Q2 2021 PepsiCo Inc Earnings Q&A Conference Call
Second quarter earnings question and answer session.
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Today's call is being recorded and will be archived at www Dot Pepsico Dot com.
It is now my pleasure to introduce Mr. Ravi <unk> Senior Vice President of Investor Relations. Mr. <unk> you may begin.
Thank you operator, good morning, everyone. I hope everyone has had a chance. This morning to review our press release and prepared remarks, both of which are available on our website bill.
Before we begin please take note of our cautionary statement, we may make forward looking statements on today's call, including about our business plans updated 2021 guidance and the potential impact of the COVID-19 pandemic on our business forward.
Forward looking statements inherently involve risks and uncertainties and only reflect our view as of today July 13th 2021, and we are under no obligation to update when discussing.
Our results, we refer to non-GAAP measures, which exclude certain items from reported results.
Please refer to our Q2.2021 earnings release and form 10-Q available on Pepsico Dot com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward looking statements.
Joining me today are pepsico's, chairman and CEO, Ramon <unk>, and Pepsico's, Vice Chairman and CFO Hugh Johnston, we ask that you. Please limit yourself to 1 question and with that I will turn it over to the operator for the first question.
Thank you once again in order to ask a question or make a comment. Please press star followed by 1 on your Touchtone phone at any time.
Our first question is coming from Bonnie Herzog of Goldman Sachs.
Good morning, everyone.
Good morning, Mike Good morning, I guess I wanted to ask about <unk>, hoping you could provide a little bit more color on that business and the drivers of the robust topline growth that you saw in the quarter I guess I'm wondering if you know the growth accelerated each month in the quarter and you know if you're seeing this double digit growth continue.
So far in July also.
So how big of a driver was the stepped up marketing and advertising spend which you mentioned was up double digits in the quarter, how much did that help drive the top line and then maybe finally on this business. You mentioned you know revenue and your on premise business doubled in the quarter you know clearly that's helpful.
A very easy comp, but just curious when do you expect revenues from that business to be back to normal levels. Thank you.
Yes.
Tony.
Try to answer a few of those elements.
I've seen the results of the <unk> business are a consequence of the work we've been doing for the last I would say 3 years or so.
To.
Proved the equity of the brands improve the execution.
Improved.
The organization of phone calls et cetera.
We are very pleased with the performance of all our brands.
If you think about mountain Dew Pepsi Gatorade.
Large brands are growing very nicely and then on top of that are let's.
I'd say, it's smaller medium sized brands.
Mike Starbucks or purely for bubbly.
Others are also growing.
Very nice space. So I think the portfolio is working very well for us as a consequence of the great work. The team is that on innovation and brand.
The field teams are doing on execution, so that that is the.
The area, we feel more proud about obviously as you mentioned there is a.
Channel shift as consumers are moving more.
More in the U S.
Martin mobility that foodservice away from from home channel is growing faster in Q2, obviously as you compared to last year and Thats, a tailwind to the to the business.
That I think will continue over the next day quarters.
The most important thing I think for us to to SaaS is that that business has been investing in <unk>.
Delivering as a consequence of that we're gaining share.
You I'm sure you've looked at the share numbers for the business in the last few months and the business keeps gaining share it keeps getting more competitive so that's.
That's a good sign of the.
The return on those investments.
Yeah, the only thing I wanted to add to that Bonnie as A&M.
It was up about 30% in the quarter to that specific question.
And PV in it.
So im sorry total.
Okay.
Our next question comes from the line of Dara Mycenaean of Morgan Stanley.
Hey, guys. So just to build on that question, obviously, a strong organic sales result in the quarter or.
To your average trends also accelerated sequentially and presumably it was the top line was better than you expected with the raised full year sales guidance. So I was just hoping for a bit more granularity on how much of the upside or the acceleration sequentially was driven by stronger category growth.
You mentioned the on premise strength, obviously in beverages versus accelerating corporate market share and maybe just give us a little more detail in the numbers around market share performance and then on a go forward basis, given the strong market share trends given the gross margin pressure we saw in Q2.
Can you just talk a little bit conceptually about pricing plans going forward in frito in beverages.
How the near term promotional environment also may impact that but just sort of your thoughts around pricing going forward.
In light of the market share strength in some of the gross margin pressure.
Yeah, let.
Let me try to cover and then Hugh will also.
Add onto it.
I think when you look at the overall Pepsico business.
Obviously.
The biggest highlight for me is that the resilience of our snacks business right. So if you think about last year. It grew high single digit. This year is growing high single digit that is.
So are the Neri, if you think about the shifting consumer behavior of how our portfolio is able to adapt to a more of an in home.
Sumption butter or a more of a in away from home consumption patterns. So that part of their business is solid it continues to grow at a very high level in the U S. And also internationally obviously the beverage category is benefiting from that.
The change of patterns and behaviors of consumers and it was very negatively affected in the away from home consumption last year. Obviously, we're benefiting now from that and you see that in the acceleration of obviously, our North America business about globally. Our beverage business is is it's growing much faster in the away from <unk>.
Home business, obviously as the stores are open and people are moving around so that from the category dynamics.
Across the board.
We're seeing a share off of market momentum in the business as a consequence of the investments we've been making for the last few years and this is not only the U S is across most of our large markets internationally and developing and emerging markets.
And that as I said is we are having better innovation better focus on our brand messaging to better execution in store better demand to supply connectivity and so all of that is working very well to our advantage.
So that's in terms of growth in the key levers as you were asking on what's driven the acceleration of the business.
When you come to.
2 our per.
Pricing in our how we going to deal with the pricing in the coming in the coming months I would say, obviously same as everybody else we're seeing.
Inflation in our business.
Across many of our.
Raw ingredients and some of our inputs and labor and freight and everything else. So we operate in the same context, we feel very quite comfortable or confident that through a combination of net revenue management initiatives.
And increased productivity, we can we can navigate this.
I mean, we're looking at.
Obviously, staying within our long term guidance for for the coming years. So it is it is a it is a.
It is a combination of tools that we're having.
We're working with our partners in the retail space in.
In the away from home space to.
<unk>.
Made the right decisions and pricing.
Give the consumers with us once we improve our margins there.
Our next question comes from the line of Lauren Lieberman of Barclays.
Great. Thanks, good morning.
I'd love to hear a little bit about <unk> margin this quarter.
Yes, John topline, so theres going to be some operating leverage but I was curious if you could talk a little bit about building blocks on the margin this quarter.
What youre thinking of as a.
We've kind of reached a new sustainable level in that bill to that aspiration to bill <unk> margins back into the mid teens type level.
So if you can share any kind of building blocks.
Channel mix.
Absent the COVID-19 costs.
<unk>.
Lower promotion that would be really helpful context. Thanks.
Yeah, Hey, Lorna too.
Actually you just mentioned a couple of the important factors for sure.
Channel mix, obviously is a benefit as <unk>.
Small foodservice as well as.
As well as the convenience store channel continues to do well convenience grew double digits. The foodservice channel as you saw it doubled.
And Thats a good profitable channel for us. So that clearly was was a tailwind but keep in mind, that's really getting us back to normal and a lot of ways as well. So I don't view this as extraordinary I just view it as we're getting back to sort of a more normal world, although clearly not all the way back.
In addition to that the energy category, which we participate in in a bigger way obviously has higher margins.
<unk> is off to a terrific start Rockstar, we're slowly steadily making progress on that as we said we believe that would take some time and we continue to believe that will take some time, but we're seeing some of the right indications there.
And then as you noted the.
The combination of sort of operating leverage in the business plus a reduction in COVID-19 costs.
As we expected.
<unk> also contributed so.
Some of the things that we've talked about in past quarters in terms of getting <unk> on the road to much stronger margins.
We're certainly very acutely aware of it and we are focused as a team on continuing to drive that improved performance.
Our next question comes from the line of Kevin Grundy of Jefferies.
Great. Thanks, Good morning, everyone and congratulations on the strong results.
Question on the extension of the restructuring initiative and how this may translate to profitability. So you now expect 1 billion in incremental annual savings through 2026, I think this was generally expected by the market and translates to over 100 basis points per annum of margins pre any sort of reinvestment. So the question is do you see a greater likelihood.
That shareholders could see a greater degree of earnings flow through in this phase of the restructuring program and I ask that in the context of a clearly healthier top line coming out of the pandemic and multi year investments that the company has made some of which we've discussed on this call that have already been put into the P&L. So and if the answer is no what do you see as the most attractive areas of.
Investments within the portfolio, whether this is by product line or geography, so thanks for that.
Yeah, Hey, Kevin it too.
A couple of things on that number 1.
We've obviously been delivering $1 billion of productivity over $1 billion a year for a number of years and we continue to find opportunities to do that number 2 part of what we're trying to do is shaped the company for the future and in doing so we're obviously taking cost out in certain places and then we're investing in certain places like <unk>.
Utilizing the supply chain and making our interactions with customers and consumer is much more efficient than than they were in the past so.
I think what Youll see is to some degree those things will balance out.
We've always talked about something in the range of 30 bps of margin improvement the 20 to 30 range that we've been in.
And I think you should.
Assume that that's that's where we're going to be going forward as well on an ongoing basis, obviously quarter to quarter, those things may shift around a little bit but.
That's sort of the track that we remain on along with accelerated revenue growth. So the combination of accelerating revenue growth and 20 to 30 basis points of margin improvement.
Translates into into nice EPS.
How much we deliver on every quarter, obviously, it will be a product of the specifics of that quarter.
Our next question comes from the line of Bryan Spillane of Bank of America.
Hey, good morning, guys.
Good morning, Brian.
Just wanted to touch a little bit on on the.
Kind of the dynamics within gross margin.
In the quarter and I guess as we're looking forward.
We know we've got raw materials and commodity costs moving labor costs are higher it sounds like Theres also some just tightness in supply in some some packaging items, so I guess.
To the extent that that raw material inflation, probably is going to be with us for a while I'm just trying to understand as we're looking forward how much of what Youre seeing currently you expect.
Stick for what stick around for a while.
And how much of that you think begins to fade as we move as we begin to exit 'twenty 2021.
Yeah happy to answer that Brian and maybe shape a couple of summary comments to sort of help frame the numbers a bit obviously gross margin was down in the quarter that was no surprise to anyone the biggest driver of that by far were the big International acquisitions that we had that.
Just inherently lower gross margin businesses still good businesses to be sure, but lower gross margin. So the math of that obviously, a drag them down to some degree.
In addition to that obviously, there are sort of ongoing inflationary pressure, we insulate ourselves to some degree based on our forward buying program and that has actually helped us clearly this year.
There'll be a bit more pressure in the back half, but at the same time as you know.
We tend to we tend to take pricing after labor day.
In both of our businesses and I think you would expect to see that pattern continue so.
Is there some somewhat more inflation out there. There is are we going to be pricing to deal with it. We certainly are the investments in our brands and the investments that we've made in and supplying our customers. I think is what enables us to take that pricing as we have every year.
Our next question comes from the line of Andrea to Sarah of JP Morgan.
Hi, good morning, and congrats on the share with us. So I think my question is it's.
Mike You just said Hugh.
Our sales recovery it implies the guidance implies.
About 4% to 5% growth in the second half and then Inc.
Basically the acceleration on some of your Sac. So what is driving this more conservative assumption that something outside the U S.
The lack of visibility.
Given that you have to be opening you have the <unk> coming back you just saw.
I don't know post Labor day, you have the <unk>.
I think coming in and you also commented about the energy becoming bigger for you. So all of those can.
Can you help us bridge why the second half or would it be.
That's generation on a 2 year stack.
Yes Andrea.
Things I think go into our guidance first and I'll always start with this 1.
When we deliver guidance to you all it is a number that we intend to hit and we have high high assurance of hitting it so as we sort of evaluate scenarios for the balance of the year. We obviously contemplate both the opportunity factors that you've mentioned all of which are quite real as well as the risk factors of.
We're not fully out of the pandemic at this point, yet there's sort of lots of <unk>.
Volatility to some degree in the U S and developed countries, but to an even greater.
Your degree in developing and emerging countries.
We sort of think about our guidance, we sort of package all of that up and we adopt a posture that.
Gives us the ability to deliver under pretty well almost all scenarios and that's why we've been as consistent as we have been in and delivering our guidance.
As you think about our posture ill just remind you of that that's the way we tend to approach. This.
Yes, I think in there is to build on what he is saying I think we're seeing obviously.
Positive trends in many markets, we also see <unk>.
<unk>.
The pandemic.
Yes in Europe last week, working with the European team.
When we thought it was going to be out of the.
Covid lockdowns there back into Lockdowns in many markets.
I think as Hugh said, we are confident on our market place performance I think that will continue.
Continue I think we're confident on the resilience of our categories.
But also we're aware of.
Absent downs that may come in the coming months, especially as we move into the colder months.
In the northern Hemisphere. So that is all included India, India and the forecast for the balance of the year.
And the 1 thing I will remind Europe is we're delivering 6% on a.
A full year basis, that's on top of a 4.2 last year and on top of a $4.5 the previous year. So.
It's pretty strong overall topline performance for the year.
Our next question comes from the line of Glenn debt of Guggenheim.
Hey, good morning, everyone.
And I'd like to come back to some of the commence you've made on the energy category. Even though you did that same peer market was pretty strong and you mentioned that.
You still have some work to do on the brookstone. So clearly we are seeing that Starbucks and <unk>.
Drives to some extent in Bangkok doing very well, but Brooks times behind so could you maybe.
Give us a bit more granularity about the Duke we don't share.
And when do you see can the numbers come in.
In the U S Inc.
Specifically in Europe for Rockstar.
There was some some indication about a month.
I'm going to rise.
So thats, we understand what's going on the energy could be great for you guys. Thank you.
Yes, listen I think you mentioned the 4 pillars of our strategy right.
You go back a 1 by 1.
Starbucks, we're super happy with the performance of that portfolio and the partnership with Starbucks is stronger than ever and we continue to innovate.
And I think the new products are excellent and the execution is excellent and that business is growing.
Take home and now away from home it's really.
Firing in all cylinders.
Mountain Dew rise.
We're very happy with the initial execution and the initial consumer reaction. So execution was very good from our teams we tend to do that quite well we have.
We have good at DSD system that executes ground early at a good level and we're seeing very good initial.
Trial from consumers very good repeat if you follow on social networks all day.
Comments are extremely positive about the days about the efficacy of the product. So good it's 1% of energy 1% share is clearly.
Volume for much more but it's only been in the market for 3.
For the 3 months very good start I think it's a it's a solid foundation for what is going to be I think a great business.
As you're saying, we continue to distribute the bank business as per our.
Commitments, and that's going well and then on Rockstar.
We were always very transparent this is a.
Our multiyear effort, we are trying to put strong foundations strong foundations in the areas of product.
We're changing some of the Formula I think the non sugar portfolio is excellent and thats the area of <unk>.
The category that is growing faster as our execution is improving a lot, we're gaining distribution and we get better visibility of the brand and I think our brand position and is quite good as we have found a niche that is what's in there.
Clearly as differentiated from Red Bull and from Monster and it's a unique position and that we plan to to insist on anything and we're getting good good feedback as well on.
That positioning so.
As I said, it's going to be a multi year, we're very Fokker was all the.
Domestic business here in the U S. But also the international teams are very focused on that priority and and we will execute.
No.
On a multi quarter multiyear basis, and we're very positive what we're seeing.
Again, we'll keep updating you every quarter on how the how things are evolving but positive so far.
Our next question comes from the line of Vivien <unk> of Cowen.
Hi, good morning, Thank you.
Thank you could please comment on.
First that the stream in the quarter and in particular, how that business has responded to the recovery in away from home from Samsung.
Thank you.
Yes good.
The solid stream businesses.
As a global business right. So he has a.
Very solid penetration in Europe.
That business continues to thrive I would say in Europe.
And also in the U S. We're gaining a lot of <unk>.
<unk> penetration in the U S.
The latest thing, we're doing and it's working quite well, it's putting some of our large beverage brands into the silver stream.
Let's say consumption model we start.
Got it in Europe.
The U S. We started with bubbly probably drops are working very very well.
<unk>.
An enhancer of the of the sub.
Other stream experience and we continue to push that combination of the bubbly flavors on the solid stream sparkling water experience, so I would say.
Bill far from its potential in India household penetration is as good in some central European market is slow everywhere else. We continue to build that and we've continued to build a direct to consumer model trying to get many more insights on consumption behaviors and that is helping us not only to develop the silver stream.
I was about to develop the rest of our.
Our innovation and category, so a pretty good ecosystem we're building.
Consumption at home, but also insights and innovation from the browser business. So we feel good about the momentum of the of the business and we'll continue to it's going to continue to be a priority for us going forward.
Our next question comes from the line of Steve powers of Deutsche Bank.
Yes, Hey, good morning.
Ramon you commented on this just there a bit in the context of soda stream, but when you step back I was hoping you could expand on how youre viewing the performance.
Of your recently acquired businesses in aggregate.
Where you're at in terms of.
Integrating them into the broader portfolio relative to your plans coming into the year.
Hugh in that context, I guess I just missed it.
<unk>, whether its fair to assume that the financial performance expected this year.
You feel youll be on track to remove some of the financial constraints that you posed upon yourself. This year in terms of being able to resume elective buybacks <unk>.
We enter the M&A market looking out beyond the end of this fiscal year, just a health check there would be great. Thank you.
Yes, that's great.
Let me just go around the different.
M&A.
I'll give you an update on.
Obviously, we started with solid stream I think it's.
As I was saying as a future consumption model that we're betting on.
It's great in terms of consumer personalization of their product and obviously better for the planet.
It's going very well as going above our initial expectations for the business will continue to invest when it comes to.
To the U S. Several acquisitions, the situs board business.
Which.
That was the muscle milk brand and evolve brand and some others that business is really thriving clearly we see that consumers are moving into protein and sport and that's a space that will continue to grow.
Very positive momentum with the 2 brands and there were some jewels in that business like evolve and some and some others that we're trying to.
Take the maximum amount of those brands as you will see in the coming future Rockstar I mentioned Rockstar was an acquisition that gave us a great business about all shiny enablement for a for a broader strategy I think we're executing.
Those plans.
Feel very good about it the other acquisition we did in the U S.
In the snack business was.
The better better for your company the pulp corners brands and some other brands that business had that is amazing performance. We knew that there was a space for that bump in technology and for the pop corners brands.
In India, the healthier space for snacking in premium.
Truth is that it.
We keep adding capacity and.
The Frito team are really doing a fantastic work in terms of expanding distribution and building the brand. So we feel very good about that 1 day. When you go internationally. There were 2 focus acquisitions 1 based in.
The Africa expansion.
Pioneer business and that is we're in the middle of the integration. Obviously Covid has had an impact in the integration of that business.
Sure.
<unk>. This is a horizon 5 type of.
Investment Africa will be a.
Source of growth for all our companies around the world.
The coming decades, and that's an investment we at that time of that type of perspective, and the other business was it being cheery bill.
Business in China, which is a.
Our direct to consumer.
Snack business that complement our potato achieves in corn business.
In China with a lot of local as snacks and in <unk> and.
And you will go to Mike in the form of direct to consumer that is also working very well, we're starting to integrate with.
We're launching some of their being cheery products into our.
Let's say brick and mortar distribution system.
That's pretty good in China, and the other way around we're putting some of our brands into the BN share with direct to consumer model and so I would say.
The execution is good day as strategic intent that we had with all these acquisitions.
Its work in the business case continues to be.
To be.
So as we thought so good progress I would say in all of these different acquisitions.
And then Steve to follow up on your questions on capital allocation no change at all to what I've previously said regarding M&A and no change regarding buybacks.
Our next question comes from the line of Nik Modi of RBC capital markets.
Yes, thanks, good morning, everyone.
The question is really on international if you could provide obviously you had some pretty strong performance the COVID-19 situation seems a bit.
The matrix, obviously between the U S and other parts of the <unk>.
World. So just wanted to get some context on away from home at home. What you saw there and then some of the channel work that we've done would suggest that Pepsico hot beverages.
Quite active.
In the retail trade promotion.
Promotion, so I just wanted to get some context around that with it's just an opportunity that you saw.
Kind of pushing people into.
Away from home consumption, because the sorry at home consumption per the away from home was under pressure.
Thanks.
Yes.
Let me tell you a bit of how the how we see the situation of the different markets around the world, Obviously, starting with China, China is obviously out of Covid already for some time.
Friends are.
The away from home business grew last year. It continues to grow our snacks business continues to the very strong the same with beverages. So good good macros in China.
The rest of Asia being the more challenged or we're seeing.
Think about Vietnam, Thailand.
Japan, even even Australia.
Dahlia, there been more challenges there India, Inc.
And consumers are going back to normal behaviors, so that might take a little bit of time.
Obviously Africa Middle East.
You guys are reading the news now and so there's a lot of.
Steve a lot of.
Challenges there with running normal operations in all those markets. So it will be a while before those markets go back to normality.
Eastern Europe very strong actually in spite of some of the coffee challenges in Russia, specifically consumer.
Consumers are moving around and in Eastern Europe is very strong Cherokee included.
Where they had some.
It is.
Locked down so we see those markets performing very well.
Improving compared to last year, but its still you don't see the normal traffic north South in Europe. This time of the day at this time of the year, sorry consumers are standing there in there in their countries or not.
It's not going to be the usual movement of people in Europe, North South so.
We plan for that and we plan to execute our summer programs around that.
In America and it happened to be I wasn't in Mexico, a few weeks ago.
Still the pandemic is very visible and that consumers are.
Chris in their mobility and that obviously is having positive positive impact in our.
Small small shops performance and somehow the restaurant business the same with Brazil.
That.
That hopefully gives you a little bit.
Picture of how the.
How the different parts of the world are behaving and the trends in our channels.
Yeah. The only thing I'd add is broadly the environment seems quite rational.
We're managing through this successfully.
And it obviously shows up in the results the growth numbers were quite strong pretty well around the world.
Okay.
Our next question comes from the line of Rabat, and Steve <unk> of Evercore.
Great. Thank you very much.
Still still early days, and maybe premature but love to get your thoughts on what the new normal is going to look like for the consumer channels.
Any long lasting behaviors that you are starting to pick up on.
That we'll see post COVID-19 and to the extent there are how you are changing or adapting the company to meet them. Thank you.
Yes, good question.
We're still obviously looking at consumer behaviors and I think consumers are also.
Trying to figure it out at this point, we see some trends that I think we are going to state. The most important 1 probably is the shopping behavior is changing I think e-commerce or.
Let's call. It e-commerce in a broader sense, it's going to continue to be a preferred way of shopping.
That a lot of families try during the pandemic and we're seeing those families sticking to that behavior. So that that is going to be a permanent trend and obviously, we've been investing in e-commerce for quite some time capabilities.
<unk> chain.
Advertising models et cetera, and we're working very closely with our customers to pivot to that so that I think that that's something that is going to stay.
The homeless a hub is also a trend that we're seeing more.
I think consumers are venturing out, but there is still doing a lot of their activities at home and we.
We foresee a.
Yeah.
A flexible working.
It'll where consumers are going to spend more time at home and they're not going to go back to the op fees kind of every day of the week, obviously certain type of.
People not everybody, we see that as an opportunity for hours and acts in our our breakthroughs in our.
Fluid business in general and also for our beverages business.
We see consumers.
In general being more concerned about what we call holistic health mental health physical health consumers are exercising more consumers are more and making more val.
Balances between their food choices, which.
For us generates a couple of important trends at portion control.
Seeing that as a strategy consumers are following and thats, giving us a huge growth in our variety packs in multi bags in.
This is a trend that we are capturing I think it will continue.
Other 1 is.
Moving to healthier spaces in our categories clearly non sugar is growing very fast and I think we're very well positioned from the R&D point of view and the innovation point of view on on non sugar and the same with.
For more permissible snacks, where we in the last few years we've been.
Between acquisitions and on development and we have a very good portfolio that is gaining share in that particular space. So those are some of the trends that we're seeing obviously consumers we will continue to evolve.
But obviously, we're following very close whats happening across different parts of the world and adapting.
Very fast in our brands and our innovation our channel.
Resources to that to that to those new trends.
And we have time for 1 more question. Our final question will come from the line of Chris Carey of Wells Fargo Securities.
Hi, Thank you for the question.
So you just noted on.
The trend to consume healthier products.
In your prepared remarks, you also talked about continuing to invest behind.
Zero sugar, both on the carbonated and non carbonated side.
I Wonder if you could maybe just help.
Lay the land here on how the portfolio is performing and how you see it positioned and where you think the investments.
We'll go both on a product and geographic basis, I mean, obviously in the U S.
Diet Mountain Dew and losing some share maybe.
Maybe diet, Pepsi, Max Max gaining but still relatively small probably doing quite well.
And so just.
Any perspective on how important or.
The go forward trends that you see in this business and where you really expect to focus.
In the near medium and longer term. Thank you.
Yes happy to do so listen I think the.
Obviously consumers are moving I think.
<unk>.
It's going to be a long term trend into healthier choices in beverages and snacks right and we've been working on this for a long time in our R&D and I think we're getting very good at.
Providing our consumers with very good.
Taste experiences and functional experiences with zero sugar and that is a.
A great capability, we have in the system. We have great. Examples of that if you only think about for example in Gatorade zero right. I mean, this is a massive innovation.
Over $1 billion.
Innovation on the free I would say 20 months something like that in the marketplace. So we're able to provide functionality.
Good day is at a zero sugar, even in spaces like Gatorade clearly for.
For a more refreshing experiences or more indulgent experiences.
The.
The Pepsi zero solution of the months in the zero solutions those are.
Extremely great tasting products that are getting.
A lot of consumer favor if you think about our European business for example.
The equivalent of Pepsi zero, which is Pepsi Max in Europe is is leader in many of the European brand.
Our European markets, we have a much higher share in the non sugar category that we have in the sugar category and I've seen that that's where we've been investing for a long time, we will continue to invest we see that trend.
Not stopping for the foreseeable future and is where.
We are putting our R&D investments or brand investments on our innovation investment.
Okay, I think we've run out of time so.
Thank you very much everybody for joining us today and.
For the confidence you've placed in Pepsico and in US with your investments. So we hope that you all stay healthy and safe. Thank you very much and Dr. Hugh again.
Thank you ladies and gentlemen, this does conclude today's call you may now disconnect.
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