageable headwind due to proactive team responses. He noted a very strong start for the retail business in 2026, with robust share in January, expecting continued momentum and balanced, broad-based growth across channels, brands, and packages, driven by volume and strategic revenue management. CFO David Hass added that the implied 0.5% growth faces a tougher start due to Customer Direct volume headwinds, with volumetric growth balancing out in the second half, particularly Q4 for direct delivery. Retail and premium brands (Saratoga, Mountain Valley) are expected to perform strongly as new capacity comes online.

Drew Levine asked for context on the retail business embedded in the guidance, considering factors like pantry loading, the Hawkins tornado impact, and poor weather. He also inquired about any phasing impacts on the direct delivery business from severe winter weather in the Northeast.

Answer

Eric Foss, Chairman and CEO, acknowledged that weather had been a headwind at the start of the year but noted the teams' proactive response, expecting it to be a manageable impact. He highlighted a very strong start for the retail business in 2026, with strong share performance in January, and reiterated the goal for balanced, broad-based growth across the enterprise. David Haas, CFO, added that the guidance implies a tougher start to the year for volume due to Customer Direct headwinds from 2025 disruptions, with volumetric growth expected in the second half, particularly Q4.

Drew Levine, on for Andrea Teixeira, asked for a breakdown of Q4 revenue growth between retail and home/office delivery, more detail on the growth outlook by business segment, and the potential for synergies beyond the newly raised $300 million target.

Answer

The company is now viewing the business as one integrated go-to-market system rather than separate segments. The 2025 growth outlook is balanced between volume and price/mix. The current synergy target is a firm $300 million, accelerated into a two-year plan, and they will update if there are future changes. Synergy capture will be reported on as it is realized.

Drew Levine, on behalf of Andrea Teixeira, requested a breakdown of Q4 revenue growth by channel and more detail on the growth outlook by business segment for 2025. He also asked about the potential for synergies beyond the updated $300 million target.

Answer

CEO Robbert Rietbroek emphasized the company's shift to a single, integrated go-to-market system, moving away from separate channel reporting. CFO David Hass reiterated the 2025 growth outlook is balanced between volume and price/mix across the unified portfolio. Regarding synergies, Rietbroek stated the current $300 million target is firm, achieved through operations, procurement, and SG&A, and the company will provide updates if there are future changes.

Drew Levine, on for Andrea Teixeira, asked for a breakdown of the Q4 5.5% combined revenue growth between the retail and Home & Office Delivery (HOD) channels, and sought more detail on the 2025 growth outlook by business segment.

Answer

CEO Robbert Rietbroek responded by emphasizing the company's strategic shift to viewing the business as one integrated, end-to-end go-to-market system rather than distinct channels. CFO David Hass reiterated the 2025 outlook of 3-5% growth balanced between volume and price/mix, and noted synergy capture would ramp up after Q1.

Drew Levine, on behalf of Andrea Teixeira, asked CEO Rahul Goyal if Molson Coors could achieve low single-digit organic sales growth even if the industry remains in a 3% decline. He also inquired if the company might pursue more sizable M&A, departing from the previous 'string of pearls' approach, given the current industry landscape.

Answer

CEO Rahul Goyal affirmed a pathway to delivering top and bottom-line growth by strengthening core and economy brands, leveraging above-premium opportunities like Peroni, and expanding Beyond Beer with successful additions like Fever-Tree. He outlined M&A criteria focused on filling portfolio gaps, being accretive to both top and bottom lines, and maintaining a prudent balance sheet and leverage ratio, without specifying a size shift.

Drew Levine asked if the company could return to low single-digit organic sales growth even if the industry remains down 3%, and whether the M&A strategy might shift towards more sizable deals given the industry context.

Answer

CEO Rahul Goyal affirmed a pathway to top and bottom-line growth by strengthening core and economy brands, leveraging above-premium opportunities (Peroni, Blue Moon), improving flavor performance (Topo Chico), and growing non-alc (Fever-Tree), alongside Canadian and European business. For M&A, he emphasized deploying capital for brands that fill portfolio gaps, are accretive to both top and bottom line, and are prudent from a balance sheet perspective, without specifying size.

Drew Levine of JPMorgan, on behalf of Andrea Teixeira, asked for more color on the 3% decline in U.S. brand volume, seeking insights into underlying consumer behavior and channel performance.

Answer

CEO Gavin Hattersley explained that performance was aided by an extra trading day in the quarter. From a consumer perspective, he noted a shift back into the convenience store channel after a move away from it during the summer, and also mentioned that the on-premise channel continued to show slight outperformance.

Drew Levine, on for Andrea Teixeira, asked for more detail on the U.S. beer industry backdrop, questioning what drove the recent performance improvement in September and October after a summer of value-seeking behavior.

Answer

CEO Gavin Hattersley attributed the summer softness to economic pressures accelerating channel and pack shifting, a trend that eased in September and October. He stated that overall consumer behavior has not meaningfully changed from previous trends but noted that recent improvements in consumer confidence are encouraging.

Drew Levine asked for context on the beer inventory rebalance, specifically comparing current distributor inventory levels to those before the rebalance. He sought confidence that this was a one-time event and inquired about the visibility for shipments and depletions to track closely in the second half, noting typical H2 depletes are higher.

Answer

CFO Garth Hankinson explained the Q2 ship-dip trip resulted from typical Q1/Q2 overshipment for summer, lower-than-expected takeaway, and pulling Q3 rebalancing into Q2. He confirmed current distributor inventory levels are good, with no retailer destocking and continued gains in points of distribution and shelf space, providing confidence that H2 shipments and depletions will align.

Drew Levine asked for context on the beer inventory rebalance, specifically current distributor inventory levels versus before the rebalance, and the company's confidence that this was a one-time event. He also inquired about the visibility for shipments and depletions to largely track in the second half, noting typical seasonal patterns.

Answer

CFO Garth Hankinson explained that the Q2 ship-depletion trip resulted from typical Q1/Q2 overshipping ahead of summer and an earlier-than-usual rebalancing. He confirmed that distributor inventory levels are now in a good spot, with no retailer destocking, and expressed confidence in shipments and depletions aligning for the balance of the year.

Drew Levine from JPMorgan Chase & Co. pointed out that energy drinks were not mentioned in the prepared remarks, a departure from recent quarters. He asked if this signaled a change in the company's view of the category or its growth plans.

Answer

CEO Ramon Laguarta stated there was 'nothing special to mention,' which is why it was omitted. He reaffirmed that energy remains a fundamental part of PepsiCo's U.S. beverage growth strategy and that the company is well-positioned with a comprehensive portfolio to serve both consumers and customers.

Asked for a breakdown of the updated guidance between inventory adjustments and slower consumption, including depletion trends. Also inquired about the competitive and promotional environment.

Answer

In Q2, depletions exceeded shipments more than anticipated, and the company expects a rebalancing in the second half. Distributor inventory levels are not high. The promotional environment is more intense in the value segment (sub-$15), and they are not increasing promotional activity for their brands.

Asked about the drivers of the 2024 EBITDA guidance, including the cadence of M&A and cost savings, and questioned the company's confidence in achieving high single-digit organic growth in the long term.

Answer

EBITDA growth is expected to be driven by margin expansion from production investments, automation, and achieving a $20 million productivity run rate by year-end. Long-term growth confidence comes from a strategy focused on volume acceleration in the second half of the year, targeting high-value customers, and a robust M&A pipeline that is not included in the current guidance.