Frito-Lay Margins Outlook
Q: Will Frito-Lay margins expand in '24?
A: Management expects margin improvement over time at Frito-Lay, noting that margins are already healthy. They emphasize investing back into the business to sustain growth and aim to grow the salty savory category to benefit overall margins. -

PBNA Profitability Improvement
Q: Explain PBNA profitability improvement plans.
A: PepsiCo is focusing on more profitable parts of the PBNA portfolio, deemphasizing less profitable products like packed water and certain take-home formats. They expect profitable growth and margin expansion at PBNA through better operational efficiency and focus under new management. -

Consumer Behavior Impact
Q: How is consumer behavior evolving for snacks?
A: Globally, consumers are resilient due to low unemployment and rising wages. However, Chinese consumers are cautious with high savings rates, and lower-income U.S. consumers are stretched, making strategic choices. PepsiCo is tailoring commercial programs to retain these consumers in their categories. -

International Performance Outlook
Q: Are strong international profits sustainable?
A: Management is confident in sustaining strong international performance, citing investment in capacity, innovation, and local market understanding. They expect to continue outperforming categories internationally, with the international business already at $36 billion and growing at a high single-digit rate with good profitability. -

Gatorade and Mountain Dew Volumes
Q: How will Gatorade and Mountain Dew volumes recover?
A: Both brands gained share in Q1. Gatorade was impacted by weather but is expected to improve with strong programs planned. Mountain Dew's launch of Baja Blast has been successful, bringing incremental consumers. Strong summer programs aim to continue building the brands. -

CELSIUS Partnership and Energy Drinks
Q: Update on CELSIUS partnership?
A: The CELSIUS partnership is strong, helping PepsiCo gain scale in go-to-market channels. A recent agreement better aligns long-term interests and benefits PepsiCo shareholders. Energy is a fast-growing, profitable category important for their portfolio. -

Sector Slowing and Demand Recovery
Q: Thoughts on slowing in immediate consumption?
A: Management believes consumers will return to categories at higher frequency as wages grow above inflation and food inflation is below CPI. They focus on innovation and programs to drive their categories ahead of macro trends, expecting sequential improvement over the year. -

Category Growth Expectations
Q: Expected category growth in regions?
A: PepsiCo expects their categories to grow faster than overall food and beverages in most countries, driven by urbanization and secular trends. They aim to deliver value by growing their categories ahead of market trends, benefiting both the business and customers. -

Frito-Lay Price/Mix Benefit Details
Q: Break down Frito-Lay's 4% price mix benefit.
A: The 4% price/mix benefit in Frito-Lay North America is approximately two-thirds price and one-third mix. Management expects moderate inflation and smooth revenue relationships, with not much volatility expected during the year. -

APAC Performance and China
Q: Is APAC growth durable with cautious China?
A: APAC performance is partly due to the timing of Chinese New Year, but the region is improving outside China. In China, despite cautious consumer behavior, PepsiCo continues to gain share, building a capable and profitable business. -

International Margins and Affordability
Q: How do you balance international margins and affordability?
A: PepsiCo focuses on affordability and relative value to drive category growth, ensuring products remain attractive compared to substitutes. Margin expansion results from gaining scale, improving fixed cost leverage while keeping affordability central to strategy. -

Spring Shelf Space and Energy Drinks
Q: Are you gaining shelf space as desired?
A: Shelf resets are ongoing and expected to complete in about six weeks. PepsiCo feels positive about space gains in both snacks and beverages, observing performance improvements where resets are done. They reaffirm guidance to grow at least 4% in net revenue for the year. -

European Market Performance
Q: How is Europe performing vs. the U.S.?
A: Europe is showing strong performance, with both developed and developing markets growing. Eastern Europe is growing faster. Management credits strong productivity, cost control, and reinvesting in brands, creating positive momentum. -

Frito-Lay Volume Trajectory
Q: Update on Frito-Lay volume trends?
A: Frito-Lay continues to outperform the category. They expect sequential volume improvement, especially in the second half, as they cycle high prior-year comparisons and focus on growing the savory category and gaining share. -