Rob Ottenstein

Rob Ottenstein inquired about the holiday season outlook, specifically regarding promotional intensity in categories like waste bags and food bags, and the impact of consumer affordability challenges on growth. He also asked why management flagged the risk of retailers shifting store brand business to other suppliers.

Answer

Scott Huckins, President and CEO, explained that promotional intensity in waste bags and food bags is in line with pre-pandemic levels, with Hefty Waste Bags outperforming the category. He noted that consumers remain under pressure due to inflation, cooling labor markets, and declining sentiment, but Reynolds is prepared to serve both affluent brand loyalists and value-oriented store brand shoppers. Regarding the store brand risk, Huckins clarified it's an expected increase in bid activity from retailers seeking value for consumers amidst economic uncertainty, but Reynolds, as a U.S.-centric manufacturer, expects to win more than it loses.

Rob Ottenstein questioned whether affordability has become a greater driver of consumer choice in the U.S. and how P&G plans to address this through channel strategy, RGM, or price pack architecture, beyond innovation.

Answer

Andre Schulten, CFO, clarified that 'value' (price over integrated performance) is central, not just affordability. He noted continued consumer trade-up where value is attractive, declining private label shares, and P&G's improving sequential value share. He emphasized serving consumers across all value tiers and channels with strong price ladders, optimized pack sizes, and targeted promotions, while maintaining integrated superiority.

Rob Ottenstein asked about the increasing importance of affordability in U.S. consumer choice and how Procter & Gamble plans to address this through channel strategy, revenue growth management, or price pack architecture, beyond just innovation.

Answer

CFO Andre Schulten clarified that 'value' (price over integrated performance) is central, not just 'affordability,' noting consumers still trade up where value is attractive, with private label shares declining. P&G addresses value through strong price ladders, optimizing pack sizes, channel presence (club, online for larger packs; smaller cash outlay for paycheck-to-paycheck consumers), and innovation across all value tiers (e.g., Luvs, Cascade, Tide, Gain).

Rob Ottenstein sought clarification on the reported increase in loyalty for Corona and Modelo, particularly for Corona Extra, which has seen greater declines than competitors. He inquired about Corona's demographic mix, the performance and size of Corona Familiar, and the specific data indicating enhanced loyalty for Corona.

Answer

CEO Bill Newlands stated that brand health metrics, including intent to buy and first-choice consumer preferences, indicate increased loyalty. While Corona Extra has faced challenges, the broader Corona family, including Corona Familiar (a top share gainer) and Corona Sunbrew (the number one new brand in dollars), is performing exceptionally well, with Corona Extra providing a crucial halo effect for the overall franchise.

Rob Ottenstein sought clarification on the reported increased loyalty for Corona and Modelo, particularly for Corona Extra which has seen declines relative to competitors, and asked for insights into the performance and size of Corona Familiar and the data supporting increased Corona loyalty.

Answer

CEO Bill Newlands explained that brand health metrics, including intent to buy and purchase intentions, indicate increased loyalty. He acknowledged Corona Extra's recent challenges but highlighted its halo effect for the broader family, noting Corona Familiar as a top share gainer and Sunbrew as the number one new brand in dollars and number four share gainer overall, supported by marketing efforts like Major League Baseball sponsorship.