Robert Ottenstein

Robert Ottenstein asked about the improvement in Twisted Tea's performance, the specific actions driving this, and the company's outlook for shelf space across the industry, including beer, beyond beer, and the impact of hemp-based beverages.

Answer

Founder and Chairman Jim Koch explained that Twisted Tea's improvement was due to pricing adjustments in certain markets and packages, aggressive promotion of Twisted Tea Extreme and Light, and efforts to regain display space. He also discussed the erosion of beer shelf space to RTDs and hemp-based beverages, anticipating some recovery from the latter in 2026.

Robert Ottenstein asked about the improvement at Twisted Tea, specific interventions, and expected follow-through, as well as shelf space dynamics at both the macro level and for Boston Beer's brands.

Answer

Founder and Chairman Jim Koch explained that Twisted Tea's improvement was due to pricing adjustments in certain markets and packages, aggressive promotion of Twisted Tea Extreme and Light, efforts to regain displays, and increased local market support with wholesalers. Regarding shelf space, he noted some erosion of beer shelf space to RTDs (mostly from beer suppliers), but not significant overall, and expects some space back from hemp-based beverages due to federal restrictions.

Robert Ottenstein (represented by Greg) asked about the impact of hemp beverages and the Hispanic consumer on the company's products. He sought to understand how much of the overall beer category decline could be attributed to the weaker Hispanic consumer and hemp beverages, and which of Boston Beer's products were most exposed to market share losses from hemp beverages.

Answer

Founder, CEO, and Chairman Jim Koch estimated that approximately 20% of Twisted Tea drinkers are Hispanic. He broadly attributed the beer category decline to macroeconomic conditions, health concerns, the Hispanic community's buying rates, and then hemp beverages (estimated at 1% of the 5.5% decline). CFO Diego Reynoso stated that brand-specific detail on hemp impact is not available due to the evolving legal framework of the category.

Greg, on behalf of Robert Ottenstein, inquired about the specific impact of hemp-derived beverages and the buying trends of Hispanic consumers on the company's products, and how these factors contribute to the overall beer category decline.

Answer

Founder, CEO, and Chairman Jim Koch estimated that macroeconomic conditions and health concerns are the two biggest drivers of beer category decline, with the Hispanic community and hemp beverages contributing smaller, but notable, impacts. He noted that Twisted Tea is slightly over-indexed with Hispanic shoppers. CFO Diego Reynoso added that detailed brand-specific impact from hemp beverages is difficult to quantify due to the evolving legal landscape.

Robert Ottenstein asked about the potential for industry consolidation given prolonged weakness and whether Boston Beer is considering strategic moves into non-alcoholic categories like energy drinks.

Answer

Founder & Chairman C. James Koch responded that while the company's innovation team is beginning to explore non-alcoholic opportunities, they have not yet found an attractive entry point, recognizing the intense competition. He dismissed the idea of major M&A, stating it was 'above my pay grade' and not currently in the company's plans.

Robert Ottenstein from Evercore ISI revisited the topic of Twisted Tea's steep growth deceleration, questioning his prior assumption that the core product was under-distributed. He asked if the brand fails to resonate in certain regions, if there are execution issues, or if it is, in fact, fully distributed.

Answer

CFO Diego Reynoso clarified that while distribution opportunities exist, they are primarily for brand extensions like Twisted Tea Light and among specific demographics like Hispanic consumers. CEO Michael Spillane added that the high-ABV and light versions are 'really under distributed' and represent a key growth pillar. Both executives also pointed to macro headwinds, cannibalization from new products like Sun Cruiser, and the influx of smaller competitors last year as contributing factors to the slowdown.

Robert Ottenstein asked about the discrepancy between the company's flat year-to-date depletions and negative scanner data, and also questioned how Sun Cruiser's potential compares to competitor Surfside.

Answer

CFO Diego Reynoso addressed the data discrepancy by noting that scanner data from sources like Circana does not cover a significant portion of their business, making internal depletion data a more accurate measure. On Sun Cruiser, CEO Michael Spillane expressed high confidence, citing strong performance in New England and plans to triple its distribution points, while acknowledging that competitor Surfside had a significant head start.

Robert Ottenstein of Evercore ISI requested an early read on October business trends and asked for a deeper diagnosis of the recent slowdown in Twisted Tea's scanner data and its momentum heading into 2025.

Answer

Founder and Chairman C. Koch noted that while year-to-date depletion trends through 42 weeks showed slight improvement, it was too soon to call a trend for Q4. Regarding Twisted Tea, he attributed the deceleration to growing off a much larger base and facing increased competition, but expressed confidence in regaining momentum in 2025.

Robert Ottenstein asked CEO Damian Gammell to elaborate on his 'personal passion' for how promotional money is spent, the size of this opportunity, and the specific learnings derived from the experience in Germany.

Answer

CEO Damian Gammell emphasized that promotional spending is a significant and ongoing opportunity due to its substantial financial impact and influence on performance. He highlighted continuous efforts in promotional efficiency and effectiveness, leveraging analytics and live market tests. In Germany, higher promotional prices led to consumer hesitation, impacting purchase frequency, which CCEP is actively learning from. He stressed the importance of promotional effectiveness over mere quantity to achieve better returns for both customers and shareholders.

Robert Ottenstein asked CEO Damian Gammell to elaborate on his 'personal passion' for how promotional money is spent, the scale of this opportunity, and the specific learnings derived from the situation in Germany regarding promotional effectiveness.

Answer

CEO Damian Gammell emphasized that promotional spending is a significant financial and performance driver, warranting intense focus. He sees it as a 'never-ending opportunity' for efficiency and effectiveness, leveraging analytics and live market tests. In Germany, he explained that some promotional packs exceeded consumer price thresholds, leading to hesitation and an impact on purchase frequency. The learning is to continuously refine promo strategies by pack, brand, and channel, using data and AI, while acknowledging that customer-set shelf pricing also plays a role.

Robert Ottenstein asked about CCEP's key focus areas and initiatives for 2026, including innovation, RGM, and IT-related projects, following discussions with The Coca-Cola Company. He also requested a reminder of the historical impact of the World Cup on CCEP's performance in previous years.

Answer

CEO Damian Gammell highlighted the World Cup as a major event for brands, with extensive planning for 2026 activation. He noted continued focus on energy category innovation and distribution, benefiting from 2025 and 2026 cooler placements, and ongoing support for Diet Coke in GB and Australia. Gammell also mentioned more flavor innovation in the sparkling category, including Coke Original Taste and Coke Zero, and continued work on Fanta. CFO Ed Walker added that 2026 would be another significant year for productivity and transformation, targeting EUR 350-400 million, with increased cooler investments, leveraging capacity, and the first major go-lives of the S/4HANA suite.

Robert Edward Ottenstein inquired about CCEP's key strategic initiatives for 2026, including innovation, revenue growth management (RGM), and IT-related projects, and asked for a reminder of the historical impact of the World Cup on performance.

Answer

CEO Damian Gammell highlighted the World Cup as a major summer campaign, continued energy category innovation and distribution drive, and ongoing support for priority brands like Diet Coke. CFO Ed Walker added that 2026 would be a significant year for productivity and transformation, aiming for the EUR 350-400 million target, with substantial investment in coolers, capacity, AI/RGM tools, and the first major SAP S/4HANA rollouts.

Requested a two-year assessment of the Jack and Coke rollout and other Alcohol Ready-to-Drink (ARTD) initiatives in Europe, including any surprises, disappointments, changes made, and the future outlook.

Answer

Management is 'really pleased' with the progress, especially in Great Britain. A key learning has been the importance of a portfolio approach (e.g., adding Bacardi & Coke, Absolut & Sprite), which drives stronger performance. ARTD is a high-growth area with accelerating momentum, and they see many more years of growth as they expand across Europe and are opportunistic with brands.

Robert Ottenstein of Evercore ISI requested an assessment of the Jack and Coke launch and other alcohol ready-to-drink (ARTD) initiatives in Europe over the past two years.

Answer

CEO Damian Gammell expressed satisfaction with the ARTD progress, particularly in Great Britain. He highlighted that a key learning has been the effectiveness of a portfolio approach, including brands like Bacardi & Coke. CFO Ed Walker noted that momentum has accelerated in the last 6-12 months.

Robert Ottenstein of Evercore ISI requested an assessment of the alcohol ready-to-drink (ARTD) initiatives in Europe, like Jack and Coke, over the past two years, asking about learnings and future development.

Answer

CEO Damian Gammell expressed that he is 'really pleased' with the progress, particularly in Great Britain. A key learning has been the importance of a portfolio approach, combining brands like Jack and Coke with others like Bacardi and Coke. CFO Ed Walker added that momentum in the category has been accelerating in the last 6-12 months.

Robert Ottenstein from Evercore ISI asked for insight into the coordination between CCEP and The Coca-Cola Company in Atlanta, focusing on global initiatives, marketing, and portfolio alignment for 2025 and beyond.

Answer

CEO Damian Gammell highlighted the benefits of The Coca-Cola Company's evolved marketing model, which is more productive and efficient. He noted close alignment on portfolio strategy (e.g., sparkling flavors, sports drinks) and quick access to global innovation like ARTD. He also mentioned the evolving use of shared data and insights as a key area of collaboration.

Robert Ottenstein inquired about the strategic coordination between CCEP and The Coca-Cola Company, asking about key global system initiatives that CCEP is participating in for 2025 and beyond.

Answer

CEO Damian Gammell highlighted several benefits from the partnership, including a more productive marketing model, alignment on portfolio growth in sparkling and sports, and quick access to global innovation like ARTD. He noted that leveraging data insights between consumer, customer, and shopper is an evolving area of collaboration, and the incidence pricing model continues to drive aligned behaviors.

Inquired about the strategic coordination and initiatives between CCEP and The Coca-Cola Company (Atlanta) for 2025 and beyond.

Answer

The collaboration with The Coca-Cola Company is very strong and beneficial. CCEP benefits from a more efficient global marketing model, aligned portfolio strategies, and quick access to innovation like ARTD. An evolving area of deeper collaboration is leveraging data and AI to bridge consumer, customer, and shopper insights.

Robert Ottenstein asked for insights into the key elements of the U.S. market turnaround and the lessons learned. He then questioned how these strategies and tactics could be applied to other major global markets, specifically China, and what actions were initiated in 2025 or are planned for 2026 to improve their trajectory.

Answer

CEO Michel Doukeris highlighted the U.S. turnaround's success, attributing it to rebalancing the portfolio for growth, investing in the right segments and brands, and innovating in underrepresented areas. The key learning was the power of consistency, long-term investment, and hard work. Applying these learnings, he focused on China, where the business is being reorganized to adapt to channel and geographic shifts, particularly the decline in on-trade and the need for off-trade and inland distribution. The strategy for China involves focused, speedy, and consistent execution, investing in the right channels, and fostering a sense of urgency, which led to stable market share in Q4 and improved Budweiser performance.

Robert Ottenstein inquired about AB InBev's recent Champions League announcement, seeking context on its evolving sports and big assets strategy, the expected ROI, and timing given Heineken's current sponsorship. He also asked about the success of Cutwater in the U.S., its drivers, sustainability, key learnings, and potential for international expansion.

Answer

Michel Doukeris, Chief Executive Officer, emphasized that investments in mega platforms, big partnerships, and culturally relevant moments are crucial for long-term brand success, with UEFA Champions League being a significant addition starting in 2027. Regarding Cutwater, Doukeris explained that the brand, launched in 2018, patiently built high quality, distribution, and premium positioning, reaching a tipping point this summer as the #1 share gainer in spirits and a top 10 U.S. spirits brand. He highlighted learnings about building the incremental Beyond Beer segment and its potential for international rollout, with Cutwater still accelerating.

Robert Ottenstein asked for context on AB InBev's recent Champions League sponsorship announcement, its role in their sports and asset strategy, the expected ROI, and the timing given Heineken's current rights. He also questioned the drivers behind Cutwater's significant success in the U.S. this year, its sustainability, key learnings, and potential for international expansion.

Answer

CEO Michel Doukeris explained that investments in mega platforms like UEFA Champions League, FIFA, and Netflix are crucial for integrating brands with culturally relevant moments, meeting evolving consumer behavior, and driving long-term brand winning and premium positioning, with UEFA starting in 2027. Regarding Cutwater, he highlighted patient brand building since 2018, focusing on quality, distribution, and consumer occasions, leading to it becoming a top 10 spirits brand and number one share gainer. He noted that Beyond Beer is incremental, increases the addressable market, and offers higher profitability, with learnings being applied to other markets like Flying Fish.

Robert Ottenstein of Evercore ISI asked about the key learnings from the impressive turnaround in the U.S. market and the potential to apply these strategies to other regions.

Answer

CEO Michel Doukeris attributed the U.S. success to a consistent, long-term strategy of rebalancing the portfolio, which began in 2017. He highlighted the momentum of Michelob Ultra and Busch Light, fueled by intentional and meaningful innovations like Michelob Ultra Zero and Busch Light Apple. He emphasized that learnings around consistent investment in mega brands and category expansion levers are embedded in their global plans.

Robert Ottenstein asked for an overview of the U.S. strategy, questioning the sustainability of recent market share gains and the rationale for increasing investments in what appears to be a mature market.

Answer

CEO Michel Doukeris stated the U.S. business has reached an 'inflection point,' justifying increased investment to fuel momentum in key brands like Michelob Ultra and Busch Light. He described productivity as an 'always on' initiative and framed the investment as part of a long-term, multiyear program to capitalize on significant growth headroom.

Robert Ottenstein asked a nuanced question about the company's cultural change toward organic growth, specifically focusing on whether the balance between central and local marketing decision-making has shifted and the role data and AI play in driving recent share gains.

Answer

CEO Michel Doukeris provided a detailed response, framing the culture shift as moving to an organic-growth-led company. He explained their model combines local focus via 'mega brands' (top brands in each market) with global scale via 'mega platforms' (e.g., FIFA, Olympics). This is enabled by a data-driven, standardized marketing process that allows for global insights to be adapted into locally relevant products, such as different low-calorie options for different markets.

Robert Ottenstein from Evercore ISI requested a detailed update on the U.S. business, including market trends through Q2 into July, progress on portfolio rebalancing, and adjustments to the cost structure and investment priorities.

Answer

CEO Michel Doukeris reported that the U.S. beer industry remains resilient, gaining share from wine and spirits. He noted the company's market share stabilized, with gains in May and June. The portfolio rebalancing is on track, with above-core brands now representing 45% of revenue, and he highlighted strong early July sales trends and ongoing productivity initiatives.

Robert Ottenstein challenged Coty's strategy, asking how the focus on SKU rationalization and portfolio streamlining balances with significant changes in consumer buying behavior and route-to-market (RTM) shifts, particularly the weakness in drugstores and department stores versus the growth of Amazon and new channels. He also asked about changes in channel strategy.

Answer

Markus Strobel (President of Global Skin & Personal Care, Coty) stated that driving sell-out and market share is the primary focus, and SKU focus is one part of this. He noted strong performance on Amazon for the prestige portfolio (over 30% growth in the last six months) and positive halo effects from TikTok Shop activities (e.g., Rimmel in the UK). He emphasized investing in new channels while protecting existing ones, especially for brands like COVERGIRL and Sally Hansen, which cater to Gen X consumers. He confirmed investments in online, e-commerce, and TikTok shops, adapting to where consumers shop.

Robert Ottenstein challenged the prioritization of SKU rationalization over route-to-market (RTM) footprint changes, given significant shifts in consumer buying channels, and asked about the balance between these strategies and any changes in channel strategy.

Answer

Markus Strobel, Executive Chairman of the Board and Interim Chief Executive Officer, clarified that driving sell-out and market share is the primary focus, with SKU rationalization being a key component. He confirmed that channel footprint is also being addressed, citing strong growth on Amazon for Prestige brands (over 30% in the last six months) and active engagement on TikTok Shop for Rimmel in the UK. He emphasized investing in new channels like e-commerce and TikTok while also protecting existing channels where current consumers, such as Gen X for COVERGIRL and Sally Hansen, continue to shop.

Robert Ottenstein from Evercore ISI asked for clarification on the Q4 sales outlook, questioning if the projected sharp deceleration reflects weakening consumer demand, changes in retail inventories, or specific company actions.

Answer

CEO Sue Nabi explained the outlook is not due to worsening market conditions but rather a deliberate company action to "clean up the baseline" in the Prestige division ahead of a large innovation pipeline for fiscal '26. She noted continued pressure on Prestige cosmetics in Asia and a mid-single-digit decline in the global Consumer Beauty cosmetics category, stating the decline would be low-single-digit without the cleanup actions.

Robert Ottenstein of Evercore ISI asked for more detail on the structural and competitive challenges in U.S. color cosmetics and the company's strategy to address them.

Answer

CEO Sue Nabi identified challenges from drug store closures and a market imbalance favoring new indie brands over heritage brands. She argued that the category's health requires a combination of both, citing discussions with retailers to foster this balance and return the market to low single-digit growth.

Robert Ottenstein asked for greater detail on the structural and competitive challenges facing U.S. color cosmetics and the company's strategies to address them.

Answer

CEO Sue Nabi explained that the challenges are both structural and temporary, citing drugstore closures as an example. She argued that the mass color cosmetics market lacks the healthy mix of heritage and trendy indie brands that drives growth in the Prestige segment. Nabi stated that fostering this balance is key to discussions with retailers and is necessary to return the market to its traditional low single-digit growth.

Robert Ottenstein from Evercore ISI sought clarification on the drivers behind stronger-than-expected battery performance and lower-than-expected gross profit increase, specifically confirming if Panasonic product sell-through and tariffs were the primary factors. He also inquired about the strength in December, distinguishing between category improvement and Energizer's specific gains, and the outlook for market share, shelf space, and distribution in calendar 2026.

Answer

John Drabik, EVP and CFO, confirmed that the three main factors impacting gross profit were higher tariffs, the 200 basis point drag from APS transition (Panasonic sell-through), and transitional product costs. Mark LaVigne, President and CEO, noted that the category improved in December, and Energizer gained market share slightly ahead of the category. For calendar 2026, he anticipates an increased and higher-quality distribution footprint, leveraging the full portfolio (value to premium), and exciting innovation launches in batteries and auto care in Q2 and Q3.

Robert Ottenstein, Senior Managing Director at Evercore ISI, sought clarification on the factors contributing to stronger-than-expected battery performance but less-than-expected gross profit increase. He also inquired about the drivers of December's strength (category vs. Energizer), potential market share gains, and expectations for shelf space and distribution in calendar 2026.

Answer

John Drabik, EVP and CFO, confirmed that the lower gross profit increase was primarily due to three factors: higher tariffs (300 bps impact), the APS transition (200 bps drag from Panasonic-branded product sales), and transitional product costs (100 bps impact). Mark LaVigne, President and CEO, noted that while the category improved in December, Energizer also gained share. He expressed expectations for increased and higher-quality distribution in calendar 2026, leveraging the full portfolio and new innovation in batteries and auto care.

Robert Ottenstein from Evercore ISI asked how the recent Advanced Power Solutions acquisition fits into the company's broader manufacturing footprint transformation over the last five years. He also inquired about capital allocation priorities, leverage targets, and CapEx outlook for the next two years.

Answer

President and CEO Mark LaVigne explained that the acquisition, along with others in Indonesia and Belgium and Project Momentum, creates a dynamic global network for in-region production, cost optimization, and tariff mitigation. EVP and CFO John Drabik projected free cash flow at 10-12% of sales and CapEx near 2% of sales. LaVigne added that while debt reduction is a priority, the company pivoted to share repurchases due to equity value and will remain flexible.

Robert Ottenstein from Energizer (as per transcript) asked for an analysis of the competitive dynamics under the new tariff regime, focusing on competitors' supply chains (e.g., Duracell, private label) and whether this presents a strategic opportunity to push value brands like Rayovac to gain shelf space.

Answer

Executive John Drabik assessed that they are largely in a similar position to their main competitor. He noted that about half of the U.S. private label battery market (which is ~20% of the total category) is sourced from China. Executive Mark LaVigne confirmed they see a potential opportunity and are actively exploring how to leverage their value brands to augment retailer offerings, agreeing with the strategic line of questioning.

Robert Ottenstein asked for specifics on consumer behavior regarding channel shifting and private label trends. He also requested quantification of the new distribution gains and insight into the internal strategies driving this repeatable success.

Answer

Mark LaVigne, President and CEO, confirmed consumers have a 'new found muscle' for shifting channels to seek value. He described the distribution gains as broad-based across channels, geographies, and product lines. He attributed the success to the strategy of first restoring margins via Project Momentum, then focusing on five growth pillars (distribution, innovation, etc.) to drive consistent 1-2% annual top-line growth. John Drabik, EVP and CFO, quantified that distribution is expected to generate about 200 basis points of growth for the fiscal year.

Robert Ottenstein sought confirmation of the company's e-commerce growth figures, asking about the channel's overall size, its impact on retail strategy, the drivers behind its expected acceleration, and its current profitability profile.

Answer

Mark LaVigne, President and CEO, confirmed 15% e-commerce growth in fiscal 2024 and stated he would be 'disappointed if we didn't double that growth rate next year.' He noted the channel is over 20% of the U.S. battery market and that investments funded by Project Momentum are fueling this growth. On profitability, he described the channel as 'more neutral' on balance.

Robert Ottenstein asked about the macro backdrop informing PepsiCo's guidance, including any changes in trends in major markets through Q4 and January, and the expected impact of government measures in the U.S.

Answer

Ramon Laguarta, CEO, stated that the guidance is consistent with Q4 trends, reflecting a stretched and choiceful middle and low-income consumer in the U.S. Internationally, he noted positive trends in Mexico, China, and the Middle East, weaker conditions in Western Europe, and a neutral situation in Brazil. Overall, the macro assumptions for guidance are continuistic based on available monthly consumer data.

Robert Ottenstein asked for an overview of the macro backdrop PepsiCo is operating in, including any changes in trends in major markets through Q4 and January, the expected impact of government measures in the U.S., and how macro conditions inform the guidance for the year.

Answer

CEO Ramon Laguarta stated that PepsiCo's guidance is consistent with Q4 trends, reflecting a stretched and choiceful middle and low-income consumer in the U.S. Internationally, he noted varied behaviors but expressed optimism for Mexico, positive trends in China, South Africa, and the Middle East, with Western Europe being a bit weaker and Brazil neutral. He concluded that the overall macro assumptions for the guidance are continuistic, based on available monthly consumer data.

Robert Ottenstein presented a two-part question: first, confirming if PepsiCo's strategy involves transforming the portfolio for growth while aggressively attacking costs (especially in the U.S.) to invest in international growth and innovation, which might require a more complex, agile cost structure; and second, asking about the decision to hire an external CFO (Steve) from a major customer and his expected role in driving this vision.

Answer

Chairman and CEO Ramon Laguarta confirmed that the strategy is both portfolio transformation for growth and cost structure reduction for competitiveness and value. He emphasized the need for agility, flexibility, and leveraging past technology investments. Regarding the CFO transition, he thanked Jamie Caulfield for his 33 years of service and expressed excitement about welcoming Steve, highlighting his experience, skills, proven record, and cultural fit to accelerate the company's transformation towards its Strategy 2030.

Robert Ottenstein posed a two-part question: first, seeking confirmation on his assessment that PepsiCo's strategy involves right-sizing the cost structure (e.g., U.S. assets) while driving growth through international expansion and innovation (which might require a more complex, agile cost structure). Second, he inquired about the decision to hire an external CFO (Steve) from a major customer and how this new leader is expected to drive the company's vision.

Answer

Chairman and CEO Ramon Laguarta affirmed that the strategy is "not an either-or," but rather a simultaneous transformation of the portfolio for future growth and a reduction of the cost structure to remain competitive and offer value. He emphasized the need for agility, flexibility, and optionality, leveraging past investments in technology and AI. Regarding the CFO transition, Laguarta thanked Jamie Caulfield for his 33 years of service and expressed excitement about welcoming Steve, highlighting his experience, skills, proven record, and cultural fit to accelerate the company's transformation towards its Strategy 2030 goals.

Robert Ottenstein from Evercore ISI asked about the drivers of the strong international beverage performance and whether the ongoing North American business integration would preclude any future refranchising considerations.

Answer

Chairman and CEO Ramon Laguarta attributed international beverage success to three key platforms: no-sugar colas, energy drinks like Sting, and hydration with Gatorade, all supported by strong bottler partnerships. Regarding North America, he stated that the priority for the next three to four years is to capture the significant synergies from integrating the two large businesses.

A representative for Robert Ottenstein at Evercore ISI asked about the pricing and promotional strategy for PepsiCo Beverages North America in 2025. He also inquired about the incrementality of the Baja Blast launch and the broader strategy for the Mountain Dew franchise.

Answer

CEO Ramon Laguarta described Baja Blast as a key part of the strategy to grow the Mountain Dew franchise, noting it's a nearly $1 billion platform that is highly incremental and brings new Gen Z consumers. For overall beverage pricing, he emphasized a disciplined approach focused on price-pack architecture and channel mix to create value for retail partners and consumers.

Robert Ottenstein requested a 'report card' on the Gatorade transition and asked if the PBNA DSD system has been re-engineered to be less volume-dependent, aiding the path to mid-teen margins.

Answer

Chairman and CEO Ramon Laguarta gave a positive report on Gatorade, noting meaningfully improved service levels and sustainable market share gains. He also highlighted strong growth from Propel. He confirmed that go-to-market optimization is a key productivity lever for PBNA, expressing confidence in the business's trajectory toward its mid-teens operating margin target.

Robert Ottenstein asked about the specific impact of Amazon's disproportionate growth in P&G's categories on media efficiency and competitive dynamics against smaller brands, and any relevant learnings from China.

Answer

CFO Andre Schulten emphasized strengthening core brands with improved performance and e-content, identifying opportunities for premium-priced 'bigger more' innovations online, and drawing inspiration from smaller brands' creative ideas. CEO Shailesh Jejurikar added that P&G is deliberate about winning in fast-growing segments and channels, citing India's e-commerce growth where P&G's share is 1.8x its offline business, and ensuring strong content and item specificity.

Robert Ottenstein questioned the impact of Amazon's disproportionate growth in P&G's categories on media efficiency and competitive dynamics, asking what P&G needs to do differently and if there are learnings from China.

Answer

CFO Andre Schulten emphasized strengthening core brands with improved performance and e-content, capitalizing on opportunities for higher-priced items online, and drawing inspiration from smaller brands' creativity. CEO Shailesh Jejurikar added that P&G is deliberate about winning in fast-growing e-commerce segments, citing India's e-commerce growth and P&G's strong online share as an example of successful adaptation.

Robert Ottenstein of Evercore asked about the distinction between value and affordability, and whether P&G needs to increase its focus on providing superiority that is more affordable for consumers.

Answer

President, CEO & Chairman Jon Moeller agreed that affordability is a key concern, which P&G addresses through appropriate pack sizes and clear communication of performance and value. He emphasized that the company's strategy is to offer the best proposition in every price tier it competes in, not just at the premium end, by using pricing ladders to provide affordable options.

Robert Ottenstein of Evercore ISI asked about the logic for taking price on skincare in a tough China market and how major retailers are reacting to trade policy changes regarding their supply chains and private label strategies.

Answer

Executive Andre Schulten explained that the skincare pricing in China is directly linked to significant innovation on Olay and the super-premium SK-II LXP line, which provides superior value and drives market growth. While declining to speak for retailers, he highlighted P&G's strategic advantage of having localized, integrated, and reliable supply chains, which is a key focus of their retail partnerships.

Robert Ottenstein of Evercore ISI asked for commentary on the health of the Chinese consumer and whether the impact of this year's innovation pipeline could be quantified against prior years.

Answer

Jon Moeller, Chairman, President and CEO, described the Chinese consumer as still challenged but showing signs of improvement, such as increased travel and growth in the premium SK-II brand. He expressed high confidence in the innovation pipeline, citing the strong performance of the Tide evo test market, but stated he could not provide a specific numerical quantification of its strength versus previous years.

Robert Ottenstein asked for a big-picture view on China, noting a multi-year sales decline and questioning if structural market changes require a new approach. He also asked if there were any 'green shoots' for the SK-II brand.

Answer

Executive Andre Schulten acknowledged significant structural shifts in China's retail channels, consumer preferences, and media consumption, confirming the team is actively adapting its go-to-market model. For SK-II, he said it was too early to declare 'green shoots,' but noted that 'the brown shoots are disappearing' as the company focuses on rebuilding brand equity with early positive signs.

Robert Ottenstein asked about Gen Digital Inc.'s view on the current macro environment, consumer health, and how a significant downturn might impact its two business segments. He also inquired about the mechanics and unique opportunities of the LifeLock integration and cross-sell journey with secure financial wellness products.

Answer

Vincent Pilette, CEO, explained that the security and privacy segment has historically shown little correlation to economic downturns, while the secure financial wellness segment (MoneyLion) continues strong growth with no change in consumption patterns. He detailed the LifeLock integration, focusing on embedding curated financial marketplaces and Norton Money features into the LifeLock application, aiming for more engaged user interaction.

Robert Ottenstein asked about Gen Digital's view on the current macro environment, the health of the consumer, and the expected impact of a significant downturn on its two business segments: Security & Privacy and Trust-Based Solutions. He also inquired about the mechanics and unique opportunities for cross-selling within the LifeLock integration, specifically regarding member interaction frequency and identity unlock features.

Answer

Vincent Pilette (CEO) explained that the Security & Privacy segment has historically shown resilience to economic downturns due to the increasing threat landscape. For Secure Financial Wellness, he noted strong growth in personal financial management and the marketplace, with no observed changes in consumption patterns, and potential benefits from declining interest rates. Regarding LifeLock integration, Pilette detailed revenue synergies focusing on Norton Money (EWA features, PFM tool) and embedded curated marketplaces within LifeLock, highlighting positive early results from embedding a credit card marketplace and aiming for a more engaged application.

Robert Edward Ottenstein sought granular detail on The Vita Coco Company's international market performance, particularly in Europe, asking about consumer occasions, competitive intensity, margin profiles compared to the U.S., and any unusual factors flattering Q3 results.

Answer

CEO Martin Roper highlighted strong European growth, led by the U.K. (80%+ share, cold shelf focus) and Germany's early-stage national authorizations. He noted private label's significant role in other European markets, lower consumer pricing but good margins due to direct-to-retail and lower ocean freight, and confirmed strong demand as the primary driver for Q3 results without unusual flattering factors.

Robert Edward Ottenstein asked for more granularity on the international market, particularly in Europe, regarding consumer occasions, competitive intensity compared to the U.S., and margin profile. He also asked if anything unusual had flattered the Q3 international results.

Answer

Martin Roper, Chief Executive Officer, detailed the international market, primarily Europe, highlighting the UK's strong category share (over 80%) and cold-shelf dominance, contrasting it with the U.S. warm-shelf presence. He described Germany as being in early innings, where Vita Coco's brand launch accelerated category growth, and noted the company's patient, ground-up approach to market development. Mr. Roper explained that international margins are good, benefiting from lower ocean freight costs from Asia to Europe, despite lower consumer pricing. He confirmed that Q3 international results were driven by strong demand.

Robert Ottenstein from Evercore ISI asked for a deeper understanding of the company's successful U.S. marketing strategy, including target demographics and usage occasions. He also inquired if this strategy differs in European markets like the UK and Germany.

Answer

Executive Chairman Michael Kirban explained the strategy involves pulling share from sports drinks, enhanced water, and juice, with a current marketing emphasis on the sports drink occasion. The target demographic is young, multicultural, urban consumers, though growth is broad. He noted the European strategy is very similar, with minor regional nuances. CEO Martin Roper added that a key difference in Europe is the need for more fundamental category-building and education, as the market is less developed than in the U.S.

Robert Ottenstein asked about the potential for the coconut water category to gain shelf space during major retailer beverage aisle resets and inquired about the commercial plans and potential for the Powerlift protein drink.

Answer

CEO Martin Roper stated that preliminary conversations with retailers about shelf space have been positive, noting a potential move to a higher-traffic set could be beneficial for the category. Regarding Powerlift, he confirmed the company is still exploring the protein beverage space but said the product is not expected to be material to the P&L in the upcoming year and that formal plans have not been announced.

Robert Ottenstein requested more detail on the new visual identity and 'Unleashed' proposition for the Monster Ultra line, asking for the rationale behind altering such a successful brand family.

Answer

Hilton Schlosberg, Vice Chairman & CEO, clarified the initiative is designed to enhance the successful Ultra line, not fundamentally change it. The goal is to give Ultra a more distinct identity with a silver claw logo and improve in-store merchandising through dedicated coolers and displays. He added that the company is capitalizing on a recent viral social media trend for Zero Ultra to market the line more effectively.

Robert Ottenstein of Evercore ISI asked for more detail on the relative weakness in the specialty retail channel, questioning trends in shelf space, displays, and potential channel cannibalization.

Answer

CEO Amanda Baldwin addressed the question by highlighting positive trends, noting that year-to-date specialty retail sales were down only 3% with sequential improvement in sell-through. She stated that the brand has strong retail partnerships, new merchandising in key retailers like Sephora and Ulta, and that she and the Chief Revenue Officer are personally engaged in strengthening these relationships.

Robert Ottenstein asked if consumer confusion, caused by an increase in competitive 'bonding' products, is a key issue. He also asked for more specifics on how Olaplex plans to communicate its unique science and efficacy to differentiate itself in a crowded market.

Answer

CEO Amanda Baldwin agreed that effectively explaining the brand's science is the central challenge. She highlighted that the company has made material changes to its social media and content strategy to better translate its complex, patented technology for consumers. She also emphasized the importance of new innovation and positioning Olaplex as a comprehensive prestige hair care brand, not just a 'bond brand,' to drive daily use.

Robert Ottenstein of Evercore ISI asked about the broader industry implications of a sustained volume decline, questioning potential impacts on retail shelf space for beer, brewery footprints, and the possibility of consolidation or increased contract brewing to manage fixed costs.

Answer

President and CEO Gavin Hattersley responded that industry comps get tougher for the remainder of the year. He stated that Molson Coors has successfully held its significant shelf space gains and that exiting the Pabst contract brewing arrangement has been beneficial, reducing complexity and freeing up capacity for strategic brands like Peroni and the Yuengling partnership. He affirmed the company is pleased with its current brewery footprint.

Greg, on behalf of Robert Ottenstein, asked for more detail on the heightened competitive landscape mentioned in the EMEA and APAC regions.

Answer

CEO Gavin Hattersley explained that the U.K. market saw a soft start to the year with high promotional intensity, where Molson Coors is pursuing a 'value over volume' strategy for its Carling brand. In Central and Eastern Europe, the beer industry remains sluggish due to declining consumer confidence and geopolitical tensions, resulting in increased promotional pressures. He affirmed the company remains optimistic and is investing behind its power brands and new launches like Madri.

Robert Ottenstein of Evercore ISI asked for details on the economics of the Fever-Tree agreement and for guidance on how to model potential tariff impacts, especially concerning brands sold in Canada.

Answer

CEO Gavin Hattersley did not provide detailed financial projections for Fever-Tree but noted it is a high-revenue-per-barrel brand and that one-time integration costs would be in the 'tens of millions.' Regarding tariffs, he stressed that the vast majority of Molson Coors products are produced in the markets where they are sold, which significantly mitigates cross-border tariff risks for its major brands.

Robert Ottenstein asked for an assessment of the current pricing and promotional environment, including whether there was any selective pricing activity in the import space, for instance with Peroni.

Answer

CEO Gavin Hattersley clarified that their strategy for Peroni is not promotional; instead, they are leveraging onshoring to improve supply, add pack formats, and reinvest margin into marketing. He described the overall pricing environment as rational, at the high end of the 1-2% historical range, but noted some deeper discounting in the above-premium tier by competitors, which Molson Coors did not match.

Robert Ottenstein of Evercore ISI asked for an assessment of the Colgate Total relaunch's global performance, particularly in Latin America. He also inquired about the consumer environment in Mexico and Brazil and the outlook for the second half.

Answer

Chairman, CEO & President Noel Wallace reported that the Colgate Total relaunch is performing strongly, especially in Latin America, and is now in 75 markets with positive early results in Asia and Europe. He acknowledged consumer cautiousness in Latin America, with some deceleration in Brazil's categories, but confirmed that pricing actions taken in Q2 will benefit the second half of the year.

Robert Ottenstein of Evercore ISI, after sharing a positive personal anecdote about Hill's Science Diet, asked about the drivers of strong performance in Europe, the role of the elmex brand, and if that strategy could be replicated in other major markets.

Answer

Noel Wallace, Chairman, President and CEO, attributed Europe's success to strong volume growth on top of a tough prior-year comp, driven by market share gains in Oral Care from both Colgate and the elmex/meridol franchises. He explained the elmex strategy involves innovation, strong advertising, and professional endorsement. While the elmex model is being selectively applied in markets like Brazil and the Middle East, he stressed it's a long-term, 5-to-10-year play, not a short-term tactic.

Robert Ottenstein asked for clarification on price competition in China and sought details on the Colgate Total relaunch, including its scale, definition of success, early results from Latin America, and marketing approach.

Answer

CEO Noel Wallace clarified that the heightened price competition was in India, not China, where the pricing environment is stable and the Colgate brand grew high single-digits. Regarding the Colgate Total relaunch, he described it as a meaningful formula upgrade focused on prevention and science. He reported that its Q4 launch in Latin America is already driving 'terrific' market share growth, and the global rollout will encompass toothpaste, toothbrushes, and mouthwash to encourage regimen usage.

Robert Ottenstein sought a deeper explanation for Colgate's broad-based success, asking to what extent it is driven by technology and innovation in Oral Care versus marketing spend, and how the successful model in China is applicable in a tough market.

Answer

Noel Wallace, Chairman, President and CEO, attributed the success to consistent execution and building long-term capabilities in innovation, digital, and data analytics, funded by P&L flexibility gained from prior pricing actions. For China, he noted easy comps but highlighted strong performance from both the Colgate brand (driven by premiumization) and a recovering Hawley & Hazel business. He stated the company is rethinking its go-to-market approach in China to ensure sustained growth.

Robert Ottenstein asked about the specific consumer purchase patterns observed amid weak confidence and what provides the company confidence in its ability to execute price increases, given the competitive and promotional landscape.

Answer

CEO Scott Huckins stated that confidence in pricing stems from brand strength and that price increases have been executed as planned. He noted that the overall promotional environment and brand vs. store-brand mix remain stable year-over-year. He also pointed to value-seeking behavior driving channel shifts to club and online, particularly among lower-income shoppers, which aligns with the company's initial outlook.

Robert Ottenstein sought clarification on the potential impact of tariffs from Mexico, Canada, and China. He also asked about private label trends in waste bags, the use of revenue growth management tools, and the company's strategy for entering adjacent categories, including whether it would be organic or M&A-driven.

Answer

President and CEO Scott Huckins stated that 97% of revenue is U.S.-based and 16 of 17 plants are in the U.S., minimizing direct tariff impact. CFO Nathan Lowe added that direct purchases from impacted regions are a single-digit percentage of costs. On adjacencies, Huckins mentioned the company could expand both organically, by leveraging brand strength, or through bolt-on M&A. He also noted that in the waste bag category, branded products took share from store brands in the past year.

Robert Ottenstein asked about the Hefty waste bag business, questioning if recent scanner data indicated market share loss, and inquired about the timing of higher resin prices hitting the P&L.

Answer

President and CEO Lance Mitchell asserted the waste bag business is performing well, achieving record quarterly revenue with share above 2022 levels, attributing conflicting scanner data to 'statistical anomalies.' CFO Scott Huckins stated that resin price changes typically flow through to the P&L in 3-4 months and that 'Reyvolution' cost savings are the primary tool to offset these headwinds.

Robert Ottenstein asked for clarity on pricing dynamics within U.S. liquid refreshment beverages and inquired about the health of the consumer, particularly how KDP is using RGM levers to address affordability concerns.

Answer

CFO Sudhanshu Priyadarshi confirmed positive net pricing was driven by CSDs. CEO Tim Cofer added that the consumer remains 'fairly resilient' but noted caution among lower-income households, who are shifting to value channels. Cofer asserted that KDP's portfolio is well-positioned due to the durable nature of its categories, the value it offers, and strong innovation.

Robert Ottenstein raised concerns about whether KDP is taking on too many new initiatives at once and asked about the company's infrastructure capabilities to handle the increased complexity, as well as the plan for transitioning GHOST from the Anheuser-Busch distribution system.

Answer

CEO Timothy Cofer expressed confidence in KDP's ability to execute, citing the smooth transitions of C4 and Electrolit as proof of the DSD system's resilience and recent infrastructure investments. He stated that KDP expects to begin transitioning GHOST distribution to its own network in mid-2025, following the required 6-month termination notice with the current distributor.

Robert Ottenstein of Evercore inquired about global consumer strength, asking if the company was surprised by pockets of weakness and how trends progressed from June into July.

Answer

Chairman and CEO James Quincey stated that the global consumer remains resilient overall, though the pace of market shifts has accelerated. While noting improvements in North America and Europe, he identified the ASEAN region (Thailand, Indonesia, Vietnam) as a source of 'surprising' weakness in Q2, separate from known issues in Mexico and India. He expressed confidence in second-half plans to improve the volume performance.

Robert Ottenstein asked about the growth trajectory for the Fairlife brand, inquiring about when new capacity will come online, the brand's long-term potential, and how its intellectual property will be protected.

Answer

Chairman and CEO James Quincey clarified that 'moderating growth' refers to the percentage rate due to the law of large numbers, while dollar growth remains robust. He stated that major new capacity will come online at the end of the year, which will be sufficient for several years. He sees a 'very substantial' long-term opportunity for the brand, driven by multiple product attributes beyond just its IP.

Robert Ottenstein asked for the company's perspective on the emerging 'modern soda' category, highlighted by new shelf space at retailers like Walmart, and how Coca-Cola plans to compete.

Answer

CEO James Quincey viewed innovation and new brands in the beverage industry as great news, underscoring the sector's vibrancy and growth. He stated that as a total beverage company, Coca-Cola looks to compete wherever there is enduring consumer demand. He emphasized the company's strong track record of creating brands organically and scaling small M&A into billion-dollar brands, positioning it as a clear leader and winner in the industry.

Robert Ottenstein from Evercore ISI inquired about the drivers behind the improved performance of the CSD business in the U.S. and whether CSDs are regaining market share from energy drinks.

Answer

Chairman and CEO James Quincey attributed the growth to strong execution across the portfolio, noting that both Trademark Coke and other sparkling beverages grew volume in Q3. He highlighted double-digit growth for Coke Zero and credited the success to the company's marketing transformation combined with improved execution by the bottling system.

Robert Ottenstein asked for clarity on free cash flow deployment priorities, including the company's openness to larger acquisitions and the level of commitment to the new $4 billion share repurchase authorization.

Answer

CFO Garth Hankinson reiterated that capital allocation priorities are unchanged: achieving 3x leverage, maintaining a ~30% dividend payout, and executing share repurchases. He emphasized the new $4 billion authorization reflects the belief that the stock is undervalued and will be acted upon with discipline and opportunistic flexibility. M&A remains the lowest priority, focused on smaller, plug-in opportunities.

Robert Ottenstein asked for an update on beer inventory levels, both internal and at the distributor level, compared to historical norms. He also inquired about expectations for shelf space gains in the upcoming calendar year.

Answer

CEO William Newlands stated that inventory levels are fairly consistent with historical norms, though they are holding slightly more inventory on the U.S. side of the border as a prudent measure. He expects to continue gaining shelf space due to strong brand performance, though likely at a more normalized rate compared to the outsized gains of the past year.

Robert Ottenstein asked for more details about Ambev's award as the top Pepsi bottler. He sought to understand the metrics Pepsi uses for the award, the operational changes Ambev made to earn it, and any connection to the BEES platform.

Answer

Executive Jean Neto attributed the success of the NAB business to its strong position in the growing non-sugar segment, with brands like Pepsi Black performing well. While he did not have the specific metrics Pepsi uses for the award, he suggested it was a broad evaluation of distribution, brand execution, and overall performance. He highlighted the strong partnership and future growth plans for brands like Gatorade.