Peter Graham

Peter Graham followed up on the fiscal 2027 tariff commentary, asking if the benefits would largely drop to the bottom line or be reinvested. He also sought clarification on coffee elasticity expectations and how to model top-line growth (price vs. volume) for the balance of the year, considering no additional price increases.

Answer

Tucker Marshall, Chief Financial Officer, confirmed that the tariff-off environment and not taking pricing for tariffs should benefit the bottom line, acting as a tailwind for the coffee portfolio in the next fiscal year. He detailed the current coffee outlook of 16% year-over-year growth, comprising 22% pricing offset by 6% down volume mix, noting an improvement in elasticity assumptions from 0.5 to approximately 0.3.

Peter Graham asked for clarification on the FY2027 tariff commentary, specifically whether the benefits would largely drop to the bottom line or if some upside would be reinvested. He also inquired about the company's current expectations for coffee elasticity and how price versus volume would contribute to top-line growth for the balance of the year, given no additional price increases.

Answer

Tucker Marshall, Chief Financial Officer, confirmed that the tariff-off environment and the decision not to take pricing for tariffs should benefit the bottom line, acting as a tailwind for the coffee portfolio in FY2027. He stated that the current coffee outlook is 16% year-over-year growth, comprising 22% pricing offset by a 6% volume mix decline, indicating an improvement in elasticity assumptions from 0.5 to around 0.3.

Peter Graham asked for clarification on the deceleration of North America consumption throughout the quarter, the expected evolution of underlying category demand, and how the prior year's port strikes will impact the Q2 outlook.

Answer

CFO Andre Schulten confirmed North America consumption decelerated from 2.0-2.4% to 1.8-1.9% value growth, expecting it to remain in the 1.5-2% range for the next few quarters. He explained that Q2 will be the softest growth quarter due to a higher base period from last year's port strikes (October and January threats), but consumption run rates are expected to continue. He projected category growth to return to 3% in the future through increased users, usage, and value per use.

Peter Graham inquired about the deceleration of North America consumption throughout the quarter, the expected evolution of underlying category demand, and how much the port strike laps would impact Q2's growth.

Answer

Andre Schulten, CFO, confirmed North America consumption decelerated from 2.0-2.4% to 1.8-1.9% value growth, expecting it to remain around 1.5-2% for the next few quarters. He explained that Q2 would be softer due to a higher base period from last year's port strikes, with stronger growth anticipated in the back half of the year. P&G's long-term goal is to return category growth to 3% through increased users, usage, and value per use.