Half Year 2021 Coca-Cola Europacific Partners PLC Earnings Call
Slide deck, we will then turn the call either short questions.
Many of the metrics presented today will be on a pro forma basis. These affect the results. The C. C P under Australia Pacific under Indonesian Fitness unit API I think the Coca Cola Amatil transaction had occurred at the beginning of this year comparable measures you've got the tiny impact of amatil deal, which completed in May.
The slides and our prepared remarks will distinguish between these two methodologies accordingly, following the call a full transcript will be made available as soon as possible on our website.
I'll now turn call over to our CEO Damian.
Thank you Sara and many things to everyone joining us today.
Let's start with our house one key takeaways.
Strong performance delivered by highly engaged colleagues and quite a dynamic environment. So to all my colleagues are sincerely grateful.
For the hard work and commitment, but you've all shown to see CDP and continued to show.
We closed out 2021.
We are again the number one FMC G customer value creator in Western Europe, and I'm very pleased to say that we continue to win market share both in store and online across the RTD category.
Critically we are continuing to accelerate our investments across too.
Key areas.
Sustainability agenda.
Long side, our ongoing digital transformation.
I'm very pleased that the integration of API is well underway.
We are working.
On joint growth plans with the Coca Cola company as we look forward to an even more exciting 2022.
Yes.
We have a simple book Viking purpose as we move forward as Coca Cola Your Pacific Partners.
To refresh Europe specific on Indonesia, and critically to make a difference for all our communities and our stakeholders.
We do believe in a bright future for our business.
Led by our aspiration to be the world's most digitized Coca Cola bottler.
And as I mentioned earlier, our strong commitment to delivering on our ambitious sustainability agenda.
We have a solid track record of delivery and execution.
And I'm very pleased we do retain our number one position.
Customer value creator in Western Europe.
We are fortunate to operate in a highly attractive valuable and growing category.
With our exciting portfolio of brands products and packaging, we enjoy scale and a leading position across all the geographies.
We also have a great opportunity to continue to unlock the potential.
Of our newly acquired business units API.
We continue to position ourselves to be fit uncompetitive for the longer term.
Despite COVID-19, we have continued to invest for long term growth.
Particularly in our portfolio our people.
Our digital journey under sustainability agenda.
We know we will go forward it together.
And greater more sustainable value for all of our stakeholders.
We have a simple focus around great people, great service, great beverages bone sustainably for a better shared future.
So now I'd like to touch on each of these areas as we look back from the first half of this year.
As you know the well being and safety of our colleagues is our absolute number one priority.
We continue to support our colleagues through the evolving challenges of the pandemic.
As well as the recent widespread flooding unfortunately occurred in Belgium, and Germany.
We continue to work to break down barriers to intrusion.
Our colleague celebrated pride across many of our sites and offices and.
And shared photos and stories on our digital communication platform Red line.
In New Zealand, we were thrilled to be named New Zealand's employer of choice 2021.
The only company to receive the Gold award for three consecutive years.
And across CCP.
We're also recognized as a great place to work with strong engagement shown in our first global engagement and culture survey of Coca Cola Your Civic partners, which has been recently completed.
Great service is critical for our customer growth story and engagement.
Supporting our customers and the reopening of <unk> has been a key priority and.
When we launched a number of initiatives across all of our markets such as we are horrific campaign in Spain.
On the customized digital support program in France, and Germany and.
In Europe are focused on creative Euro football activation <unk>.
Generated great excitement not just for our customers our colleagues, but also of course for our consumers.
As lockdowns ease of people could do what they love to do across Europe during the summer get out and about and enjoy a coke with friends and family.
And despite these challenges of the pandemic, we have maintained high levels of customer service in the high nineties.
And we will continue to invest in capacity to support our growth on our revenue growth management initiatives. This includes placing over 50000 cold drink equipment units in the first half of this year.
Increasing our counting capacity and efficiency.
On accelerating our in sourcing plans.
This year, we've already installed timelines from Papua New Guinea.
That decline in France in the first half of the year.
And we've launched our stock.
And online marketplace in GB and Wahid, a b to B ecosystem platform in Portugal.
Old fire, our ventures, our CCP ventures, as we continue to explore and progressed new models that make it easier for our customers to do business with us.
And lastly, we're extremely privileged to make move and sell the best beverages in the world.
Coca Cola zero and Monster continues to outperform across all of our markets in the first half.
Our new taste, new look a new campaign for Coca Cola Zero Sugar in Europe has been a great success.
Our monster innovations of support of impressive growth, new Ultra Fiesta mango, a monarch launch in eight of our European markets.
It's a launch months are super fueled in Australia, and New Zealand.
We're very excited about Costa coffee and we are readily expanding this brand outside of GB, We're making good progress in Germany, Belgium, Norway, and we've recently launched Costa Express in Spain and.
In Indonesia, we launched a new and well received to flavor cocoa Panda for Ramadan on.
On top of Chico continues to be an exciting opportunity now loans six of our European markets.
As we progress on our commercial agenda, we do this with a mindset clearly focused around sustainability.
And we know we need to go further and faster on this agenda.
Carbon reduction is at the heart of our business.
As we move towards our net zero greenhouse gas emissions target by 2040 across our entire value chain.
Contributing around 40% of these emissions packaging is clearly front and center.
And I am pleased that we're making progress on a number of fronts.
Across Europe, we are continuing to accelerate our or PT plans toward our ultimate goal of 100%.
In Australia, we have signed up to a JV to build and operate a new P. T recycling facility expected to process 1 billion bottles per year and produce over 20000 tons of recycled PT.
Across the partnership.
And likewise in Indonesia, we have announced in the industry collaboration to construct a recycling facility.
We'll have the capacity to save 25000 tons of Virgin plastic each year.
This will help stimulate the recycling industry in Indonesia, and accelerate much needed improvement in recycling rates.
Bold collaborations are a step forward towards creating a circular economy for PT within our industry.
Beyond packaging I'm also extremely proud to have achieved carbon neutral status of two of our manufacturing sites in Spain and Sweden.
With the aim of extending the certification to afford a four sites by the end of 2023.
We have met the global benchmark for responsible water stewardship in the Netherlands, making this plant one of just five and the Coca Cola system to achieve such an accreditation.
Finally, we recently signed up to the EU code of conduct for responsible business and marketing practices, which aims to make healthy and sustainable food choices easier for our consumers. So all in all a great first half towards a better shared future with a clear acknowledgment that there's more to do.
And we must go faster.
Just turning now to our performance. We are pleased to report a strong performance in the first half.
We continue to win with our customers.
Having created more than double the absolute value sales increase compared to any of our peers in western Europe.
Supporting the reopening of <unk> has been a key area as I touched on earlier.
Our strong performance from our core brands.
Led to some great share gains both in store and critically online.
Across our combined markets, we gained 90 basis points of share in flavors on 170 basis points in energy.
And our European markets and in our European markets. Our energy portfolio has gained nearly 300 basis points of value share since 2019.
The performance in Europe was supported by the new months of flavors wider distribution.
<unk> and an impressive volume growth of 50% versus 2019.
Meaning we are well on track to double the size of our European energy business relative to 2019.
All of these elements combined to deliver a very solid top line performance.
The 6% increase in pro forma comparable volume.
Obviously reflect the easing of restrictions in Q2 under.
On the soft prior year Comparables.
You will recall.
Q2 was the worst impacted period last year.
We've been encouraged with the pace of volume recovery.
And I'm, particularly pleased that our continued focus on revenue growth management.
Has driven growth in revenue per unit case above pre pandemic levels.
An impressive results given the mixed headwinds we've continued to face during the first half of this year.
We're moving at pace to accelerate our digital capabilities and I'll come back to this on the next slide.
We do remain focused on efficiency.
And are on track to deliver the efficiency programs and the combination benefits that we shared with you earlier this year.
And finally, we've made a great start with the API integration.
Further together and I'll provide a little bit more detail on this later.
So to some highlights on our digital transformation journey, a critical journey for all of US the CCP as we aspire to lead and to be the world's most digitized Coca Cola bottler.
We have seen continued share gains and strong performance in online grocery.
With our RSV of 28% and our online grocery share up by 100 basis points in Europe. Our beverages were also the most order beverages on food aggregator platforms.
Our own B to B portal <unk> Dot com.
Is on track to deliver a record year of over $1 billion in revenue.
We expect the number of customers using the platform to reach 90000 by the end of the year an increase of over 150%.
In GB Star stock was launched in partnership with CCP Ventures Star stock as an online marketplace, which enables license venues to order directly from major drinks companies in Brewers.
A great example of how our ventures platform is focused on identifying strategically relevant partners.
That can help CCP make our business more efficient sustainable and future proof.
And I'm also very excited that we've launched Robby.
Our new E b to B platform in Portugal.
We continue to develop our D to C platform Youre Coca Cola <unk>.
Encouragingly, the platform's average order value is increasing.
This is aided by recent product innovation subscription services and special bundles for special locations.
One recent innovation was the launch of personal icons.
Great and fun way for us to engage directly with our consumers.
We are taking learnings and generating valuable consumer insights.
Partnering with the Coca Cola company to leverage the power and inside of the system as we progress on our digital journey.
From a supply chain perspective.
Achieving a single integrated source to pay process.
And took this invoice automation through the implementation of S. HP Aruba.
We will provide over 100000 hours of efficiency savings.
And in the workplace, we reaching recently launched Compass, which brings all of our workplace digital services together, making it easier for all of our colleagues defined the tools they need when they need them to.
The use of automated translation is also driving time and cost efficiencies across CCP.
And on that note I would now like to hand over to Nick to talk more in detail to the financials Nick.
Thank you Damian and thank you all for joining US today, let me start with our half one financial summary, I will touch on each of these now and go through some more details shortly in each of these areas.
Starting with our pro forma revenues at 7 billion euros, that's an increase of 11, 5% on an FX neutral basis.
Our pro forma Cogs overall was up 10% and on a per unit case increased by one 5% on a pro forma comparable and FX neutral basis.
We delivered pro forma comparable operating profit of 802 million euros up nearly 60% on an FX neutral basis, reflecting the growth in our revenues and the benefit of our ongoing efficiency programs and our continuous efforts on managing the discretionary spend areas closely.
Our comparable effective tax rate declined to 21% from 24% last year when calculated on a similar basis.
The reduction is driven by the utilization of previously unrecognized losses, and reassessment of uncertain tax positions.
This resulted in comparable diluted earnings per share one nine.
Up 87, 5% on a comparable and FX neutral basis.
Free cash flow generation continues to be a core priority for us and we generated strong free cash flow of approximately 615 million euros on a comparable basis.
Now looking at the pro forma revenue highlights the increase was driven by both an increase in volume and importantly, our revenue per unit case.
As mentioned earlier by Daniel we are encouraged by our volume performance in Q2, as we lap the west impacted period from last year.
Revenue per unit case grew by 3% versus 2020, reflecting positive pack and channel mix. Following the reopening in the away from home channel positive brand mix and favorable underlying rate increases and encouragingly were up half a percent versus 2019.
Despite the mix headwind.
Unsurprisingly the most significant improvement has been an hour away from home channel as restrictions ease and mobility generally increased towards the end of the second quarter.
As a result 2019.
The away from home channel was down 22% in the first half.
Strong trading in the home channel continued benefiting from the increased at home locations as well as continued growth in online grocery with volumes up 3% versus 2019 during half one.
Overall this meant that total volumes were down seven 5% versus 2019.
From a tax perspective.
Undergo immediate consumption was positively impacted across both channels with volumes doubling in Q2 in Europe due to increased mobility.
Now if you look at revenue by segment Youll, obviously seen more detailed commentary by geography in the release, but on an FX neutral basis Europe revenues were up 10, 5% in half one versus 2020 and down 8% versus 2019, reflecting the REO.
Turning off away from home during Q2 and capital restrictions, obviously in Q1, when you compare with last year.
On an FX neutral basis API pro forma revenues were up 15, 5% in half one and flat versus 2019, reflecting the minimal restrictions in place in Australia, New Zealand through the first half.
Which has obviously changed during the last few months.
As I mentioned earlier strong second quarter performance was driven by the reopening of away from home in Europe, and cycling a soft comparable in both segments.
We are now well progressed into the third quarter a quarter that last year started to see an initial easing of restrictions and therefore, resulting in tougher comparables compared to Q2 last year.
While we are encouraged by the broad based recovery, we are seeing across our markets and therefore, we remain cautiously optimistic we are seeing several challenging factors at play.
Generally the weather has been colder and wetter across most of our markets.
Softer international tourism, given ongoing travel restrictions has impacted markets like Spain, Portugal and trends.
And of course renewed restrictions in Australia, New Zealand, and Indonesia as I referenced earlier.
And as I will talk to in a moment in the context of commodities in Opex.
We're seeing pressure on global can supply, which does remain alongside increasing pressure on Holly availability, especially in great Britain.
As a result, our Q3 quarter to date pro forma volumes for July and August are slightly down versus 2020.
We will of course update on this at our Q3 trading update in November and this has been factored into our guidance for the full year that I will discuss in a few moments.
Moving now to look at Cogs as you are aware typically around 85% of our total Cogs variable. This include a concentrate purchases in finished goods accounting for 45%, which have naturally increased in line with our incidence model, reflecting the improvement in revenue per unit case.
I talked to earlier.
Commodities account for about 25% and had been mainly adverse with higher aluminum sugar and PT prices.
We'll go into more detail on the upward pressure, we're seeing on commodities on the next slide.
And finally, approximately 15% relate to manufacturing and DNA, both of which are largely fixed as expected. We saw a positive impact on our Cogs per unit case, resulting from the favorable recovery of fixed manufacturing costs, given the higher volumes during the first half.
And as the mix favorably comes back into the top line. This has a cogs impact for us as well.
So when you combine all these factors resulted in Cogs per unit case, increasing by one 5% on a pro forma comparable and FX neutral basis.
While there continue to be a number of moving parts I do want to take the opportunity to give some color on commodities as well as the current view on Cogs per unit case for the full year.
As you can see from this chart, we are experiencing upward pressure with total commodities up around 2% in the first half.
Surprisingly aluminum is a significant driver of the increase due to the movements in global spot prices and pressures on cattle supply.
We are accelerating the use of recycled PT across our portfolio as we progress towards our sustainability commitments and we're also seeing higher lease cycle prices due to increased market demand versus feedstock.
Bergen PT and sugar prices are also increasing the due to our hedging profile, we expect the impact from these elements to subside next year.
As we look out to the remainder of the our commodity exposure is largely hedged and over 90% for both the API in Europe for 2021.
Taking all this into account, we anticipate commodity inflation of around 3% for the full year. So clearly an upward trend in half two this year versus the first half.
This translates to our latest view on Cogs per unit case for the full year, assuming volumes continue to recover often increase around 2% on a pro forma comparable basis.
As you will see here we are.
Similarly, 40% hedged on commodities for next year.
So we currently expect to see an increase in the range of mid to high single digits, when compared to 2021 on our commodities exposure.
We continue to look at the right trigger levels to lock in more of our exposure depending on market conditions and will update you as appropriate.
We do have several levers to manage through these pressures on a multi year view.
As you will have seen we have been successful in driving underlying price during the first half and will continue to focus on this with our customers as we look to create value jointly with them.
As our volumes continue to normalize we expect to benefit from positive mix and continued operating leverage and we continue to identify and take meaningful action on a wider cost base to be fit and competitive for the longer term, which I will touch on next.
So as we look at the efficiencies as we communicated earlier in the year, both Europe and API are committed to re basing their cost base versus pre pandemic levels alongside announcing wider efficiency programs.
As a reminder, we announced 200 to 225 million euro efficiency savings in Europe.
And about 145 million Aussie dollars or 19 million euros for API.
We also communicated combination benefits of 60 to 80 million euros weighted to 2022 and beyond from procurement supply chain and best practice sharing and group functional costs and lifting structures.
These three announced efficiency savings in combination benefits equate to the 350 to 395 million euros in total on which we remain largely on track.
These ongoing programs along with our continuous assets on discretionary spend optimization are helping us protect profits and margins in the short term, while ensuring that we would be fit and competitive for the longer term.
In absolute terms you can see despite the increases in volumes in the first half our total opex was broadly flat.
Or as a percentage of revenue Opex is lower now not only compared to last year, but more importantly, compared to pre pandemic levels.
Although a great achievement at the half year point, we would anticipate some volume related increases in opex as the recovery continues.
Our focused investments in PMA to support that recovery and as I mentioned earlier, we also need to manage the business to mitigate as far as possible against some upward inflationary pressures in areas such as labor and haulage.
Now moving to guidance for the full year, which reflects our current assessment of the scale and magnitude of the pandemic and the continued uncertainty around the pace and timing of the recovery.
We expect full year revenue growth of 26% to 28% and operating profit growth of 40% to 44%.
Each of these growth figures are on a comparable basis and therefore reflect the timing of the acquisition of Coca Cola Amatil, which completed in May and are based on actual FX rates.
We are also guiding to a full year effective tax rate of approximately 20% down from 24% last year when calculated on a similar basis.
The 20% effective tax rate equates to around an 18% increase to the current boom a consensus on the EPS, which is available on our website.
The expected reduction from 2020 is largely due to the utilization of previously unrecognized losses, and reassessment of uncertain tax positions as I touched on earlier.
Our latest estimate for 2022 is between 21% and 22% and therefore, we expect to see some upward pressure driven mainly by the anticipated increases in corporate income tax rates in certain markets.
Finally, we are also reiterating our dividend payout ratio of approximately 50%.
Finally, we are also reiterating our dividend payout ratio of approximately 50%. This will of course be based on the last earnings base of the combined business on which we will update for 2021 with our Q3 trading update.
And finally as I mentioned at our Investor event in May the amatil transaction firmly underpins, our medium term objectives, giving us greater confidence in our revenue and operating profit growth ambitions.
We increased our free cash flow target to at least one <unk> two 5 billion euros per annum to reflect the greater incremental cash generation, giving us the confidence to commit to returning to our target leverage range of between two and half to three times net debt to adjusted EBITDA within a three year period.
And in line with the guidance I just mentioned for this year, we will continue to maintain a competitive and progressive dividend payout ratio at around the 50%.
So with that I'm going to hand back to Damian for some closing thoughts and then we'll take Q&A. Thank you.
Damian.
Thank you Nick.
Now to touch on the very exciting amatil transaction.
As a reminder, from our investor events, we truly believe that this transaction is a great move.
And it happened at the right time.
The recent news of New Zealand being crowned champions of the 2020 comes or Coke.
Annual Global Coca Cola system Buckler competition is a great example of us acquiring a business with momentum.
On the business, which we can learn from in Europe.
The tangible top and Bottomline growth story.
Combination benefits and best practice sharing as well as an even stronger relationship with the Coca Cola company.
The brand partners are all reasons that this transaction will create significant value for all our stakeholders.
It is indeed.
A really exciting opportunity for all of us at <unk>.
Pete.
On the integration, we are well underway and I am extremely pleased with the progress we've made in the first 100 days.
We have key talent in place, including Jorge.
New GM of Indonesia, and Papua New Guinea, who recently joined us.
From one of the Mexican Coca Cola Bottlers, Jorge has extensive emerging market experience and is a great addition to our team.
From a digital perspective, we have started on the journey to bring to bring our people together systems and processes to allow us to collaborate and operate as one across multiple time zones.
We're already sharing learnings and best practices.
And one example of this is an excellent use of analytics.
The Australian business has been doing for a number of years.
And as Nick mentioned earlier, we are making progress on our efficiency programs on the combination benefits we are committed to deliver.
We've also been simplifying our ways of working.
Such as acquiring the minority interest in Paradise beverages are alcohol business and Fiji.
And arguably most importantly, we're already creating long term growth plans with the Coca Cola company to better align our portfolio focusing more on the core.
The sale of our minority interest in May group, a coconut water premium juice in yogurt business in Australia.
A great example of this.
We look forward to updating you on further momentum in due course.
And close to our heart as you know we.
We're all working on aligning our sustainability commitments across the broader CDP.
Now looking forward to the second half of this year.
In a nutshell. This is a slide we showed at the investor event in May.
On our priorities have not changed.
We continue to work successfully on the integration of API.
We are focused on growing our core and creating value for our customers and as I said earlier, we are making great progress on our digital transformation.
Both to maximize the opportunity online.
And also to better support our customer consumers unemployed needs.
Investments in our people and their development of wellbeing is always front of mind.
We continue to go forward, it together and navigate the ever changing situation around COVID-19.
And as always our focus on sustainability will remain as.
As we want to accelerate our journey to net zero.
As you will differ today, we are making great progress in this area and following completion of our review of this area in API.
We will be able to align and update our targets at ESC CDP level.
So.
With the rest of 2021 mines and indeed beyond here.
Here are some examples of what I am, especially excited about.
We will continue to support our customer as.
As the recovery from the pandemic continues.
We will be helping our customers on their journey to net zero <unk>.
For example, our involvement in the net zero pull Bambara initiative in GB.
Project aiming to raise awareness of the climate impact.
In the hospitality sector.
On the core watch out for the new Coca Cola, No sugar taste and packaging launch in Australia.
And the exciting new look to our Coca Cola zero sugar and vanilla variants in GB.
Both of which will be supported by exciting new marketing campaigns.
We will continue to rollout our Costa express machines across Europe.
With new gingerbread latte ready to drink innovation on its way for Christmas.
And as I mentioned earlier, we are well on track to doubling our European energy business.
Monster will drive more innovation, including new flavors, especially across the performance energy range through the rain Brown.
And last but not least the continued rollout of topo Chico. It is still early days, but we are seeing positive initial results and all of the six markets in which we've launched.
We will start to move into the away from home channel with dedicated plant in Spain, and the Netherlands, and focusing on building the brand and category awareness throughout the months ahead.
And finally to close with the key takeaways for half one.
Which I shared with you at the beginning of this call.
Our strong performance delivered by highly engaged colleagues of CCP.
I am sincerely grateful.
We are again the number one FMC G caster provided greater in Western Europe.
And I am pleased that we continue to win share.
In the market with both gains and volume value in store and online.
Importantly, we continue to accelerate our sustainability investments on.
And also to invest heavily in our ongoing digital transformation.
And as I mentioned earlier, the integration of API is well underway.
And it is very much now part of the CCP family as our fixed business unit.
And we're very excited with the growth plans, we are developing with the Coca Cola company for Indonesia in particular over the coming years.
So now we would like to open up for questions.
Over to you operator, and thank you.
Thank you and as a reminder, if you would like to ask a question. Please press Star then one to join the question queue. Once again that is star one to.
<unk> entered the question queue, and we're going to pause for just a moment, while we compile that roster.
Okay.
And our first question today is going to come from the line of Donnie Herzog Goldman Sachs.
Thank you hi game in the neck.
Income.
Hi, I was hoping to get some color on your recent pricing actions and how these have been received in your markets I guess in.
In general have retailers than accepting and are you finding that you're your pricing actions have been sticking and then finally how.
Are you guys thinking about pricing in the balance of the year and how aggressive do you think you might need to be to potentially offset some of the inflationary pressures certainly that youre seeing are or maybe touch on what other levers you can pull to offset some of these pressures. Thank you.
Hi, Bonnie.
Yes.
On pricing for 'twenty one.
As you know I mean most of that.
Randy will conclude at the end of 2020 and into the first quarter. This year as we finalize our.
Broader customer agreements.
So clearly we are happy with the level of pricing, we're seeing in 'twenty one.
That's definitely supporting our very strong first half of the year and we will continue to support our performance into the second half of the year.
We are also being.
I think we.
Really starting to benefit from some of the investments we've been making back since aiding in 19 around our revenue growth management strategy and tools.
So one of the metrics I'm, particularly happy with is that our revenue per case is ahead of the low teen.
This year, which is a phenomenal achievement given some of the mixed headwinds from a channel perspective, we've endured so.
So I think we are getting the pricing we are managing each market Giorgio.
Clearly as we look through the second half of this year and into 'twenty, two electrical and become a capability that we're going to need to use even more to offset some of the hurdles that are negative.
Alluded to around some of the commodities.
Cogs pressure.
We're having those conversations already although this is not new news to anybody so we're engaging with our customers.
To look at our pricing plans for 'twenty two they will be as another is finalized more towards the end of the calendar year and into the first quarter and we will obviously be updating everybody on.
How they're progressing.
But obviously, it's going to be a different type of pricing environment. When you look at some of the headwinds ourselves our competitors.
Forget our customers in Europe are also big suppliers on their own so these headwinds iridium.
Bye bye.
Bye everybody so from that perspective, we're confident that we're going to be able to navigate.
The challenges, we see them more shorter term in nature. So we are not going to do anything that will jeopardize the long term health of our category of us.
Similarly, a combination of price mix.
For 'twenty, two will be what we need to offset those headwinds particular linear but we're already working a lot on as I said engaging with our customers. So for 'twenty one.
I'm very happy, particularly happy with our net revenue per case performance for 'twenty two great line of sight and visibility on the challenge, which always helps.
Critically good capabilities inside CCP to make sure we can.
Put all our pricing in a sustainable way so we don't do only.
Long term guidance.
Until consumers. So that's how we're looking at pricing at the moment than Kt will update as we get into those discussions at the end of this year and into Q2.
Okay. Thank you I'll pass it on.
Thank you. Our next question is going to come from the line of Eric <unk> with Evercore ISI.
Alright, thanks for the question.
Could you address any of the supply constraints that you're seeing across Europe are.
Any of your markets more broadly is it impacting your cost of goods more or are you seeing any top line impact from.
Supply constraints on the can side or the logistics side.
Hi, Eric Yes.
Yes.
Again, along with the industry some interesting challenges in 'twenty one.
I suppose the broader warner's being around some pressures or an ela minion and can supply I think our supply chain team.
A really good job.
Sourcing count to minimize out of stocks, our customer service levels remain in the high <unk>. So it hasnt really impacted our topline performance.
Customer service levels, and that's been critical for us to maintain.
Some unique situations in the U K, where I'm sure you've read with some haulage shortages. So we're working with our customers to minimize the impact of the whole of the shortage in again.
We're looking at innovative ways to mitigate that as we go into 'twenty two using different Salesforce solutions.
We've had a couple of one offs in Germany, and Belgium around floating in a couple of awards plus but again relatively small in the total mix of our business. So.
It has been a challenge for us.
To say when I look at the service service that we've been able to sustain our teams have done a great job in mitigating that and I'll just pass over to make in terms of the impact it's had on our Cogs.
Yes, and I think.
Highlighted clearly some of those those challenges are flowing through in terms of.
Look for half two.
<unk>.
Cogs, mainly coming from from.
Can supply shortages.
And then just.
The pricing element in stock prices significantly higher than what we had forecasted.
So that's been factored into the Cogs guidance, but more importantly, then into our overall guidance and then we are seeing some opex pressures in some of the markets as Damien just alluded to.
And in particular with some labor and haulage issues, but again, that's all been factored into our thinking for 2021.
And Damien just talk about the type of actions that will be taking for 2022 to protect the business.
Longer term.
Great and then a quick follow up.
In terms of Australia, I know no transactions have been announced yet but could you provide us any update on your big picture thinking about the portfolio cleanup work that you had alluded to needs to be done there.
Where are you in the process where are you in the evaluation of the process.
Any update or high level color you could provide would be helpful.
Yes that work is ongoing Eric it's something that we identified early on in the transaction has been a source of value for the system. Both first in the Coke company to align.
Our brand portfolio a lot better so essentially.
<unk> concluded the transaction when you're working with Peter and the team on the Coke company in Australia to really set.
Our medium to long term view of the category.
Because controllable.
And we're now just finalizing within the landscape what are the brands that we believe we need to win and create value.
Over the next three to five years.
Work is where we're at at the moment and clearly that will lead to some decisions around brand ownership.
Totalling over the portfolio of loading if you want to cover them all the time.
Yes.
Working through that and we're looking at what we might do.
Our brand partners in particular Coca Cola.
When we look at some of the portfolio choices for water and flavors as we've alluded to.
We're spending some time also assessing.
What is the right.
Longer term profile of some of the other categories such as coffee.
Size et cetera.
So we're working through that so I think we'll be able to give you an update hopefully towards the end of the but also very much on track.
And on target with our plans.
Great. Thank you very much I'll pass.
Right.
I think the good news on that Erik as well.
It's really confirmed a lot of our pre deal assumptions.
So we're very happy with others.
King.
Terrific. Thanks.
Thank you. Our next question is going to come from the line of Sanjay <unk> with.
Credit Suisse.
Hey, Thank you. Thank you guys a couple of questions from me. Please firstly.
One for Nick on the commodity cost outlook into 2022.
Is it reasonable to interpret that mid to high single digit guidance on commodities as a sort of one and a half to two and a half Cogs per unit case impact or should I be assuming some mix impact on top of that.
And then just on the tax rate guidance.
Going up slightly 21% to 22% next year.
Is that a reasonable range to think about more medium term and are there any cash tax implications.
We should be factoring in above and beyond that P&L tax rate. Thank you.
Hey, Sandeep on on on the commodities guidance.
Now obviously, we're working through the various elements on overall Cogs. So it can be a little premature, but as I said.
As Youre aware, the overall profile of our Cogs mix.
Policy acquisition still remain.
Largely similar so you're looking at about 25% of overall Cogs being the commodities piece now clearly as David alluded to we will be looking at pricing, which clearly has an impact on concentrate in line with our incidence model.
And then two other factors I think recovery.
We'll continue.
Volumes will come back, which will support us on the manufacturing side.
And then you know.
Clearly I think.
<unk> should be a net positive obviously that will have a cogs impact depending on the revenue mix implications as well. So early days to give you overall cogs guidance, but you can clearly look at.
Trends of what we've seen in years.
2018.19.
And be able to assess some initial estimates based on that commodities guidance.
In relation to the tax question, obviously clearly we continue to look at this in terms of what is the medium term impact look like.
From an angle of 'twenty two.
Given some range I think that shouldn't be doable in 'twenty three as well remember the one main factor we need to keep in mind is.
Are there any statutory rate changes that it can continue to come about today. The only one that we know about is what is planned for the U K.
In that move in 'twenty, three and 'twenty four.
But potentially does that must be reassessed as well. So we'll continue to keep you updated on that but at least for the next couple of years absent rate changes, we see that 21% to 22% being sustainable.
Got it and just on cash tax should that differ from.
Income income P&L tax.
Well the cash tax piece was continued to defer but you won't.
In the past, we've seen a bigger delta.
Between the effective and cash tax rate.
You will see that turn narrow so I don't think youll see as much of an impact on the cash tax piece.
Got it.
In line with what we've been having in the past.
Great. Thanks, I'll pass it on.
Our next question is going to come from the line of Edward Mundy with Jefferies.
Damian and Nik two questions. Please the first is on your guidance for the full year and I appreciate it's pretty difficult to guide in the world still so fluid and when we've got a crystal ball, but all you make any specific assumptions around the COVID-19 situation within the guide for instance, do you think or do you assume that things improve an API into Q4.
You assume that things deteriorate.
Europe into Q4 with the flu season.
And then the second is on the $53.0 to $8.0 million of savings.
Are you able to update us on sort of how much you've done.
Color on the phasing for the remainder of this year and also into next year.
Yes.
On the guidance, we've assumed that clearly therefore.
Our reopening in API coming about in Q4 and Thats based on what is known in the public domain today, which is kind of indicating that.
Probably September ish and there are things to start opening up so we're continuing to watch that the good news is that the impact.
Has not been as severe.
Given some of the restrictions and.
The business continues to perform strongly.
Despite some of those challenges in Europe, obviously, we are not planning for anything significant or catastrophic in terms of changes.
For Q4, right now and we expect and hope that the current trajectory should continue so.
Obviously, you would have been kind of crystal ball gazing, if we tried to make all kinds of assumptions because we just have to go with what we know today.
In terms of the 350 to 395 I would say to you everything is very much on track.
In terms of that delivery phasing.
What we have committed to for 2021 in particular I would say to you all indications that we will deliver on if not slightly ahead of those numbers, but that's been factored into the range of guidance that we've provided.
And as we finalize some of our plans.
Particularly as we look at.
Areas that we might be able to offset some of those challenges from commodities inflationary pressures et cetera.
We work with the business units to see how Nike accelerate some of the loans into 'twenty two versus 'twenty three 'twenty four but we will provide you an update on that probably.
Lakes, Indiana.
Hi, Ed.
Just wanted to give a bit more color for Nick's comments, I mean I think.
API in particular.
We've been very pleased with how that business has performed.
Part of these new Lockdowns and I suppose we are learning to operate.
And perform with logos and I think API demonstrating that at the moment I think that's great.
As we look through the second half of the year.
I think it's really a positive that we could give the guidance. We gave I think that demonstrates our confidence in and what we're seeing in our business. Despite some of the macro uncertainties.
So that's another element certainly those of space in the U K.
<unk>.
I'm happy to say that I could talk about the weather being a challenge in the second half of the year.
<unk>.
Particularly as we came out of June I think.
That's also something that we factored in when we looked at our full year outlook.
So the bulk of it is kind of nice to be able to reference of whether on an earnings call again.
And then as we look through to 'twenty two.
I suppose we haven't seen the reopening in 'twenty, one being a little bit slower to bit more patchy. There. We would have liked having said that we are.
Still we believe we are delivering great results in spite of that that will obviously, we believe come back even stronger 22.
So when we look at some of those.
Pressures.
We've talked about on the call was also going to be a mixed bag.
<unk> for us as we see away from home, having a full year of more reopening as we get through the end of 'twenty. One 'twenty. Two so that's also something that we're excited about as we look through 'twenty one into 'twenty two.
Thanks, Tim and then just a quick follow up on Coke zero, which is seeing really good traction up 10% versus 2019.
Levels could you, perhaps give us your view on sort of how much more of a penetration opportunity what's the type of runway you've got zero.
Given the.
The money just combine that most of the reformulation.
Yes, I think we've got a lot of room ahead, I think we've landed on a formulation that's been really well accepted in the market I think the visual identity looks great.
We've had a number of different graphic iterations on Coke zero.
Developed upfront I think we've now landed on the look and feel of consumers are giving us positive feedback if.
<unk> been in any of our stores and it's Greg on shelf.
And that momentum has given us more confidence around some flavor renovation, which will be coming and then also continuing to evolve some of the pack variety. So.
See that brand format being the big part of our growth.
Our long term docomo, it's playing.
Two of the Ria pauses in the category at the moment.
Honestly great taste.
On the sugar free momentum.
Certainly in some market starts to go a long way to go.
And we're excited about it.
As I said it looks great on shelf so.
That's that's kind of a big part of what we will be talking about for the next few years.
Great. Thank you.
Our next question is going to come from the line of Mitch Collett with Deutsche Bank.
Hi, there.
Couple of questions.
Excellent commodities.
I give the floor.
40% hedged rate.
That's very helpful.
Well to comment on whether or not that's a normal level of hedging at this stage of the year.
I guess with three quarters of the way from 'twenty, one which would normally be.
Yes.
40% are you able to say, perhaps comment on what that input cost inflation.
Nick.
Unhedged basis, what is roughly the sports right.
Right now and I think you mentioned that logistics costs.
Opex I mean, it sounds like there's probably.
Some headwinds that are you able to quantify the increase you'll see if any on logistics costs and maybe give us.
Similar.
How material logistics costs.
Thank you.
So on the I think I picked up your question because you were patching in and out but.
On the coverage hedge coverage levels.
40% I would say to you that.
That would be lower than where I would have liked to have been at this time of year.
Typically we look at hedging to be on a rolling 12 month basis.
Somewhere towards that 80%, so clearly where the spot prices have been we've been looking.
Two to lock in as appropriate when when we can and obviously the areas that we continue to have open.
Primarily as aluminum.
We've done well with some of the sugar and I think as I said.
Given where some of the <unk>.
<unk> pricing is.
We should see those would be okay for next year from a PT perspective to the real main challenges around alumina.
Aluminum and we continue to be able to look at.
The spot pricing and when we should lock in as well as the premium piece, which is significantly high cash piece as well so.
Having said that I mean.
If you look.
2021, as an example, when we go back and look.
Hedging how do we not have the type of new levels of coverage that we had just to give you a perspective.
Lending to be close to about 80% you could've seen on spot pricing upwards of a 100 plus million euros often impact.
On.
Cogs number right, so kaling, our hedging and doing it at the lifetime.
Payoffs and.
We will continue to look at that and see what we can lock in but we also don't want to lock ourselves in depending on how things might be moving right and we do expect hopefully some forecast that we're hearing that there might be some reprieve, but again no of course.
For both.
So we'll see how that plays out on logistics costs, yes, you're right.
That is largely a part of Opex because you do have some element of that we call it depending on your.
<unk>.
In.
Freight between.
Plant, two warehouses et cetera as well.
Clearly, we managed through that cost and that factored into our guidance I think it would be premature to give you any indications on 2022 for now until we have a better view. So we will provide an update on that in due course.
Okay. Thank you and just to come back on my second question, which maybe Mike sound quality wasn't guidance at the time, but.
I was really looking for what is the spot today.
How do you what hedging for next year.
And you have to cover your cost spot as of now roughly.
Roughly what sort of level of inflation would you be looking at it versus the mid to high single digit range you gave on a hedged basis.
It would probably be that high two if not even know.
<unk>.
With that 40% hedge in.
That lock locked in of some of the.
Areas that I talked about.
Okay.
Thank you very much.
Our next question is going to come from the line of Bryan Spillane with Bank of America.
Hey, good afternoon, Nick Damian.
Couple of quick ones, one just a follow up on that last question.
On Cogs.
Can you just are there any.
Issues with labor.
We're seeing it a lot here in the states, it's not just labor cost pressure, but it's like labor availability I guess for lack of a better way to put it.
So my first question is just is there any any pressure on either either one of those whether it's labor cost pressure, but more importantly, just.
Staying fully staffed I guess.
Hi, Brian.
No I would love to say, we really.
Obligated some of those challenges as well as CCP.
Also invested a lot of time and effort to keep all of our employees safe during the pandemic to minimize.
Any disruption that obviously to protect their health.
Elementary so we haven't seen it in terms of the FCC.
We have I suppose.
Back to my earlier comment on the UK haulage.
<unk>, which was really external because as you know most of our all age is externally sourced. So we have seen a number of our largest contract struggling in the UK of labor.
The government drag or others.
Yes.
A combination of demand Brexit.
Covid impacts.
People finding other work so that's the one area that has tried it.
CCP, but again it hasn't been a problem for us generally across all of our markets.
Even in the UK, we're maintaining reasonably good service levels despite that challenge.
We continue to focus on how we can mitigate that so we haven't.
Okay looking at what's going on in the U S. We haven't seen that trend.
Okay. Thanks.
Or Indonesia.
And then the next one is just Damien can you.
Looking at the commercial plans are developing the commercial plans.
And API things that you might look to change or swapping best practices could you just give us some sense of how COVID-19 or just how this environment right now is affecting the.
The planning and then the execution. So I guess, what I'm trying to understand is just well, they're probably more just as theyre going to be any delay or any timing effect in terms of implementing maybe some of the changes that you've identified just because the environment is not conducive.
I don't see that Brian actually I think we've.
As I mentioned in my comments, we've seen.
Really pleased with how quickly you can move with the integration of API.
Not just from a I suppose a formal integration, but really from getting it in over 60, New as you said sharing best practices.
Learning from Australia, and New Zealand.
From Europe, So I haven't seen anything that slowing this down because of the pandemic in terms of share and we apply.
In some ways, we've been able to share a lot of what we went through in Europe.
With Australian in particular now as they've come into further lockdowns because something we're fortunately we have been quite experienced at navigating so.
No. It Hasnt I suppose we are looking at.
The recovery both in Europe, and in Australia, as we go into 'twenty two.
When we even grow faster together.
Every pleased that Jorge.
Has joined to lead our Indonesia business, because again as that recovers from the pandemic I think there's a lot we can do together with the Coke company.
So other than being a challenge to physically get to Australia due to some of the regulations.
Right.
Really really pleased with where we are as a team ahead of my expectations to be honest at this stage. Okay. Great. Thanks, and just last one I have made this request to Sarah.
Maybe the next slide deck for the next call. If you need a picture of you and Nick closing with the Candler Cup.
Yeah.
Okay.
[laughter] housing.
And do you want to take credit risk.
Zero.
Okay.
Okay.
The SEC.
Thanks Scott.
Thank you.
Our next question will come from the line of Vinton, Ryan with J P. Morgan.
Yes.
Good afternoon Damien's afternoon, Nick Thanks, <unk> I think most of my major ones have been answered.
Go down the route of commodity costs at this point again.
Interestingly now that you sort of.
The range of <unk>.
For just over three months, if you could give any.
Specifically around the leisure business.
How have you talked about.
Representing about a few weeks back.
Commercial pound birds next year.
Post COVID-19.
Any sort of Covid welcome and then secondly, again sort of relates to the telco Chico launch in Europe, but any learnings that you're taking from the call.
Our coal business in Australia.
You can sort of bring to that business Europe.
I appreciate that and I think the type of Chico triggered in Australia is going to be held by a third party but.
Hi.
That conversation commonplace.
Relationship with beam Suntory is there any tension there potentially.
Thank you.
Thanks.
So slightly one touch.
Sure.
So APR.
Fully diluted through.
It's ahead of our expectations on a number of levels.
Since we've taken over that business.
We're very pleased with where we are on Indonesia in particular.
I think it's it's impossible not to be excited about that market. When we look at the macros. When you look at the size of the population the capital levels.
GDP growth Unfortunately, its securities suffering from Covid at the moment.
Im, particularly pleased with a new GM in place.
We've taken the time.
As we looked at the API business to do a full top to bottom analysis of the industry there the categories.
Of our business.
Clearly that's pointing to a number of.
No.
Decisions, we feel very good about really focusing on our core brands in Indonesia.
<unk>.
Quickly Coke Fanta sprite.
Building on some of the work that has started on the amatil around affordability, particularly in sparkling smallpox.
I'm, taking the opportunity if you look at our route to market with our cost to serve so that work is ongoing obviously jorge with his experience both in Asia, and Mexico is bringing some great insights into that conversation.
We look forward to the end of the year until our next capital markets day, we will obviously be able to share even more.
The detailed plans for Indonesia.
A lot happening.
Very good Ramadan period for our business. So that's all obviously it gives us some encouragement.
On top of Chico.
Alcohol.
As you said prior to us acquiring amatil.
Couple of CECO.
Distribution was through a third party that's something we will continuously look at with the Coca Cola company, taking in mind, obviously, we have a great relationship relationship with beam Suntory and was a great business. There. So that's something that we are continuing to learn from.
And as we look at Europe.
Clearly theres been a lot of.
I suppose experimentation in the Australian business around beer so either.
Something with Peter we're looking at as well.
What can we learn and we are also as you know had a number of them.
Markets in Europe, where we've looked at alcohol distribution partnerships. So we're combining all of that together.
On top of Chico.
It's been a very interesting.
<unk>.
The system.
We will have benefited from a little bit better weather in Europe.
Yes.
But it's something that we're encouraged by as a category.
Over time, we'll just have to look and see how do we how do we look at outside of Europe.
Ultimately we were very pleased with the way the business is structured at the moment were conducted by the group at a later time.
Very clear thank you.
Thank you. Our next question is going to come from the line of Charlie Higgs with Redburn.
Hi, Damian.
I've got two questions. Please the first one.
If you've seen any impact.
From the company's decision last year to change its business structure, particularly things like separating trademark Coca Cola from from flavors and then also have you seen any benefits from platform services or if thats still to come.
And then the second one you're correct Colin.
<unk> business here in GB it looks to be going great guns. I was just wondering if you had any thoughts about potentially expanding that into any of your other markets. Thank you.
Thanks, Charlie Yes, maybe I'll start with the last point.
Yes.
Got a lot of phone and a lot of excitement with our direct to consumer business in GB, It's still early days.
I think it's proven to be a really interesting move for us too.
<unk> built our value.
<unk>.
To engage with consumers in a different way.
We're getting a lot of positive feedback of people proposing the people by using one of our comes with a dedicated message and birthdays and so thats something that we.
We've learned a lot from and clearly we're going to look at what are we can we apply that to other markets, particularly.
<unk>, Spain, Jeremy our big market so.
That's work in progress.
Sure.
I think on the Coca Cola company.
We are seeing.
Improved collaboration more alignments.
I think a combination of the moves they made in the network organization and also candidly.
The need to make bigger and bolder decisions due to COVID-19 as just draws closer.
But I think having to align due to the COVID-19 challenges.
So on quicker around priorities has just moved to system.
Even stronger place in my view around how we work together on how we collaborate.
I think the decisions on brands.
I think there les.
<unk> market by market.
We're very much aligned to those around the role of flavors.
Obviously, as we mentioned earlier, we're very happy with them.
Coca Cola zero performance, so overall a positive.
We've also had the chance to work a lot closer with them, particularly in Australia, and Indonesia, We wanted to validate some of our deal assumptions around what we can do with those businesses and in particular as we've talked about earlier the brand portfolio in Australia.
So a lot happening.
But certainly.
Stronger level of collaboration and transparency I think due to both of those factors.
And I would just add I mean.
In the same vein as having set out what was the cross enterprise procurement group.
With the move to platform services.
A lot more engagement on.
A cross enterprise collaboration group to ensure that both areas such as finance and integration services.
Business process and technology, there's a lot more sharing of learnings and leveraging that across the system, which I think is a great positive as well.
Okay.
Perfect. Thank you very much.
Okay.
Our next question is going to come from the line of Carlos Laboy with HSBC.
Hi, good afternoon, everyone.
Premium.
Is your digital capability.
Advanced enough at this stage of your journey.
If you don't get the pricing.
You want to cover some of these raw material costs.
Having up in trade discount management.
Through these tools for next year, but maybe you can offset a lot of this.
Impact.
Hi, Carlos.
I think when we look at some.
The digital and analytic capabilities that we started building coming out of 18 or 19.
Certainly one of the areas.
Given us the most insight.
<unk> has been around the whole promo effectiveness to notwithstanding.
Where we invest on price promos on the return.
Both of our retailers, but also obviously to CCP.
On the profit level.
As we look through to 2002, we spend a lot of money on trade promotions.
It's our biggest investment in our business, but when you look at it from the top line.
So clearly.
We want to use that capability to as I mentioned in my comments to be smart about the pricing, we're going to take 22, so clearly.
We're hedging will become a more efficient predictor as a company.
Ultimately, we are going to take pricing in 'twenty, two to offset some of those headwinds.
But we want to do it in a way that doesn't.
Jeopardize the long term health of our business, our customer relationships and one of the delta for that.
Certainly what you've called out which is to be a lot smarter about how we use the existing investments on price promo.
The analytic tools, we've developed gives us that transparency and that's something we didn't have a number of years ago. So it's absolutely part of that.
Decision process around how do we take pricing.
How do we mitigate any negatives on our consumer customers.
How do we used.
Big Big.
Look at cash and Testament of price promo.
To make smarter decisions so yeah.
That's.
Absolutely correct.
Thank you and just very quickly on Indonesia, we spoke about our recycling investment can you can you speak how youre thinking is evolving there as we look at that market on renewables.
Yes, that's something where we're looking at at the moment to see.
So is there a role for refillable packaging in Indonesia.
There are many many years ago the system exited out of it.
Certainly the platform a lot of used in a number of emerging markets to drive affordability.
On sustainability, so clearly it's something we're going to look at it to see.
Should that be prouder of our future pipe pricing.
Mix.
So that's some of the work we're doing at the moment Carlos <unk>.
Get clarity on that towards the end of the year, we'll be able to provide more color on the role of receivables in Indonesia.
We're also continuing to use <unk> in Europe, we just launched a 400 ml RGB glass pack in Germany.
Resealable.
It was in the market our recent looks great on shelves. So that's a very different use refillable not so much on the affordability side are much more around sustainability and premium.
But that's an on the go.
So we're continuing to look at how we settle those can can play a role not just on the traditional affordability.
Yes.
Ongoing on the sustainability agenda in some markets so.
And Indonesia will be key to that absolutely.
Thank you.
Thank you. Our next question is going to come from the line of Sean King with UBS.
Hey, good afternoon, and I apologize if I missed this but what are you seeing in terms of market shares in the away from home channel that they return and any efforts that youre, making to kind of lean in to that reopening opportunity.
Thanks, Sean.
King.
Obviously in northern Europe away from home.
Reopening very strongly.
We put in a number of programs.
Going into the second quarter actually to support our customers on reopening from from basic cold drink equipment as opposed to mix readiness through two promotions digital.
Initiatives, particularly in France, and GB has gone really well, so thats, obviously supporting our customers and supporting our share. So we continue to.
Perform extremely well away from home in other markets.
It's reopening a bit slower, particularly in Iberia.
Many on the back of tourism.
A slower recovery in tourism during the summer.
But we're seeing about 90% of the outlets reopening so thats probably higher than we originally anticipated. So it's a very resilient segment and hardy across all of our markets.
So we'd expect that to continue into 'twenty, two and then obviously the biggest delta there will be footfall. So as people get back to the office transportation tourism will see footfall in Hollister continued to improve.
We can see that already in markets like the UK, which is probably further ahead.
And then some of our other European markets.
So we can kind of frame, what's trucker, that's going to progress in our work with our customers to make sure. We've got the inventory in place we've got promotions in place.
As I mentioned earlier that will be a benefit as we look through to 'twenty two in terms of our mix.
As you away from home channels come back even stronger.
Thank you very much.
Thank you and our last question for today will come from the line of Simon Hales with Citi.
Thank you Damian.
Sure.
My first question, perhaps than you'd probably be honest this perhaps in response to Cogs as question around digital capabilities.
Now coming back to the whole price negotiations with customers as we head into the year and clearly most consumer companies are facing significant cost headwinds and need to price Im just wondering if there's anything from the CCP side, specifically that you think gives you an advantage relative to other FMC James.
To get those pricing negotiations over the line.
And then secondly, when we think about sort of elasticity of demand to those pricing moves.
<unk> over the last sort of couple of years, given the portfolio change we've seen the changes to mix et cetera. In the business is there anything you could share with us.
Thanks, Tom Kelly.
We're very focused on.
On the whole pricing strategy and something that we've seen since we've tried to CCP, that's being part of our story around price mix and a leading those pricing conversations with our customers.
What gives me.
Some degree of confidence is really the value creation story that we've laid out so.
We've consistently generated the highest amount of revenue for our customers not just within Jason but across CPG and I think that gives us.
A good seat at the table to discuss proactively with our customers was the right decision to make.
For the category, obviously for both of our businesses. So I think our value creation platform. If you just look at the size and scale.
We now represent of our customers revenue and profitability I think that's clearly something that gives us a strong.
On slide four.
Secondly, Brian.
I think we are very very focused.
Certainly the best beverage brands with some of the best funds.
Across the CPG.
Consumers and shoppers lower but we never take a breath and thats why we take pricing decisions.
On a one year basis, because we don't want to we don't want to.
Dominic start relationship, but clearly that gives us a lot of confidence in terms of brand strength also flows through to the elasticity point that you've made but I'm curious to know that in some channels.
In some occasions that we have got a lot more pricing elasticity.
Then we probably realize a number of years ago I think that's certainly going to support our pricing objectives, and then mix, we haven't talked a lot about product mix today, but.
From a beverage category perspective, we've introduced a lot of a lot more premium smallpox.
On the goal is being impacted by the pandemic that should come back.
Our IC mix should come back.
So while that's not a direct pricing charity. It plays in that whole net revenue per case evolution, which is what we're focused on getting out ahead of the commodity headwind. So all of that together I think helped I think the second aspect of the raises that we're continuing to invest in our business. So when we sit with customers when we talk about pricing.
We're doing that on the back of.
Multiyear investments.
With the Coke company in media and advertising our trade marketing investment remains our capital investment remains.
We're still investing in innovation, whether it's with the Monster company or with the Coke company. So it's never easy and I think anybody who sat in front of our customers talk about pricing.
We affirmed up but I do think we've positioned ourselves.
Best we can.
For those discussions and as I said they've already started.
That gives us confidence in what we've laid out today.
Anthony Thanks.
Thank you I would now like to turn today's conference over to Damian Gammell for his closing comments.
Thank you operator, and again I just wanted to thank you to everybody for joining us this afternoon or this morning.
Myself and they have laid out very strong start to the year in the first half and we're very very pleased with that.
Also really pleased that our integration of API continues to go really well.
We are now very much focused on delivering the full year 2021, and we're looking forward with excitement through to 2022 as we continue to come out of the pandemic. The COVID-19 restrictions that we've seen across our business in 2021.
As both myself and make the talk to today, we believe we are well positioned to manage some of those shorter term inflationary headwinds.
In parallel we're very much focused on the long term of.
All of this great business.
Across a number of areas, but in particularly our sustainability journey, our digital investment.
Finally, and most importantly, our people so with that I'd like to end today's call and again. Thank you for joining us and we very much look forward to speaking to you again.
About our great business at <unk>. Thank you everybody.
Once again, we would like to thank you for participating on today's Coca Cola Euro Pacific Partners Conference call. We appreciate your participation you may now disconnect.
Two.
Okay.
Okay.
Okay.
At this time.
Yeah.
Thank you.
Okay.