Q3 2021 Coca-Cola Europacific Partners PLC Trading Statement Call

November 9, 2021

Hello, and thank you for standing by welcome to today's Coca Cola argue a buffet fake baldness Q3, 2021 trading update conference call.

At this time all participants are in a listen only mode. After the Speakers' remarks, there would be a question and answer session to ask a question. During the session you will need to press star one on your telephone I must advice you that this conference is being recorded today and I would now like to hand, the conference. So that your vice president of Investor.

Relations and corporate strategy Sudbury, Let's please go ahead Sir.

Thank you all for joining us today I'm here with Damian Gammell, I'll see a Nick John Kiani of CFO.

Before we begin with allied team with remarks on our third quarter trading update a reminder of our cautionary statements. This call will contain forward looking management comments and other statements, reflecting our outlook.

These comments should be considered in conjunction with the cautionary language contained in today's release as well as the detailed cautionary statements found in reports filed with the U K U S Dutch and Spanish authorities.

A copy of this information is available on our website at Www Dot Coca Cola E P Dot com.

Prepared remarks will be made by Damian will then turn the call over to questions.

Otherwise stated metrics presented today will be on a comparable and FX neutral basis throw out.

There will also be presented on a pro forma basis, that's reflecting the results of CCP and Australia Pacific and Indonesia business, you did a T. I S. If the Coca Cola Amatil transaction had occurred at the beginning of this year rather than in May when the acquisition can teach it.

Following Nicole a full transcript will be made available as soon as possible on our website.

Now I'll turn the call over Tosti Damian.

Thank you Sarah and many thanks to everyone joining us today.

I will keep my comments brief given that the key geography and category highlights our.

Well detailed in today's release.

As you would have seen.

Very pleased to report that we are raising our full year guidance for 2021.

Selecting a solid third quarter's performance.

This translates into year to date revenue growth of seven 5%.

Driven by solid growth in revenue per unit case ahead of 2019.

As we continue to drive price and mix to our smart revenue growth management initiatives.

Our continued focus on our core brands and execution.

Continues to serve us well.

Year to date comparable volumes grew by approximately three 5%.

According to Nielsen, we've also solidify their position.

Largest F N C G value creator for our retail customers.

And I'm very pleased there'll be again, both value and volume share in what has been a very robust and they are to the category.

Growing in volume terms by approximately 3% in Europe and over 8% and API.

Now looking at the third quarter, specifically, we delivered solid revenue per unit case growth of 2%.

Tune in a percent versus 2019.

Our European volumes declined by 1%.

Impacted primarily by a relatively cold and rainy summer however.

However, with modest revenue growth of 1%.

Volumes were down 2% in API.

So despite renewed restrictions revenue for the quarter was flat demonstrating the ongoing resilience of our business.

Fractionation rates are improving with many of the restrictions being lifted during October.

API has real momentum going into fourth quarter.

Year to date revenues in Australia, and New Zealand are both ahead of 2019.

In Indonesia, Indonesia Importantly grew revenues ahead of volume.

From a channel perspective, although we're not yet back to 2019 levels. We did see sequential improvement in away from home volumes on a two year basis, reflecting improved mobility.

Number of outlet closures is relatively contained.

So we expect footfall and momentum in this channel to continue to recover.

Now turning to our brands.

Several of which I am pleased are growing ahead of 2019, so to share with you a couple of highlights.

Okay Cola zero sugar is benefiting from its recent new formulation and look now, including Australia up 4% in Q3 versus prior year.

Double digits year to date versus 2019.

Amongst our brand continues to perform strongly with overall volume growth in energy of eight 5% in quarter three.

This drove year to date value share gains of 160 basis points.

This means that versus 2019.

Our energy portfolio has grown 36% year to date.

Fuze tea volumes were up nine 5% year to date in Europe versus 2019, reflecting new pack offerings on flavor rotations.

Quarter three trading aside we continue to invest for long term growth, particularly in our people.

Our portfolio.

Our sustainability agenda, and our digital framework.

You may have seen some great Panther Halloween activation across our markets.

The popular fuze tea Apple cinnamon flavor is returning for the festive season.

We are extending our monster ultra portfolio with the addition of a new water melon flavor.

Now to sustainability.

Even more front of mind given cup.

26, well, we are actively participating in events in Glasgow in order to continue the call for action.

Committed a year ago to ambition to be reducing our absolute.

G H G emissions across our entire value chain by 2030.

Also embedded in our long term incentive plans.

On our roadmap to reaching net zero emissions by 2040.

But these dates are not set in stone, we continued to challenge our commitments and we will go faster wherever possible.

We are taking action where it matters most.

So our first carbon neutral manufacturing sites. The work, we're doing with our suppliers to reduce their emissions.

Reducing the impact of packaging has on the environment.

France will soon follow Germany, who recently transitioned to all there on the go packs to 100% recycled P T.

And via our <unk> ventures arm, our first pilots of self pay self pour drink defense technology have now been launched in Spain.

In the digital space, our transformation journey continues.

To be portal <unk> dot com remains on track to deliver a record year of over 1 billion euros in revenue.

And in partnership with the Coca Cola Company, we are extending the recent launch of the EV to be thoughtful wildly <unk>.

Portugal from Liberum two portal.

And online grocery we continue to see share gains and strong performance with N. A R. T D revenue up 23%.

And our online grocery share up by 130 basis points year to date.

Our European and APAC markets.

And if youre looking for Christmas presents ideas.

You can see platform your Coca Cola, which celebrated its first birthday last week has recently extended its personalized offering two comes with Christmas theme. So please.

Check it out.

And finally, we continued to make excellent.

Progress on the integration of API.

We continue to bring our people.

<unk> and systems together.

We have an even greater focus on our portfolio now and we recently announced plans in Australia to exit.

Beer and Apple cider.

Including the proposed sale of the craft beer Federal we will of course update more on this in due course.

So now onto the full year, reflecting our solid Q3 performance our more recent trading momentum I am very pleased to be raising full year 2021 guidance.

This is all detailed in the release, but the key highlights are that we have increased our expectations on comparable revenue growth to a range of 29% to 30%.

From 26% to 28% previously.

This results in new comparable EPS guidance growth of between 54, and 57% compared to last year.

These growth rates are on a comparable only basis, reflecting the timing impact of the acquisition of API in may this year.

Based on actual FX rates clear.

Clearly this will also flow through to an even stronger free cash flow generation for the full year.

We continue to be very pleased with our performance.

And in particular, we are pleased that our operating margins in the second half of this year continue to approach the pro forma second half operating margin of 2019.

It's not only demonstrates the resilience of this business, but also puts us in a solid position as we head into 2022.

So looking out to next year.

We continue to focus on protecting our margins, while managing the business for the long term to deliver value creation for our shareholders and our customers.

This alongside protecting the health and the affordability of the robust and growing any RTD category.

We are clearly however, not immune to the volatile macro uncertain inflationary environment.

Once we do intend to provide more detailed full year 'twenty guide.

Guidance of our results in February.

We do expect elevated commodity inflation.

As we talked to at the half this year based on current rates and our latest hedge position of 45%.

Hope from 40% in September.

This is weighted and therefore higher in the first quarter. So we continue to closely monitor the appropriate trigger levels to lock in more of our own hedged exposures, depending on the market conditions.

As a reminder to what we said at the half year, we continue to expect commodity inflation to be in the mid to high single digit range for full year 2022.

This we currently expect to translate into a range of 4% to 5% and overall pro forma Cogs per unit case growth.

We are confident in our ability to mitigate these inflationary pressures and to navigate.

Global supply chain challenges as we head in to the new year as.

As we look to full year 2022, we have a number of levers we can pull across headline price mix procurement initiatives and efficiency programs to again manage our business for.

For the long term health of the category.

Coming from a position of strength as I called out earlier, having delivered more growth in revenues for our retail customers than any of our F. M. C. G peers, we will continue to work with our customers to optimize our recommended price.

Range on package architecture.

And we will continue to leverage data analytics customer and consumer insights to drive smarter or jem initiatives to expand the category.

Right sizing.

However.

Given the backdrop as we head into full year 2022.

Coming cycle of joint business transformation with customers pricing will clearly need to take a bigger role compared to previous years.

Well, we have been able to achieve net pricing increases in previous years typically representing at least half of our revenue per unit case growth.

Across headline price.

Optimizing our promotional spend.

And then to our wider color space.

Optimizing our discretionary spend is very much business as usual.

Volumes will continue to recover.

Rivaling favorable fixed cost absorption.

And we are focused on delivering and accelerating our transformational efficiency program, which will ensure that we are fit and competitive for the longer term.

We remain on track for our previously announced efficiency savings and API combination benefits.

Waiting to 350 to 395 million euros in Tokyo.

Now finally to our goal of driving sustainable shareholder value.

Today.

We are raising our full year 2021 guidance and we are declaring a full year dividend of one euro and 40 per share.

This level of dividend maintains an annualized payout ratio of approximately 50%.

And it's progressing given that represents a 13%.

The increase versus its pre pandemic 2019 base.

Collectively this combination demonstrates our confidence in the future of our business.

Our ability to deliver on our goals.

So that's our update for today.

Don't know whole heartily would like to thank our customers and in particular, our colleagues for their ongoing support dedication and hard work.

We continue to focus on our colleague safety and wellbeing.

To ensure we protect them for local vaccination efforts progress at different prices.

Across our markets.

For the remainder of the year. We are we are all now focused on executing our exciting plans as we head towards Christmas.

From the summer season, and API to the winter season in Western Europe.

Thank you for your time.

Nick and I will now be happy to take your questions.

Over to you operator.

Thank you very much ladies and gentlemen, we will not begin the question and answer session I shall remind us if you would like to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to come soon you'll be classic police tester Husky line.

Once again paced by Star one if you wish to ask a question.

While we compile the Q&A queue dish could only take a few moments.

Okay.

And your first question comes from the line of Colin Lieberman of Barclays. Please go ahead.

Great. Thanks, good morning.

Good morning, I was curious a little short term and I know that you raised the revenue guidance and outlook and momentum sounds to you know quite good but I was curious if you could talk a bit about visibility for in stock levels for the fourth quarter. There's just been so many headlines in the last two months about various supply chain bottlenecks packaging.

She is and so on haulage so did.

If you could talk about what you've done to be able to manage through that and what that in stock position looks like for for Q. Knowing how important is the holiday season is particularly across Europe. Thanks.

Hi, Lauren.

Yeah I suppose there is a couple of different perspectives to that question I think across API. We're in great shape from a supply chain perspective heading into our summer there. So.

No no significant challenges in Europe, it's really a tale between Gd in the other markets. So I think we're in good shape across all of Europe, it's been more challenging in J D.

For a couple of reasons one as you've seen the numbers, we've had a number of fantastic launching Judy so exceeding our expectations in terms of volume.

And then secondly, we have had.

Probably more constraints and Jamie around haulage than we've seen in other markets. So our team has done an excellent job with our customers.

Really the way we're navigating it is obviously, we've got good inventory levels. All our plants are running well and we're doing kind of weekly allocations with our customers to make sure. We've you.

You know minimize any out of stocks on the shelf.

I've been working in that way really since we came out of the summer.

It's something that I think will remain a challenge as we look into 'twenty, two but with that approach with our customers. We're navigating an extremely well so really supply chain is in good shape as we look towards Christmas them across all of our markets.

Good shape for the summer season and API.

Yeah, we don't see any challenges coming through December in Europe, So little bit of extra work, but you know I think a sense of it's all working out very well and just just some color to add Damian comment around GB in particular, what we've done is we've actually look at a rolling.

16% to 12 week type of position with each of our customers and what we've tried to make sure. We do is actually smooth out that curve. So that we actually delivering in October and November as opposed to everything coming in December as well, so that will help us in terms of ensuring shelf available.

<unk>.

Great. Thank you and then I was also wondering if you know on the packaging side. If there has been constraints, which then.

The name of turning lemons into lemonade creates more opportunity with migrating package architecture on the shelf in a way that's beneficial to revenue per case over time.

We have so earlier in the year, we talked to some kind of constraints in particular.

The challenge for Us as we came into the summer it's.

It's getting better as we as we come out of those of the solar into Christmas and into next year.

Beyond that we've been really focused on our.

Oh, Jim strategy law and to optimize our retailers' revenue or profitability in Arizona shelves.

So when you look at you know, what's driving that small glass and premium one liter glass.

Our multi pack cans strategy.

And we've changed a number of our P T formats.

So all of that has kind of been happening as we go through 2021.

Sets us up well for 'twenty two.

I'm kind of reading through I'm sure. A question, we'll get later, obviously, that's one of the levers we've been putting in place now to navigate some of those cogs headwinds that I called out in my prepared remarks. So.

There's certainly no supply chain issues behind us and we can use all of those tools.

As we look forward to December and then into next year. So no no real constraints from that perspective.

Okay great.

And then if I can squeeze in one more.

The portfolio decisions on Australia, where great to see some news on that front and I was just curious if you could add a little more color on the decision to exit their insider.

Continuing the RTD alcohols and spirits. If you can offer any color on that or maybe it's more still to come on the portfolio front.

No I mean, we've spent a lot of time pre acquisition looking at where we felt we could create more value for our shareholders.

When we looked at alcohol in particular, it became quite apparent that we had despite the best efforts of a number of years of the team in Australia in particular, not achieved a scalable position of being inside or and then as you know that market theres. Some formidable competitors. So we found it very challenging to see a way to create sustainable shareholder value of that category.

Scale and the efficiencies, particularly in a market like Australia. There. They were just not coming so we felt that was a good decision.

Give us one leaner.

But also to allow us to focus on where we really make a good return for our shareholders, which is obviously within sparkling but also we have a great relationship with Centurion, our ready to drink side and that is a segment, where we've got a scalable share we generate great returns for our customers and for our shareholders. So.

It was really clear decision that when we you know when we just look through that business, we didn't really see a path to sustainable.

And then we're happy we could move quick.

And clearly tidying up our portfolio with the Coca Cola company on the sparkling side is the next step but.

But we're supposed to make a very pleased with the progress on that and we can update.

As we get to a decision point, but probably moving a bit faster than we expected which is great.

Okay, great. Thank you so much I'll pass it on.

Thank you and your next question comes from the line of Simon How Hep C. T. Please go ahead.

Thank you morning, Damien who afternoon, Damian Nik Sarah a couple for me.

Shorter term again, Jamie I mean can you just talk a little bit below about what's driving your confidence in Q4 in terms of that top line upgrade is it a little bit more driven by the.

The API business in the reopening you'll see that post restrictions or is it Europe is it both.

Any more color really is we've been through October that you could share on.

That would be interested in that but that's my first question.

Yeah. It really is both.

I think we experienced probably.

In API in particular stricter lockdown.

We had planned for.

Clearly our business remains really resilient, both in Australia, New Zealand and in Indonesia.

Would love to have a I'm sure you've seen or our lifting we're heading into summer with great momentum so lots of confidence around our API business and also in Europe, and I think you know we.

Did suffer from a little bit of a mixed August we talked about that in September the weather wasn't great Preopening wasn't quite where we expected it to be.

Well that really changed as we came through September.

And we saw a lot more momentum in our European business.

And as we look through October and November to December with the plans, we have in place with our customers with the aforementioned stock levels customer service levels now are back above 95% across our markets.

Our promo plans are in place.

If you are in the market in the UK in particular, you would've seen really strong Halloween activation. So there's some really good assets. So it's a combination of that and obviously, we have suffered a little bit from <unk>.

From home opening probably a quarter to six months later than we expected.

But despite that we've been able to drive really good top line results and as we look at Q4, although it's not the weather for sitting outside in Europe, we are seeing footfall and how it can continue to improve when people go back out.

And then of course that gives us confidence not just from a revenue perspective, but also helps them make some volume as we look at a stronger Q4 than we originally anticipated.

Got it.

And then secondly, maybe maybe one for Nick.

You can just update some where you are overall with your input.

Input cost hedging for 2022 now.

Perhaps also how youre thinking about inflation.

Inflation in the broadcast space.

Into next year.

Maybe just associated with that.

Obviously, you're going through processing renegotiations now she highlighted with the big retailers like do you think that's going to happen a little bit early I'll conclude a little bit earlier than they would do in a normal year. I mean, I think you were talking back in September that'd be H. One results that you were already engaging in conversation. So by the time, we get to the Q4 results would you hope would you hope to have concluded a lot of those.

<unk>.

Great.

Pick up on that last one absolutely. We're in a continued dialogue and we started up that process I would say probably a little earlier just given what we were seeing pressures across all our markets to your question I do believe that we should have a good line of sight by the time, we get to our full year results.

And we'll be able to update you then and I think as we said.

We do see pricing playing a much bigger role than what it has in the past and we wouldn't rule.

Rule out looking at a second round of price increases to depending on how the markets continued to fare in trend.

As we go into the early part of next year. So I think both those very much on the table and we will definitely put some more color to that when we talked to you around the mid February Mark.

In terms of input costs I think as Damian said, we have moved up coverage remember at the half year. We were just under 40% today with about 45%, but I would read into that from an angle of how we've looked at it in terms of each of the quarters.

So as you probably seen aluminum prices have had some respite over the last couple of weeks and we moved quickly so we've actually covered.

Close to about 80% of our exposure for Q1, so when we look at our overall coverage is a lot more Q1 weighted so that 45% roughly.

And slaves to about 70% from Q1 closer to about 50 for Q2 and then obviously.

Less in Q3, and Q4 and that's intentional right because we want to continue looking at how the market evolves.

In terms of broader inflationary pressures clearly you're seeing it on all angles right, you're seeing it on haulage transportation labor issues et cetera.

We're obviously working through our planning assumptions. So I think we'll be able to give you a little bit more of a outlet come back in February as well, but it comes back to the point that Damian made I think we've got multiple the other lever that we will continue to manage to offset some of those pressures, including what we've announced.

Just in terms of the competitiveness program and we never we never static that so I think we'll challenge ourselves to that.

Even more and the other area is our procurement team continues to look at various initiatives as well to further protect us as well. So I think both in terms of the overall shape of the P&L and margin protection as well as Opex. Those are multiple levers that we will continue to manage.

Pretty next thanks very much.

Thank you and your next question comes from the line of some cheap stuff up credit Suisse. Please go ahead.

Hi, Damien Nicks here a couple for me please.

Firstly, just thinking about the pace of volume recovery given the momentum you've seen in Q4.

You look out to 2020 two assuming no further restrictions as any reason why you can't get back to pre pandemic levels and I guess slightly tied to that given pricing is going to pay or play a bigger role with retail into negotiations for next year. How are you thinking about elasticity on volumes I think most staples companies.

Coke themselves.

Given quite a quite an upbeat message on that but love to get your specific thoughts on Europe. Thank you.

Yeah, So I think to your first question.

Question, Sanjay I think Theres no reason, why we will not get back to the 2019.

Some of our markets, we're seeing that already in 2021, and so I think that is definitely as you said absent further lockdowns, which we also do.

Don't expect and that's certainly the journey, we're all I think there's a couple of aspects of it kind of goes back to the last question.

That is probably being a headwind for us in 'twenty, one relative to other geographies, we've had slightly longer lockdowns in Europe, some more disruption to away from home business. So.

Very pleased to be able to sit here today and talk about our results in that context, because we've had to navigate out probably six six months longer than we expected.

That will be definitely a tailwind for next year. So as we come out of a strong Q4.

As we look through to next summer, particularly for markets, where we've got really strong positions in France, and Spain, tourism, which really never really came back significantly this year.

Should definitely supports faster recovery back to those two 2019 levels as you spoke about and as I said, we've seen some of our markets getting there throughout 'twenty one in a given month or even in the given quarter, obviously GB is going to stand out.

So that certainly gives us confidence.

From an overall perspective.

Also going to be cycling slightly longer lockdowns that API than we had originally planned and again as we look through the second half of next year that should support volume as well so I suppose what kind of held us back a bit this year. It will be a benefit for us next year and that'll certainly supports ballroom on getting back to that sort of NRG level.

Yeah, the only the only thought and that that really helps our P&L as well as as.

Given the fact that that overhead recovery should should come through the only caveat I would put on that is we still need to look at how the mix continues to evolve in terms of the away from home. So I think to Daniel's point will probably continue to see.

Strong benefits at home today away from home is still below our 19 levels, depending on the market, but the good news there too is the fact that we've seen substantial re openings compared to what we had in 19. So it's not a base issue it's more around that continued footfall.

That we need to see and that will be supported as Damian said, hopefully with tourism pretending as well.

And then just talking elasticity I mean, it's certainly something we've been working on for a number of years through analytics.

The number of our markets even back to 18 and 19, we did a reset on our promo strategy too.

To take.

Longer term view on the health of the category and that's really come through in our results on an MSR levels, even though the dinosaur level for case in 'twenty one.

So very strong performance. So we will continue to use that.

Two as Nick called out I mean, there will be more headline pricing than in previous years. That's just the environment. We're in.

We're having those conversations now.

We've talked openly about next year potentially being a multiple.

Pricing year, if needed. So we give ourselves that flexibility I think that's the only appropriate for ourselves and for our customers. I think we're also going to be very careful I mean, the category has been super robust, particularly in the home market throughout Covid, we've seen a lot of people coming back into the category and enjoying coax at home.

You know as they were in Lockdown, and we don't want to lose that habits, and we don't want to lose those consumers. So.

As in any year will continue to navigate the pressure on our cost base in our P&L, but clearly make sure. We don't do anything that could damage the loyalty of our consumers are or our customers to our brands.

And when you look at the value, we're creating for our customers clearly that's in their best interest as well so the combination of mix.

[noise] reopening being ahead of 2021 on headline price.

Then balancing that with some really good procurement decisions on our ongoing competitiveness program all of that.

To me will be the tools that we can use to deliver another solid performance next year.

Great. Thank you both.

Thank you and your next question comes from the line of a treadmill of Jefferies. Please go ahead.

Afternoon, Jami Nelson and Nick.

Questions from this side please.

You're not the only company facing cokes precious within Europe, and I appreciate it's still far too early to call how the pricing discussions.

What will turn out but I was one of the largest value drivers yoki Kosmos how does this help the pricing discussion today relative to history.

Of your your revenue per case, Chris between that and the other levers how do you think about the split into 'twenty just wanted to ask to shutter. It comes back on.

Unless you've got a better mix.

And then third question.

Really around.

Addressing your portfolio within Australia.

With what the impact to EBIT might be from some of these existing measures or other measures that might still to come.

Thanks, Ed so.

On the first.

Question I mean, clearly we have.

Generated a lot of value throughout.

Number of years, but particularly so cold with a costumer. So I suppose the benefit of that is when we go and talk to our customers about pricing for.

For next year, we come in with a lot of credibility and a lot of scale.

Myself and nature are kind of small sometimes with the amount of conversations thats going on now about pricing but.

But we've been doing that for many years at TCP. So we have a history of taking price.

And that's been in the best interest of the category, our customers and obviously our shareholders.

And I think when we look at the mix clearly headline price will be a bigger part of that in 2022, that's for sure. So.

And I think that is to protect our business and I think that's the mindset we're going in.

As we look across F N <unk> partners, it's similar conversations.

And clearly that's creating.

A lot of dialogue with our customers, but we will continue to do the right thing for the long term so I think.

Using mix using headline price playing with a promo.

And you got to remember in Europe, depending on the market, 30% to 40% of the revenues can go through a promo so that's a big lever for us.

Managing that in a way that doesn't as I said earlier, you know overly impact our consumers is really what we're focused on so that gives us the confidence.

And we'll share more of that in February to an earlier question most of our pricing will be locked in by then so we will be able to give us at least for our first price increase and a lot more clarity on.

That said, but we have a lot of experience, we're coming off I think a lot of credibility and value creation.

It's not easy we know that what we've been doing it for a number of years.

So our OEM strategies, we've built more tools to use in this environment.

I think a lot of other suppliers, so I think that that helps.

I'll pass it to Nick on your last point on Australia, maybe you could clarify that question.

So I think.

What are you trying to just understand is how would we give you what that EBIT basis. So keep in mind a couple of things.

One other thing Damon touched upon.

Both the fact that we will be exiting the back side of the portfolio, but also looking to.

So some of our flavors and our water brands to the Coca Cola Company.

On the latter I am hoping that we will have that completed before the end of the year as Daniel said, but progressing well and it's important that we move so that we have clarity in terms of how do we think about portfolio choices across any RTD with the Coca Cola company.

So.

The beer and cider sale might take a little bit longer, but I think what we will probably do by February is use the API base as we exit 2021 and gives you a clear indication of what that impact would have been had we sold those businesses in 'twenty. One. So you have a clean base to go off of for <unk>.

2022.

And we will probably give you that including what our position is to be inside that even though that might not happen like I said until the latter part of half one.

But it should be a good basically owe to mom.

Modest growth from.

But at this stage, it's probably a little bit too early to show what the April impact might be from an EBIT standpoint.

Probably too early right now because I think you've got to balance out also from an angle of the cash that we will be receiving upfront, particularly as we sell brand to the Coca Cola Company, and then obviously give up potentially around that half of that value stream.

Having said that remember this is not going to be a big big number given the fact that these businesses.

Had been small and.

There is an opportunity, particularly on the flavors and water to scale up as we partner with the Coca Cola company going forward, Yeah, there's more going forward as opposed to that Rebase. Yeah. I think that's an important point, it's a small part of our business and one of the reasons that we're looking to do this is to make it a bigger part of our business. If you look at our share within Australia.

Moderately underperform in flavors I don't.

I don't think it's a coincidence that when the bulk of their own flavors on this competing against Phantom surprised that it's not it's not the most optimal portfolio strategy. So.

The reason, we want to execute it until I get up now is that we do see that supporting our longer term growth agenda in sparkling in Australia, So small part of our business today.

So right thing to do to set it up for the long term.

I'm Katy will share more about the financial impact of it but again as Nick said, it's quite small today and Thats. The reason why we want to target it should be a lot bigger.

Got it thank you.

Thank you and your next question comes from the line of Mitch Collett from Deutsche Bank. Please go ahead.

Hi, Damien Hi, Nick.

My first question is on GDP, which is I think.

9% versus 2019, and Q3 and up 5% over the nine months can you just comment on away from home is N. G. P is at pretty close to back to normal.

To what extent, you're seeing the gains you made in hiring.

A pretty sticky even when away from home has begun to recover.

That is what you're saying is there any signs that that could be repeated in other market.

Yeah, I mean <unk> has been a it's been a great performer throughout this year for us and the team led by Stephen Moorhouse already done a great job.

The growth that we're seeing.

<unk> is on the back of a number of initiatives that we're taking coming out of 2019 into 'twenty and into 'twenty one.

Strong retail performance.

That's continuing so.

Our at home business is performing well both in store and online.

We're very pleased with that and we've been in every participant in our customers' online platforms in GB and it was cold. It certainly served us well and we continue to trade ahead online versus in store.

In GB away from home, it's a little bit more mixed we saw outlets reopening a little bit faster in the U K is a vaccination levels were ahead of Europe. So that's given us a benefit we've had some good customer wins and so we've taken back business and away from home and that's supporting our growth we're still seeing obviously in.

If you're in London, clearly since the city centers, the financial district is coming back slower and two or three days a week.

We're seeing that but if you're on the tube tracking around aluminum it doesn't feel like that most say so certainly.

The UK is ahead.

On the reopening.

To your last point, obviously, that's something we're leveraging that learning back into our other markets. So that's been very very helpful. Since the pandemic hit we have been doing a good job sharing what's working what's supporting profit and revenue across our markets.

Certainly our pack pricing strategy in GB has held up extremely well in retail.

Our away from home business is coming back, but certainly want us to hold onto the gains we've made in retail as we move into 'twenty, two and I think that's that's what we're seeing at the moment.

I think just to add some numbers to that in terms of GB for the third quarter. We clearly were seeing mid single digit growth versus 19 levels in the away from home and obviously strong performance in the home channel obviously year to date that has slowed down given the fact that we were pretty much locked down for the majority of the.

First half, but that you.

That gives us good comfort as Damian said in terms of the pace of recovery once those re openings happen.

Great. Thank you and then an unrelated follow up can you comment on where you expect to be with regard to cost savings by the end of <unk>.

That's 21, and therefore, what's baked into your updated guidance today.

Very much I would say to you at the top end of what we provided in terms of the range is for 'twenty. One both in terms of European terms about mitigation and competitiveness program as well as the fighting fit so that would be baked into our base as well.

We go into 2022, and we'll obviously provide some color as we close the year out.

Okay. Thank you.

Thank you and your next question comes from the line of Ryan <unk> from J P. Morgan. Please go ahead.

Good afternoon Daniel.

Thanks.

Just two questions from me please more around the portfolio in particular.

Couple of Chico.

Performed within the.

European markets so much of the summer.

So you're not as much about it in Australia, how would you see that progressing going forward.

Particularly with your relationship with Suntory, India, Australia markets.

Secondly, if you could give some detail in terms of Costa coffee out of home businesses now trading like your ambitions for us as we go into Q4 to 2022. Thank you.

Thank you Vincent.

The portfolio too.

A question first on top of Chico.

It was probably a difficult year for salons to brand in most of our markets given the away from home as you know.

Clothes are restricted.

Throughout most of certainly Continental Europe, and then also we clearly the brand positioning fits really well we believe in our markets.

For tourism.

And similar events.

Just didn't really happen. So I think we will look forward to next year given tougher Chico.

More space in focus, particularly in continental Europe, and GBS quite different the brand is doing better.

And we're pleased with it has performed in GB its a category.

<unk> was further developed in GB done in Continental Europe.

So clearly we were coming in after white claw.

<unk> seen good rates of sale good performance of our multi packs.

Again, it's a brand that we'll look at with the Coke company, particularly for the summer season, I think it really fits well in the summer season, and we're all looking forward to a more open summer Ah in 2022, so more to come on top of Chico.

Overall.

Well in GB.

Didn't really get a fair chance to continental Europe, because of the lockdown, but we'll keep it there.

And then on Costa coffee.

Again, our away from home ambition and Costa <unk>.

Not to take a little bit of a pause there's clearly a lot of those outlets wasn't open.

Particularly in the first half of the year as we've come out of it.

Continuing to build our business both in retail what's sort of away from home innovation on packaging.

And then also in away from home with the express machines on building out a vending platform. So we are now open.

Open running in Spain, Germany.

Felix.

Publicly GB.

So they are moving into Norway, So our footprint on Costa. Despite COVID-19 has moved quite quickly.

In retail in particular in away from home and that's clearly an area that we feel will.

Should be growth beyond 'twenty two for number of years as we build up that capability.

Great and just on your question on Australia, I mean, we announced in September that the Coca Cola Company has elected to bring topo Chico.

Through a different distribution model.

In that market and obviously, we're working with as Damian said senatorial and we have good scale and a good business, but we'll continue to evaluate and assess that with the company going forward.

That's clear and maybe also just comment on Indonesia.

Appreciate it.

Et cetera in terms of the statement this morning, but like how that business performed during the quarter. In particular, you see sort of what are your tons for 2022.

Next year.

Great momentum.

Alright.

Yeah, So Indonesia has performed well, particularly sparkling category. So as we as we look at our business and we look at the opportunity in the midterm.

We continue to believe it's got to be built off of more profitable unhealthier sparkling platform enough, what we've been working with the Coke company.

That's actually what we're seeing in the results already.

Our business has been really supported by a much healthier sparkling performance, Indonesia has been obviously a challenge with vaccination rates, we've got to continue to <unk>.

See the vaccination rates grow go open the market reopened them they have reduced a quarantine time. So so there is positive moves coming and they feel obviously at the government level that they are getting older more controls. So that's good to see.

As we look through to Ramadan in April May next year, which will be the key selling period again, it's going to be very much focused on sparkling with the Coke company. We believe that's a sparkling occasion that we can bring our brands to more consumers and bring them into the category and really what we're focused on now is how do we retain them in the category. So Troy.

Price packaging architecture, as we recruit new users into the category, how do we retain them as we move into <unk>.

Post Ramadan period so.

Overall quite positive we announced a new CEO, who has gone in there Jorge he's certainly.

Building.

<unk> plans, both on our route to market level on a portfolio level with the Coke company.

Clearly early signs of sparkling strengths are encouraging despite the COVID-19 challenges, so certainly more to come on that as we get into 2022.

Yeah.

Great. Thank you very much.

Thank you and your next question comes from the line of Bryan Spillane of Bank of America. Please go ahead.

Hey, good afternoon, everyone.

Just two quick ones for me Nick is we're looking at the Cogs per unit case.

Our outlook for next year does that include any changes in concentrate prices. So I guess to the extent that you're contemplating price increases have been planning on price increases.

And that will drive a higher concentrate as does the 4.5% to 5% also include whatever effect that'll have on concentrate.

Yes.

Based on our best estimates of what we will get in terms of top line growth including mix absolutely.

Update that as we get into February.

Once we know where we're lending on some of those discussions as well.

Okay and then just the second one is just kind of related to the whole topic around pricing and inflation and elasticity and I guess.

I guess my question is just you know as Youre looking at the potential to raise prices or the variables I guess associated with it you know what we've seen here right in the states.

You know generally elasticities have been.

Better than better than expected I guess and I think some of that is just against the backdrop of.

They're just being broad based inflation here, probably more so than we've seen in a long time, you've also got a lot of pent up.

Demand I guess.

Household budgets are pretty good so I guess I'm trying to get at what I'm asking it really what I was trying to get underneath is just as you look across your markets.

Does the inflation backdrop kind of favor at all or make it different in terms of the way you are approaching price increases now than maybe you would have in the last five or 10 years, just simply because this is such an unusual environment.

Yeah, Brian I think the dynamics that you've laid out are very similar in Europe, and so traditionally we have seen the elasticity of our category being stronger.

We probably realized.

And I think a lot of the pent up demand issues are very common in Europe, as well as Australia as they had a lot of lockdown.

Certainly if you try and find a restaurant in London or across Europe at the moment. It's a challenge. So we are seeing a lot of the dynamics that you're talking about in North America from a.

From a pricing perspective definitely supports us being a bit more ambitious on our pricing then we would've been in previous years. I mean, we were taken pricing and pretty benign inflationary environment. Because we felt the category was somewhat undervalued that would have been overly promoted for a number of years and we weren't really generating the shift to value for our customer.

<unk> offers shareholders and that kind of goes back to the Genesis of CCP. So that was in a pretty.

Suppose flat environment now that we're seeing inflation clearly pushes us even even further so that does help.

When you've got all the suppliers and all of the customers talking about inflation.

Certainly a different environment than we've been going into pricing discussions.

Obviously, and I think that can only help.

And I think just keep in mind too when you talk to our customers and they have owned brands and private labels relative to price on shelf the increases that theyre going to see are going to be even higher. So it supports us in terms of what they've seen as they go into those environments as well for their own brand and unable to.

Yeah, Thanks for bringing that up because that was going to be I guess my follow up on that whole point is just retailers are also needing some price right I mean, they've got they've got their own costs theyre trying to absorb so it's.

It's almost like you're both in the going in the same direction versus maybe in the past where <unk>.

Conversation might've been a little bit more.

I don't know.

And you said you know I think Brian just to add to that I think Damian said earlier right. We have continued to drive significant value for all our customers over the last four years right and even during Covid. So I think we've come in with a position of credibility strength in terms of what we've done for their margins are knockout.

Corey.

As well as free cash flow et cetera, So we need to continue leveraging that for them and for us going forward.

But also maintain that balance off the health of the category affordability et cetera.

So I.

I think the backdrop is definitely favorable as you said.

Thanks, Nick Thanks Damian.

Thank you and your next question comes from the line of Robert Stein from ethical please.

Yes.

Great. Thank you very much and congratulations on a terrific execution in a very challenging conditions.

I think you mentioned in the preamble that your value share in Australia was up 8% year to date is that correct.

Correct.

Can you. That's that's incredible performance can you give us a little bit more background on that and how that was achieved.

So hi, Robert.

Thank you for your comments the category was up 8% that we gained share in the category. So we were not quite up 8% and revenue, but aren't sure. What we where we have continued to gain share in a very dynamic category.

But I suppose that comes back to some of the comments that we've seen up Peter.

Peter and the team in Australia have done an incredible job through Covid and making sure one building on the learnings we shared from Europe.

Sparkling category within retail.

<unk> continues to perform well.

And that 8% is a great number for a market like Australia, and then to gain share.

In that environment I think is.

It is great and really it was driven by our Cola category performance.

Coke zero continues to do really well, Australia, it's a brand that's doing really well across all our markets. We've reformulated, we've launched a new visual identity, that's certainly giving us.

A lot of momentum so it's.

It's been a it's been a good performance I think Australia is headed into summer.

We'll continue to be strong.

Also reopens I think lets not forget the certainly Victoria's has I think one of the world's largest lockdowns.

That's coming out of Sydney ahead of Lockdowns for longer than we all would have liked that's now reopened clearly as we're looking at Grace guys in London today, they're looking at bright Blue skies ahead into solar so yeah.

It's been a good performance.

Great Great and then if we could talk about our energy for a moment I think you said.

Your energy was up 8.5%, that's that's a little bit of a slowdown is that disappointing.

In the U S at least there are significant issues.

In terms of getting cans are for monster.

And also a lot of debate on pricing, where red Bull doesn't seem to want to take pricing or has been unwilling to and that's kind of a clogged up the whole system in the U S. On the energy drink side love to get your thoughts in terms of what's going on in Europe with energy. Thank you.

Yeah, I think energy is being Robert to stand that category in some ways since 2019.

It's certainly been the walnuts performed strongest through October.

I mean, the quarter I Wouldnt look too much of the quarter I just look at our year to date sales.

Over 30%.

Again, it's been a great led by months. So it's been a great brand performance for us so.

We don't see the energy category slowing down in Europe in particular.

We see a great pipeline of innovation coming in the category as we look into 2022, we had some supply chain challenges earlier in the year on energy, which the team did a good job to navigate but despite that we could deliver a 30% plus growth.

So I wouldn't really look at the quarter number to me is a reflection of where the category is I think it's still the fastest growing most dynamic category in Europe.

And across all of our markets, including API. So.

And it doesn't seem to be slowing down at all those supply chain challenges are.

More or less behind US now so we're clearly planning for a stronger 2022.

And how is the pricing environment for energy drinks.

Well, we took our pricing on energy back John said.

And we were pleased with the price realizations it'll fit into that broader conversations that we're having on pricing.

As we as we look at them.

Into 2022, we generally have had on a per liter level quite a competitive price versus our biggest competitors.

And I think we will.

We remain very competitive on energy as we look at 2022, despite our great growth.

Still a category, we can take it a lot more Sharon.

So pricing will probably be in line with the rest of the soft drinks and any or to the category as we as we look to 'twenty two.

Terrific. Thank you very much.

Thank you and your next question comes from the line of which we have taken some cap hefty sky.

Good afternoon, all thanks, so thanks for the questions I have two please.

First of all can you update us on the customer focus in Australia, I think that was an area where you saw opportunities for for major improvements.

And to increase penetration in certain channels. So so what have you done so far and how does this translate into growth or market share gains.

And then the second question I have is maybe for Nick is there any reason to believe that the upgrade its operating profit guidance for this year does not filter through to cash flow.

So on the second one absolutely will flow through to cash flow I'd be very disappointed if it didn't so.

My team is listening that it will definitely come through the cash flow as well well that's good to hear Nick thanks.

And just to the first question Richard on Australia, as I kind of talked to Robert in the previous.

You know answer I mean, clearly there's a lot of a lot of good momentum.

All driven by great retail performance with our biggest customers in Australia. So we're very pleased with what the team have been doing down there we've been learning from them back in Europe, and sharing learnings with Europe ex Australia, I think as we come out of 'twenty, one as I mentioned earlier tightening up the flavors portfolio was something that we've talked about being.

A good initiative for our customers.

We're starting that process already.

So overall, a very strong key account performance in Australia in 'twenty one.

Look for the same in 'twenty two.

Okay, great. Thanks.

So.

Thank you and your next question comes from Charlie Hate Somebody. Please go ahead.

And mix I would hope you're well the first one is just on your plans in a P O I and the pace of that just with a pure going back into Lockdown in Q3 would you say you've been able to keep your plans going as planned using zoom and other tools like back to just some color on kind of the pace of your your plans done an API.

And have you actually managed to fly out there yet to kick the tires.

And then.

The second one on the Coca Cola company's acquisition of body armor. Just if you had any early thoughts on where that brand could be most exciting across any of your territories. Please.

Hi, Charlie So yeah, I mean, we were all hoping to be doing this call from Australia.

That hasnt been possible, yet, but at least there's a lot at the end of the total in terms of its reopened for Australian citizens and clearly there are some indications that business travel.

We will be the next.

I think the reopened to Singapore completely in the 28th of November that's sort of like a test for them. So I think we're all.

Optimistic that we could escape the European winter.

And go down and kick the tires again, he cannot be down there to kick the tires pre acquisition, but clearly we are very anxious to get back it hasnt really at all slowed down our momentum or our progress of API in fact mice.

I myself am maker.

Really pleased we're ahead of where we thought we'd be at this stage on the acquisition.

And that's really on the back of Great leadership.

Peter and his team, but Christian you Zealand Hoy and on Indonesia.

Really being able to accelerate momentum on the integration.

On best practice sharing but also on the business results and I think you've seen that so.

Maybe they would say its better we don't go down there because things are going okay.

But certainly we will be there in the near term, but despite that.

And I suppose we all learn to live and work virtually.

If those every time to acquire a business.

With such a time difference and to be able to use technology. It's really been in the last 12 months, so that's definitely still towards but fundamentally and.

Under the leadership of Chris Peter in Hawaii, and Yeah, as I said.

We're ahead of where we thought we'd be by now despite it being a longer lockdown.

Just use the seven and 10 P M calls a day.

But that's okay.

Okay.

Yeah.

Great operator. Thank you. Your next question comes from the line of Carlos Laboy from HSBC. Please go ahead.

Yes, Hello, Damian Nik.

Can you update us on your digital transformation.

<unk> progress and are these tools kicking in already in terms of helping you manage your trade discount and your pricing.

Or is this really more of a 2022 type of Oh.

The benefit that you see ahead.

We've noticed in other bottlers in the early phases of these tools.

Kicking in.

Can be really powerful, particularly in terms of managing trade discounts in helping and inflationary periods like this.

Yeah, Hi, Carlos Yes.

We're very pleased on two fronts with our digital performance.

And so far year to date I think.

On our own platform.

<unk> Dot com.

Clearly delivering over 1 billion of revenues is a great milestone for the business.

So that's driving not just efficiencies.

Order management process, but clearly it gives us a lot of data.

As we continue to collect all the order information and then we're adding on continued benefits to our platform. We are looking at Fintech. We're looking at a number of other tools that we can build out.

Just on the loyalty we have from our customers on that platform. So that will continue.

And that business will continue to grow ahead of our coal business security as we look into 2022.

On the other side, we spent a lot of money backing <unk>.

<unk> 19 in 'twenty as we created CCP to.

To build a enterprise wide system.

That would allow us to kind of really apply better data analytics to our business.

We've recently made the move.

With Lia to consolidate our analytics capabilities and that's really in this space you are talking about so thats, allowing us to look at promo efficiency promo spend return on investment on promos.

We're also looking at how it drives market share shopper basket penetration so.

That's a muscle that we've really develops but clearly it's something that's going to continue to grow as we get a lot more data insights from our customers and our consumers putting it through that process has given us much better insights on how to spend their money.

I'd also have to say that the Australian team.

<unk> had been doing a lot of great work in data analytics, and where they are building that into a kind of broader company approach that's something that we weren't in that clearone as we looked at.

CCA, but as we got into the conversations with Peter they've been doing a really good job, particularly around the segmented analytics. So looking at store by store behavior on how you can really change your relevance in the particular store so very very much around micro segmentation and that's something that we're now.

Bringing back to Europe, So I think we'd be having lots of great conversations around the power of digital analytics of CCP for many years to come and clearly as you called out our challenges to get scale as quickly as we can across our markets and that's what we're focused on.

In the last 18 months, we've really become a retail business with the lockdowns in away from home and that's given us even more impetus to drive this even faster when you see that in our NSO per case being ahead, and 19 and Thats really on the back of some of those smart decisions.

Driven by analytics, so very exciting space for us at the moment.

Thank you.

Thank you and your last question comes from the line of Harry <unk> from ABN, who do please go ahead.

Hi, Good afternoon, everyone. One question on recycled P T.

I believe you've committed yourself through sourcing half of your total PTT needs.

From recycled P T by 2023.

There appears to be quite some demand for this commodity which I believe you cannot hedge. So I was wondering could it be a scenario that is 2023.

Commitments could be at risk should inflation persist.

Our pets.

And do you want to protect your margins. Thank you.

Thanks, Eric.

Where we're very much.

On track to meet that commitment.

And that remains our focus there has been some short term challenges around supply, which has driven up the price, but that's reflected in our results year to date and how we've talked about Cogs for next year.

So we're very much committed to meeting that goal and in some ways as the market hopefully rebound in terms of supply of all pit, we could even get ahead of it.

Because clearly 50% was the first milestone we want to get there, but we believe we need to go further and faster. So no change in our commitment that has challenged us a little bit given the price inflation.

But we've been managing that in our results. Nick do you want to know and I think that's very much factored into how we're thinking around 22, and I would almost say to you. We're actually even ahead of where we intend to what we've committed for 2023 and very importantly to Daniel's point I.

I think we will continue to see more capacity for that feedstock collection, and then processing to actually then probably bring down some of those prices 2023 onwards. So I think 'twenty two is probably hopefully the last of those crunches.

But an unwavering and unchanged in terms of our commitments of what we've laid out.

Understood very helpful. Thanks.

Thanks, Eric for the question I'll hand, the call back over to Damian Gammell for closing remarks.

So once again, thank you everybody for joining us for your questions. Today, we are obviously very pleased with our Q3 performance and the ongoing.

Successful integration of API.

Very pleased that we could raise our full.

Full year 'twenty, one guidance today, and declaring our dividend ahead of 2019 and absolute terms.

Just to come back to the last question.

Also we are in.

The weeks of Cop 26, our teams are actively engaged in Glasgow, we've been spending a lot of time, there and clearly as we talk about our business.

Sustainability objectives remain core to what we're doing at CCP, but we want to get to net zero ambition Foster add to Eric's question, we are committed to our <unk>.

<unk>.

Ft percent by 'twenty three are going faster we will.

I believe the first bottler element of the <unk>.

Our CPG companies to put a net zero ambition into our L shape.

So as we move into 'twenty, two we look forward to sharing more with you on how we're making CCP the leader in terms of being a sustainable partner for our customers.

On our consumers as we sit here today, we're now very much focused on executing the plans for the rest of the year, Obviously Christmas in Europe somewhere in API gives us two great platforms to finish the year strongly and to build momentum as we head into 2022 as we look into next year a lot of conversations around protecting our <unk>.

Margins.

Managing the business for the long term to continue to deliver that value creation for our customers and obviously for our shareholders. So myself to make conservative team really look forward to updating you again in February and again, thank you for joining us and stay safe and stay well.

That concludes the call operator, thank you.

Thank you, Sir ladies and gentlemen that does conclude your conference call for today. Thank you felt participating and you may now disconnect.

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Thank you all for joining us today, I'm here with Damian Gammell, and Nick Jones, our CFO.

Before we begin with ally team with remarks on our third quarter trading update a reminder of our cautionary statements. This call will contain forward looking management comments and other statements, reflecting our outlook.

A copy of this information is available on our website at Www Dot Carlo E P Dot com.

Prepared remarks will be made by Damian will then turn the call over to questions.

Unless otherwise stated metrics presented today will be on a comparable and FX neutral basis throw out there.

That would also be presented on a pro forma basis, that's reflecting the result to see C. P.

And Australia and Pacific in Indonesian business, she that ATI.

If the Coca Cola Amatil transactions had occurred at the beginning of this year.

But then in May when the acquisition completed.

Following the call a full transcript will be made available as soon as possible.

Alright.

I'll now turn the call over to Damien.

Thank you Sarah and many thanks to everyone joining us today.

I will keep my comments brief given that the key geography and category highlights our well detailed in today's release.

As you would've seen I'm really very pleased to report that we are raising our full year guidance for 2021.

Reflecting our solid third quarter performance.

This translates into year to date revenue growth of seven 5%.

Driven by solid growth in revenue per unit case ahead of 2019.

As we continue to drive price and mix to our smart revenue growth management initiatives are.

Our continued focus on our core brands and execution.

<unk> continues to serve us well.

Year to date comparable volumes grew by approximately three 5%.

According to Nielsen, we've also solidified our position as the largest F N C G value creator for our retail customers.

And I'm very pleased that we again, both value and volume share in what has been a very robust.

Or to the category.

Growing in volume terms by approximately 3% in Europe and over 8% and API.

Now looking at the third quarter, specifically, we delivered solid revenue per unit case growth of 2%.

Two and a half a percent versus 2019.

Our European volumes declined by 1%.

Impacted primarily by a relatively cold and rainy summer however.

However, with modest revenue growth of 1%.

Volumes were down 2% in API.

So despite renewed restrictions revenue for the quarter was flat demonstrating the ongoing resilience of our business.

Vaccination rates are improving with many of the restrictions being lifted during October.

API has real momentum going into fourth quarter.

Year to date revenues in Australia, and New Zealand are both ahead of 2019.

In Indonesia, Indonesia Importantly grew revenues ahead of volume.

From a channel perspective, although we're not yet back to 2019 levels. We did see sequential improvement in away from home volumes on a two year basis, reflecting improved mobility.

The number of outlet closures is relatively contained so we expect footfall and momentum in this channel to continue to recover.

Now turning to our brands.

Several of which I am pleased are growing ahead of 2019, so to share with you a couple of highlights.

Okay Cola zero sugar is benefiting from its recent new formulation and look now including Australia.

4% in Q3 versus prior year and up.

Double digits year to date versus 2019.

Amongst our brand continues to perform strongly.

With overall volume growth in energy of eight 5% in quarter three.

This drove year to date value share gains of 160 basis points.

This means that versus 2019.

Our energy portfolio has grown 36% year to date.

Fuze tea volumes were up nine 5% year to date in Europe versus 2019, reflecting new pack offerings on flavor rotations.

Quarter three trading aside we continue to invest for long term growth, particularly in our people.

Our portfolio, our sustainability agenda, and our digital framework.

You may have seen some great Panther Halloween activation across our markets.

The popular fuze tea Apple cinnamon flavor is returning for the festive season.

We are extending our monster ultra portfolio with the addition of a new water melon flavor.

Now to sustainability.

Even more front of mind given.

26, while we are actively participating in events in Glasgow in order to continue the call for action.

We committed a year ago to ambition to be reducing our absolute <unk>.

H G emissions across our entire value chain by 2030.

Also embedded in our long term incentive plans on our roadmap to reaching net zero emissions by 2040.

But these dates are not set in stone.

We continue to challenge our.

And we'll go faster wherever possible.

We are taking action where it matters most.

So our first carbon neutral manufacturing sites. The work, we're doing with our suppliers to reduce their emissions.

And reducing the impact of packaging has on the environment.

France will soon follow Germany, who recently transitioned to all there on the go packs to 100% recycled P T.

And via our <unk> ventures arm, our first pilots of self pay self pour drink defense technology have now been launched in Spain.

In the digital space, our transformation journey continues.

Our b to B portal <unk> dot com.

Remains on track to deliver a record year of over 1 billion euros in revenue.

And in partnership with the Coca Cola Company, we are extending the recent launch of the E&P to beef up our widely in Portugal from Liberum two portal.

And online grocery we continued to see share gains and strong performance with <unk> revenue up 23%.

The online grocery share up by 130 basis points year to date across our European and APAC markets.

And if youre looking for Christmas presents ideas are.

You can see platform your Coca Cola, which celebrated its first birthday last week has recently extended its personalized offering to cans with Christmas team. So please.

Check it out.

And finally, we continue to make excellent.

Progress on the integration of API.

We continue to bring our people.

<unk> and systems together.

We have an even greater focus on our portfolio now and we.

We recently announced plans in Australia to exit.

Beer and Apple cider.

Including the proposed sale of the craft beer Farrell will of course update more on this in due course.

So now onto the full year, reflecting our solid Q3 performance our more recent trading momentum I am very pleased to be raising full year 2021 guidance.

This is all detailed in the release, but the key highlights are that we have increased our expectations on comparable revenue growth to a range of 29% to 30%.

Up from 26% to 28% previously.

This results in new comparable EPS guidance growth of between 54, and 57% compared to last year.

These growth rates are on a comparable only basis, reflecting the timing impact of the acquisition of API in may this year.

Based on actual FX rates.

Clearly this will also flow through to an even stronger free cash flow generation for the full year.

We continue to be very pleased with their performance.

And in particular, we are pleased that our operating margins in the second half of this year continue to approach the pro forma second half operating margin of 2019.

This not only demonstrates the resilience of this business, but also puts us in a solid position as we head into 2022.

Yes.

So looking out to next year.

We continue to focus on protecting our margins, while managing the business for the long term to deliver value creation for our shareholders and our customers.

This alongside protecting the health and the affordability of the robust and growing <unk> category.

We are clearly however, not immune to the volatile macro uncertain inflationary environment.

Once we do intend to provide more detailed full year 'twenty guide.

Guidance at our results in February we.

We do expect elevated commodity inflation as we talk to at the half this year based on current rates and our latest centralization of 45%.

From 40% in September.

As a reminder to what we said at the half year, we continue to expect commodity inflation to be in the mid to high single digit range for full year 2022.

Yeah.

This we currently expect to translate into a range of 4% to 5%.

Overall pro forma Cogs per unit case.

<unk>.

We are confident in our ability to mitigate these inflationary pressures and.

To navigate.

Global supply chain challenges as we head in to the new year as.

As we look to full year 2022.

We have a number of levers we can pull across headline price.

<unk> procurement initiatives.

Patiency programs to again manage our business.

For the long term health of the category.

Coming from a position of strength as I called out earlier, having delivered more growth in revenues for our retail customers than any of our S. M. C. G peers, we will continue to work with our customers to optimize a recommended price range on package architecture.

And we will continue to leverage data analytics.

Customer and consumer insights to drive smarter or G M initiatives to expand the category and create siding.

However, given.

Given the backdrop as we head into full year 2022.

Coming cycle of joint business penetration with customers pricing will clearly need to take a bigger role compared to previous years.

We have been able to achieve net pricing increases in previous years typically representing at least half of our revenue per unit case growth.

Across headline price.

Optimizing our promotional spend.

And then to a wider cost base.

Optimizing our discretionary spend is very much business as usual.

Volumes will continue to recover driving favorable fixed cost absorption.

And we are focused on delivering and accelerating our transformational efficiency program, which will ensure that we are fit and competitive for the longer term.

We remain on track for our previously announced efficiency savings and ATI combination benefits equating to 350 to 395 million euros in Tokyo.

Now finally to our goal of driving sustainable shareholder value.

Today, we are raising our full year 2021 guidance and we are declaring a full year dividend of one euro and 40 per share.

This level of dividend and maintains an annualized payout ratio of approximately 50%.

And he is progressing given that represents a 13% absolute increase.

It's pre pandemic 2019 base.

Collectively this combination demonstrates our confidence in the future of our business and.

And our ability to deliver on our goals.

So that's it.

Our update for today.

I wholeheartedly, we'd like to thank our customers.

And in particular, our colleagues for their ongoing support dedication and hard work.

We continue to focus on our colleague safety and wellbeing.

To ensure we protect them for local vaccination efforts progress at different prices across our markets.

For the remainder of the year. We are we are all now focused on executing our exciting plans as we head towards Christmas.

From the summer season, and API to the winter season in Western Europe.

Thank you for your time, Nick and I will now be happy to take your questions.

Over to you operator.

Thank you very much ladies and gentlemen, we'd rather not begin the question and answer session I shall remind us if he would like to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to come soon you'll be classic place attached to Husky line.

Once again paced by Star one if you wish to ask a question.

Finally, while we compile the Q&A queue, they should only take a few moments.

Okay.

And your first question comes from the line of Colin Lieberman of Barclays. Please go ahead.

Great. Thanks, good morning.

Good morning, I was curious what is the little short term and I know that you raised the revenue guidance and outlook and momentum sounds to you know quite good but I was curious if you could talk a bit about visibility for in stock levels for the fourth quarter. There's just been so many headlines in the last two months about.

<unk> supply chain bottlenecks packaging issues and so on college so did.

If you could talk about what you've done to be able to manage through that and what that in Scotland position looks like for <unk>. Knowing how important is the holiday season is particularly across Europe. Thanks.

Hi, Lauren.

Yes, I suppose there is a couple of different perspectives to that question I think across API. We're in great shape from a supply chain perspective heading into our summer there. So.

No no significant challenges in Europe, it's really a tale between <unk> and the other markets. So I think we're in good shape across all of Europe, it's been more challenging in J D.

For a couple of reasons one as you've seen the numbers, we've had a number of fantastic London JV, so exceeding our expectations in terms of volume.

And then secondly, we have had.

Probably more constraints and Jamie around haulage than we've seen in other markets. So our team has done an excellent job with our customers.

Minimize any out of stocks on the shelf.

Been working it that way really since we came out of the summer.

It's something that I think will remain a challenge as we look into 'twenty, two but with that approach with our customers. We're navigating an extremely well so really supply chains in good shape as we look towards Christmas them across all of our markets.

In good shape for the summer season and API.

Yeah, we don't see any challenges coming through December in Europe, So little bit of extra work, but you know I think a sense of it's all working out very well and just just some color to add to David's comment around GBS in particular, what we've done is we've actually look at a rolling.

16% to 12 week type of position with each of our customers and what we've tried to make sure. We do that should smooth out that curve. So that we actually delivering in October and November as opposed to everything coming in December as well, so that will help us in terms of ensuring shelf available.

<unk>.

Great. Thank you and then I was also wondering if you know on the packaging side. If there has been constraints, which then.

The <unk>.

Name of turning lemons into lemonade creates more opportunity.

With migrating package architecture on the shelf in a way that's beneficial to revenue per case over time.

We have so earlier in the year, we talked for some time constraints in particular.

The challenge for Us as we came into the summer.

It's getting better as we as we come out of the summer into Christmas and into next year.

We've been really focused on you know our <unk> strategy to optimize our retailers' revenue and profitability in Arizona shelves.

So when you look at what's driving that small glass and premium one liter glass.

Our multi pack cans strategy.

And we've changed a number of our PDP formats.

So all of that has kind of been happening as we go through 2021.

Sets us up well for 'twenty two.

Theres certainly no supply chain issues behind us and we can use all of those tools.

As we look forward to December and then into next year. So no no real constraints from that perspective.

Okay great.

And then if I can squeeze in one more.

The portfolio decisions on Australia, where great to see some news on that front and I was just curious if you could add a little more color on the decision to exit their insider.

Continuing the RTD alcohols and spirits. If you can offer any color on that or maybe it's more still to come on the portfolio front.

No I mean, we've spent a lot of time pre acquisition looking at where we felt we could create more value for our shareholders.

When we looked at alcohol in particular, it became quite apparent that we had despite the best efforts of a number of use of the team in Australia in particular now that achieves a scalable position in beer and cider and then as you know that market theres. Some formidable competitors. So we found it very challenging to see a way to create sustainable shareholder value in that category.

Scale and the efficiencies, particularly in a market like Australia. They were just not coming so we felt that was a good decision.

Give us one a leaner.

And but also to allow us to focus on where we really make a good return for our shareholders, which is obviously within sparkling but also we have a great relationship with Centurion, our ready to drink side and that is a segment, where we've got a scalable share and we generate great returns for our customers and for our shareholders. So.

It was really clear decision that when we you know when we just look through that business, we didn't really see a path to sustainable.

Returns.

We're happy we can move quick.

And clearly tightening up our portfolio with the Coca Cola company on the sparkling side is the next step on a level at which doesn't make a very pleased with the progress we can update.

Are you on that as we get to a decision point, but.

Moving a bit faster than we expected which is great.

Okay, great. Thank you so much I'll pass it on.

Thank you and your next question comes from the line of Simon How sub C. T. Please go ahead.

Thank you morning, Damien who afternoon, Damian Nik Sarah a couple for me.

Just shorter term again, Jamie I mean can you just talk a little bit below about what's driving your confidence in Q4 in terms of top line upgrade is it a little bit more driven by.

The API business in the reopening you'll seeing that post restrictions or is it Europe is it both any.

Any more color really is we've been through Oct, hoping that you could share on.

That would be interested in that but that's my first question.

Yeah. It really is both.

Think we experienced probably in.

In API in particular stricter Lockdown was done we had planned for and clearly our business remains really resilient and bolt in Australia, New Zealand and in Indonesia.

Those lockdown that I'm sure you've seen or our lifting we're heading into summer with great momentum so lots of confidence around our API business and also in Europe, and I think you know we.

Did suffer from a little bit of a mixed August we talked about that in September and the weather wasn't great Preopening wasn't quite where we expected it to be.

Well that really changed as we came through September.

And we saw a lot more momentum in our European business.

As we look through October November to December with the plans, we have in place with our customers.

The aforementioned stock levels customer service levels now.

95% across our markets.

Our promo plans are in place.

If you are in the market in the UK in particular, you would've seen really strong Halloween activation. So there's some greater good assets. So it's a combination of that and obviously, we have suffered a little bit from away.

Away from home opening probably a quarter to six months later than we expected.

But despite that we've been able to drive really good top line results and as we look at Q4, although it's not the weather for sitting outside in Europe. We are seeing footfall in order to continue to improve when people go back out.

And then of course that gives us confidence not just from a revenue perspective, but also have some mix and volume as we look at a stronger Q4 than we originally anticipated.

Got it.

And then maybe secondly, maybe maybe one for Nick.

If you can just update from where you are overall with your input.

Input costs hedging for 2022 now.

Rob tool, so how youre thinking about inflation.

Inflation in the broadcast space.

Into next year.

Maybe just associated with that.

Oh, I'm sure you're going through pricing renegotiations now as you highlighted with the big retailers like do you think that's going to happen a little bit early or completed a little bit earlier than they would do in a normal year. I think you were talking back in September that'd be H. One results that you were already engaging in conversation. So by the time, we get to the Q4 results would you hope would you hope to have concluded a lot of those.

<unk>.

Great.

Pick up on that last one absolutely. We're in continued dialogue and we started up that process I would say probably a little earlier just given what we were seeing pressures across all our markets to your question I do believe that we should have a good line of sight by the time, we get to our full year results.

And we'll be able to update you then and I think as we said.

We do see pricing playing a much bigger role than what it has in the past and we wouldn't.

The rule out looking at a second round of price increases to depending on how the markets continued to fare in centers.

As we go into the early part of next year. So I think both those very much on the table and we will definitely put some more color to that when we talk to you around the mid February Mark.

So as you probably seen aluminum prices have had some respite over the last couple of weeks and we moved quickly so we've actually covered.

Close to about 80% of our exposure for Q1, so when we look at our overall coverage is a lot more Q1 weighted so at 45% roughly.

The in place to about 70% from Q1 closer to about 50 for Q2 and then obviously.

Less in Q3, and Q4 and that's intentional right because we want to continue looking at how the market evolves.

In terms of broader inflationary pressures clearly you're seeing it on all angles right, you're seeing it on haulage transportation labor issues et cetera.

We're obviously working through our planning assumptions. So I think we'll be able to give you a little bit more of a outlet come back in February as well, but it comes back to the point that Damian made I think we've got multiple other lever is that we will continue to manage to offset some of those pressures, including what we've announced.

Just in terms of the competitiveness program and we never we never static that so I think we will challenge ourselves that even more and the other area is our procurement team continues to look at various initiatives as well to further protect us as well. So I think both in terms of the overall shape of the P&L.

And margin protection as well as Opex those are multiple levers that we will continue to manage.

Pretty next thanks very much.

Thank you and your next question comes from the line of some cheap I wish the Hep Credit Suisse. Please go ahead.

Hi, Damien Nicks here a couple for me please.

Firstly, just thinking about the pace of volume recovery given the momentum you've seen in Q4 as you look out to 2022, assuming no further restrictions as any reason why you can't get back to pre pandemic levels and I guess slightly tied to that given pricing is going to pay or play a bigger role with retailing to bigger.

So next year, how are you thinking about elasticity on volumes I think most staples companies and coke themselves of <unk>.

Given quite a quite an upbeat message on that but love to get your specific thoughts on Europe. Thank you.

Yeah, So I think to your first question.

Question, Sanjay I think Theres no reason, why we will not get back to the 2019.

So all of our markets, we're seeing that already in 2021, and so I think that is definitely as you said absent further lockdowns, which we also do.

Don't expect that.

Certainly the journey we're on.

There's a couple of aspects of it kind of goes back to the last question.

That is probably being a headwind for us in 'twenty, one relative to other geographies, we've had slightly longer lockdowns in Europe, some more disruption to away from home business. So.

Very pleased to be able to sit here today and talk about our results in that context, because we've had to navigate probably six six months longer than we expected.

That will be definitely a tailwind for next year. So as we come out of a strong Q4.

As we look through to next summer, particularly for markets, where we've got really strong positions in France, and Spain, tourism, which really never really came back significantly this year.

Should definitely supports faster recovery back to those two 2019 levels.

You spoke about and as I said, we've seen some of our markets getting there throughout 'twenty, one in a given month or even in the given quarter, obviously GB as being the standout.

So that certainly gives us confidence.

From a an overall perspective.

We're also going to be cycling slightly longer lockdowns in API than we had originally planned and again as we look through the second half of next year that should support volume as well so I suppose what kind of held us back a bit this year. It will be a benefit for US next year that will certainly supports volume on getting back to that sort of NRG level.

Yeah, the only the only thought and that that really helps our P&L as well as as.

Strong benefits at home today away from home is still below our 19 level, depending on the market, but the good news there too is the fact that we have seen substantial re openings compared to what we had in 19. So it's not a base issue it's more around that continued footfall.

That we need to see and that will be supported as Damian said, hopefully with tourism pretending as well.

And then just on the elasticity I mean, it's certainly something we've.

Been working on for a number of years through analytics.

It was a number of our markets even back to 18 and 19, we did a reset on our promo strategy too.

To take.

<unk> view on the health of the category and that's really come through in our results on an MSR levels, even on an MSR level per case in 'twenty one.

So very strong performance. So we will continue to use that as the other two as Nick called out I mean, there will be more headline pricing than in previous years Subsys environment, We're in and we're having those conversations now.

We've talked openly about next year potentially being a multiple.

Pricing year, if needed so we've given ourselves some flexibility I think that's only appropriate for ourselves and for.

Our customers I think we're also going to be very careful I mean, the category has been super robust, particularly in the home market throughout Covid, we've seen a lot of people coming back into the category and enjoying folks at home.

You know as they were in Lockdown, and we don't want to lose that habits, and we don't want to lose those consumers. So as in any year will continue to navigate the <unk>.

Pressure on our cost base in our P&L, but clearly make sure we don't do anything that could damage the loyalty of our consumers are all our customers to our brands.

And when you look at the value, we're creating for our customers clearly that's in their best interest as well so the combination of mix.

We opening being ahead of 2021 on headline price.

And then balancing that with some really good procurement decisions on an ongoing competitiveness program all of that.

To me will be the tools that we can use to deliver another solid performance next year.

Great. Thank you both.

Thank you and your next question comes from the line of Edward <unk> of Jefferies. Please go ahead.

Afternoon, Damon LTE, Nick a couple of questions from this side. Please.

You're not the only company facing cokes precious within Europe, and I appreciate it's still far too early to call how the pricing discussions.

And it will turn out but I was one of the largest value drivers yoki Kosmos how does this help the pricing discussion today relative to history.

And then my second question I think Damian you mentioned in your opening remarks, historically half of your revenue per case growth was really from headline pricing and optimizing primary spend I just think about the balance of of your your revenue per case, Chris between that and the other leavers. How do you think about the split into 2022.

<unk> is the charter it comes back.

Unless you've got a better mix.

And then third question.

Really around.

Addressing your portfolio within Australia, you have to help us with what the impact to EBIT might be from some of these existing measures or other measures that might still to come.

Thanks, Ed.

On the first.

Question I mean, clearly we have.

Generated a lot of value throughout.

Number of years, but particularly ZIP code with our customers. So I suppose the benefit of that is when we go and talk to customers about pricing for next year, we come in with a lot of credibility.

A lot of scale.

A lot of good tools that we share with them ultimately around elasticity in analytics, but I think that at least creates the right environment for the conversation. We also have a history of taking price so myself and Nick are kind of small sometimes with the amount of conversation that's going on now about pricing.

We've been doing that for many years at CCP. So we have a history of taking price.

Now that's been in the best interest of the category, our customers and obviously our shareholders.

And I think when we look at the mix clearly headline price will be a bigger part of that in 2022 that's for sure.

No.

And I think that is to protect our business and I think that's the mindset we're going in.

As we look across FMC G partners, it's similar conversations.

And clearly that's creating.

A lot of dialogue with our customers, but we will continue to do the right thing for the long term so I think yeah.

Using mix using headline price playing with a promo investment you've got to remember in Europe, depending on the market, 30% to 40% of the revenues can go through a promo so thats a big lever for us.

<unk> that in a way that doesn't as I said earlier overly impact our consumers is really what we're focused on so that gives us the confidence.

And we'll share more of that in February to an earlier question most of our pricing will be locked in by then so we will be able to give at least for our first price increase.

A lot more clarity on.

On that and said, but we have a lot of experience, we're coming off I think a lot of credibility and value creation.

It's not easy we know that what we've been doing it for a number of years and I think through our OEM strategies, we've built more tools to use in this environment.

I think a lot of other suppliers, so I think that helps.

I'll pass it to Nick.

Last point on Australia, maybe you could clarify that question.

I got that so I think.

Just trying to understand is how would we give you what that EBIT basis. So keep in mind a couple of things.

One obviously damien touched upon.

The fact that we will be exiting the bank side of the portfolio, but also looking to.

So some of our flavors and our water brands the Coca Cola company.

On the latter I am hoping that we will have that completed before the end of the year as Dan said with progressing well and it's important that we move so that we have clarity in terms of how we think about portfolio choices across any RTD with the Coca Cola company.

So the.

<unk> cited some might take a little bit longer, but I think what we will probably do by February is use the API base as we exit 2021 and gives you a clear indication of what that impact would have been had we sold those businesses in 'twenty. One. So you have a clean base to go off of.

1022.

And we will probably give you that including what our position is to be insider, even though that might not happen like I said until the latter part of half one.

But it should be a good basically or to.

Modest growth from.

The state is probably a little bit too early to show what the April impact might be from an EBIT standpoint.

Having said that remember this is not going to be a big big number given the fact that these businesses.

Have been small and.

Think theres, an opportunity, particularly on the flavors and water to scale up as we partner with the Coca Cola company going forward, Yeah, there's more going forward as opposed to that re basing yeah. I think that's an important point, it's a small part of our business and one of the reasons that we're looking to do this is to make it a bigger part of our business. If you look at our share within Australia.

Moderately underperform in flavors I don't think it's a coincidence.

When the Butler on flavors and is competing against that I'm surprised that it's not it's not the most optimal portfolio strategy. So.

The reason, we want to execute it until I did up now is that we do see that supporting our longer term growth agenda in sparkling in Australia, So small part of our business today.

So right thing to do to set it up for the long term.

I'm clearly will share more about the financial impact of it but again as Nick said, it's quite small today and that's the reason why we want to target.

It should be a lot bigger.

Got it thank you.

Thank you and your next question comes from the line of Mitch <unk> from Deutsche Bank. Please go ahead.

Hi, Damien Hi, Nick.

My first question is on GP, which is I think.

9% versus <unk> 19 in Q3 and up 5% over the nine months can you just comment on away from home is in G. P is at pretty close to back to normal.

To what extent you see that the gains you've made in a hurry.

A pretty sticky even when.

Way from heightened.

And if that is what youll see is there any signs that that could be repeated in other market.

Yes, I mean <unk> has been a it's been a great performer throughout this year for us from the team led by Stephen Moore has already done a great job.

Growth that we're seeing.

On the back of a number of initiatives that we're taking coming out of 2019 into 'twenty and into 'twenty one.

Very strong retail performance.

That's continuing so.

Our at home business is performing well both in store and online.

We're very pleased with that and we've been in every participant in our customers' online platforms in GB and those coals. It up certainly served us well and we continue to trade.

Online versus in store.

In GB away from home, it's a little bit more mixed we saw.

Outlets reopening a little bit faster in the U K as the vaccination levels. We're ahead in Europe. So that's given us a benefit we've had some good customer wins and so we've taken back business and away from home.

And that's supporting our growth.

Still seeing obviously and if you're in London, clearly since the city centers the financial district is coming back slower and two to three days a week.

We're seeing that but if youre on the tube tracking around aluminum it doesn't feel like that most certainly.

Certainly.

The UK is ahead.

The reopening some.

To your last point, obviously, that's something we're leveraging that learning back into our other markets. So that's been very very helpful. Since the pandemic hit we've been doing a good job sharing what's working what's supporting profit and revenue across our markets.

Certainly our pricing strategy in GB has held up extremely well in retail.

They are away from home business is coming back, but certainly want us to hold onto the gains we've made in retail as we move into 'twenty, two and I think that's what we're seeing at the moment.

I think just to add some numbers to that in terms of GB for the third quarter. We clearly were seeing mid single digit growth versus a 19 levels in the away from home and obviously strong performance in the home channel obviously year to date that has slowed down given the fact that we were pretty much in lockdown for the majority of.

The first half but that.

That gives us good comfort as Damian said in terms of the pace of recovery once those re openings happen.

Great. Thank you and then an unrelated follow up can you comment on where you expect to be with regard to cost savings by the end of <unk>.

21, and therefore, what's baked into your updated guidance today.

We're very much I would say to you at the top end of what we provided in terms of the range is for 'twenty. One both in terms of Europe in terms of our mitigation and competitiveness program as well as the fighting fit so that will be baked into our base as we.

Go into 2022, and we'll obviously provide some color as we closed the year out.

Okay. Thank you.

Thank you and your next question comes from the line of <unk> Ryan from Jpmorgan. Please go ahead.

Good afternoon Daniel.

Thanks.

Just some questions may be is more around the portfolio in particular.

Hello Chico.

Formed with Sbe.

European markets drove this summer.

So you and I had lunch about it Australia, how would you see that progressing going forward.

Particularly with your relationship with Victoria in the Australian market and then secondly, if you could give some detail in terms of Costa coffee.

<unk> home business is not trading like your ambitions for us as we go into Q4 to 2022. Thank you.

Thank you Vincent.

Portfolio.

Two questions first one top of Chico.

It was probably a difficult year for us to launch the brand in most of our markets given away from home.

Clothes are restricted.

Throughout most of certainly Continental Europe, and then also we clearly the brand positioning fits really well we believe in the markets.

Tourism.

And similar events.

Just didn't really happen. So I think we will look forward to next year given tougher Chico.

More space in focus, particularly in Continental Europe in GB is quite different the brand has done better.

We're pleased with how it's performed in GB its a category.

<unk> was further developed in GB done in Continental Europe.

So clearly we were coming in after white claw and we've seen good rates of sale.

The performance of our multi packs.

Again, it's a brand that we look at with the Coke company, particularly for the summer season, I think it really fits well enough that summer season, and we're all looking forward to a more open summer.

'twenty two so more to come on top of Chico.

Overall.

Well in GB.

Didn't really get a fair chance of continental Europe, because of lockdown, but we'll keep it there.

And then on Costa coffee.

Again, our away from home ambition and Costa <unk>.

Not to take a little bit of a pause of clearly a lot of those outlets wasn't open.

Particularly in the first half of the year as we've come out of it we're continuing to build our business both in retail within our away from home innovation on packaging.

And then also in away from home with the express machines on building out a vending platform. So we are now open.

Open running in Spain, Germany.

Felix.

Publicly GB.

So theyre moving into Norway, So our footprint on Costa Despite COVID-19 has moved quite quickly.

In retail and particularly in away from home and that's clearly an area that we feel will.

Should be growth beyond 'twenty two for number of years as we build up that capability.

Great and just on your question on Australia, I mean, we announced in September that the Coca Cola company have elected to bring topo Chico.

Through a different distribution model.

In that market and obviously, we're working with as Damian said centuri and we have good scale and a good business, but we will continue to evaluate and assess that with the company going forward.

That's clear and maybe also just some comments on Indonesia.

Appreciate it.

Et cetera in terms of things this morning, but that business performed during the quarter, particularly as you sort of what are your tons for 2022 broke down next year.

Great.

We're quite pleased.

Yeah, So Indonesia has performed well, particularly sparkling category. So as we as we look at our business and we look at the opportunity in the midterm.

We continue to believe it's going to be built off of more profitable unhealthier sparkling platform lapse, but we've been working with the Coke company.

That's actually what we're seeing in the results already.

Our business has been really supported by a much healthier sparkling performance, Indonesia has been obviously challenge with vaccination rates.

Got to continue to.

The vaccination rates grow go open the market reopened them they have reduced the quarantine time. So so there is positive moves coming and they feel obviously at a government level that they're getting is under more controlled so thats good to see.

As we look through to Ramadan in April May next year, which will be the key selling period again, it's going to be very much focused on sparkling with the Coke company. We believe that sparkling occasion that we can bring our brands to more consumers to bring them into the category are really what we're focused on now is how do we retain them in the category. So tour.

Price packaging architecture as.

As we recruit new users into the category, how do we retain them as we move into.

Post Ramadan period, so overall quite positive we announced.

Our new CEO has gone in there Jorge he certainly building.

Solid plans both on our route to market level on a portfolio level with the Coke company.

And clearly early signs of sparkling strengths are encouraging despite the COVID-19 challenges, so certainly more to come on that as we get into 2022.

Yes.

Great. Thank you very much.

Yeah.

Thank you and your next question comes from the line of Bryan Spillane of Bank of America. Please go ahead.

Hey, guys.

Good afternoon, everyone.

Just two quick ones for me Nick is we're looking at the Cogs per unit case.

Our outlook for next year does that include any changes in concentrate prices. So I guess to the extent that you are contemplating price increases have been planning on price increases.

And that will drive a higher concentrate as does the four 5% to 5% also include whatever effect that'll have on concentrate.

Yes.

In fact based on our best estimates of what we will get in terms of top line growth, including mix, absolutely and we'll update that as we get into February.

Once we know where we're landing on some of those discussions as well.

Okay and then just the second one is just kind of related to the whole topic around pricing and inflation and elasticity and I guess.

I guess my question is just as Youre looking at the potential to raise prices or the variables I guess associated with it what we've seen here right in the states.

Generally elasticities have been.

Better than better than expected I guess and I think some of that is just against the backdrop of.

They're just being broad based inflation here, probably more so than we've seen in a long time, you've also got a lot of pent up.

Demand I guess.

Household budgets are pretty good so I guess I'm trying to get at what I'm ask but I really wanted was trying to get underneath is just as you look across your markets.

Yeah, Brian I think the dynamics that you've laid out are very similar in Europe, and so traditionally we have seen the elasticity of our category being stronger.

We probably realized.

And I think a lot of the pent up demand issues are very common in Europe, as well as Australia as they had a lot of lockdown.

Certainly if you try and find a restaurant in London or across Europe at the moment. It's a challenge. So we are seeing a lot of the dynamics that you were talking about in North America from a.

From a pricing perspective are definitely supports us being a bit more ambitious on our pricing then we would've been in previous years. I mean, we were taken pricing and pretty benign inflationary environment. Because we felt the category will somewhat undervalued that it had been overly promoted for a number of years and we weren't really generating the shift to value for our customer.

<unk>, our first shareholders in that kind of goes back to the Genesis of CCP. So that was in a pretty.

Suppose flat environment now that we're seeing inflation clearly pushes us even even further so that does help.

When <unk> got all the suppliers and all of the customers talking about inflation.

Certainly a different environment that we've been going into pricing discussions previously and I think that can only help and.

And I think just keep in mind too when you talk to our customers and they have owned brands and private label relative to price on shelf the increases that theyre going to see are going to be even higher. So it supports us in terms of what they see as they go into those environments as well for their own brand and on labels too.

Yeah, Thanks for bringing that up there because that was going to be I guess my follow up on that whole point is just retailers are also needing some price right I mean, they've got they've got their own costs theyre trying to absorb so it's Tim.

It's almost like you're both in the going in the same direction versus maybe in the past, where our pricing conversation might've been a little bit more.

I don't know.

And you said you know I think Brian just to add to that I think Damon said earlier right. We have continued to drive significant value for all our customers over the last four years right and even during the Covid. So I think we come in with a position of credibility strength in terms of what we've done for their margins on a cat.

Corey as well as free cash flow et cetera. So.

We need to continue leveraging that for them and for us going forward.

Also maintaining that balance of the health of the category of affordability et cetera.

So.

I think the backdrop is definitely favorable as you said, okay. Thanks, Nick Thanks Damian.

Thank you and your next question comes from the line of profit Stein from Evercore. Please go ahead.

Great. Thank you very much and congratulations on a terrific execution in a very challenging conditions.

I think you mentioned in the preamble that your value share in Australia was up 8% year to date is that correct.

Correct.

That's that's incredible performance can you give us a little bit more background on that.

And how that was achieved.

So hi, Robert.

Thank you for your comments the category was up 8% that we gained share in the category. So we were not quite up 8% and revenue, but arent sure. While we were we have continued to gain share in a very dynamic category.

And I suppose that comes back to some of the comments that we've seen.

Peter and the team in Australia have done an incredible job through Covid and making sure one building on the learnings we shared from Europe.

Sparkling category within retail.

<unk> continues to perform well.

And that 8% is a great number for a market like Australia, and then to gain share.

In that environment I think is it.

Great and really it was driven by our Cola category performance.

Coke zero continues to do really well in Australia, It's a brand that's doing really well across all our markets. We've reformulated, we've launched a new visual identity, that's certainly giving us.

A lot of momentum so.

It's been a it's been a good performance I think Australia as it heads into summer, we will continue to be strong.

Also reopens.

I think let's not forget the certainly Victoria's has I think one of the world's largest lockdowns.

That's coming out of Sydney ahead of Lockdowns for longer than we all would have liked that is now reopened.

Clearly as we're looking at Grace guys in London today, they're looking at bright Blue skies ahead into solar so.

It's been a good performance.

Great Great and then.

Could talk about our energy for a moment I think you said.

Your energy was up eight 5%.

That's that's a little bit of a slowdown is that disappointing in the U S. At least there are significant issues.

In terms of getting cans for monster.

Yeah, I think energy has been Robert just on the category in some ways since 2019.

It's certainly been the walnuts performed strongest.

Yes, I mean, the quarter I Wouldnt look too much at the Cora just look at our year to date sales.

Over 30%.

Again, it's been a great led by months or it's been a great brand performance for us. So we don't see the energy category slowing down in Europe in particular.

So I wouldn't really look at the quarter number to me is a reflection of where the category is I think it's still the fastest growing most dynamic category in Europe.

And across all of our markets, including API. So.

And it doesn't seem to be slowing down at all those supply chain challenges are.

More or less behind US now so we're clearly planning for.

As stronger 2022.

And how is the pricing environment for energy drinks.

Well, we took our pricing on energy back John said.

We're pleased with the price realization it'll fit into that broader conversations that we're having on pricing.

As we as we look.

Into 2022, we generally have had on a per liter level quite a competitive price versus our biggest competitors.

And I think we will.

We remain very competitive in energy as we look at 2022, despite our great growth.

Still a category, we can take it a lot more Sharon.

So pricing will probably be in line with the rest of the soft drinks and any or to the category as we as we look to 'twenty two.

Terrific. Thank you very much.

Thank you and your next question comes from the line of Richard We've taken some cap hefty sky.

Good afternoon, all thanks, so thanks for the questions I have two please.

First of all can you update us on the customer focus in Australia, I think that was an area where you saw opportunities for major improvements.

And to increase penetration in certain channels. So so what have you done so far and how does this translate into growth or market share gains.

And then the second question I have is maybe for Nick is there any reason to believe that the upgrade its operating profit guidance for this year does not filter through to cash flow.

So on the second one absolutely will flow through to cash flow.

I'd be very disappointed if it didn't so I.

My team is listening that it will definitely come through the cash flow as well that's good to hear Nick thanks.

And just to the first question Richard on Australia, as I kind of talked to Robert in the previous.

I mean, clearly with a lot of lot of good momentum.

All driven by great retail performance with our biggest customers in Australia. So we're very pleased with what the team have been doing down there we've been learning from them back in Europe, and sharing learnings with Europe back to Australia, I think as we come out of 'twenty, one as I mentioned earlier tightening up the flavors portfolio was something that we talked about being.

A good initiative for our customers.

We're starting that process already.

So overall, a very strong key account performance in Australia in 'twenty one.

Look for the same in 'twenty two.

Okay, great. Thanks.

So.

Yeah.

Thank you and your next question comes from the line of.

Charlie Hakes somebody please go ahead.

The mix ever hope you're well the first one is just on your your plans in API and the pace of that just with a pure going back into Lockdown in Q3 would you say you've been able to keep your plans going as planned using zoom and other tools like back to just some color on kind of the pace. If you will your plans done and a P. I.

And have you actually managed to fly out there yet.

The toys.

And then the.

The second one on the Coca Cola company's acquisition of body armor. Just if you had any early thoughts on where that brand could be most exciting across any of your territories. Please.

Hi, Charlie.

Yeah, I mean, we were all hoping to be doing this call from Australia.

And that hasnt been possible, yet, but at least there's a lot at the end of the total in terms of its reopened for Australian citizens and clearly there are some indications that business travel will be the next.

I think the reopened to Singapore and take in to 2008 of November that's sort of like a test for them. So I think we're optimistic that we could escape the European winter.

And go down and kick the tires again, you cannot be down there to kick the tires pre acquisition, but clearly we are very anxious to get back it hasnt really at all slowed down our momentum our progress in API in fact.

Myself and maker.

Really pleased we're ahead of where we thought we'd be at this stage on the acquisition.

And that's really on the back of Great leadership.

Peter and his team, but Chris in New Zealand Hoy and on Indonesia.

We've really been able to accelerate momentum on the integration.

Best practice sharing but also on the business results and I think you've seen that so.

Maybe they would say its better we don't go down there because things are going okay.

But certainly we will be there in the near term well despite that.

And I suppose we all learn to live and work virtually so if those every time to acquire a business.

With such a time difference and to be able to use technology. It's really been in the last 12 months, so that's definitely still towards but fundamentally.

It's down to the leadership of Chris Peter Hawaii, and yes, as I said.

We're ahead of where we thought we'd be by now despite it being a longer lockdown.

Seven and 10 P M calls a day.

But that's okay.

Okay.

Great operator. Thank you. Your next question comes from the line of Carlos Laboy from HSBC. Please go ahead.

Yes, Hello, Damian Nik.

Can you update us on your digital transformation you appear to be progress.

And.

Are these tools kicking in already in terms of helping you manage your trade discount and your pricing.

Or is this really more of a 2022 type of.

The benefit that you see ahead, we've noticed in other bottlers in the early phases with these tools.

Kicking in.

Can be really powerful, particularly in terms of managing trade discount from helping.

And inflationary periods like this.

Yeah, Hi, Carlos Yes, we are.

We're very pleased on two fronts with our digital performance.

And so far year to date I think.

On our own platform.

<unk> Dot com.

Clearly delivering over 1 billion of revenue is a great milestone for the business.

Yeah, that's driving not just efficiencies.

Order management process, but clearly it gives us a lot of data.

As we continue to collect all the order information and then we're adding on continued benefits platform. We're looking at Fintech. We're looking at a number of other tools that we can build out.

Based on the loyalty we have from our customers on that platform. So that will continue.

And that business will continue to grow ahead of our coal business security as we look into 2022 on the other side, we spent a lot of money backing.

<unk> 19 in 'twenty as we created <unk>.

To build a enterprise wide system.

That would allow us to kind of really applied better data analytics to our business.

<unk> recently made the move.

With Lia to consolidate our analytics capabilities and that's really in the space you are talking about so thats, allowing us to look at promo efficiency promo spend return on investments on promos.

We're also looking at how it drives market share shopper basket penetration so.

So I think that's a muscle that we've really developed but clearly its something thats going to continue to grow as we get a lot more data insights from our customers and our consumers putting it through the <unk>.

<unk> is giving us much better insights on how to spend their money I'd also have to say that the Australian team.

Had been doing a lot of great work in data analytics.

We're building that into a kind of broader company approach, that's something that we weren't that clearone as we looked at the <unk>.

CCA, but as we got into the conversations with Peter they've been doing a really good job, particularly around segmented analytics. So looking at a store by store behavior on how you can really change your relevance in that particular store, so very very much around micro segmentation and that's something that we're now bring.

Going back to Europe, So I think we'd be having lots of great conversations around the power of digital analytics of CCP for many years to come and clearly as you called out our challenges to get scale as quickly as we can across our markets and that's what we're focused on.

In the last 18 months, we've really become a retail business with the lockdowns in away from home and that's given us even more impetus to drive this even faster and you see that in our <unk> per case being ahead, and 19 and Thats really on the back of some of those smart decisions.

Driven by analytics, so very exciting space for us at the moment.

Thank you.

Thank you and your last question comes from the line of <unk>.

<unk>. Please go ahead.

Hi, good afternoon, everyone.

One question on recycled P T.

I believe you've committed yourself to sourcing half of your total <unk> needs.

From recycled P T by 2023.

There appears to be quite some demand towards commodity, which I believe you cannot hedge. So I was wondering could there be a scenario that is 2023.

Commitments could be at risk should inflation persists.

For our pets.

And you want to protect your margins. Thank you.

Thanks, Eric.

<unk>.

Where we're very much.

On track to meet that commitment.

That remains a focus there has been some short term challenges around supply, which has driven up the price, but that's reflected in our.

Our results year to date, and how we've talked about Cogs for next year.

So we're very much committed to meeting that goal.

Some ways as the market hopefully rebounds in terms of supply of all pit, we could even get ahead of it.

Because clearly 50% was the first milestone we want to get there, but we believe we need to go further and faster. So no change in our commitments. It has challenged us a little bit given the price inflation.

But we've been managing that in our results. Nick do you want to know and I think that's very much factored into how we're thinking around 22, and I would almost say to you. We're actually even ahead of where we are in terms of what we've committed for 2023 and very importantly to Daniel's point.

I think we will continue to see more capacity for <unk>.

That feedstock collection, and then processing to actually then probably bring down some of those prices 2023 onwards. So I think 'twenty two is probably hopefully the last of those crunches.

But an unwavering and unchanged in terms of our commitments of what we've laid out.

Very helpful. Thanks.

Thanks, Eric.

The other question and I'll hand, the call back over to Damian Gammell for closing remarks.

So once again, thank you everybody for joining us for your questions. Today, we are obviously very pleased with our Q3 performance and the ongoing.

Successful integration of API.

Very pleased that we could raise our full.

Full year 'twenty, one guidance today I'm, declaring our dividend ahead of 2019 and absolute terms.

Just to come back to the last question.

Also we are in.

The weeks of Cop 26, our teams are actively engaged in Glasgow, we've been spending a lot of time, there and clearly as we talk about our business and our sustainability objectives remain core to what we're doing at CCP and we want to get to our net zero ambition faster to Eric's question, we are committed to.

Our <unk>.

<unk>, 50% by 'twenty three are going faster.

Where I believe the first bottler.

First CPG companies to put a net zero ambition into RL chip.

So as we move into 'twenty, two we look forward to sharing more with you on how we're making CCP the leader in terms of being a sustainable partner for our customers.

Consumers as we sit here today, we're now very much focused on executing the plans for the rest of the year, obviously Christmas in Europe somewhere in API. It gives us two great platforms to finish the year strongly and to build momentum as we head into 2022 as we look into next year a lot of conversations around protecting our margins.

<unk>.

While managing the business for the long term to continue to deliver that value creation for our customers and obviously for our shareholders. So myself Nathan Sara the team really look forward to updating you again in February and again, thank you for joining us and stay safe and stay well.

That concludes the call operator, thank you.

Q3 2021 Coca-Cola Europacific Partners PLC Trading Statement Call

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