2024 Earnings Growth Amid Hyperinflation
Q: How will you achieve U.S. dollar earnings growth in 2024 despite hyperinflation and other headwinds?
A: We expect mid-single-digit earnings growth in 2024, which, excluding structural changes, translates to a 6–7% growth. This reflects the continued strength and momentum of our core business, with consistent volume growth and normalized pricing in most countries. We've managed inflation cycles effectively, and while hyperinflation adds a few points to the top line, our all-weather strategy positions us to navigate headwinds and deliver growth in line with our algorithm.

Volume vs. Pricing in Growth Guidance
Q: Can you clarify the balance of volume and pricing in your 6–7% organic sales growth guidance for 2024?
A: In 2023, we achieved 2% volume growth, consistent over the last five years, and plan to maintain this momentum. In non-hyperinflationary markets, we had around 3.5% price/mix growth in Q4. For 2024, we aim for a balanced combination of volume growth and normalized pricing across 95% of our business. Hyperinflationary markets may contribute a couple of points to the top line, but our core focus remains on delivering revenue growth at the top end of our long-term algorithm.

Gross Margin Outlook and Drivers
Q: What are the key drivers of your gross margin expansion, and how might margins evolve in 2024?
A: In 2023, our gross margins benefited from pricing actions, partially offset by higher inflation in commodity and non-commodity costs. For 2024, we expect margin expansion, considering the mechanical impact of refranchising markets and more normalized cost inflation. We'll continue leveraging revenue growth management tools, a resilient supply chain, and local sourcing to drive productivity and sustain margin expansion.

Currency Headwinds Impact
Q: How will currency headwinds affect your revenue and EPS in 2024?
A: We anticipate a 2–3% currency headwind on revenue and a 4–5% headwind on EPS for 2024. The incremental bottom-line impact is challenging to precisely quantify due to numerous variables, including remeasurement of monetary assets. Typically, the multiplier effect is 1.5 to 2x, but hyperinflationary markets introduce distortions. We'll continue providing guidance as the year progresses.

Capital Allocation and Share Buybacks
Q: Will share buybacks become a larger part of your capital allocation strategy going forward?
A: While we remain committed to increasing our dividend, we recognize the potential for share repurchases. Our debt leverage stands at 1.7x, below our goal of 2–2.5x. We've increased CapEx for 2024 to build growth foundations. We did execute share repurchases in the back half of the year, taking advantage of proceeds from bottler sales. Going forward, we'll balance investment needs, cash flows, and considerations like the pending IRS tax case when deciding on share buybacks.

Refranchising and System Evolution
Q: How has refranchising improved your system performance, and what are your priorities moving forward?
A: Refranchising has enhanced performance every time we've partnered with the right bottlers, leading to stronger execution and growth. We're nearing the completion of our refranchising efforts, with only a few pieces remaining. Our focus remains on leveraging the combined strengths of our company and bottling partners to sustain momentum and deliver growth at the top end of our algorithm.

North America Consumer Trends
Q: How are you addressing varying consumer segments and channel dynamics in North America?
A: The U.S. consumer landscape is diverse; while overall spending power is strong, some segments face income pressures due to inflation. We've focused on affordability for these consumers through individual pack sizes and multipacks. At the same time, we've seen strong growth in premium segments like fairlife, Core Power, and Simply among consumers with greater purchasing power. Channel dynamics are normalizing post-COVID, with away-from-home channels slightly ahead of at-home, returning to pre-pandemic patterns.

China Consumer Outlook
Q: What is your outlook for consumer demand in China for 2024?
A: In 2023, China started strong but softened over the last three quarters. We anticipate a reversal in 2024, with a slower first quarter due to tough comparisons, followed by improvement throughout the year. We're investing in key moments like Chinese New Year and focusing on reigniting momentum in sparkling beverages through marketing and execution initiatives.

Scaling Innovations and Capacity Expansion
Q: How are you scaling successful innovations like fairlife and Core Power?
A: fairlife has experienced near double-digit volume growth for several years, with even faster revenue growth. To support this, we've begun constructing a mega plant in upstate New York to expand capacity. Core Power is also performing exceptionally well. We continue to experiment with new products and plan to scale successful ones, leveraging innovation to drive growth.

Sparkling Category Growth
Q: What is your perspective on the sparkling category's future growth?
A: The sparkling category remains robust globally, both in volume and revenue growth. We've consistently achieved 2% volume growth in sparkling beverages, averaging 3% over the past 20 quarters. Innovations like Coca-Cola Spiced and targeted marketing aimed at Gen Z and other consumers drive engagement and reconsideration. By focusing on brands like Coke, Sprite, and Fanta, and tailoring our strategies, we continue to lead and grow this category.

Global Away-From-Home Channel Dynamics
Q: How are away-from-home channels performing globally, and what are your expectations for 2024?
A: Post-COVID, away-from-home channels have rebounded and are slightly ahead of at-home channels in markets like the U.S. and Europe. This reflects a return to pre-pandemic norms. We don't anticipate significant mix effects from channel shifts in 2024, as the renormalization is largely complete. Our strategies account for varying dynamics across regions, but overall, we expect stability in channel performance.

Investing in Digital Capabilities
Q: What is the status of your digital investments and bottler CapEx globally?
A: Investment levels in digital capabilities and bottler CapEx are at the highest percentage of system revenue we've seen. This commitment is consistent worldwide, not just in Latin America. Our system partners are investing ahead of the curve in digital initiatives, enhancing our competitive advantage across all markets, including the U.S..

U.S. Market Performance Expectations
Q: Did the U.S. market perform as expected, and what do you anticipate for 2024?
A: The U.S. market's performance in Q4 was largely in line with our expectations, with only fractional differences from full-year growth. We observed a slight softening due to inflation outpacing wage growth but anticipate improvement as consumers regain purchasing power. In 2024, we expect stable or slightly increasing volume with continued pricing initiatives. This aligns with our global strategy of balancing price and volume growth across different markets.